It is also important to note that the discount that will be provided will be reinvested in the economy in the development of new houses after three years. The economy will grow considering this investment. With the increase in tax on high rent house, the demand may reduce and thus the suppliers will consider the development of small houses and thus the supply of low rent houses will increase.
Accessing private finance for subsidised homes:
Subsidy and financing are the most important component of the housing industry as it enables in keeping the sector uplift. As per the report there is a direct relationship between capital subsidies, private finance, rental levels and rental subsidies. This component is more important in providing decent housing for poorer households. It has been recommended to permit local authorities to introduce additional tax bands. The income generated from this tax band will be required to be invested in social housing. Secondly there should be certainty in respect of the rental formula to the housing providers for next 15 years. This will ensure attractiveness of investment to the private investors and funders. It has also been recommended that stock owning local authorities should be allowed. This will result in using the borrowing capacity of the asset base in building homes or in supporting other providers.
The above recommendation is employed extensively employed by the governments whereby the expenses in one sector in the form of subsidies are met by introducing tax bands in other sector of the industry. In this case income generated from this tax band will be required to be invested in social housing (McConnell, Brue & Flynn, 2014). Thus there will not be additional pressure on the investors. This will increase the attractiveness of the housing industry with long term perspective. Further the recommendation of stock owning local authorities will enable streaming investment and inflows towards the sector which is negatively impacted.