With the housing shortage continuing across much of the country, reforms to the planning system must be implemented to free up more homes according to the Council of Mortgage Lenders (CML).

Older borrowers are often left occupying large homes while younger families remain in properties which are too small for their needs.

Simply building more homes will not address the underlying structural problems in the market, CML chief economist Bob Pannell warned.

He warned that the UK’s housing stock was not being used in the best way.

“There is a huge degree of under-occupation when it comes to existing property because there are factors that inhibit the free flow of property,” he said.

“Measures that could be looked at include how stamp duty creates barriers to more efficient use of stock, whether the planning system could recognise the knock-on benefits of older homeowners right-sizing and freeing up family homes, and additional ways in which older households could retain ownership of larger homes but supplement their incomes by renting elsewhere.

“When it comes to housebuilding we need to focus on the mix, not just quantity.”

Figures from the trade body showed that around 1.2 million house purchases were expected this year, little more than activity was in the mid-90s.

“Even if government policy helps to deliver the 250,000 or so homes needed in England, and 300,000 in the UK as a whole, over the next decade, 90% or more of the housing stock that will exist in 2025 has already been built, and is being lived in by somebody,” Pannell added.

“Government measures that nudge towards better use of the current stock could contribute materially to the supply-demand picture.”