Business leaders are calling for the scrapping of Stamp Duty on additional properties and exemptions for retirement homes as part of plans to tackle the housing shortage.

A report by the Confederation of British Industry makes several recommendations on how the Government could improve its housing policy if it is to build 1 million new homes by 2020.

Explaining the impact of housing shortages on business, the No Place Like Home report says: “Housing shortages can also be seen to hit productivity. Analysis by the TUC put the average commute time in 2014 at 55 minutes, and noted that the number of commuters travelling for more than two hours every day has increased by 72% in the last decade – a trend that could be partly attributed to a lack of affordable homes near to people’s places of work.

“Not only is this costing people money – losing £770m a year of discretionary spending according to the CBI’s 2014 report – but it is costing valuable time, reducing the pool of talent accessible by firms and limiting the jobs available to individuals.”

The CBI’s suggestions include scrapping the Stamp Duty surcharge to support investment in the private rental sector and providing homes for specific needs.

The report suggests giving greater consideration to ‘empty nesters’, those whose children have left the family home and who could downsize to suitable properties to free up housing stock.

It said: “A vast number of properties across the country are potentially being under-utilised. Indeed, it has been estimated that if just half the number of older people that are interested in downsizing did so, it could free up 3.5 million family-sized homes.

“As such, greater consideration should be given to helping older people who are keen to move to smaller properties, such as specialist retirement homes and developments, which currently make up only 3% of the supply pipeline in the UK.

“For example, these types of homes could be made more attractive to both developers and potential residents, through incentives such as Stamp Duty exemptions, as well as more joined-up thinking by local authorities, where retirement developments often fall into a grey area.”

Josh Hardie, deputy director general of the CBI, said: “Solving the UK’s housing shortage has long been a tough nut to crack. For Britain’s businesses, it is far from something confined to the news columns. It’s a problem the impacts of which are seen every day, from high prices barring people moving home and deterring them from applying or staying in a job, to the dent it puts in productivity.

“The ‘one size fits all’ approach has passed its sell-by date. As the demographic landscape changes, we must have homes in the right places that fit the needs of people who live in them, creating vibrant and attractive communities. Equally, we must see different types of players in the market, like small house-builders, more innovation and new partnerships between business to boost our supply base.

“A flexible approach, underpinned by government working with business, will enable us to deliver the homes we sorely need, and which will drive productivity, boost growth and increase prosperity in every corner of the country.”