Declaring the housing market as ‘broken,’ would have been an appropriate title for any white paper on housing since the early 2000s. Eric Pickles, Brandon Lewis and now Gavin Barwell have overseen Conservative housing policies at a time when ownership has been continually dropping and housing has become increasingly present in the public conscience.
The end of home ownership as a priority?
The main soundbite which strayed in and out of national news this week was the departure from subsidising home ownership under Cameron/Osborne to the belated green light to PRS developers under the May government. The idea of convincing a nation to shelve its Englishman’s castle mentality to prepare for a future of renting is one which will take time to absorb. While sold as a way of providing security to those currently trapped in the often damp, inhospitable and unreliable conditions of the private rented sector, this was an altogether new strategy to support purpose-built developments which are more likely to provide long-term secure tenancies.
Underpinning this policy is the fact that the rental sector is a gigantic unearthed commercial opportunity. The UK’s private rented sector is, in the most part, loosely regulated, informal and used by buy-to-let individuals to derive a second income. Government support for a more comprehensive PRS sector will please financial institutions who are always on the lookout for new ways to channel the pot of idle pensioner savings in the region of around £90bn according to property analyst Andrew Teacher. The likelihood is that a boosted PRS sector will do more to improve the quality of rental housing in this country than its affordability.
Is this government getting tough on developers?
No. While the white paper does acknowledge the problems of land banking and the oligarchic nature of volume housebuilding, there is nothing that will stir up rabid discontent among the big players in the market. Speeding up construction starts from the point of planning approval from three to two years is now put to consultation and is caveated crucially by the fact it must not impair the financial ‘viability’ of a scheme. There is some encouraging news for SME builders in terms of making it easier to access finance however.
A ‘Downsizing Revolution?’
This was the Daily Mail’s Monday morning headline, who joined the Telegraph in sensationally overplaying the content of the housing paper on encouraging elderly people to move out of large family homes.
The academic Danny Dorling describes not a ‘housing crisis’ per se but a crisis of accommodation, by which if all the available stock was redistributed in the right areas, the demand for housing would be satisfied. One major social divide in the housing sector is a generational one, which leads to a gap in the fortunes of young and old. However there is a serious undercurrent to the lack of appropriate housing for the elderly, which is tied in with the incapacities of social care at local level. Similar government backing should be made to providers to improve this sector.
We need to move on from blaming local authorities
In general, UK governments, whether local or national, do not build housing. Our fate is very much commandeered by the large house builders and their motivation to build. Thus it is simply counterproductive and misleading to imply that councils are at the heart of a lack of housing supply. Capital controls still exist which prevent local authorities to borrow sufficiently to pursue their own housebuilding programmes. Isolated examples exist of positive and forward thinking work by the public sector to make this happen, but in the majority of cases there is simply not the political will to make it happen. The white paper does all councils to charge up to 20% more for planning fees, which has to be reinvested directly into resourcing costs which will be a welcome boost. However the financial tools on offer remain limited to personnel rather than directly commissioning housing itself. Rather than blame councils, or even developers for that matter, politicians from across all parties are beginning to reluctantly see that the public sector has to be reawakened if the level of housing supply is to meaningfully change.
All in all, the white paper provides a good statistical argument for the issues facing the industry. However it’s suggestions, of which there are few, will not tackle head on the glaring disparity between incomes and house prices and the role of inflationary housing finance. The government would have done well to feed off ideas such as the London living rent which tie rents at a third of average local earnings and be far more interventionist in addressing the planning systems’ impact on the affordability of land. Social housing remains sidelined by national government as a principle, while Right to Buy looks to be expanded rather than curtailed.
One MP described the white paper as a ‘Macmillan-like effort’ to get Britain building again. Harold Macmillan was of course acting at a time of national emergency in the postwar period and was able to pull a number of levers (most notably those of local authority departments and prefabrication) in order to reach his fabled 300,000 new homes a year. This white paper provides a mirror for our current situation, where the problem is made blindingly clear through government publications which set up questions rather than act upon them. Without fully supported local authority housebuilding, we will remain inept at building at the rate we need.