First Homes: what’s the big idea?
Posted: June 9, 2021 Filed under: Affordable housing, First Homes 1 CommentOriginally published as a column for insidehousing.co.uk
It is of course complete coincidence that the First Homes scheme was launched in the constituency that perhaps most symbolises the Conservative election victory in 2019.
It’s not just that Bolsover had been Labour since it was created in 1950, it’s also that it had been represented by Dennis Skinner since 1970, making it a reverse ‘Portillo moment’ for the Tories.
All of which makes the launch of the scheme itself look like an extension of the nakedly political approach taken with the Towns Fund and Levelling Up Fund.
A more generous interpretation might be that the government had more sway over this particular site, which looks like it was developed by Keepmoat Homes in partnership with Homes England.
Either way, this is the launchpad for housing secretary Robert Jenrick’s big idea, homes for sale at a discount of at least 30 per cent market value to first-time buyers. Discounts of up to 50 per cent may be available in some localities.
This is Starter Homes 2.0 with one significant advantage over the original scheme: the discount will remain in perpetuity rather than disappearing into the pocket of the first buyer.
The disadvantages remain the same. The scheme will be delivered initially with grant and then via the planning system. Either way it will squeeze out other forms of affordable housing funded via Section 106, with 25 per cent of developer contributions reserved for First Homes. The government claims it will ringfence homes for social rent so the main impact could fall on share ownership and affordable rent.
Read the rest of this entry »A not so humble address
Posted: May 27, 2021 Filed under: Fire safety, Home ownership, Planning, Private renting, Section 21 Leave a commentOriginally a column for Inside Housing.
Affordable and safe housing for all’. Who could argue with that?
Pretty much everyone, funnily enough, because this was the title of the housing part of the House of Commons debate on the humble address following the Queen’s Speech.
Catching up with last week’s debate, two things struck me really powerfully: first, just how much politics has been turned on its head; and second just how riddled with contradictions the government’s position on housing really is.
In the post-Brexit and (hopefully) post-Covid world, the more that the blanks in the empty slogan of levelling up are filled up, the clearer the first becomes.
Read the rest of this entry »When planning reform meets politics
Posted: May 25, 2021 Filed under: Housebuilding, Planning | Tags: Robert Jenrick Leave a commentOriginally a column for Inside Housing.
A couple of miles away from where I live in Cornwall a community land trust wants to build 29 affordable homes for people with a strong local connection.
These are the first new affordable homes of any kind in Newlyn for years but (you guessed it) there is a ‘backlash from angry locals’. It’s not the homes they object to (of course not, it never is) but the traffic they will generate.
On the one hand, house prices are way out of reach of local earnings and there is a desperate shortage even of homes for private rent thanks to holiday lets. It would be hard to think of an example of a development more deserving of local support rather than campaign groups organising against it.
It’s a compelling reason why the government’s plans to reform the planning system so that individual planning applications no longer come into the equation and land is simply designated for protection, growth and renewal should be taken very seriously.
On the other, this is one of the rural areas facing the ‘threat’ of 400,000 new homes in a report this week that illustrates the scale of the well-housed Tory rebellion in the shires.
But something else I was reading recently suggests a need for caution. My Style of Government is Nicholas Ridley’s critique of the record of Margaret Thatcher’s Conservative administration between 1979 and 1990.
Ridley was one of the main ideologues of Thatcherism and as her environment secretary between 1986 and 1989 he was the architect of the Housing Act 1988 and therefore of much of the housing system as we know it today.
He is also credited with popularising the term NIMBY, although his credibility suffered when it was revealed that he had himself objected to a planning application near his country home in the Cotswolds.
But what’s significant I think is this arch Thatcherite’s admission of complete failure on planning and the political lessons that he drew from it.
Read the rest of this entry »Guarantees, cladding and the housing market
Posted: April 20, 2021 Filed under: Fire safety, Housing market, Mortgages, Stamp duty Leave a commentOriginally published on April 20 on www.insidehousing.co.uk.
The housing market is at a frenzied record high as house prices rise by more than 2 per cent in a single month.
Just the moment then for the government to step in with a scheme to guarantee 95 per cent mortgages for anyone who thinks they have to climb the ladder before it disappears out of reach.
The house prices in question are only asking prices as recorded by Rightmove but the £6,733 average increase between March and April reflects a rush to beat the end of the stamp duty holiday and demand for more space from people who have done well during the pandemic.
It’s now 13 months since the start of the pandemic and, to pick another measure, house prices are up by around £16,000 or more than 7 per cent since then, according to the Nationwide.
Prices initially fell amid the economic uncertainty but surged again on the back of the stamp duty holiday introduced by chancellor Rishi Sunak last July and then extended in March.
The overwhelming beneficiaries are people who already own homes who have been able to sell them for higher prices that now wipe out the stamp duty savings for most buyers. For all the rhetoric about helping people on to the housing ladder, few first-time buyers saved much in stamp duty and all now face having to spend considerably more in total.
The mortgage guarantee scheme, essentially a rehash of one part of Help to Buy, should help them by addressing a genuine problem with the supply of high loan-to-value mortgages.
However, lenders are cautious. The Financial Times reported on Saturday that the largest banks are refusing to lend on new builds under the scheme and that they may also charge higher rates and apply stricter affordability criteria.
From their point of view that makes sense to guard against falling prices, especially when they factor in the new-build premium that adds around 10 per cent to the cost of a new home. .
And the benefits look dubious for first-time buyers too. Based on the Nationwide index, a 95 per cent loan on home at the current average price would be £220,000 – more than the total price was when the stamp duty holiday was first announced.
None of this makes any sense and yet, in an under-supplied and under-taxed housing market fuelled by credit and low interest rates, somehow it does.
As memories fade of the housing market crash of the early 1990s and the downturn after the financial crisis, the logical next step would be a relaxation in affordability checks on mortgages to allow loans at larger income multiples, ignoring the lessons of the 2000s and the economic headwinds that could lie ahead as furlough ends.
But all of this is happening at the same time as the entire market for recently built flats remains mired in the continuing fall-out from the fire safety crisis.
Inside Housing reported on Friday on cases of leaseholders buying flats on the basis of External Wall System (EWS) form declaring that their cladding was safe only for new inspections to decide that it must be removed.
One buyer purchased a £350,000 flat rated A1 and safe in February only for the EWS to be downgraded to B2 just 34 days later. That made her flat worthless and left her facing costs for waking watch and cladding remediation.
If the EWS rating can be changed at the drop of a hat like this, why would anyone risk buying a recently built flat?
The government has grudgingly and in stages committed a total of £5.1 billion to fixing the cladding crisis so far and it has announced some welcome reforms to leasehold.
But leaseholders in buildings below 18m are only eligible for loans and help does not apply to other fire safety problems, leaving a significant chunk of the housing market in limbo.
The fact that at the same time the government has spent £5.4 billion on the stamp duty holiday says it all about where its priorities really lie.
The cake and the crumbs
Posted: April 15, 2021 Filed under: Affordable housing, First Homes, Planning, Right to buy Leave a commentOriginally published as a column on insidehousing.co.uk on April 15.
From Brexit to just about anything else you care to mention, Boris Johnson is known for wanting to ‘have his cake and eat it’. Why should it be any different for housing?
That was the first thought that sprung to mind reading through a raft of recent government responses to consultations. Much like the social housing green and white papers, they try to face in two different directions at once.
One points towards the more tenure-neutral territory staked out under Theresa May. The other points backwards to the promised land of home ownership staked out by David Cameron, the former prime minister turned PR man for failed bankers.
Both are evident in the outcome of consultations on the new model for shared ownership, changes to the current planning system and First Homes, supporting housing delivery and public service infrastructure and use of receipts from Right to Buy sales in the run-up to Easter.
So we get the expansion of permitted development to cover the conversion of most empty commercial buildings, not just offices, into residential. This may mean more ‘units’ but with too few constraints on quality to be regarded as ‘homes’.
Plans for reform of shared ownership include confirmation that landlords will be liable for repairs for the first 10 years on new homes but no acknowledgement that this leaves existing tenant-owners living in devalued assets.
There are plans to give existing as well as new shared owners the statutory right to a lease of 990 rather than 99 years but no fresh solutions for those left out of government help for fire safety costs or forced to take out £50 a month loans.
Reductions in the minimum initial stake and staircasing threshold meet commitments previously made by housing secretary Robert Jenrick without any real evidence supporting them.
Changes to the current planning system include a welcome u-turn on a proposal to increase the threshold at which small sites are exempt from affordable housing requirements from 10 homes to up to 50. That could rescue up to 30,000 affordable homes over the next five years.
However, that’s trumped by confirmation of plans to require a minimum of 25 per cent of homes delivered through developer contributions to be First Homes. Mr Jenrick is therefore diverting a sizeable chunk of the funding mechanism that accounts for more than half of affordable homes into his pet project.
On the Right to Buy, local authorities get five years rather than three to use receipts to build new homes and receipts can account for 40 rather than 30 per cent of the total cost. These are improvements to the scarcely credible ‘one-for-one replacement’ pledge made when discounts were increased in 2012.
But that could still leave them forced to sell homes for less than it cost to build them and it does not address the parallel question of ‘like-for-like’ replacement.
Far from responding to concerns raised in the consultation about broadening the definition, the government suggests that ‘affordable’ replacements for social rent homes sold could include not just affordable rent and shared ownership but also (you guessed it) First Homes.
All of which suggests that the loss of social rent homes – 210,000 in England in the last eight years, according to the latest UK Housing Review – will continue even as ministers make rhetorical nods to the tenure.
It’s as though one part of government wants to shift the balance of policy in favour of social and affordable housing only for another to tilt it back towards home ownership and the free market.
With crucial choices looming as society reopens and the economy moves off life support, which will get the cake and which will be left with the crumbs?
We need to talk about tax reform
Posted: November 12, 2020 Filed under: Housing market, Tax 1 CommentOriginally published as a column for Inside Housing on November 12.
When the pandemic is eventually over, one of the big political questions will be how the government will go about recouping the huge sums pumped into keeping the economy going.
Chancellor Rishi Sunak told the Conservative conference that he believes it is his ‘sacred duty’ to balance the books. Even before the costs of the second wave, a document leaked from the Treasury in May suggested that tax rises or spending cuts equivalent to £25-£30 billion would be needed.
However, Mr Sunak is boxed in by manifesto promises not to increase income tax, VAT and national insurance and not to scrap the triple lock on pensions.
Cutting public spending will not be easy either. If anything the pressure will be the other way as the government looks to implement its levelling up agenda.
That applies even to the depressingly familiar remedy of cutting benefits, with calls for temporary increases in universal credit and local housing allowance to be made permanent set to grow as unemployment rises.
However, housing could still be a key battleground when it comes to tax and areas not covered by those manifesto promises. So far, it’s been another cost to the Treasury, with the £3.8 billon earmarked for the stamp duty holiday, but sooner or later attention will turn to the other side of the ledger.
Read the rest of this entry »The politics of planning reform
Posted: October 26, 2020 Filed under: Housebuilding, Planning | Tags: localism, Planning white paper Leave a commentOriginally published by Inside Housing on October 26.
Remember when a newly elected Conservative-led government was determined to put an end to top-down planning and scrap Labour’s ‘Stalinist’ housebuilding targets?
It may be only 10 years ago but all that ‘localism’ seems a long time ago in the wake of a planning white paper that Boris Johnson says will deliver ‘radical reform unlike anything we have seen since the Second World War’.
But that 2010 rhetoric from Eric Pickles and Grant Shapps is a reminder of the tensions that are inherent in the conflict between Conservative determination to deliver more homes from the centre and the conservative impulse to resist them at a local level.
For all the lofty promises about ‘big, bold steps so that we in this country can finally build the homes we all need and the future we all want to see’, that struggle has never gone away.
In the final few weeks of consultation on the white paper, ministers were already signalling a u-turn on a key part of it after a revolt by Tory backbenchers.
Read the rest of this entry »The problems with Johnson’s housing priorities
Posted: October 6, 2020 Filed under: Decarbonisation, Fire safety, Mortgages, Stamp duty Leave a commentOriginally written as a column for Inside Housing on October 6.
You are prime minister. You have £5.8 billion to spend on housing. What do you do?
Before you answer there is a catch. You are a Tory prime minister. So this has to be all about home ownership.
This is not about the Affordable Homes Programme either – although the modest increase in that is tilted towards home ownership too.
You may have guessed by now that this is about decisions already taken by Boris Johnson’s chancellor Rishi Sunak, decisions that are looking worse and worse the more time goes on.
That thought was prompted by the only ‘new’ idea that I’ve seen emerging from the Conservative Party conference: a plan to create ‘Generation Buy’ by encouraging low-deposit mortgages to help young people on to the housing ladder.
The idea revealed by Mr Johnson in a Telegraph interview on Saturday is not especially new – essentially it’s a rehash of the mortgage guarantee part of Help to Buy and it harks back to the days when Gordon Brown wanted to encourage long-term, fixed-rate mortgages – and it seems to be inspired by a report published by the Centre for Policy Studies last month.
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