The long-term consequences of falling home ownership

A report today from Generation Rent predicts that the number of pensioner private renters will increase by 169% in England over the next 20 years at a cost of an extra £3.5bn in housing benefit.

The increase will come as a result of trends already hard-baked into the housing system and they have nothing to do with the people in their 20s and 30s that we are used to thinking of as Generation Rent.

Successive editions of the English Housing Survey (EHS) have shown that falls in home ownership are rippling up through the age bands as existing private renters get older and find themselves unable to buy.

The report by David Adler of Oxford University and Dan Wilson-Craw of Generation Rent looks at the current EHS, Office for National Statistics and housing benefit data to forecast what will happen by 2035/36.

There are currently 1.1 million private renter households aged between 45 and 64 who will reach retirement age in the next 20 years. Some of them will still be able to buy but on current trends 947,000 will be private renters into retirement.

Add another 50,000 current retiree households who will live into their 80s and you have a million who could be reliant on insecure short-term tenancies and potentially dependent on housing benefit. That could translate into an extra £3.5bn on top of the current housing benefit bill.

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The horrors of temporary housing

Originally posted as a column for Inside Housing on November 8.

From ‘temporary’ homes that last for 19 years to families with young children living in the middle of an industrial estate, a Commons debate on Tuesday found MPs queuing up to relate horror stories from their constituencies.

Labour MP Siobhan McDonagh opened the debate about temporary accommodation with an eloquent and angry explanation of the situation facing 78,000 families and 120,000 children but she was joined by MPs from all parties in calling for urgent changes.

The stats about temporary accommodation are grimly familiar. Among them are a 66% increase in the number of children affected since 2010, 1,200 families with children housed in B&Bs beyond the six-week legal limit and a five-fold increase in families from London housed outside the capital since 2012.

All this has come at a cost of £3.5 bn over the last five years for accommodation that is stretching the definition of ‘temporary’ to breaking point.

Siobhan McDonagh said three quarters of families in temporary accommodation in London have been there for more than six months and one in 10 for more than five years. There are even cases in Camden and Harrow of families living in ‘temporary’ accommodation for 19 years.

A graphic illustration of that came from David Lammy, Labour MP for Tottenham, later in the debate:

‘One family in my constituency have been living in temporary accommodation for 14 years. Another family have been there for 17 years. That family have seen their children grow up in temporary accommodation—the only home that the children have ever known, from their first day at primary school to their first day at secondary school. Next year, the 18th birthday of the eldest child will be celebrated in this so-called temporary accommodation.’

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Look beyond the rate rise for the real housing squeeze

Originally posted as a column for Inside Housing on November 2.

Today’s first rise in interest rates for a decade is an important symbolic moment but it will make little or no immediate difference to the housing costs of millions of home owners with a mortgage.

The increase from 0.25% to 0.5% could see average mortgage payments rise by around £15 a month but it will not apply straight away to people with fixed rate mortgages and in any case it only restores the base rate to what was a record low between 2009 and the aftermath of the referendum.

Compare that with the continuing squeeze on benefits and tax credits/universal credit that the Institute for Fiscal Studies forecasts today will help to increase the percentage of children in relative poverty after housing costs from 30% now to 37% by 2022.

And contrast it with the latest overall benefit cap statistics also published today: as at August 68,000 families were hit by the lower cap that came into effect a year ago and nearly a third of them are losing between £50 and £100 a week. The cap is now £26,000 in London and £20,000 elsewhere.

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A massive relief to social landlords and tenants, but what now?

Originally posted as a column for Inside Housing on October 26.

So finally even the prime minister accepts that plans to impose a local housing allowance (LHA) cap on supported and social housing are unworkable.

Theresa May’s announcement at prime minister’s questions that the cap will not be implemented represents a massive u-turn that will be an equally massive relief to social landlords and tenants.

Statements from a succession of different ministers over the last few weeks had signalled the move for supported housing in the face of overwhelming evidence of postponed investment and knock-on costs for the health and social care sectors.

The decision to scrap it for social housing too was more of a surprise, though it may have been influenced by the difficulty of distinguishing social from supported homes.

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Are things moving at last on housing?

Originally published as a column for Inside Housing on October 23.

Two of the many things about housing that have been obvious since 2010 could be set to change at last.

First, at a time when interest rates are at a record low, it makes sense to borrow to invest in homes and the infrastructure for them.

Sajid Javid committed this heresy against austerity when he told the Marr Show on Sunday that: ‘Investing for the future, taking advantage of record low interest rates, can be the right thing if done sensibly.’

Second, private housebuilders will build homes only as fast as they can sell them, so if we want more homes the state needs to intervene.

As I’ve argued many times before, it makes financial sense even for a government committed to austerity to commission homes directly, rent them at first and then sell them to recoup the money.

Ministers have taken tentative steps towards this position in the last few Budgets but according to a report in The Sunday Times a giant leap towards it is under consideration for November 22.

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Starting with the evidence

Originally posted as a column for Inside Housing on October 20. 

Almost everyone agrees there is a housing crisis, that the housing market is broken and dysfunctional and that urgent action is required – but why and what exactly should be done about it?

For most of the last seven years, the answers to these questions seem to been scribbled on the back of a fag packet at Policy Exchange or emerged fully-formed from the brilliant mind of Iain Duncan Smith.

Any idea of evidence-based policy disappeared after 2010, with evaluations of policy published only reluctantly and ignored when their conclusions are inconvenient.

That has begun to change under Theresa May, who became prime minister with a reputation for taking her time over decisions and insisting on looking at the evidence for herself before she took them.

With the Conservatives apparently prepared to consider some ideas that were previously off limits, and even to fund social rent once again, the political consensus about the need to do something about housing is growing.

So the timing could hardly be better for a new initiative dedicated to supplying the evidence to help diagnose the problems with the housing system and come up with solutions.

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The turn of the screw

Originally published as a column for Inside Housing on October 13.

As universal credit understandably took all the headlines, the scale of the threat posed by restrictions on the local housing allowance (LHA) has come into even sharper focus.

The mood music this week suggested that ministers are set to make concessions over their plans to apply LHA caps to supported housing but the rest of social housing is still right in the firing line.

In a packed Westminster Hall debate on Tuesday and at the Communities and Local Government committee, ministers gave strong hints of flexibility to come.

The debate was called by Tory MP Peter Aldous, who called on the government to give ‘full sand serious consideration’ to recommendations made by two select committees for a supported housing allowance rather than LHA plus local top-ups.

Communities minister Marcus Jones said:

‘This matter is a priority for the Government, and we will announce the next steps shortly—later this autumn. I believe that when those proposals are introduced, they will show that we have listened and have understood the important issues at hand and the important situation. What is at stake is helping and supporting some of the most vulnerable people in our society.’

It remains to be seen exactly how much ministers have listened and understood about a system that would create a postcode lottery and has already halted development plans.

But at stake too is the government’s attempt to impose a flawed system originally designed to reflect private rents to control a very different combination of rent and care costs in supported and social housing.

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