New secretary of state, same old problems

Originally written as a column for Inside Housing.

So it’s farewell to Robert Jenrick and time to ‘welcome’ a new housing secretary in Michael Gove. 

The removal of Mr Jenrick is not a great surprise given a record that includes Westferry, failure to fix the building safety crisis and a flagship policy on planning reform that seems to be sinking. 

Still more so when he ranked third bottom in Conservative Home’s survey of grassroots Tories on how they see members of the Cabinet. Only Gavin Williamson (sacked) and Amanda Milling (demoted) were less popular than him. 

But he also got more money out of the Treasury for building safety than either of his two predecessors and that unpopularity may deserve more respect if it was based on nimby opposition to his planning reform agenda to deliver more homes 

The former housing secretary was an early supporter of Boris Johnson and was loyal to the point of defending government policies on the Sunday morning talk shows that were scrapped in u-turns an hour later.

But loyalty is not always what counts in politics and as if to prove the point he is replaced by Michael Gove, the man who famously stabbed Johnson in the back in the 2016 Tory leadership contest. 

The former Chancellor of the Duchy of Lancaster is the longest-serving current cabinet minister and brings with him cross-departmental clout that will include driving forward the manifesto commitments to deliver 300,000 new homes a year by the mid-2020s and end rough sleeping by the end of this parliament

He was the shadow housing minister before Grant Shapps so he will be familiar with the issues and the main players and he will get an early reminder today of the biggest new issue in his in-tray when leaseholders and building safety campaigners hold a rally in Westminster.

However, such an apparently known quantity still leaves plenty of questions about what his priorities will be and he retains a capacity to surprise (not least on the dance floor). 

He comes with a reputation for delivery forged in the Cabinet Office but while some of this morning’s papers see his new job as central to the government’s mission to level up, others see it as a demotion or disappointment compared to his hopes of higher office. 

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Fixing social care by protecting property wealth

Originally published as a column for Inside Housing.

Boris Johnson has broken all kinds of election promises in his announcement on health and social care levy but for housing purposes there is one pledge remains front and centre.

Amid the wreckage of the triple locks on pensions and tax rates, it’s a survivor of the sunlit days of July 2019 when the new prime minister stood outside Number 10 and said: ‘My job is to protect you or your parents of grandparents from the fear of having to sell your home to pay for the costs of care. And so I am announcing now on the steps of Downing Street that we will fix the crisis in social care once and for all with a clear plan we have prepared to give every older person the dignity and security they deserve.’ Note the order of priorities.

It was there too in the Conservative manifesto in December, even though the ‘clear plan’ had become a somewhat vaguer aspiration for a cross-party consensus.  The significant bit came next (with original emphasis): ‘That consensus will consider a range of options but one condition we do make is that nobody needing care should be forced to sell their home to pay for it.’

And it’s there front and centre in the plan announced this week for a new £86,000 cap on the amount that anyone in England will have to spend on their personal care costs.

There are still some big caveats to mention – not least that the cap does not include accommodation costs and that social care comes after the NHS in the queue for cash – but the net effect should still be that people get to keep far more of their housing wealth and pass it on to their children and grandchildren.

Yet when we consider the details of the Health and Social Care Levy that will pay for it all, it’s striking that one category of assets and income is left completely untouched.

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Tackling the blight of second homes

Originally published as a column for Inside Housing

As the staycation summer starts to draw to a close, spare a thought for everyone living in the places where the rest of us have been on holiday.

Coastal areas and beauty spots in the countryside are well used to tourists but this year has really brought home the impact of second homes, holiday lets and relocating buyers on housing for locals.

On the beach on the  Llyn peninsula in North Wales, the message is Hawl i Fyw Adra (the Right to Live at Home) while demonstrators have scaled the country’s highest mountains to protest that Nid yw Cymru ar Werth (Wales is not for Sale).

In the South West of England, there are persistent reports of Londoners snapping up homes they’ve seen online without even viewing them in person and of tenants being evicted to make way for lucrative holiday lets.

House prices beyond the reach of local wages and rents inflated by holiday lets have long been features of the market but a new development this year is an acute shortage of any homes for rent, let alone affordable ones.

A quick search on Rightmove for my home town in Cornwall reveals just four rentals listed all summer – a studio flat, two bedsits in an HMO and a retirement flat.

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Why are house prices rising around the world?

Originally written as a column for insidehousing.co.uk

News that house prices are rising at their fastest rate since 2004 highlights both the perverse effects of the pandemic and long-term problems with affordability.

Average prices across the UK rose by 13.2 per cent in the year to June according to the official UK House Price Index  with Wales and the North of England leading the way.

While a low level of transactions suggests a need for some caution in interpretation, the same pattern has emerged in other house price surveys of double digit inflation led by regions outside London and the South East.

That confounds expectations at the start of the pandemic of recession about a declining market. The stamp duty holiday announced last Summer looks like an expensive mistake that has just helped fuel house price inflation.

In normal circumstances a bust might well follow the boom but continued support for the market will come from the estimated £180 billion in savings  that households have built up during the pandemic and the wealth gap  between housing haves and have-nots seems set to widen still further.

There is evidence of the same pattern emerging in housing markets around the world: annual house price growth across the 38 richest nations has more than doubled during the pandemic to hit 9.4 per cent, according to the OECD.

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Shopping for homes

Originally published on August 12 as a column for Inside Housing.

Walk down most High Streets in the country and you’ll see empty shops and offices. What’s the best way to turn them into homes?

That’s the question this month’s extension of permitted development rights (PDR) in England attempts to address but is the answer as simple as the government makes out?  

PDR for residential conversion has applied to some commercial buildings since 2013. But the regime has now been significantly expanded to more types of property and in some cases its demolition and replacement as well as conversion.

The results look they will be significant. Enthusiastic analysis by Nimbus Maps, which advises developers, says that around 31,000 properties and more than 8m sq m of floor space could be converted into 135,000 two-bedroom flats. The combined value of the buildings would almost double from £23 billion with commercial use to £43 billion as residential, it says.

A much more sceptical, but equally dramatic, view comes in research by University College London for the Town and Country Planning Association: based on case studies of Barnet, Crawley, Huntingdonshire and Leicester, it concludes that the total floorspace eligible for residential conversion will double under the new regime.

In terms of housing, the issues may seem straightforward. What’s  the problem if the policy could create so many extra homes in buildings that would otherwise lie empty or under-utilised?

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Latest attempt to end fire safety crisis leaves more questions than answers

Originally published as a column for Inside Housing.

While everyone will be hoping that Robert Jenrick has finally found a way through some of the worst aspects of the fire safety crisis, it’s hard not to be a bit sceptical.

The housing secretary issued a dramatic written statement just as MPs were preparing for the Second Reading debate on the Building Safety Bill last week. An accompanying press release from the Ministry for Housing, Communities and Local Government said that: ‘Leaseholders in blocks of flats with cladding should be supported to buy, sell or re-mortgage their homes after the government agreed with major lenders to pave the way to ending the need for EWS1 forms. It comes following expert advice that the forms should no longer be needed on buildings below 18 metres.’

However, that use of ‘should’ is telling because the announcement will achieve nothing if mortgage valuers and lenders do not accept it and if potential buyers are not convinced that the flats are risk-free. The banks quoted as supporting the agreement have only promised to review their practices so far.

Previous attempts to reform the EWS1 process have failed and – even though the small print of this announcement contains the potentially significant addition of a government-backed indemnity insurance scheme for external wall system assessors. This one has already hit a significant obstacle as the Royal Institution of Chartered Surveyors (RICS) says it cannot change its advice to valuers and banks saying they will not change their policies the government changes its own fire safety guidance.

Even if we assume that this is a chicken and egg problem that can be resolved, there are still grounds for scepticism about Jenrick’s attempt to close Pandora’s Box.

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Social housing as business opportunity

Originally published as a column for Inside Housing.

Sometimes a news story stops you in your tracks. A report in The Times that former chancellor Philip Hammond is teaming up with Tory election guru Sir Lynton Crosby in a social housing business certainly did it for me.

After checking that it really was July and not April 1, I read that the plan is to lease homes to local authorities where there is a shortage of social housing. Municipal Partners, a company formed last year, is a ‘for-profit social impact business to acquire, refurbish and lease residential property’.

Seen from the perspective of the Labour leader of Barking and Dagenham Council, Darren Rodwell, this makes some kind of sense in an area where 30 per cent of properties are owned by buy-to-let landlords, including many sold under the Right to Buy. Municipal Partners would instead fund the purchase of the homes, the council would charge affordable rents and pay an income to the company before taking back possession at the end of an agreed period.

Cllr Rodwell says that ‘we can’t fund it via government, so we’re talking to different private pension funds, other organisations and seeing what’s out there’. While he has political differences with Philip, now Lord, Hammond, ‘if he and the company he represents gives us the deal that works for us, and the due diligence all plays out, then obviously we would do business with them because it would benefit my residents’.

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The pandemic and wealth inequality

Originally published as a column for Inside Housing.

Three numbers from a report published this week sum up the financial impact of the pandemic on households – and housing is at the heart of it.

First, £50,000. That’s the average increase in the wealth per adult of the richest 10 per cent of households, says the report by the Resolution Foundation think tank.

Second, £7,800. The increase in the wealth per adult of households in the fifth decile, those right in the middle of the wealth distribution.

Third, £86. That’s the average gain per adult in the poorest 30 per cent of the population.

In part, these numbers reflect the pattern established in the 1980s and then accelerated after the financial crisis whereby wealth begets wealth.

But they also represent something new: the Resolution Foundation estimates that total household wealth has increased by £900 billion since the start of the pandemic, making the period we have just lived through the first recession since the end of the Second World War in which we have got richer.

Some of that is down to spending less (£125 billion) and getting into less consumer debt (£10 billion) but over 80 per cent of it is due to rising asset prices (£750 billion). 

Some of that is driven by rising share values but most of it is due to increases in house prices, which are now up by more than 10 per cent since the start of the pandemic, fuelled in part by the stamp duty holiday.

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Ominous signs ahead of the spending review

Originally published as a column for Inside Housing.

The government’s refusal to extend the £20 a week uplift in Universal Credit has ominous overtones for housing’s prospects in the spending review to come in the Autumn.

Consider the evidence. Unemployment-related benefits in the UK are among the least generous in Europe, not least because of cuts made in the original plans for Universal Credit. Removing the uplift means benefits will fall to their lowest ever level as a proportion of earnings.

For all the government’s arguments about levelling up, the cut will hit a third or more of working age households in Wales, the North and Midlands against a fifth in the South East.

For all the government’s arguments about work being the route out of poverty,  almost as many people on Universal Credit (2.2m) are in work as unemployed and looking for work (2.3m). The remaining 1.6m are not required to work because of ill-health or having a child under 1. All will become £1,000 a year poorer. 

Of course there is still time for ministers to change their mind, but for the moment they look set to go ahead despite lobbying from the last six Conservative work and pensions secretaries to keep the uplift.

But can you imagine the last six housing ministers, or communities secretaries, doing the same as their colleagues at the Department of Work and Pensions? And, even if they did, do you think that the chancellor would be more or less likely to listen to them?

So Matthew Bailes is surely right to warn that the housing sector should be on a ‘war footing’ ahead of a spending review being conducted in the context of long-term structural pressures on the public finances.

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Falling short on climate change

Originally published as a column for Inside Housing.

With just four months to go until the COP26 UN Climate Change Conference in Glasgow, the government is long on ‘historic’ targets but woefully short on credible policies to implement them.

That was the verdict from the government’s own adviser last week in reports that identify housing as a key sector where action fails to match the lofty and legally binding target of achieving net zero by 2050.

The Committee on Climate Change says a ‘step change’ is required but it is hard to discern any comprehensive strategy in climate plans announced in the last 12 months and statements of ambition have been undermined by delays to essential legislation and plans to decarbonise buildings.

The Ministry for Housing, Communities and Local Government (MHCLG) is accused of falling short on ensuring that building standards are fit for purpose and properly enforced and overseen ‘almost none of the necessary progress in upgrading the building stock’.

Meanwhile the Planning Bill misses ‘the powerful opportunity to ensure that developments and infrastructure are compliant with Net Zero and appropriately resilient to climate change’.

Delivery rates on key retrofit measures have ‘continued to stagnate’. On the vital issue of how homes are heated, the number of heat pumps installed in new and existing homes rose from 33,000 in 2019 to 36,000 in 3020. The CCC says 900,000 installations a year are needed by 2028. 

We are even falling short in new homes. Heat pumps were installed in just 5 per cent of them in 2020 against a requirement for 20 per cent by this year.

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