10 things about 2013: part 2

Here’s the second part of my look back at the key themes I’ve been blogging about this year.

6) Help to Buy

If the bedroom tax was the subject I blogged about most in 2013 (see Part 1 of this blog), Help to Buy was certainly the best (or worst) of the rest.

The first hints of the scheme came in January as the coalition published its Mid-Term Review. Perhaps conscious of the gap between rhetoric and reality when it came to the government’s record on housing, David Cameron promised more help for people who cannot raise a deposit for a mortgage, with details to come in the Budget. By March Cameron and Clegg were promising what sounded to me like the coalition’s fourth housing strategy in three years. And in the Budget George Osborne duly announced what I called a huge gamble, loosening the targeting of previous schemes at first-time buyers and new homes and extending the help available much further up the income scale.

Help to Buy 2, the mortgage guarantee element, attracted criticism from just about all sides, including the all-party Treasury committee, Sir Mervyn King and the Institute of Directors. It seemed that only the National Trust’s nimby-in-chief Sir Simon Jenkins and London estate agent Foxtons had a good word to say about the scheme. I concluded that the strongest arguments in favour were the ones that ministers could not mention.

Osborne showed what he thought of all that by bringing forward the launch of Help to Buy 2 from January 2014 to the week after the Conservative conference in October. The following month Cameron was boasting that Help to Buy was ‘helping hardworking people realise their home-owning aspirations’ and making a series of statistically dubious claims about the benefits.

7) Help to Build

Half time for the coalition government was a chance to reflect on an administration that had promised to make us ‘a nation of homebuilders’. As the housebuilidng numbers flatlined, I blogged that it was clearer than ever that a complete change of tactics was required in the second half. An important report from Shelter looked at what would be needed to get to the magic number of 250,000 homes a year.

Not that any of this made any difference to government rhetoric. In July Eric Pickles quoted every statistic you could shake a stick at to show that supply was on the up – except the housebuilding ones produced by his own department. Thanks in part to the expectations generated by Help to Buy, the second half of the year did see a rising trend but completions still finished the year on half the level needed to meet demand. The government continued to claim that cutting red tape on housebuilders was the answer. The truth, as ever, was more complex. I again questioned the government’s strategy of giving housebuilders what they wanted without asking for more homes in return.

Housebuilding came to have increasing political significance too. In September George Osborne claimed that the economy was ‘turning a corner’ in a speech made at a London housing development where work that stalled during the credit crunch had just restarted. With 40 per cent of private sales to overseas buyers and separate entrances for rich and poor, the One Commercial Street scheme turned out to be a symbol of far more than the recovery he had in mind. In October Ed Miliband said that a future Labour government would aim for 200,000 homes a year by 2020 and briefings revealed the first hints of new policies. I blogged about the seductive but simplistic argument that if you fix planning you fix supply and if you fix supply you solve the housing crisis. In the wake of Alex Morton’s move to the No 10 Policy Unit (see the first part of this blog) and the formal launch of Labour’s housing commission, I debated the chances of a political arms race on housing ahead of the next election.

8) Help to Rent

The reality for those ubiquitous hardworking people was that they were becoming ever more likely to be renters rather than owners. Low interest rates and austerity effectively meant that renters were paying to keep mortgages low while the astonishing rise of self-employment was one illustration of a labour market that was no longer creating enough jobs with regular incomes to get on to the housing ladder.

In March the CIH’s UK Housing Review showed that the scale of the decline of home ownership, especially among the young, and I posed the question of whether we should be accepting this as an inevitable trend. David Cameron gave a speech pledging the Conservatives’ continued faith in the property-owning democracy of Eden, Macmillan and Thatcher, but I argued we are actually moving towards a property-owning plutocracy. When the Baroness died in April, the second of two blogs about her legacylooked at her role in turning tenants into owners.

As buy to let continued to rise, and Help to Buy started to boost prices, many of the under-45s were giving up on ever owning and millions of people were caught between stagnating wages and rising costs. Reports from Shelter and the Resolution Foundation proposed a reformed shared ownership as one solution but Savills forecast in November that private renting will grow by another million households in the next five years. Help to Buy may be the claim but Help to Rent is the reality.

9) Waking up to renting

The year began with definite signs that politicians were accepting the need for reform and engaging in genuine debate about what to do about the growth of the private rented sector. Things were changing within the sector too: April brought a symbolic move by the Prudential back into private renting, a modest move on consumer redress against letting and management agents and new signs of renter activism. The urgent need for reform was demonstrated only too clearly in a report from Shelter on the plight of private renter families with children.

Lack of action in England was all too clearly illustrated by the Welsh Government’s moves to regulate landlords and agents and implement tenancy reform. The Labour Party in England continued a policy reviewhinting at similar action and flirting with rent stabilisation. The all-party Communities and Local Governemnt committee attempted to find some common ground. And finally there was some movement from a government that had sets its face firmly against what it saw as ‘red tape’. The package announced by Eric Pickles in October may have been minimalist and voluntary but it also showed that the Conservatives were waking up to the issue at last.

10) Taking the strain: past, present and future

My blogs on the housing legacy of Margaret Thatcher reflected on the thing that has underpinned housing policy for the last 30 years or so: the assumption that housing benefit will ‘take the strain’ of higher rents. It seemed unlikely even at the time and even more unlikely in the wake of coalition ‘reforms’ of housing benefit (see Part 1 of this blog) and 2013 brought some new thinking about whether it was really such a good idea to subsidise rents rather than homes.

I blogged about three things in June that illustrated the growing debate about the future.  A speech by Ed Miliband showed that Labour was thinking seriously about a system that only invested £5 in bricks and mortar of every £100 spent on housing. However, the outcome of the spending round seemed to point in the opposite direction: there was 10 years of certainty for rents for social housing and five years on grant but confirmation of another round of affordable rent and of yet more ‘welfare reform’. An independent commission set up by the RICS diagnosed ‘clear signs of market failure’ and proposed a series of reforms across all tenures.

The impact of all this could be seen most clearly in London, where Londoners and their leaders were waking up to the scale of the housing crisis facing the city. The furore over developers treating new developments as an export market eventually led to housebuilders proposing a voluntary pact not to market properties to overseas investors before offering them in the UK. In November Boris Johnson proposed what I call the boldest attempt yet seen from a Conservative administration to get to grips with the housing crisis. The launch of his housing strategy was a significant development with some good ideas even though I blogged that it did not go remotely far enough.

For anyone interested, I have more detailed explorations of where we are coming from and where we are going on housing in two policy essays for the CIH here. In the meantime, happy New Year.

Originally published on my blog for Inside Housing


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