Moment in the sun

Originally posted on December 4 on Inside Edge 2, my blog for Inside Housing

First, the good news: new government figures show that the supply of affordable housing is at a 20-year high. The 66,640 homes delivered in 2014/15 represented the highest output since 1995/96 and is among the highest seen since new council housing investment was killed off in the 1980s.

Yes, the surge in output is partly explained by the rush to beat the April 2015 deadline for the 2011-2015 Affordable Homes Programme, but it is still testament to the efforts of everyone involved: housing associations, government agencies, local authorities and housebuilders.

And given the usual doom and gloom on this blog maybe I should even allow ministers a moment in the sun too. Greg Clark and Brandon Lewis were understandably quick to seize on what was also the biggest increase in supply seen since 1992/93, when another Conservative government invested in housing in the wake of the housing market crash. Here’s what Clark had to say for himself:

‘Today’s figures show how far we’ve come to get the country building, bringing the industry back from the brink to deliver the highest annual increase in affordable housebuilding for over two decades. But we are far from complacent and the doubling of government investment in housebuilding announced at the recent Spending Review reaffirms our commitment to deliver a million new homes by 2020. Affordable homes to rent and buy are a key part of that, helping to give young people and families across the country the best possible start in life.’

Now for the bad news. Most obviously, the increase has only been achieved by redefining the word ‘affordable’. Of the 66,640 homes delivered in 2014/15, 40,710 (61%) were for ‘affordable’ (up to 80% of market) rent. Under 10,000 were for social rent, which is probably the lowest seen since the Second World War. Contrast that with 1995/96 when 57,000 (77%) of the 75,000 affordable homes were for social rent. This graph makes what’s happened all too clear:

In case the key to the graph isn’t clear, the colours in the graph represent social rent (mauve), affordable rent (light blue), intermediate rent (maroon) and affordable home ownership (yellow).

You could still see this as a pragmatic choice to maintain numbers at a time of deep cuts in public investment (the show was definitely kept on the road) were it not for the fact that we already know what is going to happen next.

First, output is already falling again following the AHP surge. That is evident in stats published a day after the supply figures showing starts and completions funded by the HCA and GLA. Starts fell 12% in 2014/15 and the figure for April to September 2015 (the first half of 2015/16) was down 25% on a year earlier. First half completions were down 47% on April to September 2014.

Second, the whole emphasis is being switched to affordable home ownership. Even under the 2015/18 Affordable Homes Programme, an uncommitted £700m has been switched from rental to ownership and Affordable Housing Guarantee programme is being wound up. As Pete Apps blogged earlier in the week, the ending of a scheme that could deliver 20,000 affordable homes at almost no cost to the public purse tells you all you need to know about the government’s priorities. And the Spending Review makes clear that the AHP to come will be even more dominated by ownership than the current one is by affordable rent.

Again you could see this as a legitimate choice by an elected government to prioritise the needs of people who cannot afford to buy. There are good arguments in favour of shared ownership provided some of its problems can be ironed out.

But this is where the very bad news comes in. This will be not just a change in priorities but a full-scale cannibalising of affordable housing for those in the most need to fund the aspirations of frustrated would-be home owners. Most glaringly, £2.3bn will be devoted to a fund for Starter Homes and disappear into the pockets of buyers and builders rather than being recycled into more affordable homes.

However, the changes do not stop there. Quite apart from grant, a series of other changes will undermine the whole eco-system for affordable rented homes:

• More funding for Starter Homes will come from changing the rules on Section 106 that will remove a key secondary source of affordable homes from the equation.
• The benefit cap, another political choice by government, is set to make affordable rent unviable across whole swathes of the country.
• Pay to Stay will mean compulsory market rents for ‘high income’ social tenants.
• Some social landlords have already scaled back their investment programmes in the wake of the 1% a year cut in rents
• Many local authorities have dropped ambitious plans to get back into development fearing that they will be forced to sell the homes they build as soon as they come up for re-let to pay for housing association Right to Buy discounts.

The list goes on and on. At the same time thousands of social rented homes are being converted to higher rents as they fall vacant. As Monimbo blogs on Red Brick, the last four years saw construction of 75,000 new social rented homes but the conversion of 76,000. Another 32,000 were sold under the right to buy. The next five years will see more rented homes sold and converted to ownership and lost to the right to buy with questionable ‘replacements’.

This process is already evident even in this week’s triumphant figures. Of the 66,640 affordable homes delivered in 2014/15, 3,190 came through the Affordable Housing Guarantee, another 14,370 were nil grant Section 106 completions and 4,330 came from local authorities. That’s 22,000 homes, or a third of last year’s total, that would probably not have been there under the measures listed above. On top of that, many of the other affordable completions will have been partly supported by Section 106.

Celebrate the good news while it lasts and prepare for yet more stretching of the definition of affordable.