10 things about 2015: part 1Posted: December 30, 2015 | |
Originally posted on December 30 on Inside Edge 2, my blog for Inside Housing
Has there ever been a year quite like it for housing? Here’s the first part of my look back at the issues I’ve been blogging about in 2015.
1) Be careful what you wish for
It was the year that Homes for Britain became Home Ownership for Britain as political campaigning turned into political salvaging. Housing professionals made their case from Land’s End to London, filled the Albert Hall and secured wide ranging support for its case for more homes. But the election result changed all that – and many of them had booed the representative of the party that won.
True, housing and the need for new homes moved up the political agenda as the year went on but not quite in the way campaigners had imagined. As the election neared the Tories promised a ‘housing revolution’. What amounted to Plan C, the third revolution in five years, took a poor record on supply, and traded it in for what amounted to homes for votes on a grand scale. The campaigners who had filled the Albert Hall found themselves facing the extension of the Right to Buy to housing association tenants.
2) Tenure is back
If it ever really went away, that is. The long-term shift from home ownership to private renting continued to accelerate. In February the English Housing Survey showed that for the first time since the 1930s (my best guess) there were more outright owners than people buying with a mortgage. The proportion buying with a mortgage was lower than in 1981, when Mrs Thatcher’s drive for a home owning democracy was in full flow.
Two months later DCLG figures revealed just how much England has become a rentier nation. I calculated that from April 2010 to April 2014 – the first four years of the coalition – 533,000 homes were added to the dwelling stock. That was poor enough in terms of overall housing supply but the tenure breakdown said it all: the social/affordable stock was up by 46,000 homes, private renting was up by 676,000 homes and owner-occupation fell by 186,000.
Reversing these underlying trends will be a huge job given rapidly declining ownership rates among younger people but as the year went on the government seemed determined to throw everything it had at having a go.
3) The reckoning for buy to let
The year began with the engine room of the rentier nation running at full steam ahead. A report in January revealed that buy to let landlords had made an incredible £177bn from rising house prices over the previous five years. I calculated that they had saved the same again from low mortgage rates. By March Brandon Lewis was ending what he called the ‘tenant tax’, the ‘unnecessary red tape’ of landlord licensing. Growing calls for the return of rent control before the election came to nothing.
However, there were also mutterings from individual Conservatives about the unfair tax treatment of buy to let compared to first-time buyers and the reality dawned on ministers that the private renting boom was not quite as benign as they thought. Landlords and others with a stake in the status quo had campaigned vigorously against Labour’s plans for a mansion tax and tentative moves towards rent stability. After the election they were found that George Osborne was not quite the friend they thought as he moved to ‘level the playing field’. The chancellor first moved to cut tax relief on their existing properties and then imposed a punitive rate of stamp duty on new purchases. He is clearly looking to a more professional private rented sector, with institutional investors and corporate landlords leading the way. There are some positive signs in this direction but whether he’ll get it remains to be seen.
4) Own, own, own
The election also marked a step change in support for home ownership. The coalition had already introduced two versions of Help to Buy, equity loans for new homes and mortgage guarantees for existing ones. They seemed to helping housebuilders rather more than housebuilding but this was just the beginning. The Conservatives shook off their Lib Dem millstone by launching support for ownership in multiple flavours: an ISA savings scheme (effectively free money for people who can afford to buy); first 100,000 and then 200,000 starter homes at a 20% discount; an expansion of the Right to Buy and shared ownership.
First-time buyers and hard-working families were the supposed beneficiaries even though house prices continued to rise beyond their reach. The performance of the stock market on the day after the election showed who the City thought the real winners were.
5) Funeral fare
The slow death of social housing has developed as a theme throughout this decade, highlighted by the launch of ‘Affordable’ Rent in the first coalition spending review. As 2015 wore on it became more and more clear that this was just for starters. Quite literally in one sense as the government confirmed that starter homes would count as ‘affordable’ for planning purposes and effectively end the principal remaining source of new social housing.
There was briefly talk of One Nation Conservatism and a new approach to social housing and tenants to follow the Tory election triumph. In May I set 12 tests for whether it was anything more than PR puff but my scorecard currently stands at 1 out of 12.
The Housing and Planning Bill added more ingredients for the funeral buffet. Add the extension of the Right to Buy with funding via enforced sales of council housing (more on this in Part 2). Mix in compulsory Pay to Stay and the steady conversion of re-lets to Affordable Rent and shared ownership. Then blend with the 1% rent cut and further welfare reforms.
Part 2 of this blog covers more of the big issues of 2015 including the Right to Buy, the Deal and welfare reform.