Has the White Paper fixed it?Posted: February 7, 2017
Originally published on February 7 on my blog for Inside Housing.
As the advance press coverage showed, this is a White Paper with few big ideas but maybe that is no bad thing when you consider the ones that emerged the last time the government presented us with a range of ‘bold’ and ‘radical’ reforms.
The extension of the Right to Buy to housing association tenants, forced sales of higher-value council homes and Starter Homes have cast such a dark shadow over affordable housing for the past two years that they make a bit of timidity seem almost welcome.
I’ll come back to the White Paper as a whole another time. You can argue it’s a flimsy response to the housing crisis and there are sections that make you wonder if they’ve been watered down, but it does make a series of subtle changes with the potential at least to change the balance of power in housebuilding.
And there are two new ideas that are definitely worth welcoming: publication of information on land ownership and options over land, and allowing local authorities to participate in German-style land pooling for new development.
For now, though, I want to concentrate on the affordable housing side of the equation and what happened to those three big ideas that have dominated so much of the debate (and my blogs) since 2015.
The White Paper confirms what we already knew about a further regional pilot of the Right to Buy that effectively moves a national scheme to the end of the parliament at the earliest.
It seems completely silent on the forced council sales that were meant to pay for the discounts, maybe because they will not be needed any time soon.
Which leaves Starter Homes. A flagship commitment by David Cameron to build 200,000 of them by 2020 appeared in the 2015 Conservative manifesto. The White Paper tears up that pledge and accepts virtually all of the criticisms made during debates on the Housing and Planning Act:
- Rather than allowing anyone to buy, there will be same household income thresholds as for shared ownership: £80,000 outside London and £90,000 in London. Eligible first-time buyers will also have to have a mortgage to keep out cash buyers. In line with that, there is no mention of the previous price limit of £450,000 in London.
- There will be a 15-year repayment period for the Starter Home discount when the original purchaser sells to a new buyer. That and the mortgage requirement are designed to prevent the risk of speculation. The government had resisted anything like that in the Lords and had previously said there would be an eight-year repayment period.
- The mandatory requirement of 20% Starter Homes an all developments over a certain size will be dropped. Effectively that would have meant no other affordable homes on those sites, and the government says it has listened to those concerns.
- Councils will still have a general duty to promote Starter Homes but there will be no statutory requirement.
- Instead, the government will amend the National Planning Policy Framework (NPPF) to create an expectation that sites will deliver a minimum of 10% affordable homeownership. That means Starter Homes plus other sorts of affordable sale homes.
- The £1.2 billion Starter Home Land Fund will be extended to include other sorts of affordable home ownership schemes as well. Rent to Buy is specifically namechecked.
- The NPPF will also be changed to allow more brownfield land for Starter Homes on unused employment, leisure and retail land and even in the green belt.
Put all that together and you have something that looks much more like the original policy of Starter Homes on sites that would not normally get planning permission and much less like the big fat cuckoo in the nest of affordable housing that it became.
The manifesto commitment of 200,000 Starter Homes has become a wider range of programmes to help 200,000 people become homeowners by the end of the parliament. The government response to the technical consultation was also published today.
It follows that the definition of ‘affordable housing’ in the NPPF will be changed, making it clear that it only means Starter Homes within the household income eligibility cap.
But the definition will also now include ‘affordable private rent housing’. If you’re thinking that sounds like a contradiction in terms, you are not the only one, but it means at least 20% below local market rent with eligibility determined according to local incomes and house prices.
Affordable private rent is aimed especially at the build-to-let sector, with the intention that it remains available for rent at a discount for future tenants or that the provider ensures alternative affordable provision if the discount is withdrawn.
The White Paper also confirms flexibilities in the 2016/21 Affordable Homes Programme. It says:
‘We have opened up the programme, relaxing restrictions on funding so providers can build a range of homes including for affordable rent. This includes Rent to Buy homes alongside shared ownership.’
The climbdown on Starter Homes is good news, if not a total surprise given the months of silence on the detail. Left as it was, the scheme had the potential to eliminate all Section 106 funding for other forms of affordable housing, remove any local discretion from local authorities and divert precious subsidy into the pockets of people who might not need it.
But that new category of ‘affordable private rent’ highlights a theme that I noticed in all of the pre-White Paper interviews with ministers. The way they talked it was almost as though there are now only two tenures: homeownership and private rent.
The White Paper does include support for housing associations and local authorities to build homes for rent but it also warns councils that they will not be able to use housing companies to avoid the Right to Buy.
Housing associations were quick to sign up to the new agenda in a letter to Gavin Barwell earlier stressing their commitment to invest in homes for rent on the open market. What might once have been seen as a means to an end now seems to be an end in itself.
Needless to say, there is no mention in the White Paper of social rent or of anything that is ‘affordable’ in relation to earnings rather than prices. Nor is there any mention of the caps and cuts that will make it unviable to rent to people on housing benefit.
As the title of the White Paper makes clear, this is all about ‘fixing our broken housing market’. Fixing the housing system is a whole other question.