The Conservative manifesto plan for council housing

The Tory ‘council house revolution’ trailed in all today’s papers begs all sorts of questions that I’ll be blogging about soon (now up here).

In TV interviews today we’ve learned that there is no new money, just the £1.4bn for affordable housing promised in the 2016 Autumn Statement.

Conservative spokespeople refused to say how many homes were involved but the Autumn Statement said 40,000.

If that is welcome news it hardly qualifies as a ‘revolution’. However, the policy includes other details that could prove to be more significant in the longer term.

Given that all today’s reports are based on a Conservative Party press release that I can’t find anywhere online, here it is:

Theresa May’s Conservatives will build a new generation of social housing linked to a new right to buy

Today the Conservatives announce that they will offer to strike new deals with the most ambitious councils and housing associations, giving them funding, capacity support and new powers to build a new generation of homes for social rent.

In the last twenty years, the decline in local authority housebuilding has left England with a dwindling social housing stock as demand for housing has risen. In the 1960s and 1970s, councils built more than a million homes a decade, but now build just a few hundred homes a year. While housing associations have met much of this gap, there are currently 300,000 fewer homes for social rent than twenty years ago and around 1.2 million families on local authority waiting lists for a social tenancy.

Theresa May’s Conservatives will tackle this problem, by offering to support the most ambitious councils and housing associations build thousands of new homes, in exchange for them building a new generation of fixed term, high quality council homes linked to a new right to buy for social tenants.

Under the deals, the Government would give councils and housing associations funding and make available housebuilding capability from the Homes and Communities Agency. Councils would be able to assemble land, including derelict buildings or unused pocket sites, more easily under reformed compulsory purchase rules. The deals would require a proportion of the social homes built to be sold after ten to fifteen years, allowing increases in land and housing value to be reinvested in new social housing over time. The tenant would receive the first right to buy on the property at the point of sale.

The Conservatives expect councils in urban areas to make most use of the deals, assembling industrial land in cities and repurposing it for development of much-needed homes at social rents. The fact that these some of these homes will be sold after a limited period will ensure that developers consider the private value of homes, improving quality, and return funding for new social homes.

Prime Minister Theresa May said:
“A Conservative Government led by me will not duck the big challenges we face as a nation and there are few issues that are greater than the need for good-quality, affordable housing.
“Whether you rent or buy, everyone needs the security of a place to call home but too many ordinary working families are stuck on council waiting lists, facing unaffordable rents and struggling to save for that first deposit.
“That’s why we will fix the broken housing market and support local authorities and housing associations to build a new generation of council homes right across the country. Giving tenants a new right to buy these homes when they go on the market will help thousands of people get on the first rung of the housing ladder, and fixed terms will make sure money is reinvested so we have a constant supply of new homes for social rent.
“It is part of my determination to build a better Britain our children and grandchildren are proud to call home and where everyone has the chance to get on in life. But this is only possible through the strong economic management we will continue to provide – in contrast to the economic ruin that a coalition of chaos led by backward-looking Jeremy Corbyn would bring to our nation.”

ENDS

Notes to Editors

Under the deals, the Government will offer to strike deals with local authorities and housing associations.

The Government will offer funding and capability support to councils and housing associations that seek to participate, including through direct funding and extra borrowing. The Homes and Communities Agency would support local contracting and development capability.

In exchange, the Government would require at least some of the homes built to have a fixed term of social rent, for example ten to fifteen years, after which they would be sold to a private owner, landlord or institutional investor. This will align development incentives with the private market, driving up quality, and see the proceeds reinvested in new social homes over time.

To further incentivise councils to built, the Conservatives also intend to reform compulsory purchase rules to allow councils to buy brownfield land and pocket sites more cheaply. At the moment, councils must purchase land at “market value”, which includes the price with planning permission, irrespective of whether it has it or not. As a result, there has been a more than 100% increase in the price of land relative to GDP over the last 20 years and the price of land for housing has diverged considerably from agricultural land in the last fifty years. Between 1959 and 2017, agricultural land has doubled in value in real terms from £4,300 per acre to £8,900 per acre, while land for planning permission has increased by 1,200%, from £107,000 to just over £1,450,000. Local authorities therefore very rarely use their CPO powers for social housing, leaving derelict buildings in town centres, unused pocket sites and industrial sites remain undeveloped.

Councils will need to demonstrate social housing need and the deals will include checks on the quality of the homes built. We expect a number of ambitious councils already seeking to expand their own housebuilding capability to take advantage of this offer, including large urban centres like Birmingham and Manchester, who have a need for new social housing.