Theresa May’s social housing

Originally posted on May 15 on my blog for Inside Houisng. 

The reality may not match the rhetoric but it is still good news that a housing pledge is set to be the centrepiece of the Conservative manifesto. Even better, this one seems to involve building social housing rather than selling it off.

The Tories are calling it ‘a new generation of social housing’ for England and the Sunday Times a ‘council housing revolution’ but within a few hours of the policy being announced it was starting to unravel.

Senior Conservatives appearing on Sunday TV, including former housing minister Brandon Lewis, confirmed that there is no new money, just £1.4bn already announced in the 2016 Autumn Statement.

They also refused to confirm how many homes the initiative would generate but look back at the Autumn Statement though and the chancellor was claiming that the £1.4bn would fund 40,000 homes. However, this was part of a relaxation in grant funding and the statement said the money would enable housing associations ‘to deliver a mix of homes for affordable rent and low cost ownership’.

If the funding is uncertain at best, the weekend manifesto announcement sounds like a new idea and there could hardly be a bigger contrast with the Tory headline promise at the last election to extend the Right to Buy to housing association tenants and fund it by forcing councils to sell their most valuable stock as it falls vacant.

All the weekend reports were based on a Conservative Party press release that does not seem to be available online. Given its importance, and the fact that crucial details of the forced sales plan were only ever given in an unpublished press release, I’ve posted it in full on my blog here.

The first thing I noticed was the language. The quote from Theresa May is explicit not just about ‘a new generation of council homes’ but also about ‘a constant supply of new homes for social rent’.

As I blogged last week, what better way for the Tories to steal Labour’s clothes than to promise a revival of council housing?

But while the rhetoric is a real and welcome change it would not be a total surprise to find that social becomes affordable rent in the final product.

Next is the chutzpah in the historical analysis. There may be 300,000 fewer social rent homes than 20 years ago (there are actually more than 400,000 fewer homes rented from councils and housing associations) but that starts the clock at Labour’s victory in 1997.

It’s true that councils built more than a million homes a decade in the 1960s and 1970s but the reason for the big fall to only a few hundred a year now is Tory policies like the Right to Buy and controls on council borrowing.

The total loss of homes rented from social landlords since Margaret Thatcher’s victory in 1979 is 1.4 million and as the release acknowledges there are 1.2 million families on the waiting list (even after Conservative reforms reduced it).

Those total losses do not include the impact of other changes made since 2010. Funding of new social rent housing ended then with new homes, and thousands of conversions of existing social homes, on more expensive affordable rents.

And it obviously does not include imminent plans for ‘Voluntary’ Right to Buy and forced sales. One of the most interesting things about the 2017 manifesto will be whether it reiterates the desperate but unworkable promises made in 2015 or whether this is an alternative.

Finally, what will this policy really mean in practice? The press release includes enough detail to suggest that this is more than just a reheated old policy – and is has one feature that could be genuinely transformational – but, as Pete Apps explains, it also begs all sorts of questions.

On the central plank of the policy, the government would ‘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’. Support would include ‘direct funding and [my emphasis] extra borrowing’.

Deals between government and councils and housing associations 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.’

That might mean developments of social housing with a proportion that will be sold after 10 to 15 years. Or it could mean market-led development with a proportion of homes that will be social rented for a limited period before they are sold off.

You can read it either way but I’m leaning to the second interpretation. References to aligning developer incentives with the private market back that up and it could explain why thousands of homes could be built with no new money.

It also sounds a bit like a new version of the Starter Homes policy and it raises many of the same issues about the displacement of existing social housing under Section 106 agreements and the use of precious public land for developments that are largely (and eventually wholly) for sale.

However, these doubts obscure the really positive element of the announcement: reformed compulsory purchase rules to allow councils to assemble land and buy derelict buildings, unused pocket sites and industrial land more easily.

It sounds a bit like an idea in the original proposal for Starter Homes: building homes on industrial sites that would not normally get planning permission for housing.

And it seems to have real potential around the country, not just in cities like Birmingham and Manchester that are mentioned in the release.

Enhanced compulsory purchase powers to acquire industrial land were one of the key reforms proposed in a report on The Homes London Needs by Policy Exchange last year.

The Tory press release says that the existing law means councils have to pay full market value for land regardless of whether it has permission for housing or not.

An amendment like that to allow councils to compulsorily purchase land more cheaply has real potential inside cities. However, the ‘notes to editors’ at the end of the release explains that the price of agricultural land has doubled in real terms since 1959 while the price of land with residential permission has gone up by 12 times.

Given that buying agricultural land at existing use value and capturing the land value uplift for the community was the model for the original garden cities and new towns that really would qualify as a ‘revolution’.