That was the (housing) week that wasn’t

Originally posted on August 20 on my blog for Inside Housing. 

An open letter to James Brokenshire on Monday puts a lacklustre Housing Week into true perspective.

Organised by the Conservative think tank Onward, the letter calls for a change in the law to allow local authorities to buy land for housing at fair market value rather than a price that includes the ‘hope value’ that includes planning permission.

The call for a change to the 1961 Land Compensation Act is supported by a wide range of organisations including think tanks from across the political spectrum as well as Shelter, Crisis, the Joseph Rowntree Foundation, National Housing Federation, National Landlords Association and Generation Rent and even the Campaign to Protect Rural England.

And it is also signed by former Downing Street insiders Will Tanner and Neil O’Brien MP, now director and an advisory board member at Onward.

Reform to allow councils to buy land at close to existing use value would go much further that tentative government moves on land value capture and open up the possibility of a new generation of new towns or urban extensions with funding for infrastructure and affordable housing.

There are caveats to this. First, any such measure would have to withstand resistance by powerful landed interests inside the Conservative party with pockets deep enough to fund a legal challenge like the one that overturned compulsory purchase powers in the original New Towns Act and led to the 1961 Act.

Second, while few would disagree that up to £9 billion a year in land value gains could be put to better use than lining the pockets of landowners, there might be less agreement about what to do next: a report by Onwardin June argued for a programme of discounted rent homes for young people to buy and appeared to argue for less, rather than more, social housing.

However, the contrast between this week’s call for reform and last week’s highlights is still a striking one.

Last Monday’s Rough Sleeping Strategy and Tuesday’s Social Housing Green Paper had lots of warm words that lacked a wider vision or new money to back them up.

In particular, the green paper saw a role for social housing as a safety net for people in need and a springboard into home ownership for those who can afford it – but what about the millions of people who want a secure, genuinely affordable homes but cannot afford to buy? Of those who cannot afford to live on the National Living Wage?

That was followed on Wednesday by the launch of the prospectus for garden towns, the government programme that harks back to the garden cities and new towns of the past but is a pale imitation of both.

But twin announcements on Thursday showed where the government’s priorities still lie.

First, James Brokenshire launched the Midlands Voluntary Right to Buy pilot – the original national scheme may look dead in the water after the u-turn on the council housing sales levy that would have funded it but it will still swallow up £200 million of affordable housing funding.

Second, the latest round of statistics on the Help to Buyprogramme showed that other parts of the home ownership drive launched by David Cameron and George Osborne continue to flourish. .

This revealed that 196,000 Help to Buy: ISA bonuses worth £157 million have already been paid out to support 147,000 property purchases.

In total more than 1.2 million accounts have been opened – each of these offers a government bonus of up to £3,000 on top of their savings, potentially costing the taxpayer £9.6 billion by 2030.

That is on top of £8.9 billion worth of Help to Buy equity loans taken out so far on 169,000 properties.

The question of course is who exactly is being helped. The scheme may have helped to boost housebuilding but the biggest immediate beneficiaries have been housebuilder executives and shareholders.

A quarter of the properties (and 12 per cent of houses) sold so far were leasehold and incredibly, even after the scandals so widely reported last year, 9 per cent of house sales were still leasehold in the first quarter of 2018.

The scheme may benefit first-time buyers unable to save a big enough deposit and it could yet return a profit to the taxpayer if prices continue to rise.

However, 17,000 applicants (10 per cent) had a household income of more than £80,000 while 70,000 (42 per cent) earned more than £50,000.

The question is how many of them could have afforded to buy anyway or are using an equity loan as a substitute for parental help.

The equity loan is free for the first five years but attracts escalating fee after that. The first Help to Buy loans were taken out in the second quarter of 2013 so one clue will come when the government publishes data on the proportion of borrowers who are able to repay their loan in full.

Housing Week shows that the government realises it needs to take housing seriously – or at least that it needs to be seen to take housing seriously.

But it will take something much bolder than a week of delayed announcements lumped together in one of the quietest news weeks of the year to really make a difference .

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