10 things about 2018 – part two

Originally posted on December 28 as a column for Inside Housing. 

The second part of my look back at the year runs from land to Brexit via renting and council housing. Part one is here.

6. The land question

If 2018 was the year of the tenant, then another issue was not far behind as the land question took on an importance arguably not seen since before the First World War.

A developing political consensus around the potential of land value capture as a funding mechanism for infrastructure and affordable housing found expression in a favourable report from the all-party Housing, Communities and Local Government Committee and an open letter signed by former Downing Street insiders and think tanks and organisations across the political spectrum. One report put the net profit made by landowners just for getting planning permission for housing at a cool £13 bn a year.

At the same time the chancellor appointed former Cabinet minister Sir Oliver Letwin to lead out an independent review of the slow pace at which homes get built. Letwin quickly focussed on slow-build out rates on large sites but concluded that the reason why they take an average of more than 15 years to complete has less to do with landbanking (hoarding land with planning permission) than the absorption rate (the fact that developers only build as fast as they can sell for a required profit in local markets).

The key, he argued, was to build homes of different types and different tenures rather than just houses for open market sale. He eventually recommended new planning rules and incentives to increase the diversity of what gets built, and greater powers for local authorities, but advocates of land reform accused him of ducking the issue.

The year ended with the government promising a response by February but firmly rejecting anything radical on land value capture, insisting that the current system is working well. At the same time it seemed set to pursue growth outside the planning system, with an expansion of permitted development despite criticism that it has resulted in poor-quality housing and allowed developers to dodge affordable housing requirements.

7. Helping private renters

As I blogged at the start of the year, more of us now live in the private sector than at any time since the first man walked on the moon. The implications of that change in tenure – frustrated home ownership and its flipside of insecure, expensive private renting – for Conservatives were one of the main reasons why housing so dominated the bits of their party conference that were not about Brexit.

One response was a call for tax breaks for landlords to sell to their tenants but the party desperately needed a way to signal that it was on the side of renters as a whole.

In July, the government published its attempt to confront the issue: a consultation paper on longer tenancies that seemed to borrow heavily from Labour policies that the Tories had attacked as ‘Venezulean-style socialism’ only four years before.

However, the consultation was not as radical as the advance briefing about a ‘right to demand’ three-year tenancies suggested. Mandatory longer tenancies were only one of the options alongside financial incentives for landlords and education to induce behaviour change. And, thanks to Brexit chaos, we are still waiting for a final decision.

The year also brought two significant anniversaries. Ten years after their official review for the government, Julie Rugg and David Rhodes came back with an updated review of private renting that was now 40% larger and recommended a series of steps including landlord registration and licensing and property MOTs.

And November marked 30 years since Royal Assent for the legislation that changed everything for private renting: the 1988 Housing Act, which introduced default assured shorthold tenancies and Section 21.

8. Rethinking social housing

The 1988 Housing Act had also brought momentous changes for social housing in the form of private finance, higher rents, stock transfer and housing associations replacing local authorities as the main providers. Underpinning everything was a shift from bricks and mortar to personal subsidies with housing benefit ‘taking the strain’.

The Conservatives had spent much of the 2010s attempting to take social housing even further down the route to market with policies such as affordable rent, pay to stay and the extension of the right to buy. Confounding all these measures to ‘free up more tenancies’, the number of new social lettings fell for the fourth year in a row.

The tone had already changed under Theresa May but 2018 brought some changes of substance too as the social housing green paper confirmed that key parts of the Housing and Planning Act 2016 would not be implemented.

In the wake of Grenfell, the atmosphere had changed, with several different projects underway to rethink social housing for the 21^stcentury reflecting this.

In a speech to the National Housing Federation conference in September, May went even further than Sajid Javid had the year before. If her pledge of £2 bn of long-term funding was music to the ears of her hosts, then her message about ‘your unique status as public interested, non-profit private institutions’ had them rolling on their backs waiting for their tummies to be tickled. And in complete contrast to her predecessor’s thoughts about breeding Labour voters she told them that ‘the rise of social housing in this country provided what has been called the biggest collective leap in living standards in British history’.

Two things were missing though. First, for all the fine words, careful analysis showed that the government was still subsidising private housing more than social. Second, supporters of council housing claimed correctly that its contribution and its potential were being ignored.

9. Scrapping the cap

That changed in dramatic fashion when Theresa May used her speech to the Conservative conference in October to announce that the borrowing cap would be scrapped. ‘Solving the housing crisis is the biggest domestic policy challenge of our generation, she said. ‘It doesn’t make sense to stop councils from playing their part in solving it.’

True, the cap had been imposed by the coalition on top of the self-financing system they inherited from Labour, but the announcement seemed to come without any of the usual strings attached. The announcement was testament to the efforts of a wide range of campaigners but owed much to the determination of Lord Porter, the Conservative leader of the Local Government Association who would surely be the housing personality of the year if we had one.

Assessments of the impact of scrapping the cap ranged from 10,000 new homes a year to a much more sceptical estimate of 9,000 in the next five years from the Office for Budget Responsibility.

However, the announcement also followed August’s u-turns in the social housing green paper on the compulsory sales levy on higher-value council house sales and mandatory fixed-term tenancies for new council tenants.

In a year that saw the 50th anniversary of the gas explosion at Ronan Point as well as the aftermath of Grenfell,  it would be too much to say that council housing is back. Just possibly though, it is on the way back.

10. Attention elsewhere

But what did any of it matter when our politics was going to hell in a handcart? If housing really was now more politically important than the NHS, it was still in fourth place behind Brexit, Brexit and Brexit.

Amid deadlock in Brussels and political chaos in Westminster, the final housing questions of the year in the Commons was overshadowed by the prospect of a meaningful vote that was eventually postponed.

Most of the key subjects I’ve highlighted in my review of the year were raised but in the end we were left with more questions than answers. After James Brokenshire fended off criticism of his failure to take more radical action on land value capture, his Labour shadow John Healey claimed that ‘this is a government who delay and duck the big decisions on housing, because they are too dysfunctional and too divided, just as they are on Brexit’.

The sense was of a government with its attention understandably elsewhere, with hard choices still to be made over issues like reform of social housing, fire safety and the private rented sector tenancies. It all seemed – to coin a phrase – a bit nebulous.