A great leap backwards

Originally published on October 1 on my blog for Inside Housing.

The first two days of the Conservative Party conference make this look like a government that is scraping the barrel for ideas.

Boris Johnson might still have a surprise in store on Wednesday but speeches by housing secretary Robert Jenrick and housing minister Esther McVey were underwhelming at best while chancellor Sajid Javid did not even mention housing in his check-the-small-print bonanza of infrastructure investment.

Jenrick’s big new idea of a right to shared ownership for housing association tenants is not that big and not that new either but it could still have a damaging impact on people who need an affordable home.

Not that big because giving tenants the right to buy 10% of their home seemingly without a discount and then staircase up is tiny by comparison with the 2015 manifesto pledge to give them the right to buy with a big discount.

It also seems to only be a right for tenants in newly built properties with those in existing homes relying on a voluntary agreement between the government and housing associations.

Not that new because readers with long memories may recall a strikingly similar scheme that was a flagship Tory manifesto pledge in 1992.

The rent to mortgage scheme was introduced in 1993 to allow council tenants who could not afford the right to buy to purchase a share in their home first off and then gradually buy more.

Damaging because the National Housing Federation and Placeshapers are warning that the scheme could have consequences for loan deals and make it harder to build new homes.

One consolation is that the rent to mortgage scheme was a miserable failure: by 1999, despite a big promotional budget, there had been just 40 completed sales and applications had dried up. The scheme was killed off in 2004.

One reason it failed was that anyone with enough money could do the right to buy instead – a point that does not apply to most housing association tenants now.

But it still does not look like a very good deal for tenants if you think about the details and do a few quick sums.

Consider for example, a tenant paying £130 a week rent in a flat worth £250,000. If (a big if) they can afford it, buying a 10% share for £25,000 will cost them perhaps £130 a month in mortgage payments while saving them around 10% of their rent or £56 a month.

The tenant will gain if the price of their property rises but as a shared owner they will also be paying full service charges and they could be responsible for repairs on top of that.

So this looks like a gimmick that will not benefit landlords, not help tenants much and runs counter to the desperate need for more social housing.

But it is also yet more evidence that the shift from Theresa May to Boris Johnson has been accompanied by a big shift back to home ownership as the focus of housing policy.

Both Jenrick and McVey were careful to say that they are ‘tenure blind’ but otherwise their emphasis was crystal clear.

As Jenrick put it in his speech:

‘The property-owning democracy is a perpetual goal for which our party strives to ensure that every generation has the opportunity to benefit.

‘So while some people say we should give up on homeownership, that’s not my way.

‘I believe in ownership as the bulwark of individual freedom, bringing security, dignity and independence. So I will redouble our efforts.’

I’ll come back to the other big conference announcements – a national design guide for new homes and another extension of permitted development rights – another time but it’s worth making the point now that they could directly contradict each other.

Put them together and you have a system that will allow local authorities and residents to object to plans for new homes that do not conform to Roger Scruton’s idea of beauty at the same time as it waves through bling-ridden two-storey extensions to their neighbours’ Georgian townhouses.

And for all the attention paid to outward appearance it does nothing about the way that permitted development has lowered standards inside.

For a flavour of those see this Independent story over the weekend on a converted office block and a Times report on Monday showing how the same sort of practices are spreading as developers lose the living rooms in existing homes.

That just leaves time for the latest embarrassing moment from Esther McVey as the housing minister waxed lyrical about the potential of modern methods of construction.

One potential problem with that is it does not fit with the home ownership-based model the government is now intent on reviving – as the Farmer review argued in 2016, prefabrication relies on the scale and certainty of demand that comes with development for rent rather than for sale.

Another, as the minister showed in her comments that ‘we have this new way of doing it, 3D architects, 3D visionaries, doing it on computer’, is that she doesn’t seem to know what she is talking about.

The days when it seemed that the Conservatives were finally starting to come to terms with what is needed to tackle the housing crisis seem long gone.


One Comment on “A great leap backwards”

  1. Biggest lie of the decade “Affordable housing will help the homeless” No, what it actually did was it helped the banks and foreign investors and made more homeless .


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