Downturn is a chance for a reset – but will the politicians take it?

Originally written as a column for Inside Housing.

Housing market downturns are often dominated by debates about their consequences – whether they be falling house prices and negative equity, arrears and repossessions or builders going bust – and what to do about them.

But an important new report from the Joseph Rowntree Foundation argues that we should be thinking less about house prices and the immediate response to the downturn and more about the housing system as a whole and the long-term opportunities for a reboot.

We are already in a downturn even if the shape of it remains unclear. Toby Lloyd, Rose Grayston and Neal Hudson consider different scenarios ranging from back to normal (rising prices) to an outright crash but think market stagnation is the most likely outcome.

That may sound mild when seen in terms of house prices alone but the consequences would be dire: home ownership would remain inaccessible, driving up private rents and making it even more of a struggle for low-income households to keep a roof over their heads.

Arguably we are already seeing stagnation in housebuildling as the big developers slow down development and the industry as a whole warns that completions could fall to less than half their pre-pandemic peak while blaming government regulations.

The conventional response would be to support supply and boost demand but that would be very much like a rehash of what happened after 2010, when various forms of Help to Buy did increase housebuilding but also produced a boom in housebuilders’ profits, share prices and bonsues without much quid pro quo.

For all the efforts to boost the home ownership chances of first-time buyers, the private rented sector continued to grow. And millions of people in housing need were the losers as austerity put the squeeze on social rent and forced housing associations into affordable rent and market sales.

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How would a robot fix the housing crisis?

Originally written as a column for Inside Housing.

Question: Is there a housing crisis in the UK?

‘Yes, there is a housing crisis in the UK. The housing crisis in the UK is characterized by a shortage of affordable housing, high house prices, and a lack of social housing. This has led to an increase in homelessness and people being unable to afford to buy or rent a home. The crisis is driven by a number of factors including population growth, lack of new home building, and government policies that have favored homeownership over renting.’

As you may have guessed, it wasn’t me that wrote the last paragraph. The clues are, I hope, there in the plodding prose style and the American spellings.

The author was actually ChatGPT, the artificial intelligence chatbot that has workers anxious for their jobs and schools and universities fearing that essays will be written by robots rather than students in future.

The bot goes on: ‘The crisis has been exacerbated by the COVID-19 pandemic, which has led to job losses and economic uncertainty, making it harder for people to afford housing. The situation is particularly dire in London and other major cities, where housing is in high demand and prices are particularly high. The crisis is not only affecting low-income households, but also the middle-class families and young people. This is making it harder for them to access decent and stable housing.’

If that feels a bit out of date (the pandemic has arguably contributed to the opposite problem of labour shortages), it seems a reasonable summary if you accept that longstanding structural issues that we have done next to nothing to address can reasonably be described as a ‘crisis’. ChatGPT does at least get that the problem goes across incomes.

But what would the robot do about this, I wondered.

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Waiting for renter reform

Originally written as a column for Inside Housing.

Take your pick. Section 21, housing benefit, tax, net zero, standards, Covid, the courts, mortgage rates, tenants.

All of them reasons why there will be an exodus of landlords and homes from the private rented sector if you believe what you read in certain newspapers. All of them are one more nail in the coffin of buy to let.

One or more of those reasons will be quoted in every article about landlords selling up but, though there may be an element of truth to some of them, few will stop to point out that the party lasted for years. I don’t remember many landlords cutting their rents when mortgage rates fell to record lows after 2009 or complaining about the capital gains they’ve made since.

What matters, as MPs on the all-party Levelling Up, Housing and Communities Committee points out in a report published today [Thursday] is who buys the homes that landlords are selling.

Properties sold to another private landlord, or perhaps to a local authority or social landlord, are still available for rent. Those sold into owner-occupation will reduce demand for rentals if the new owner was previously a renter. 

The really damaging destination is when homes for rent are sold, or converted, into short-term holiday lets and that means that the Westminster government must go further than tentative plans for registration.

That’s a powerful reminder that reforming the private rented sector is about much more than ‘greedy landlords’ or a ‘war on buy to let’ and that any new system has to balance different interests and demand from different groups for decent homes to rent.

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