Net zero u-turn leaves tenants paying the bills

Posted: September 26, 2023 | Author: | Filed under: Energy efficiency, Private renting | Leave a comment

Originally written as a column for Inside Housing.

The clue is in Rishi Sunak’s language. This is about more than just his claim to be putting ‘the long-term interests of our country before the short-term political needs of the moment’ when he is doing the opposite.

Nor even his pledge to scrap a range of ‘worrying proposals’ on bins, flights and car-sharing that have never actually been proposed.

No, the obfuscation in his speech last week on net zero really becomes clear when you look at the details with the biggest implications for housing.

‘Under current plans, some property owners would’ve been forced to make expensive upgrades in just two years’ time,’ he said.

Some property owners? Who could he mean? The prime minister cannot bring himself to say private landlords because they simply do not fit in with his narrative of Westminster imposing ‘significant costs on working people especially those who are already struggling to make ends meet’.

Because his announcement actually does the complete opposite. The plan to tighten Minimum Energy Efficiency Standards (MEES) for private rented homes would have saved millions of tenants £220 a year on average according to the government’s own impact assessment.

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Housing and the cost of living

Posted: September 20, 2023 | Author: | Filed under: Cost of living, Housing market, Private renting, Rents, Social housing | Leave a comment

Originally written as a column for Inside Housing.

Inflation is starting to fall at last but the chances are what you pay for your housing has gone up along with the cost of everything else.

But this week’s inflation figures got me thinking about what we really mean by ‘inflation’ and how rising prices work differently in different tenures.

For starters, it all depends on the measure you use. The Consumer Price Index (CPI) is the one in the Bank of England’s inflation mandate so it matters most to its decisions on whether to raise interest rates or not.

CPI inflation affects the Bank’s decisions on interest rates which in turn drives mortgage rates so it is good news that it fell to 6.7 per cent in the year to August. However, CPI does not include owner-occupiers’ housing costs and it is not the index favoured by the Office for National Statistics (ONS).

If you’re not confused yet, on the ONS’s favoured measure of CPIH (which includes owner-occupier housing costs and council tax) inflation fell to 6.3 per cent in the year to August.

However, those costs are based on an estimate of the equivalent rents that owner-occupiers would be paying. There may be sound economic arguments for excluding rising asset values from the inflation calculation but rising house prices still mean rising housing costs for home owners that are ignored.

Old-style Retail Price Index (RPI) inflation – also falling but still considerably higher at 9.1 per cent – is the only measure that directly includes mortgage interest payments but is seen as less accurate than CPI and is no longer treated as on official statistic by the ONS. Despite that, RPI is still used to set price increases in some leases.

For all the differences between the three measures, it does seem clear that rising costs for renters and owners are playing an increasingly important role in inflation in household costs as the impact of the huge hikes in gas and electricity prices starts to recede. This ONS graph illustrates that only too clearly:

But what is really happening to house prices and rents? It all depends on who you believe.

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Who is doing ‘an effing good job’?

Posted: September 7, 2023 | Author: | Filed under: Construction industry, Housebuilding, Private renting, Social housing | Tags: , , | Leave a comment

Originally written as a column for Inside Housing.

The thing that struck me after Gillian Keegan’s hot mic moment is that virtually any other Conservative cabinet minister could clam the same thing.

Ok it may be stretching it a bit to say that Rishi Sunak, Jeremy Hunt et al are doing ‘an effing good job’ but they could quite reasonably say that ‘everyone else has sat on their arse’ (even if we might debate the use of ‘else’).

Schools with crumbling reinforced autoclaved aerated concrete (RAAC) have inevitably become a metaphor for the state of the country and the government’s attitude to public investment, chiming perfectly with Keir Starmer’s attack lines about ‘sticking plaster politics’ and ‘cowboy builders’.

But think for a minute about housing and Michael Gove could reasonably claim to have done more than all his predecessors to tackle a building safety crisis even more serious RAAC and more to restore the legitimacy of social housing even as he promises long-delayed reforms of leasehold and private renting.

Whether that amounts to an ‘effing good job’ very much remains to be seen: the building safety crisis continues for those left outside Gove’s settlement and his commitments on the other three areas are mostly rhetorical rather than actual.

In the meantime, councils are going bankrupt and housing associations are cutting their development programmes. Housebuilding in general is falling: while ministers continues to proclaim the government’s target of 300,000 new homes a year by the mid-2020s, they have surrendered to the Tory backbenchers on planning and there is no chance of hitting it.

All this as homelessness is rising, temporary accommodation is at record levels, a crisis in refugee housing is developing and RACC could yet prove to be a problem in housing.

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