Red tape and rabbit hutches

Originally posted on May 8 on my blog for Inside Housing.

New rules making it easier to convert offices into residential property have generated more than 30,000 new homes in the last two years – but at what cost?

A report published last week that deserves more attention took a detailed look at what has happened in five areas of England since the system was deregulated in 2013.

The study for the Royal Institution of Chartered Surveyors also compares the experiences of Glasgow and Rotterdam, which have also seen office to residential conversions without the same deregulation.

The English reforms extended the system of permitted development, allowing developers to apply for prior approval rather than planning permission and making it much easier for them to push office to residential conversions through the system.

This is not a total free-for-all – some local authorities have successfully applied for exemptions for some areas and it is still possible to apply for new ones – but it is a significant relaxation that is meant to deliver more homes.

When former communities secretary Eric Pickles first introduced the new system he said that:

‘By unshackling developers from a legacy of bureaucratic planning we can help them turn thousands of vacant commercial properties into enough new homes to jump start housing supply.’

The scheme was first introduced for three years from May 2013, then made permanent from April 2016.

At first glance the results seem to bear out Pickles’s hopes and look impressive in terms the contribution to the government’s plans to move towards 300,000 net additional dwellings a year.

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Labour sets out its stall on affordable housing

The green paper published by Labour on Thursday represents the most comprehensive plan for affordable housing put forward by a major party in England in 40 years.

The document launched by Jeremy Corbyn and John Healey does not just reject the market-based and Conservative-led polices of the last eight years, it also goes significantly further than the policies adopted by the last Labour government and in some ways even beyond what the party proposed at the last election.

In broad outline, it is an attempt to reclaim the word ‘affordable’ and spell out what housing ‘for the many’ would mean. And it explicitly rejects the current government’s claim that the only way to make housing affordable is to build as many new homes as possible:

‘Conservative housing policy is the wrong answer, to the wrong question. It is not just how many new homes we build, but what we build and who for that counts. We have to build more affordable homes to make homes more affordable.’

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Where the money really goes in housing

Three comparisons leap out from the latest edition of the indispensable UK Housing Review published on Wednesday.

The first two are not new in themselves and the third is only a crude estimate but all three need repeating again and again for a real appreciation of where spending on housing goes and exactly who is subsidising who.

First comes the main one highlighted by the Chartered Institute of Housing (CIH): the shift from bricks and mortar to personal subsidies, or from grants for new homes and repairs to old ones to housing benefit.

This series of pie charts from the Review shows the change over the last 40 years and the total amount of housing subsidies in real terms:

Chapters tables charts 2018

Note first that supply subsidies have sunk to just 4.3 per cent of the total pie – this despite all the cuts in housing benefit seen since 2010 and the fact that the figures to not include continuing tax reliefs for home owners (see below for more on that).

Second, note that this does not save money. Total subsidies are now 48 per cent higher in real terms than at the turn of the century (when admittedly social housing investment was very low) but they are also approaching the levels of 30 years ago (when investment was significantly higher and the unemployment rate was three times what it is now).

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Will Letwin be worth the wait?

Originally published on March 13 on my blog for Inside Housing.

So, with unintentional irony, the inquiry into why it takes so long to get new homes built is itself taking longer than expected.

For all the advance speculation and ministerial statements in the last few days, the Letwin Review of build-out rates was not published alongside today’s Spring Statement.

Instead the former Conservative Cabinet minister published a four-page letter offering housing secretary Sajid Javid an interim update on the work of the inquiry focusing on what is happening on large sites operated by large housebuilders.

A ‘draft analysis’ will follow by the end of June offering a description of the problem and its causes but final recommendations will only be made in time for the Budget in November.

In truth, expectations that Letwin would be able to offer instant solutions within a few months were always likely to be dashed – not that this stopped ministers from pre-emoting it with warnings to housebuilders to ‘do their duty’ in the planning announcements last week.

Perhaps significantly, the draft update has only one mention of the supposedly crucial issue of ‘land banks’, the nefarious practice by which housebuilders allegedly hoard land with planning permission until they can make the most money.

However, Letwin rejects most of their usual excuses too – everything from shortages of labour, materials and capital to problems with transport infrastructure, utility connections and constrained logistics on site.

He argues instead that the ‘fundamental driver of build out rates once detailed planning permission is granted for large sites appears to be the “absorption rate”.’

This is ‘the rate at which newly constructed homes can be sold into (or are believed to be sold successfully into) the local market without materially disturbing the market price’.

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Scotland shows the way on affordable housing

First posted as a blog for Inside Housing on February 27. 

News that Scotland is on track to deliver its ambitious plans for affordable homes is great news in itself but it also shows those further south what can be achieved when a government and the housing sector are determined enough.

The Scottish Government has promised 50,000 affordable homes, of which 35,000 will be for social rent, between April 2016 and March 2021. This is the largest programme of its kind since the 1970s.

And an independent analysis of local authorities’ Strategic Housing Investment Plans (SHIPs) published on Monday find that Scotland should deliver between 45,000 and 50,000 affordable homes and up to 34,850 for social rent.

That’s impressive enough but even more so when you consider it in the context of what’s happening (or not) further south.

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The real Budget agenda is clear

Philip Hammond’s Budget contains some big numbers and ambitious promises on housing but you don’t have to delve very far to find the real priorities.

Contrast, for example, what’s happening with housing, tax and welfare, two different measures that were heavily predicted and one that was desperately needed.

Stamp duty is being cut, but the chancellor has gone further than the expected holiday by abolishing it completely for first-time buyers of homes worth up to £300,000 or the first £300,000 of homes worth up to £500,000. The cut applies from now and will cost £3bn by the end of 2022/23.

Problems with universal credit are being addressed with measures including the scrapping of the seven-day waiting period, making advances easier to get and allowing continued payment of housing benefit for two weeks after a universal credit claim. The total cost is £1.5bn by 2022/23 and there is another delay to the rollout.

The universal credit changes are welcome but will still leave claimants potentially facing destitution and people in work thousands of pounds a year worse off than they would have been under the previous system.

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A look ahead to the Budget part two: investment

Originally published as a column for Inside Housing on November 15.

In normal times, a chancellor who pledged an extra £2bn for social housing and an extra £10bn for home ownership might to be greeted with general acclaim.

But these are not normal times and the pressure to do something big and bold on housing was such that what might have been two key Budget commitments (plus the new rent formula as a third) were announced last month at the party conference.

And, far from being applauded, the government came under fire for doing too little, too late on social housing and for pouring petrol on the flames of house price inflation via Help to Buy.

Philip Hammond was not helped by a curious Conservative briefing to journalists that the £2bn would only be enough for 25,000 homes but even Tory newspapers were checking housebuilder share prices on the day after the budget for Help to Buy was doubled.

This second part of my blog previewing a watershed Budget for housing looks at the prospects for further moves on investment on November 22. Part three (coming soon) will look at tax and welfare.

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