Downturn is a chance for a reset – but will the politicians take it?
Posted: February 27, 2023 Filed under: Affordable housing, Housing market Leave a commentOriginally 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.
Read the rest of this entry »How would a robot fix the housing crisis?
Posted: February 16, 2023 Filed under: Affordable housing | Tags: ChatGPT, Housing crisis Leave a commentOriginally 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.
Read the rest of this entry »The decline and fall of Trussonomics
Posted: October 18, 2022 Filed under: Affordable housing, Economics, Levelling up, Planning, Section 21 Leave a commentOriginally written on Tuesday October 18 (before the resignation of Liz Truss) as a column for Inside Housing.
Growth, growth, growth? Little survives of Trussonomics after a series of astonishing u-turns but in housing at least is still seems to be half-steam ahead.
Just two of the tax cuts announced by former chancellor Kwasi Kwarteng in his statement last month and only because the legislation for them had already gone through parliament.
The scrapping of the health and social care levy obviously begs big questions about funding for both but the increase in stamp duty thresholds now looks even more of a spare part than it did at the time.
While stamp duty is fundamentally a bad tax because it inhibits transactions, cutting it without wider reform of property taxation benefits sellers more than buyers as savings are capitalised into higher prices.
Cutting it permanently now rules out what has always been the first lever the Treasury pulls in a housing market downturn: a stamp duty holiday.
Even on the Treasury’s own figures, it will only generate an extra 29,000 house moves a year. But the limited growth in the wider property sector this generates will come at a cost to the taxpayer of £7 billion over the next five years.
New chancellor Jeremy Hunt has signalled that ‘eye-watering decisions’ about spending cuts and tax rises are on the way, mortgage costs have soared since the not a Budget and the energy price guarantee is now only guaranteed until April.
With even the pensions triple lock not guaranteed, the battle that was already looming over the uprating of benefits next year will now be even more intense.
Further freezes in the benefit cap and – despite rising rents – local housing allowance look more likely with devastating consequences for poverty and homelessness.
All this will be the acid test of Hunt’s promised return to ‘core compassionate Conservative values’.
The implication of the fiscal position for the Department of Levelling Up, Housing and Communities must be that any budget that is not already nailed down is up for grabs.
Read the rest of this entry »How short-term lets have hollowed out the rental market
Posted: September 21, 2022 Filed under: Affordable housing, Cornwall, Private renting, Short-term lets Leave a commentOriginally written as a column for Inside Housing.
It’s the end of summer and the tourists are going home but the housing problems they leave behind are here to stay.
This time last year I write about the momentum behind moves to tackle the blight of second homes in Wales and in parts of England like Devon and Cornwall.
Second homes are not new in themselves but combine them with the rise of Airbnb and short-term lets and in many areas the problem for local people has become less finding an affordable rented home than finding a rented home at all.
Anecdotal evidence I’m hearing where I live in Cornwall suggests that these trends have got far worse in the last 12 months. In the process, more assumptions about housing are being turned on their head.
Just down the road from me, the landlord of a large house converted into flats has just given all the tenants two months’ notice. One has been there 17 years, a couple in their 70s have lived there more than 20 years, and they have always paid their rent on time, but none of that matters. The house is being converted into short-term holiday lets.
A seaside town in Cornwall is possibly an extreme example of the trend but problems with short-term lets are being reported all around the country and I can think of many more villages nearby where the situation is far worse, with communities full of second homes and Airbnbs and second homes and few full-time residents.
Read the rest of this entry »Behind the Spending Review’s smoke and mirrors
Posted: October 28, 2021 Filed under: Affordable housing, Fire safety, Homelessness, Housebuilding | Tags: Spending Review 2021 Leave a commentOriginally published as a column for Inside Housing.
This was a spending review that didn’t really feel like a spending review as far as housing is concerned.
It’s the first multi-year review since 2015 but compare it to the austerity seen then and in 2010, the cuts of 1998 and even the relative largesse of 2007 and it seems to contain little that is really new.
Aside from what is claimed to be an additional £1.8 billion for brownfield land, almost everything in it has already been announced, in some cases several times.
The 2021 spending review (SR21) ‘confirms’ £5 billion for cladding removal and ‘reconfirms’ £11.5 billion for the Affordable Homes Programme alongside an existing £10 billion for housing supply but the numbers in it play fast and loose with the difference between the five years of this parliament and the three covered by the review (2022/23 to 2024/25).
A classic example is the claim in the Red Book that: ‘SR21 demonstrates the government’s commitment to investing in safe and affordable housing by confirming a settlement of nearly £24 billion for housing, up to 2025-26.’ Rishi Sunak also used this impressively large number in his Budget speech.
Read the rest of this entry »Politics trumps planning
Posted: July 1, 2021 Filed under: Affordable housing, Planning Leave a commentOriginally published as a column for Inside Housing.
Two by-elections, two widely predicted Conservative victories that did not quite turn out that way.
Labour holding a seat and the Lib Dems winning one against a government that has been in power for 11 years would never have been seen as surprise results in previous parliaments but they could signal politics beginning to return to normal after Brexit, the 2019 election and the pandemic.
If Batley and Spen shows that the Tories can no longer be confident in Labour seats in the North, then Chesham and Amersham shows a worrying vulnerability to the Lib Dems in the South.
And the upshot is a depressing one for anyone who believes in the case for new homes. Trouble was always likely when planning reform met politics, but I wasn’t expecting it to happen so quickly.
Planning is, of course, always contentious – even in a Batley and Spen by-election dominated by other issues it still featured in the letters pages of the local press.
But it was front and centre in Chesham and Amersham. While HS2 was also seen as a factor, the victorious candidate made heavy play of planning and housebuilding in her leaflets, quoting extensively from Tory critics of the plans who say they will mean ‘the wrong homes being built in the wrong places’.
This was deeply cynical of the Lib Dems, who support both the new high-speed train line and 300,000 new homes a year at a national level but said the opposite locally.
However, they were not the only ones. The losing Conservative candidate proposed turning much of the constituency into a national park during the campaign. This surely foreshadows likely tactics by local Tories in getting as much of their land as possible designated as ‘protect’ against new homes under the new system proposed in the Planning Bill.
Read the rest of this entry »First Homes: what’s the big idea?
Posted: June 9, 2021 Filed under: Affordable housing, First Homes 1 CommentOriginally published as a column for insidehousing.co.uk
It is of course complete coincidence that the First Homes scheme was launched in the constituency that perhaps most symbolises the Conservative election victory in 2019.
It’s not just that Bolsover had been Labour since it was created in 1950, it’s also that it had been represented by Dennis Skinner since 1970, making it a reverse ‘Portillo moment’ for the Tories.
All of which makes the launch of the scheme itself look like an extension of the nakedly political approach taken with the Towns Fund and Levelling Up Fund.
A more generous interpretation might be that the government had more sway over this particular site, which looks like it was developed by Keepmoat Homes in partnership with Homes England.
Either way, this is the launchpad for housing secretary Robert Jenrick’s big idea, homes for sale at a discount of at least 30 per cent market value to first-time buyers. Discounts of up to 50 per cent may be available in some localities.
This is Starter Homes 2.0 with one significant advantage over the original scheme: the discount will remain in perpetuity rather than disappearing into the pocket of the first buyer.
The disadvantages remain the same. The scheme will be delivered initially with grant and then via the planning system. Either way it will squeeze out other forms of affordable housing funded via Section 106, with 25 per cent of developer contributions reserved for First Homes. The government claims it will ringfence homes for social rent so the main impact could fall on share ownership and affordable rent.
Read the rest of this entry »The cake and the crumbs
Posted: April 15, 2021 Filed under: Affordable housing, First Homes, Planning, Right to buy Leave a commentOriginally published as a column on insidehousing.co.uk on April 15.
From Brexit to just about anything else you care to mention, Boris Johnson is known for wanting to ‘have his cake and eat it’. Why should it be any different for housing?
That was the first thought that sprung to mind reading through a raft of recent government responses to consultations. Much like the social housing green and white papers, they try to face in two different directions at once.
One points towards the more tenure-neutral territory staked out under Theresa May. The other points backwards to the promised land of home ownership staked out by David Cameron, the former prime minister turned PR man for failed bankers.
Both are evident in the outcome of consultations on the new model for shared ownership, changes to the current planning system and First Homes, supporting housing delivery and public service infrastructure and use of receipts from Right to Buy sales in the run-up to Easter.
So we get the expansion of permitted development to cover the conversion of most empty commercial buildings, not just offices, into residential. This may mean more ‘units’ but with too few constraints on quality to be regarded as ‘homes’.
Plans for reform of shared ownership include confirmation that landlords will be liable for repairs for the first 10 years on new homes but no acknowledgement that this leaves existing tenant-owners living in devalued assets.
There are plans to give existing as well as new shared owners the statutory right to a lease of 990 rather than 99 years but no fresh solutions for those left out of government help for fire safety costs or forced to take out £50 a month loans.
Reductions in the minimum initial stake and staircasing threshold meet commitments previously made by housing secretary Robert Jenrick without any real evidence supporting them.
Changes to the current planning system include a welcome u-turn on a proposal to increase the threshold at which small sites are exempt from affordable housing requirements from 10 homes to up to 50. That could rescue up to 30,000 affordable homes over the next five years.
However, that’s trumped by confirmation of plans to require a minimum of 25 per cent of homes delivered through developer contributions to be First Homes. Mr Jenrick is therefore diverting a sizeable chunk of the funding mechanism that accounts for more than half of affordable homes into his pet project.
On the Right to Buy, local authorities get five years rather than three to use receipts to build new homes and receipts can account for 40 rather than 30 per cent of the total cost. These are improvements to the scarcely credible ‘one-for-one replacement’ pledge made when discounts were increased in 2012.
But that could still leave them forced to sell homes for less than it cost to build them and it does not address the parallel question of ‘like-for-like’ replacement.
Far from responding to concerns raised in the consultation about broadening the definition, the government suggests that ‘affordable’ replacements for social rent homes sold could include not just affordable rent and shared ownership but also (you guessed it) First Homes.
All of which suggests that the loss of social rent homes – 210,000 in England in the last eight years, according to the latest UK Housing Review – will continue even as ministers make rhetorical nods to the tenure.
It’s as though one part of government wants to shift the balance of policy in favour of social and affordable housing only for another to tilt it back towards home ownership and the free market.
With crucial choices looming as society reopens and the economy moves off life support, which will get the cake and which will be left with the crumbs?
Jules Birch 