April arrives with some rare good news

Originally published on March 29 on my blog for Inside Housing.

Sometimes it feels like I’ve written a blog at this time every year with the headline ‘April is the cruellest month’.

It’s not that I have a TS Eliot fixation nor (I hope) that I endlessly repeat myself but because ever since 2010 the start of the financial year seems to have meant yet another benefit cut or housing policy change to cope with.

This year is a bit different not so much because there is no bad news but because there is some good news as well. Here are some examples:

  • The u-turn on the withdrawal of support for housing costs for 18-21 year olds under universal credit announced on Thursday. This was a cumbersome policy that required significant exemptions and barely saved any money but it’s still a significant change to the original pledge to make young people ‘earn or learn’.
  • The Homelessness Reduction Act passed in 2017 applies from April 3. The legislation should be a big step forward in ensuring that more people get help earlier but despite a recent announcement on funding there are still well-founded concerns about whether councils have the money to implement it.
  • Claimants already getting housing benefit who move on to universal credit will from April be paid an additional two weeks of housing benefit. That may not be much consolation for the (in theory) five-week wait for their first universal credit but the payment (worth an average of £233) should ease the transition a bit –and it is not recoverable.
  • It will be unlawful for landlords to give new tenancies on the least energy efficient property from April 1 – all rented property will have to qualify for at least an Energy Performance Certificate rating of E so (in theory) tenants will no longer be stuck paying high heating bills for the worst F and G property.
  • More measures introduced against rogue landlords in the Housing and Planning Act 2016 come into force, including powers for councils to issue banning orders against the worst offenders and implementation of a database of landlords and letting agents convicted of some offences.

Bear in mind too that it’s not so long ago that I would have been writing about plans to apply a Local Housing Allowance (LHA) cap to social and supported housing from…April 2018.

For all that good news, though, the suspicion remains that it will at best mitigate the impact of policies already implemented and still in the pipeline.

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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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Age, class and home ownership

Originally published on my blog for Inside Housing on February 16.

Housing is so often presented as a story of inequality between the generations but what about inequality within generations?

Analysis published on Friday by the Institute for Fiscal Studies confirms the familiar story of the collapse of home ownership among younger people that has been accompanied by a surge in private renting and adults still living with their parents into their late 20s and early 30s.

The IFS briefing concentrates on people aged 25-34, exactly the age group who could once have been expecting to take their first step on to the housing ladder.

The collapse has obviously been biggest in London but home ownership rates have fallen even in the cheapest regions like the North East and Cumbria.

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Look beyond the rate rise for the real housing squeeze

Originally posted as a column for Inside Housing on November 2.

Today’s first rise in interest rates for a decade is an important symbolic moment but it will make little or no immediate difference to the housing costs of millions of home owners with a mortgage.

The increase from 0.25% to 0.5% could see average mortgage payments rise by around £15 a month but it will not apply straight away to people with fixed rate mortgages and in any case it only restores the base rate to what was a record low between 2009 and the aftermath of the referendum.

Compare that with the continuing squeeze on benefits and tax credits/universal credit that the Institute for Fiscal Studies forecasts today will help to increase the percentage of children in relative poverty after housing costs from 30% now to 37% by 2022.

And contrast it with the latest overall benefit cap statistics also published today: as at August 68,000 families were hit by the lower cap that came into effect a year ago and nearly a third of them are losing between £50 and £100 a week. The cap is now £26,000 in London and £20,000 elsewhere.

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May dedicates her premiership to fixing housing

Originally posted as a column for Inside Housing on October 4.

You wait a lifetime for a prime minister to make housing their priority and then she gets her P45 while losing her voice with the conference set falling apart behind her.

With all that happening around her it was easy to ignore the substance of Theresa May’s speech.

You may have missed it between coughs but for the first time since the 1950s here was a prime minister promising to put housing at the heart of their premiership.

And here was a Conservative prime minister not just promising an extra £2bn for ‘affordable’ housing but even allowing bids for social rent too.

But as the letters slowly dropped off the conference slogan about ‘BUILDING A COUNTRY THAT WORKS FOR EVERYONE’ you wondered how long she will have a premiership to put anything at the heart of.

And even then it is hard to avoid drawing the obvious conclusions from the comparison between an extra £2bn for affordable housing and an extra £10bn for Help to Buy.

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Ten years after

Originally posted as a column for Inside Housing on September 28.

When I started blogging for Inside Housing in September 2007 I wondered if I’d find enough to write about.

As it turned out there was no need to worry. A week before my first post Northern Rock went bust and the world changed.

What began in the United States as a sub-prime mortgage crisis was transformed by a series of financial acronyms into a Global Financial Crisis.

The connections to housing in this country at first seemed indirect: the UK did not have sub-prime lending on anything like the same scale; we had Northern Rock but there were plenty of other lenders; and the problems at Lehman Brothers and Bear Stearns seemed a long way away.

The direct effects didn’t take long to make themselves felt as credit markets dried up, share prices crashed and politicians panicked at the prospect of cash machines running out of money.

At the time it seemed like we were set for a repeat of the housing market crash of the early 1990s with soaring mortgage arrears and repossessions and families plummeting into negative equity.

One or more of the major housebuilders looked certain to go bust. And the combination of the two would send the banks even further under.

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What a way to run a housing system

Originally posted on September 14 as a column for Inside Housing.

The balance of funding between government funding for home ownership and affordable housing schemes continues to astonish even after the change in emphasis under Theresa May.

Revised figures prepared for Thursday’s publication of the UK Housing Review Briefing Paper show that total support for the private market up to 2020/21 is set to total £32 bn compared to support for affordable housing investment of just £8.6 bn.

This pie chart really brings it home:

These are revised figures that take account of the extra money for affordable housing announced by chancellor Philip Hammond last November. Even after that, even after adjustments for lower than expected spending on mortgage guarantees, and even including the Right to Buy pilot in the pink part of the graph, we are still spending £4 on support for the private market for every £1 we spend on support for affordable housing.

What really leapt off the page at me in this chart was that the government is set to spend £4.2 bn on Help to Buy and Lifetime Individual Savings Accounts (ISAs) over the same period as it spends £4.3 bn on the main Shared Ownership and Affordable Homes programme.

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