What’s in the Budget small print?

Originally published on November 30 on my blog for Inside Housing. 

If you listened to the chancellor’s speech you may have thought this was a Budget that did not mean much for housing. As ever you may think again after reading the small print.

As I live blogged for Inside Housing yesterday, the big news in the speech was the extra money for universal credit that makes up for many of the cuts imposed in universal credit and delays the roll-out yet again and sounds like it will be enough to avoid a backbench Tory rebellion.

Elsewhere, Philip Hammond found £2.8 bn to bring forward cuts in income tax allowances by a year but he failed to find roughly half that to scrap the final year of the freeze in most working age benefits including the local housing allowance.

This was a clear political choice to go for tax cuts that overwhelmingly benefit the better-off over benefits that go to the poorest households.

Ahead of the next spending review, numbers crunched by the Resolution Foundation overnight suggest that the squeeze on everything apart from health will continue well into the 2020s.

However, the most interesting developments for housing came in the background documents published as Mr Hammond sat down.

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That was the (housing) week that wasn’t

Originally posted on August 20 on my blog for Inside Housing. 

An open letter to James Brokenshire on Monday puts a lacklustre Housing Week into true perspective.

Organised by the Conservative think tank Onward, the letter calls for a change in the law to allow local authorities to buy land for housing at fair market value rather than a price that includes the ‘hope value’ that includes planning permission.

The call for a change to the 1961 Land Compensation Act is supported by a wide range of organisations including think tanks from across the political spectrum as well as Shelter, Crisis, the Joseph Rowntree Foundation, National Housing Federation, National Landlords Association and Generation Rent and even the Campaign to Protect Rural England.

And it is also signed by former Downing Street insiders Will Tanner and Neil O’Brien MP, now director and an advisory board member at Onward.

Reform to allow councils to buy land at close to existing use value would go much further that tentative government moves on land value capture and open up the possibility of a new generation of new towns or urban extensions with funding for infrastructure and affordable housing.

There are caveats to this. First, any such measure would have to withstand resistance by powerful landed interests inside the Conservative party with pockets deep enough to fund a legal challenge like the one that overturned compulsory purchase powers in the original New Towns Act and led to the 1961 Act.

Second, while few would disagree that up to £9 billion a year in land value gains could be put to better use than lining the pockets of landowners, there might be less agreement about what to do next: a report by Onwardin June argued for a programme of discounted rent homes for young people to buy and appeared to argue for less, rather than more, social housing.

However, the contrast between this week’s call for reform and last week’s highlights is still a striking one.

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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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