A look ahead to the Budget part one: the land question

Originally published as a column for Inside Housing on November 13.

More than ever before, this year’s Budget looks like a watershed moment for housing.

Philip Hammond is under mounting pressure from all sides to do something big and bold and break with the failed policies of the past.

The calls for something radical are coming from more than just the usual suspects and are for more than just a cheque with lots of zeros.

Conservative MPs know that they cling to power (just) thanks to the votes of elderly home owners. Brexit may dominate everything but many of them realise that beneath the surface housing is one of the key issues poisoning their relationship with the under-45s.

They understand that cynical policies like Help to Buy are no longer enough, that the party is running out of time and that it has to look at policies that were previously unthinkable.

Yet conventional wisdom says that we’ve heard all this before, that Hammond’s caution and the Treasury’s orthodoxy will turn thinking that was big and bold into outcomes that are tame and timid on November 22.

After the announcements in the last few weeks of an extra £10bn for Help to Buy, another £2bn for social housing and the u-turn on the LHA cap for social and supported housing, how much is left for the chancellor to say (or spend)?

However, another view says that the housing question has such serious social, economic and political implications that the answers cannot be put off any longer. See this blog by Toby Lloyd for a good round-up of some possibilities.

In a series of columns ahead of the Budget, I’ll be looking at some of the crucial questions concerning investment, tax and welfare and, to kick things off, land. Will the Budget be big and bold – or tame and timid?

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The Housing Bill: fresh start

Originally posted on April 12 on Inside Edge 2, my blog for Inside Housing

Otto von Bismarck famously said that laws are like sausages: it is better not to see how they are made.

One exception to the Iron Chancellor’s dictum could be the way that the UK House of Lords takes the distasteful raw ingredients of legislation and improves it with new recipes.

That was certainly the case on the first day of the report stage of the Housing and Planning Bill on Monday, which saw the government twice suffer major defeats and also make a significant concession on starter homes.

As the Bill now stands, this ‘cuckoo in the nest’ of affordable housing (as Lord Best memorably called it at the committee stage) has been cut down to size a bit: the discount will be repayable over 20 years rather than eight; and local authorities will have the flexibility to decide on local needs rather than targeting virtually all section 106 contributions as starter homes. The government also accepted another amendment that will exempt rural exceptions sites from the starter home requirement.

Ministers had already moved slightly on the discount period: the Bill originally said that starter home buyers would be able to sell without repaying any of the 20% discount after five years but a consultation proposes extending that to eight years with the discount tapering away over that period.

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Checking the bill

Originally posted on February 10 on Inside Edge 2, my blog for Inside Housing 

Start with a fundamental change to the funding mechanism for the right to buy, stir in more changes to key elements of the Housing and Planning Bill, then add criticism of the lack of detail and you have a recipe that shoud give ministers indigestion.

The report of the all-party Communities and Local Government Committee does support both the extension of the right to buy to housing association tenants and the voluntary deal between the government and the NHF is ‘the best way forward’.

But that’s as good as it gets for ministers from a committee that has a Labour chair but a Tory majority. Here is the headline recommendation:

‘The Government proposes to fund the right to buy discounts for housing association tenants with the proceeds from the sale of high value council homes. However we believe that public policy should usually be funded by central Government, rather than through a levy on local authorities.’

This would undermine one of the central elements of the Bill and the government’s method of paying for right to buy discounts and the promised replacement homes. And the MPs are not finished.

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The Housing Bill: just for starters

Originally posted on January 6 on Inside Edge 2, my blog for Inside Housing

MPs staggered bleary eyed from the House of Commons at 2am last night without even getting to the most contentious parts of the Housing and Planning Bill.

Despite a series of obituaries for council housing and a ‘Kill the Bill’ protest outside, issues such as forced high-value sales, Pay to Stay and the voluntary Right to Buy will only be considered on day two of the report stage debate (set for next Tuesday, January 12).

Last night’s five-hour debate included starter homes, the regulation of housing associations, rogue landlords and the planning system. Opposition MPs complained that 65 pages of new clauses and amendments had been added at the last minute to a Bill that was only 145 pages long.

I blogged back in October that this a Bill written on the back of a fag packet and last night only confirmed that impression. The Bill also leaves a series of crucial decisions to be made by ministers by regulation later.

Nothing sums this up more than new clause 31 on planning obligations and affordable housing. This adds starter homes selling for up to £450,000 to the existing definition of affordable housing: homes for people whose needs are not adequately served by the market. However, it also adds that:

‘The Secretary of State may by regulations amend this section so as to modify the definition of “affordable housing”.’

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Moment in the sun

Originally posted on December 4 on Inside Edge 2, my blog for Inside Housing

First, the good news: new government figures show that the supply of affordable housing is at a 20-year high. The 66,640 homes delivered in 2014/15 represented the highest output since 1995/96 and is among the highest seen since new council housing investment was killed off in the 1980s.

Yes, the surge in output is partly explained by the rush to beat the April 2015 deadline for the 2011-2015 Affordable Homes Programme, but it is still testament to the efforts of everyone involved: housing associations, government agencies, local authorities and housebuilders.

And given the usual doom and gloom on this blog maybe I should even allow ministers a moment in the sun too. Greg Clark and Brandon Lewis were understandably quick to seize on what was also the biggest increase in supply seen since 1992/93, when another Conservative government invested in housing in the wake of the housing market crash. Here’s what Clark had to say for himself:

‘Today’s figures show how far we’ve come to get the country building, bringing the industry back from the brink to deliver the highest annual increase in affordable housebuilding for over two decades. But we are far from complacent and the doubling of government investment in housebuilding announced at the recent Spending Review reaffirms our commitment to deliver a million new homes by 2020. Affordable homes to rent and buy are a key part of that, helping to give young people and families across the country the best possible start in life.’

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Keep your friends close – Part 2

Originally posted on November 30 on Inside Edge 2, my blog for Inside Housing

Part 1 of this blog looked at the apparent winners and the big losers from George Osborne’s announcements last week. But there is one more group lurking on the edges of the playground, ostracised by virtually everyone. What happened to George’s well-heeled former chums should be a warning to everyone else.

Buy-to-let landlords and second home owners thought they had worked hard, done the right thing, bought a house and then another (and another). Contrary to what everyone said about them driving up house prices and destroying local communities, they thought they were providing desperately needed homes and helping pay for local services. They thought the Conservatives were on their side after they blocked a Labour tax rise on second homes in 2010 and kept buy to let out of European mortgage regulation in 2013.

They thought George was ‘one of us’. After all, he made £450,000 profit on his taxpayer-funded second home and rents out his main home for £10,000 a month while he lives in Downing Street. And they voted Conservative in May when those horrible Labour oiks planned rent regulation and a mansion tax.

Their thanks for all this? Sand kicked in their faces with cuts in tax relief in July and the Chinese Burn of hikes in stamp duty and capital gains tax in November. The fate of these entrepreneurs and investors turned enemies of aspiration should be a warning for all those who are currently part of the Osborne in-crowd.

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Beyond meaning

Originally posted on November 11 on Inside Edge 2, my blog for Inside Housing

So now it is official. Brandon Lewis has confirmed that ‘affordable’ means 80% of the market rate.

His statement at a Communities and Local Government Committee hearing on the Housing Bill confirms a direction of travel that has been clear ever since the creation of ‘affordable’ rent. Starter homes at a 20% discount to the full price now represent ‘affordable’ home ownership. Needless to say, neither is exactly affordable by any conventional definition of the word.

The minister’s statement came in this exchange with Labour MP Jo Cox:

Cox: Do you think there should be a statutory definition of affordability for both rent and purchase?’

Lewis: At the moment it’s 80% of the market value, whether to rent or purchase.

Cox: But there isn’t a statutory definition.

Lewis: Well, the definition of affordability… an affordable rent is 80% of market value and affordable purchase with starter homes it would effectively be 80% of market value.

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