LHA: a reverse supermarket sweep

Posted: April 3, 2017 | Author: | Filed under: Housing benefit, LHA cap, Private renting | Tags: | Leave a comment

Originally published on April 3 on my blog for Inside Housing.

It’s easy to forget now but the original idea behind the Local Housing Allowance (LHA) was that it would give tenants an incentive to ‘shop around’ for a cheaper rent.

Rather than get their actual rent paid, tenants would get an allowance based on the median rent for the area and if they found somewhere cheaper they could keep what they saved. In effect they could be rewarded for shopping at Lidl’s rather than Tesco’s or Sainsbury’s.

The ‘shopping incentive’ was a key feature of a new system that was designed to be fairer and more transparent than the one it replaced. The (then Labour) government said it would give tenants more choice and a greater sense of personal responsibility, administration would be easier and there would be reduced barriers to work.

Fears about the impact of moving to direct payment to tenants were allayed in local pilot schemes and for a time it seemed like the new system really was working as intended.

Nine years on and that early optimism has disappeared along with the original idea. Labour restricted the shopping incentive to £15 a week in 2009 and the coalition eventually removed it completely in 2010.

And that was just the start of a series of cuts in the allowance justified by constant references to a handful of very large claims in London, inferring that some tenants were choosing to shop at Harrods and Harvey Nicholls.

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Five things we learned from the English Housing Survey

Posted: March 2, 2017 | Author: | Filed under: Home ownership, Private renting, Social housing | Tags: | Leave a comment

Originally published on March 2 on my blog for Inside Housing.

So what have we learned from the new English Housing Survey? The largest annual survey of households and housing conditions is just out for 2015/16 and here’s what caught my eye.

1) ‘The fall in owner-occupation has abated’

The official story is one of relatively little change this year: the number of owner-occupiers seems to have stabilised at 14.3m and there were still 3.9m social renters. The survey says that ‘the rate of owner occupation has not changed since 2013-14, indicating that the fall in owner occupation has abated’. Here’s the graph summing up the trend:

However, that’s not the full story. First, a note of caution: the 2013/14 survey had sampling issues that probably exaggerated the fall in home ownership and rise in private renting in that year. As a result last year’s survey showed a surprise fall in private renting and slight rise in owner-occupation that was hailed as a turning point by the government. Private renting resumed its rise in 2015/16, with the number of private renters up 250,000 at 4.5m.

2) But mortgaged ownership falls below 30%

The picture changes again if you look at the proportion of households in each tenure rather than the number. The survey shows that the owner-occupation rate fell to 62.9%, the lowest it’s been since 1985, while private renting rose from 19.0% to 19.9% and social renting fell slightly to 17.2%. Decline abated? Not so much.

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Marks out of 10 for the housing white paper

Posted: February 10, 2017 | Author: | Filed under: Build to let, Housebuilding, Prefabrication, Social housing, Tax, Temporary accommodation | Tags: | Leave a comment

Originally published on February 10 on my blog for Inside Housing.

So have Gavin Barwell and Sajid Javid finally grapsed the nettle on the housing crisis?

Critics lined up to call the white paper a damp squib, a white flag and (my personal favourite) like a wet Tuesday in Bognor. Some had even read it first.

Supporters called it a pragmatic shift away from policy under David Cameron and ‘a blueprint for change’. And there was the inevitable ‘cautious welcome’ from housing organisations.

In some ways, the responses of two of the architects of previous Conservative housing policies were the most interesting ones. Former housing minister Grant Shapps said previous plans had not made much difference and this one probably wouldn’t either. Former No 10 adviser Alex Morton revealed the cynical political calculation at the heart of previous policy when he warned that ‘if you get dragged into an argument about renting versus owning, it will quickly become about the need for more council homes’.

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Has the White Paper fixed it?

Posted: February 7, 2017 | Author: | Filed under: Affordable housing, Build to let, Starter homes | Tags: | Leave a comment

Originally published on February 7 on my blog for Inside Housing. 

As the advance press coverage showed, this is a White Paper with few big ideas but maybe that is no bad thing when you consider the ones that emerged the last time the government presented us with a range of ‘bold’ and ‘radical’ reforms.

The extension of the Right to Buy to housing association tenants, forced sales of higher-value council homes and Starter Homes have cast such a dark shadow over affordable housing for the past two years that they make a bit of timidity seem almost welcome.

I’ll come back to the White Paper as a whole another time. You can argue it’s a flimsy response to the housing crisis and there are sections that make you wonder if they’ve been watered down, but it does make a series of subtle changes with the potential at least to change the balance of power in housebuilding.

And there are two new ideas that are definitely worth welcoming: publication of information on land ownership and options over land, and allowing local authorities to participate in German-style land pooling for new development.

For now, though, I want to concentrate on the affordable housing side of the equation and what happened to those three big ideas that have dominated so much of the debate (and my blogs) since 2015.

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12 tests for the Housing White Paper

Posted: January 12, 2017 | Author: | Filed under: Build to let, Housebuilding, Land, Local government, Planning, Prefabrication, Social housing, Tax | Tags: , | Leave a comment

This is an updated version of a post originally published on January 12 on my blog for Inside Housing. 

The moment is finally here but will radical plans to boost housing supply live up to their advance billing? Here are my tests.

  1. How half-baked is it?

In one very important way, ministers have already passed my first test. Publication of a White Paper seems to mark a return to an earlier era of government when policies went through consultation and scrutiny before they were enacted.

Contrast that with the way that half-baked ideas from thinktanks were turned into equally half-baked legislation in the back of a fag packet Housing and Planning Act.

Speaking of which, how much will we hear about the loose ends that still need tying up from the act? Pay to Stay may be dead in its compulsory form, and the extension of the Right to Buy delayed by another pilot, but we still don’t know what’s happening with forced sales of higher-value council houses or to the receipts they raise.

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Book review: The Financialization of Housing

Posted: November 13, 2016 | Author: | Filed under: Financialisation, Housing market, Mortgages, Private renting, Regulation, Social housing | Tags: | Leave a comment

The Global Financial Crisis was a wake-up call to the world about the dangers posed by a toxic mix of finance and housing, one that has still not been properly heeded.

The mortgage-backed securities, collaterialised debt obligations and other financial instruments that financed the expansion of sub-prime and predatory lending were the result of a wave of innovation by a finance industry that had been deregulated over the previous 20 years. Britain marked the 30th anniversary of the Big Bang in the City last month but similar things happened around the developed world.

All that innovation and securitisation led to exponential increases in the amount of credit circulating within the financial system but it still needed something to be secured against. Which is where housing came in: a mortgage finance system that had been based on long-term mortgage lending funded from savings was transformed into a vehicle for the expansion of credit. And the relationship between the price of homes and the earnings of people buying them was also transformed.

9781138950580

The Financializaton of Housing: A Political Economy Approach, a new book by Manuel Aalbers, is the most comprehensive attempt I’ve seen to outline this process and its consequences. It’s part of a multinational research project based at the University of Leuven in Belgium on what he calls the Real Estate/Financial Complex in 12 different countries around the world. The metaphor is a deliberate echo of the military/industrial complex and serves to emphasise the connections not just between the real estate and financial sectors but also between each of them and the state.

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Cutting the cap

Posted: November 1, 2016 | Author: | Filed under: Benefit cap, Private renting, Social housing | Leave a comment

Originally published on November 1 on my blog for Inside Housing

You might think a policy that threatens more than 300,000 children with destitution and homelessness would be attracting more attention.

The reduction in the overall benefit cap starts in just six days’ time (Monday November 7) and will be introduced in different areas over the next few weeks. It is the first of a series of crucial events for housing this month that I blogged about yesterday. But only now is it getting much attention in the national media. That’s partly thanks to new analysis by the Chartered Institute of Housing (CIH), which suggests that 116,000 families will be affected and a total of 319,000 children.

The cap is being reduced from £26,000 a year to £23,000 in London and £20,000 elsewhere (lower limits apply to single people with no children). The cap essentially works via housing benefit. The more children people have, the higher their non-housing benefits will be and the more their housing benefit will be cut. At the levels of the lower cap, widespread rent shortfalls are inevitable unless people qualify for one of the exemptions or a discretionary housing payment (DHP) from their local authority.

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Building the case

Posted: October 19, 2016 | Author: | Filed under: Build to let, Construction industry, Housebuilding, Prefabrication, Private renting, Social housing | Leave a comment

Originally posted on October 19 on my blog for Inside Housing

Sometimes powerful arguments for a change of direction in housing policy come from unexpected places.

The Farmer Review of the UK Construction Labour Model is a case in point. Before your eyes glaze over at the title, bear with me because it has profound implications not just for the way we build homes but also the sort of housing we build and who we build them for.

Subtitled Modernise or Die, the report was commissioned last year from the Construction Leadership Council by housing minister Brandon Lewis and skills minister Nick Boles. By the time it was published this week, both had moved on, but the policy context had also shifted on its axis.

Back then, the Treasury and George Osborne dominated housing policy and everything was about home ownership and Help to Buy. Now other departments have much more influence, we have a housing minister calling for a balanced approach to tenure and attention has turned to modern methods of construction for new homes.

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What next?

Posted: September 13, 2016 | Author: | Filed under: Home ownership, Private renting, Starter homes | Tags: | Leave a comment

Originally published on September 13 on Inside Edge 2, my blog for Inside Housing

As Theresa May’s government busies itself trashing the legacy of David Whatsisname and George Wotsit, what about housing?

The new government’s pick-and-mix approach to the pre-referendum commitments now includes the budget surplus target, a sudden switch to grammar schools, a delay on Hinkley Point and a downgrading of the Northern Powerhouse.

But housing is still stuck in the tray marked pending. The soundbite of ‘a country that works for everyone’ could signal a change of direction but equally well it might just mean one that works for everyone providing they are home owners.

So comments by Gavin Barwell in his first major speech as housing minister yesterday make for interesting reading. Speaking at RESI in Newport (curiously a conference held in Wales that is all about England) he said:

‘The way you make housing in this country more affordable to rent and buy is you build more homes. There is still a role for the government doing specific things to help people on to the first rung but this can’t be at the exclusion of all else.’

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Lining their pockets

Posted: August 24, 2016 | Author: | Filed under: Housing associations, Housing benefit, Private renting | Tags: , | Leave a comment

Originally posted on August 24 on Inside Edge 2, my blog for Inside Housing

Something about the rash of stories this week about ‘private landlord subsidy’ left me feeling very uneasy.

The stories were based on a briefing from the National Housing Federation (NHF) on how the amount of housing benefit that goes to private tenants has doubled in the last decade. As reported in the Daily Mail and elsewhere that means ‘Private landlords rake in £9bn a year from Housing Benefit’.

The figures were mostly familiar ones about the big increases seen since the financial crisis in the total bill, the number of claimants and the number of private tenants who are in work and also on housing benefit.

David Orr argued:

‘It is madness to spend £9bn of taxpayers’ money lining the pockets of private landlords rather than investing in affordable homes.’

He’s right, it is madness. Yes, private landlords do get £9.3bn in housing benefit. Yes, the bill has doubled since 2008.

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