Originally written as a column for Inside Housing.
Even if it had not been leaked in advance, this Budget could have been defined as much by what was not in it as what was.
The astonishing mistake made by the Office for Budget Responsibility (OBR) in uploading a report containing all the key measures before chancellor Rachel Reeves had started speaking came after weeks of well-sourced stories about them.
We already knew the headline measures: the abolition of the two-child limit; a council tax surcharge on high-value homes; and freezing income tax thresholds.
They were joined on the day by a private landlord tax (higher rates of income tax on income from property), confirmation of more money for the Warm Homes Plan and a welcome move to tackle the ‘benefit trap’ facing tenants in supported and temporary accommodation.
But the Budget delayed one of the decisions most eagerly awaited by social landlords: they will now have to wait until January for the government’s final decision on rent convergence, in effect how quickly they can increase their lowest rents above the CPI plus 1 per cent limit.
Three months on from the consultation closing, the Budget background document explains that: ‘While the government remains committed to implementing social rent convergence, it is important to take the time to get the precise details right, taking account of the benefits to the supply and quality of social and affordable housing, the impact on rent payers and affordability.’
And there was no mention at all of the Local Housing Allowance (LHA) freeze, perhaps the housing issue raised by more organisations than anything else in the run-up to the Budget.
Originally written as a column for Inside Housing.
The spending review may have given us the headlines but a flurry of announcements on Wednesday fills in much of the detail about what the government is calling ‘a decade of renewal for social and affordable housing’.
On new homes, a key question was how the £39 billion will be spent over the next 10 years and, in particular, what the trade-off will be between maximising total output of affordable homes and giving greater priority to social rent.
That got an answer in an overnight press release: a renamed Social and Affordable Homes Programme (SAHP) is forecast to deliver 300,000 homes over the ten years (30,000 a year), of which at least 180,000 (18,000 a year or 60 per cent) will be for social rent.
To put this in perspective, the current AHP was originally meant to produce 180,000 affordable homes over the five years from 2021 to 2026 (36,000 a year) but rising construction costs cut that to between 110,000 and 130,000 (22,000 to 26,000 a year. Of those, just 40,000 (8,000 a year) are forecast to be for social rent.
Importantly, strategic partnerships will be able to bid for funds over the lifetime of the programme, which should give at least some protection from the risk of cuts if a government more hostile to housing wins the next election.
Another trade-off is the split between London, where higher land prices and construction costs mean more grant per home is needed, and the rest of the country.
Under the current AHP, the Greater London Authority (GLA) got £4.1 billion (36 per cent) and Homes England £7.4 billion (64 per cent) of the grant available.
Under SAHP, the GLA’s share will be cut to 30 per cent or up to £11.7 billion. It’s hard to reconcile that with the fact that more than half of the 126,000 homeless households stuck in temporary accommodation waiting for a social home are from London.
Originally written as a column for Inside Housing.
This spending review represents a good start on housing – but it must only be a start.
Highlights of the package delivered by chancellor Rachael Reeves on Wednesday included £39 billion over 10 years for the Affordable Homes Programme (AHP) and a 10-year rent settlement of CPI plus 1 per cent for social landlords.
Then add a consultation on the return of rent convergence, £1 billon extra for cladding remediation and equal access to government funds, £2.5 billon in low-interest loans plus for social landlords.
Stir and combine with £950 million for councils to increase the supply of temporary accommodation, £10 billion in financial transactions to boost private investment and more to come for infrastructure and land remediation in Cambridge and the new towns, and this looks like great work by deputy prime minister Angela Rayner and the Ministry for Housing, Communities and Local Government (MHCLG).
But does the spending review really justify the headlines and is it really as ‘transformative’ as some in the sector are making out?
Originally written as a column for Inside Housing.
With a week to go until the most consequential spending review for ten years, the Treasury is facing desperate last-ditch lobbying from departments that have yet to agree their settlement.
Last week’s public intervention by chief constables warning that the government will fail to meet its pledges on crime unless they get more cash is sign enough of that.
So too the leaked memo from deputy prime minister Angela Rayner setting out options for higher taxes that was inevitably followed by more leaks about her spending priorities.
As of this week, the Ministry for Housing, Communities and Local Government (MHCLG) was said to be one of the departments yet to agree a settlement, alongside the Home Office, with the Department for Energy Security and Net Zero just finalising one..
By contrast with previous spending reviews, housing starts with the advantage of having a politically powerful secretary of state in charge – and Angela Rayner has repeatedly promised ‘the biggest boost to social and affordable housing in a generation’.
Originally written as a column for Inside Housing.
A final verdict will have to wait for the spending review in the Spring but how should we assess the first Labour Budget for 14 years?
The answer of course depends on what you take as your starting point. Compared with the disastrous first Conservative Budget in 2010 or even the first Labour one in 1997, this one takes some definite steps in the right direction.
But does this Budget live up to Labour rhetoric about greater investment and long-term solutions. To what extent will it really ‘fix the foundations’ and deliver ‘the biggest boost to affordable and social housing for a generation’?
Here are 10 key areas that I was looking out for:
1) New social homes: The £500 million top-up to the Affordable Homes Programme (AHP) briefed in advanceis welcome news but it must only be a down-payment on a far bigger increase for the next AHP after 2026.
It is at the lower end of expectations of up to £1 billion extra and it will not be enough to make up for a shortfall in delivery caused by construction cost inflation and other pressures on social landlords. The current AHP is on course to deliver between 110,000 and 130,000 affordable homes over five years rather than the 180,000 originally expected while need is estimated at 90,000 social homes a year.
All of which puts the 5,000 the government says will be generated by the top-up into perspective.
Details of ‘future grant investment’ in the next AHP will be set out in the spending review and will support a mix of tenures ‘with a focus on delivering homes for social rent’.
How long can you keep juggling before it all goes horribly wrong?
That’s the question for social landlords posed by a new report from the all-party Levelling Up, Housing and Communities Committee on the finances and sustainability of the social housing sector.
Juggling a couple of balls is simple. Three gets easier with practice. Four needs intense focus. Add more balls and external distractions and you risk dropping the lot.
The issues that need to be juggled are familiar ones: how do you continue to build new homes, decarbonise existing ones, fix fire safety problems and regenerate older stock when there is not enough grant to go around, construction, energy and insurance costs have soared and supposedly long-term rent settlements keep being revisited?
As the report points out, we are already seeing the results. Fiona Fletcher-Smith of L&Q told the committee that under the affordable housing programme that ended in 2021 it built 10,000 new homes in London but ‘this year in this programme we are bidding for 1,000. It is a dramatic drop.’
Originally written as a column for Inside Housing.
Inflation is starting to fall at last but the chances are what you pay for your housing has gone up along with the cost of everything else.
But this week’s inflation figures got me thinking about what we really mean by ‘inflation’ and how rising prices work differently in different tenures.
For starters, it all depends on the measure you use. The Consumer Price Index (CPI) is the one in the Bank of England’s inflation mandate so it matters most to its decisions on whether to raise interest rates or not.
CPI inflation affects the Bank’s decisions on interest rates which in turn drives mortgage rates so it is good news that it fell to 6.7 per cent in the year to August. However, CPI does not include owner-occupiers’ housing costs and it is not the index favoured by the Office for National Statistics (ONS).
If you’re not confused yet, on the ONS’s favoured measure of CPIH (which includes owner-occupier housing costs and council tax) inflation fell to 6.3 per cent in the year to August.
However, those costs are based on an estimate of the equivalent rents that owner-occupiers would be paying. There may be sound economic arguments for excluding rising asset values from the inflation calculation but rising house prices still mean rising housing costs for home owners that are ignored.
Old-style Retail Price Index (RPI) inflation – also falling but still considerably higher at 9.1 per cent – is the only measure that directly includes mortgage interest payments but is seen as less accurate than CPI and is no longer treated as on official statistic by the ONS. Despite that, RPI is still used to set price increases in some leases.
For all the differences between the three measures, it does seem clear that rising costs for renters and owners are playing an increasingly important role in inflation in household costs as the impact of the huge hikes in gas and electricity prices starts to recede. This ONS graph illustrates that only too clearly:
But what is really happening to house prices and rents? It all depends on who you believe.
Originally published as a column for Inside Housing.
The rent cap proposed for social housing may not have come as a huge surprise but the consequences will play out in very different ways for different parties.
It says it all about the cost of living crisis that whether rents are capped or not could be well down social tenants’ list of worries over the next few months.
The energy price cap has already almost doubled in the last 12 months to £1,971 a year. Next month that will rise to £3,549 and the worst forecasts suggest that could double again by next April unless the new government takes radical action.
Effectively, therefore, tenants in social housing could be paying double rent next year unless they take drastic steps to cut their bills.
But many are already doing this and finding that even turning the boiler off does not go far enough – they may be asking why the consultation does not include an option to freeze rents.
Jules Birch 