May 2015, the Home Stretch

Andrew Arden QC and Clare Cullen consider the proposals for housing from the three main political parties

Homes for Britain Campaign

The Homes for Britain campaign has a simple message – the next Government must commit to ending the housing crisis within a generation and to publishing a long-term plan to achieve that aim within a year of taking office.

That there is a housing crisis can no longer be ignored. The frustration it causes, which has been bubbling beneath the surface for a long time, was in the public spotlight during the Focus E15 mothers’ campaign a few weeks ago: empty flats in east London were occupied, in part, in protest at the lack of social housing in the area. The media interest in that case may be a cause for optimism – is the housing crisis finally filtering through to the political and media agenda?

 

The scale of the problem

A joint report from KPMG and Shelter, Building the homes we need, A programme for the 2015 government, estimates that 250,000 new homes a year are needed in England alone: in 2013, just under 110,000 were built. Not since 1987 has the number of new homes in England exceeded 200,000 per year; you have to go back to 1977 to exceed 250,000 (see DCLG, Live Table 244). Radical, comprehensive and long-term plans are required if anything like that level is to be achieved again.

The drop in new homes has been largely due to the steady decline in local authority building. In 1978, local authorities were responsible for completing 93,310 new homes; 39% of the total that year. This number declined to 840 by 2013. This wouldn’t necessarily be a problem if housing associations or the private sector had filled the gap but that simply hasn’t happened. Whilst the number of new homes built by housing association has increased, 21,610 in 2013, it is nowhere near the level that local authorities used to provide.

As for the private sector, it has rarely exceeded 150,000 since 1978 (only exceeding between 1987-1989 and in 2007) and has remained below 100,000 since 2009. This is unsurprising. As this blog has previously noted, the private sector will never supply enough “for the very simple reason that the return on investment takes so long – decades – that it is inherently uncertain, vulnerable both to financial market forces and to political shifts in residential landlord-tenant law” (Rent Control to Major Debt).

Any plan for increasing the number of new homes must include new homes within the social housing sector. Despite the changes to Part 6, Housing Act 1996 (introduced by Localism Act 2011), allowing local authorities once more to maintain closed waiting lists, waiting lists remain high (in 2013, just below 1.7 million). It is simply not possible, or economically sound, to rely more and more on private sector housing, which seems to be current policy, to fill the gap. Not only is the private sector not building more homes, but housing those who would traditionally have been accommodated in the social rented sector in private rented accommodation simply results in the benefit bill shooting up, money which could be spent investing in new homes. As set out in Shelter’s report, Bricks or benefits? Rebalancing housing investment, May 2012, reliance on the private sector has increased the cost of housing benefit significantly: it is estimated that if just 8 per cent of housing benefit claimants in private rented housing moved to affordable social homes, the Government would save £200 million.
Public support

It is often suggested that there is insufficient public support for new-build housing, particularly social housing, both because of NIMBY-ism and for public spending reasons. A recent study by the Fabian society, Silent Majority: How the public will support a new wave of social housing, September 2014, suggests otherwise: albeit using a relatively small data set through focus groups, the study found 57% in support and only 15% opposed to new social housing being built; it also found that concerns about NIMBY-ism may be misplaced, although opposition rose to 27% when participants were asked about building social housing in their area but the percentage of those in support remained higher, at 44%, with 23% undecided either way.

There is another reason, not touched on in the Fabian report. The number of adults who are still living in their parents homes – whether having moved back in or never having moved out – is at an all-time high (at any rate in recent times), as a current television programme calls it, The Hotel of Mum and Dad: “since 1996 the UK has seen the number of 20-34 year olds living with their parents grow by 25%, to reach 3.35 million in 2013 – 72% of whom are in work” (Building the homes we need, p.25). Of course, enjoying the company of one’s children for a much longer period of time than used to be the case (when, say, they either did not return from university, or only briefly) is a joy – but not necessarily an unqualified one): there are also frequent reports about how much of their savings parents are spending to help their children into owner-occupation!

This surely provides an incentive for all parties to start putting new homes, including those within the social housing sector, at the top of the political agenda.

 

Policies

The first stage in the Homes for Britain Campaign was the autumn party conferences. So, what are the current proposals of the three main parties to address this issue? We have picked a couple from each.

Conservative

Unsurprisingly, it is the Conservative Party who offer the least by way commitment to building new social housing; if this had been a priority, it would surely have already been addressed: to the contrary, the capital investment funding for social housing was reduced by 60% in the Spending Review in 2010 while the Right to Buy – responsible for a substantial part of the decline in the social housing stock – has been stimulated by increased discounts.

  • Expansion of Help to Buy One policy in which the Government continues to invest is the Help-to-Buy scheme; this applies to first-time buyers under 40 who purchase a new home and operate by way of an equity loan of 20% of the price. It is intended to build 100,000 new homes on brown field sites for this purpose. To encourage developments, they would be exempt from restrictions under s.106, Town and Country Planning Act 1990, agreements. This, however, is not going to do much for those in need of social housing as it is the s.106 agreements which have introduced the requirement for a proportion of social housing in all new developments. In other words, in place of that proportion – which guaranteed that the housing would go to those who qualified for social housing (through social landlord allocation) – the housing will go to those who can find the remaining equity, e. the better off amongst those in need.
  • Further Benefit Cap Benefits will be capped at £23,000 (down from £26,000). Whilst this is not a policy directed at new homes, it is a further attack on those who are potentially the most in need (large families) and some housing associations have already warned of potential knock on effects; if tenants are unable to pay rent due to the application of the benefit cap, housing associations will not have the funds, or will have difficulty accessing funds, to invest in new social housing.

Labour

Labour are seeking to develop a long-term plan to address the housing crisis, broadly in line with the campaign, albeit that there are as yet no real details about how they propose to do so.

  • Target to build 200,000 new homes a year by 2020 This is still short of what is required but at least looks like an attempt to formulate a long-term, sustainable plan. Sir Michael Lyons has been commissioned to lead a review for the party but this has not yet been published.
  • Cap on rent increases This policy was announced earlier this year and was the subject of comment in the post Rent Control to Major Debt. Such a measure could help prevent the housing benefit bill from increasing because of the high costs of rent in the private sector, savings which could then be used to invest in building more homes.

Liberal Democrats

The Liberal Democrats appear to be the most radical in their proposals.

General Election

The proposals are still a long way off what is required. Will the remaining six months before the General Election see the parties fully develop their plans (or be persuaded to formulate a plan) to tackle the housing crisis, or will housing – as it always seems to do – be submerged by other, putatively more pressing issues? What do you think?

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