Patrick Mooney, housing consultant and news editor of Housing, Management & Maintenance magazine, discusses the Government’s ‘transitioning’ housing policies.
The Government has sensibly accepted that its long-standing commitment to build 300,000 new homes each year by the mid 2020s is not going to be met – Michael Gove (before being replaced by Greg Clark) tried to refocus attention away from numbers and targets.
But of course the need for more housing still exists, with over one million people on local authority waiting lists, hundreds of thousands of people living in wholly inadequate temporary accommodation and the private rented sector now houses a record number of families.
Indeed the scale of the problem is reflected in recent polling by Ipsos which found that seven in 10 people agree there is a housing crisis in Britain, with the percentage who think there is also a crisis in their local area having risen from 39% to 49% in the past two years.
This change is also reflected in the fact that only 22% now oppose more local housebuilding, down from 27% two years ago. Support for more housebuilding increases if the new homes are to be affordable and designed to look right in their surroundings.
PROBLEMS & SOLUTIONS
The above finding suggests that the cult of NIMBYism may be rapidly receding, even if it is not entirely dead. People are prepared to see more housing built in their back yard, particularly if measures are taken to ensure the new housing is genuinely affordable. But it also has to look good and be in keeping with the locality to get their support.
Over half of the adults who responded to the Ipsos survey (taken in May for the New Statesman) agreed that unless more homes are built in Britain, then the country’s housing problems will never be solved. They also agreed that building more homes was preferable to encouraging older people to move out of their larger homes, in favour of bigger families with a greater housing need.
The pressures for more affordable housing were acknowledged by Michael Gove before he was fired by the PM, when he said: “We’ve reached a situation where the availability of social housing is simply inadequate for any notion of social justice or economic efficiency.”
Which is why the Government’s proposal to extend the Right to Buy to housing association tenants appears to be odd, and counter-intuitive. Given the desperate need for more genuinely affordable rental housing, surely the priority should be on reversing the long-term net loss of social housing, not in adding to it.
But that would be ignoring the political machinations at work whereby increasing levels of home ownership are usually associated with long term support for the Conservative Party. Messrs Johnson and Gove were pursuing a political agenda, rather than looking to resolve the housing crisis identified in the Ipsos polling.
AN IMPRACTICAL REMEDY
Delivering an extension to the Right to Buy might be more difficult though, as it appears to be beset with innumerable practical difficulties. This is after all an issue that has been looked at before and abandoned because pilot schemes and modelling by the Treasury showed it could not be made to work.
Developers and social landlords have already had to scale back their plans to build new homes due to the impact of (this is not an exhaustive list, just the main issues!) the pandemic, shortages of labour and materials, rising construction costs and expected changes in financial markets and planning policies.
Extending the Right to Buy to housing association tenants looks like it could only work if money is diverted away from existing budgets, in order to fund the cost of discounts on the market valuations which are necessary to tempt the tenants into taking the huge step into home ownership. (Maximum discounts available to council tenants currently exceed £100,000 depending on the property valuation and the length of their tenancy.)
Given the parlous state of public finances, it is extremely unlikely that new money will be found for the scheme, which logically means that less money will be put towards building new affordable homes. In order to achieve a different outcome, The new Housing Secretary Greg Clark will have to come up with a previously unseen piece of financial magic – as well as a very large money tree.
ASSOCIATED PROBLEMS
In its 2022 UK Housing Review, the Chartered Institute of Housing found that 40% of council-owned properties sold off under the Right to Buy ended up as homes in the private rented sector. So instead of being lived in long-term by owner-occupiers, they are bought as buy-to-let investments and rented out at rents far higher than those charged by the councils who originally owned them.
As a result, the amount of housing benefit paid to private landlords has soared over the last decade, and is now estimated to total more than £9bn. Ipsos also found that public support for extending the Right to Buy has markedly grown in the last couple of years, but how likely is it that those who answered the pollsters’ survey questions were aware of the costs associated with it, and what could be achieved if this money was instead used for building more homes of all types and tenures?
The pressures on the housing market, particularly towards the more affordable end were further demonstrated by recent analysis produced by the BBC which found that the number of holiday lets in England has risen by 40% in the past three years. Once a phenomenon of tourist areas on the coast, the second or holiday home trend has now moved inland since the beginning of the Covid pandemic with more areas witnessing properties being bought up by ‘outsiders,’ squeezing the supply for local residents and forcing up house prices.
The Department of Digital, Culture, Media and Sport is looking at whether holiday lets should be registered, or even licenced. It has now launched a call for evidence, promised in its Tourism Recovery Strategy in June 2021, on the impact of short term lets on England but it will be some time before any actions feed through to local markets and in the meantime residents will continue to struggle in their quest for affordable housing.
POPULATION TRENDS
Meanwhile, figures from the 2021 Census have revealed that the population of England and Wales has reached 59.6 million, an increase of 3.5 million on 10 years ago, but for the first time ever the number of over 65s in the population (11.1 million) is greater than the number of under 15s, at 10.4 million. The number of people aged over 90 has risen above half a million.
These and other changes in the population will be pored over by statisticians, planners and politicians for years to come and will inevitably result in changes to policies at a national and local level concerning everything from housing and social care, to education and health services.
One statistic that really caught my eye was that there are 11.1 million more people living in England and Wales than there were in 1981, when the Right to Buy (RTB) was introduced by Margaret Thatcher, as one of her flagship privatisation policies.
REPLACING SOLD HOMES
The CIH’s UK Housing Review of 2022 revealed that fewer than 5% of the estimated two million council homes sold off under the RTB have been replaced, which has contributed hugely to a reduction in the availability of social homes. It is no wonder that when he opened the Institute’s annual conference, CIH chief executive Gavin Smart said: “We absolutely must build more if we are to shift the dial on this housing crisis,” before adding “You could say that we’re at a pressure cooker moment.”
Local government leaders have been lobbying Ministers for years asking that any houses sold must be replaced quickly, in the same local authority area and on a like for like basis. They also want to keep 100% of the receipts and to set discounts locally. We can be sure that the Housing Secretary has heard the arguments, but whether he is inclined to take action along the lines requested is another matter entirely. The public purse has recently been run dry, and the favoured political solution requires money which he may not have.