Our last chance to restrain the housing bill is with the Lords
The government’s new legislation on housing and planning will have profound implications for the future of housing in this country and should be of serious concern to everybody. Unless amended, it risks bringing about the end of social housing as we have known it since the second world war and embarking on a huge new sales programme when the financial numbers to deliver it patently don’t add up.
During the election there was a cross party consensus on the urgent need to build more housing. Completions last year, at 125,000, were half the numbers needed to keep pace with what the country needs. In London, the situation has reached crisis proportions, with prices to buy or rent moving out of reach for ordinary Londoners.
The housing and planning bill, which receives its second reading in the House of Lords on Tuesday, was the perfect opportunity for new government to tackle this issue head on.
While there are some welcome measures to tackle rogue landlords and speed up compulsory purchase, the overall effect of the bill will be to promote one form of tenure, home ownership at the expense of another, affordable rented housing. Desperately needed new social housing for rent seems to be being written out of the script.
Following the voluntary deal between the communities secretary Greg Clark and the National Housing Federation, housing associations will now have greater flexibility to decide which homes they offer to their tenants under right to buy. Local authorities however will still be picking up the bill for the right-to-buy discounts, forcing them to sell off their higher value properties as they become vacant in order to fund this. Shelter has calculated that this will cost them £1.2bn a year (pdf) and require the sale of some 113,000 council homes.
The government’s intent is that these sales will be replaced one for one but this will be very difficult if not impossible to achieve. High value council homes are invariably in high value areas: the very areas where land for new build is hardest to find. In places such as Camden and Westminster, this is likely to require the sale of more than half of their stock, making genuinely mixed communities a thing of the past.
Even with the forced sale of these properties, independent research commissioned by the Chartered Institute of Housing has found that the receipts generated will not come near to covering the cost of the discounts and replacement. London sales are calculated to provide more than half the funding, so this problem will be even more acute if the capital, as currently proposed, retains more of its receipts in order to deliver two new houses for every one sold. We will therefore start the new policy knowing that the sums do not add up.
To further boost home ownership the government plans to introduce starter homes that will enable first time buyers to purchase at 20% below market price. This was originally proposed as a welcome additional source of new supply on land not currently identified for housing. It will now be deemed “affordable”, although you would need an income of £77,000 in London to buy one, and largely replace social rented housing in new schemes. The communities secretary will be given extensive powers to direct local authorities to build starter homes whether or not they believe it is right for their areas.
If local authorities are big losers from the bill, then so are social tenants. There will be fewer transfer opportunities to move into bigger properties as they become vacant these are also typically the higher value properties and grant funding for new social rented housing will largely end in three years time. If household income exceeds £40,000 in London or £30,000 outside the capital, social tenants will be expected to pay at or near market rents providing little or no incentive to advance their career. If they are new council tenants, the local authority will be required to be give them a fixed term tenancy of between two and five years instead of a permanent one.
The message all this gives about the future of social housing couldn’t be clearer.
There are wider economic consequences of the government’s approach. To have any chance of delivering the level of housing this country needs we need to build more housing of all types sale, market rent, social rent and get all parties housebuilders, developers, housing associations and local authorities to raise their game. A reliance solely on building for sale will leave us much more vulnerable to another market downturn, just when the economic forecasts are beginning to look less favourable.
Much of the vital detail for how this bill will work in practice will be in regulations that have still be published, despite the bill having completed its passage through the House of Commons. To make the government’s proposals anywhere near fit for purpose, peers from all sides of the Lords are going to have their work cut out scrutinising the detail and seeking to amend and improve the bill in the weeks and months ahead.
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