Duncan Bowie on the Government’s failure on affordable housing
Not only is the Government’s target of 1.5 million new homes over the five year parliamentary term looking increasingly unachievable, but the Government is prepared to sacrifice any policy objective to provide more social rented housing for lower income households, in order to try to get private housebuilders to increase their building programmes.
Angela Rayner made a great noise about getting the chancellor to commit £39 billion to new “affordable housing” over 10 years, though this depends on winning the next two general elections and is far short of the £188 billion estimated in a recent private sector report as needed for building the required 90,000 social rented homes a year – and part of the £39 billion will go on other sub-market homes including shared ownership rather than social rented homes. With Rayner’s departure, we now have Steve Reed as Secretary of State for Housing with his Trumpian “Build Baby Build” initiative.
In his panic response to the failure of private builders to build enough new homes (the consequence of an increase in costs combined with a falling off of effective demand – that is fewer households affording to buy homes) and a need to maintain their profit margins, Reed together with the Mayor of London, has agreed that the target for “affordable homes” in London be dropped from 35% to 20%, with a target that 12% of the total should be social rent; the remaining 8% being other forms of sub-market housing – such as shared ownership.
To explain how far this is a shift of policy, we should remember that under Ken Livingstone (for whom I was the principal strategic planner who led on the London Plan housing policies) the target was 50%, and under Boris Johnson’s mayoralty, the numerical target for affordable homes was equivalent to 40% of the total. The last assessment of housing requirements in London, published by the Mayor in 2017, assessed that 47% of new homes needed to be social rented homes, and surely if this assessment, which is eight years old, was updated, the proportion would be higher now, given the increase in both homelessness and house prices. As well as changing the London Plan target (which legally requires public consultation, an impact appraisal and an Examination in Public), the Government is reducing developer liability to pay the Community Infrastructure Levy, reducing some of the qualitative design and sustainable density requirements and giving the Mayor more power to overrule decisions of the boroughs as planning authorities.
It has always been a mistake to rely on the private sector to build homes for lower-income households, as this so-called “planning gain” is only possible when developers are making massive profits, and developers in high-risk areas will often be seeking returns of 25-30%, so are hardly going to be altruistic. Planning gain was only ever intended to supplement public subsidy, not replace it. Successive governments over the last fifty years have not been prepared to fund investment in council housing at the level required. Moreover councils and housing associations are focusing on using their limited resources to maintain and retrofit their existing housing stock. We have lost over a third of our social housing, through the “Right to Buy” and more homes through the demolition of council housing through so-called “estate regeneration” schemes. It is not surprising that homelessness has increased, as has the cost of temporary accommodation and the payment of housing benefit/universal credit to tenants in the private rented sector, as private rents have increased faster than tenant incomes.
Reed and Starmer both make statements about Labour helping a new generation of homebuyers, though the collapse of private sector housebuilding rather runs contrary to that ambition. Even if private housebuilding was doubled, it would not significantly reduce house prices. But what about those households that would never afford to buy into the market? Where is the Government policy to help these people and should this not be a priority for a Labour government?
The Government is rightly proud of the Renters’ Right Act. However, giving private tenants new rights is already leading to some private landlords withdrawing from the market, and the only thing worse than the current private rented sector is a collapse of the sector, with even more lower-income households depending on social housing, which is just not available. The Government cannot just intervene in one aspect of housing provision without a comprehensive strategy to deal with all sectors. We are still waiting for the long-promised comprehensive housing strategy.
The critical issue is that without substantial investment, these legislative interventions are just tweaking, with potential significant indirect negative impacts. How many more reports do we need to demonstrate that investing in new social rented housing now not only improves the quality of life for some of the most vulnerable households, but also saves public money in the longer term? This is not just about London. If the private housebuilders cannot deliver affordable homes from their profits in a high-value area such as London, there is no chance of them delivering in other parts of the country where sales values are lower. The reduction in the London target will just strengthen the challenges elsewhere that developers are making to local council policies. Not surprisingly, Labour councils are not happy with Steve Reed’s concessions to the developers or with Rachel Reeves’ failure to use public money to fill the gap. This new policy will only make the current position even worse. Thanks for that!