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You’ll never fix the broken market without social housing

The Government’s much-anticipated repair-plan for Britain’s broken housing market is missing a critical part of the fix. It begs the question, do ministers really want to solve the crisis – or just contain it to manageable limits? By Mark Cantrell

 

THE Housing White Paper was billed as a “bold, radical vision” to fix Britain’s broken housing market, but we’ve heard it all before. On the day, the package that finally arrived hardly resonated with originality and it left many feeling decidedly unconvinced.

The White Paper was soon labelled “timid” and “vacuous”. Indeed, shadow housing minister John Healey greeted its publication with an incredulous: “Is that it?”

Meanwhile, UK Business Insider reported analysts at Barclays Bank were so unimpressed by what they regarded as its lack of substance that they likened it to “homeopathy”. Ouch, so “watered down” it’s not even snake oil, then?

That may be a tad uncharitable. But it remains the case that the White Paper’s formula is really quite derivative, repackaging much previous policy, with a tweak here, and a twist there; it’s hard to interpret this as any kind of radical departure. Yes, it puts renting back on the agenda, loosening the Cameron regime’s all-but-exclusive focus on buying. Yet for all the sweet talk it offers renters, it remains very much a manifesto for ownership.

“The idea of owning or renting a safe, secure place of your own is, for many, a distant dream,” said Sajid Javid, secretary of state for communities, as he launched the White Paper in the Commons. “Behind the statistics are millions of ordinary working people. I’m talking about the first-time buyer who’s saving hard but won’t have enough for a deposit for almost a quarter of a century; or the couple in the private rented sector handing half their combined income straight to their landlord.

“The symptoms of this broken market are being felt by real people in every community. It’s one of the biggest barriers to social progress this country faces. But its root cause is simple. For far too long, we have not built enough houses.”

Indeed. If nothing else, then, the White Paper at least demonstrates that ministers have grasped there’s a problem. That’s got to be worth something.

Unfortunately the secretary of state’s words ring rather hollow – because of the emptiness at the heart of the White Paper. There’s a gap where genuinely low-cost social housing ought to be, if this was a serious contender for change.

At best the document is ambiguous about the fate of this tenure; at worst, its proposals threaten to escalate the decline of remaining social assets, depriving not only current but future generations of a secure – and sought-after – housing option. This absence has been noted.

Though the word ‘social’ wasn’t used, it is nevertheless implicit in some of the industry’s responses. It contains a “glaring omission”, Campbell Robb, chief executive of the Joseph Rowntree Foundation (JRF) observed, and that’s “a lack of new, genuinely affordable homes to rent for families struggling with rising rents, particularly in high-cost parts of the country”.

“For many people in the UK, high rental costs make the difference between just about managing and not being able to manage at all,” he added. “Poverty in the private rented sector has doubled in the last decade, leaving millions trapped in insecure, expensive housing. Increasing supply is crucial, but the cost of renting matters too and [this] offer is out of reach for many of those on low incomes.”

Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “We still believe the Government could do more to help those who need housing the most by supporting the building of more homes at rents that are truly affordable. Our projections show we could lose 250,000 of these homes between 2012 and 2020, which is very worrying when they are the only truly affordable housing option for many people – including some of our most vulnerable.”

Quite simply, we know the housing market is broken. We’ve known it for years. There’s no silver bullet for solving the housing crisis, that’s true, but we know that social housing is an essential part of the package. However, too many, for too long, have simply ignored this. The White Paper continues that sad tradition.

Fortunately, the tenure does have advocates. The socioeconomic case for social housing was well-made by the Capital Economics report for SHOUT (Social Housing Under Threat). Many individuals, meanwhile, from within and without the housing world, have tirelessly spoken up for the tenure. Furthermore, there’s plenty of expert analysis that reveals how rising housing costs increase poverty and inequality, such as the work undertaken by the JRF.

All told, there is evidence aplenty of a demonstrable need for investment in the delivery of more social homes. A properly functioning social housing system could be thought of as a stabilising foundation for a wobbling and top-heavy market. With sufficient numbers, it could be opened up beyond the poorest and most vulnerable. Its lower price bracket could serve as a serious challenge to the generally higher rents of the private market. In so doing, it would offer a more humane means of lowering the housing benefits bill than crude cuts and caps.

What’s more, a properly function system of social housing could offer families the scope to move from one part of the country to another, for jobs say, without having to risk sacrificing the security and stability, not to mention the genuine affordability of a social home. The tenure can also offer a stable platform for those who so choose to save for a deposit to buy. All it needs is the backing hitherto enjoyed by home ownership.

Alternatively, we can dismiss such notions as hopelessly naive and continue to push for more expensive housing, which, it must be said, has been the broad thrust of the approach for some considerable time. As it is, we should perhaps ask ourselves – and answer honestly – do we really want to solve the housing crisis, or do we just want to rein it in to more manageable levels? After all, from a certain perspective, and within limits, the crisis is a good thing: the desperation of those at its sharp end can be lucrative lubricant for the machinery of commercial interest.

That’s a cynical view, no doubt, but these are cynical times, and the White Paper does nothing to slay the ‘golden geese’ of proliferating, premium-priced ‘affordable’ housing products. The bottom line, really, is simply this: Britain’s broken housing market won’t be fixed without many more social homes.

 

# # #

 

Renters’ charter?

DAN WILSON CRAW, director of Generation Rent, said: “Sajid Javid has the right analysis about the plight of renters, but his White Paper has failed to offer us anything of substance. By limiting longer tenancies to new purpose-built, private rented homes, the Government has offered renters the bare minimum. The institutional investors building homes for rent are already keen to encourage long-term tenants, and it will typically be the better-off who can afford to rent them.

“The vast majority of tenants will remain in existing properties, with no certainty over their home beyond the next 12 months. The Government should incentivise all landlords to offer tenants greater security by putting a cost on the use of evictions where the tenant has done nothing wrong.

“Until the Government builds enough to overcome the housing shortage, high rents will continue to stifle living standards, and ambition here is also lacking. Renters on stagnant wages need homes that cost no more than a third of their income, not ones let at 80% of the market rent, with a sticker that says ‘affordable’.”

GRAEME BROWN, interim chief executive of Shelter, said: “Talk of longer-term tenancies is welcome but risks being disingenuous unless these are rolled out across the board, not just for a handful of people living in new build-to-rent properties.

“The scourge of inadequate tenancies, and indeed our broken housing system, are fuelled by the shocking lack of affordable homes available to rent or buy, so the Government is right to want to ‘get Britain building’... The white paper poses the right questions, what we need now is quick and bold action that helps people in need of a decent home tomorrow not in 10 years.”

DAVID SMITH, policy director at the Residential Landlords Association, said: “Unfortunately, the White Paper falls a long way short of the radical changes for renters that we were promised. There may be more build to rent resulting from this in our large towns and cities, but without any plans to support the hundreds of thousands of smaller landlords who make up the bulk of the supply, there will continue to be a major shortage. Landlords are happy to offer longer tenancies provided the climate is right to do so. They give landlords certainty and they are good for tenants as rents tend to increase less often.”

JOHN SHIPLEY, Liberal Democrat shadow housing minister, said: “This White Paper is utterly vacuous. It is not the ambitious, radical plan we need to solve the housing crisis. There is no mention of the one million homes commitment by 2020 and no new money for investing in the homes we need – it’s clear the Government has no real grip on the situation at all.

“We desperately need genuinely affordable housing and many more homes for rent and yet there was nothing announced to help the 35,000 people who have been on housing waiting lists for over 10 years. It’s a disgrace.”

COUNCILLOR MARTIN TETT, the Local Government Association’s housing spokesperson, said: “All types of homes – including those for affordable and social rent – have to be built to solve our housing crisis and flexibility around Starter Homes is much-needed recognition of this. It is important that councils have powers to ensure a mix of homes is built, alongside the infrastructure to support strong communities.”

He added: “Local government believes even more needs to be done to rapidly build more genuinely affordable homes to help families struggling to meet housing costs, provide homes to rent, reduce homelessness and tackle the housing waiting lists many councils have.

“For this to happen, councils desperately need the powers and access to funding to resume their historic role as a major builder of affordable homes. This means being able to borrow to invest in housing and to keep 100% of the receipts from properties sold through Right to Buy to replace homes and reinvest in building more of the genuine affordable homes our communities desperately need.”

TOM COPLEY, London Assembly Member, said: “More than anything we need an upsurge in truly affordable housing, but unless Government is willing to lift the cap on councils’ borrowing this will be difficult to achieve. While a first glance suggests this White Paper will probably have limited impact on London, the spectre of the forced sale of council homes in the capital to pay for Right to Buy discounts still hangs over us.

“The Government have indicated that they have finally woken up to the need to look beyond home ownership, with the shift in focus onto Build to Rent. But this is to attract institutional investors – and whilst the promise of longer tenancies is welcome, its bearing will be miniscule unless it is extended to existing rental properties, where the vast majority of renters actually live.

“With the Government insisting on clinging steadfastly to its definition of affordable rent as 80% of market prices, any positive step it takes towards making life better for renters will be undermined.”

 

This article first appeared in the February/March 2017 print edition of Housing magazine

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