Housing chief warns unaffordable homes will be “social suicide”

Building homes people can’t afford is “social suicide” that will lead to an even bigger crisis, the head of a North West housing association has warned.

Bob Taylor, chief executive of Knowsley Housing Trust (KHT) welcomed the announcement of a £5 billion fund for infrastructural improvements over the next three years, as announced in the Autumn Statement this week, but he said that the “heart of functioning infrastructure” is decent and affordable housing.

He also said that while any form of investment in social housing is welcome, nevertheless the investment of pension funds in the infrastructure programme could become a “double-edged sword”.

“On the plus side it would bring extra investment which can in turn be invested in housing. It would open other investment doors and could result in a reduction in investment margins over time with banks trying to become more attractive to compete with other investors,” said Taylor.

“But on the flip side will be the impact of returns expected if they are higher than currently. Over time the returns paid on initial investments will erode overall resources in the sector and therefore in the long term lead to less investment throughout. The potential problem with the expectations of higher returns is the knock on to higher costs and therefore higher rents or prices.”

Taylor also expressed his doubts about the mortgage indemnity scheme and the revamped Right to Buy programme reiterated in the Chancellor’s statement.

“This will no doubt lever the banks to offer more loans but the fundamental issue is the price of homes and people getting deposits together,” Taylor added.

“I feel strongly that offering large right to buy discounts will encourage more people to take the home ownership plunge but again at what cost? Giving homes away cheaply will reduce organisations’ ability to borrow whilst the money generated will only produce a fraction of what will be sold.”

On benefit changes, Taylor said: “Up-rating working age benefits by 5.2% is to be welcomed as inflation has been hitting people hard for some time. This at least recognises that the price of basics such as food, energy and petrol have been rising sharply, leaving many people having to make significant choices about the basic necessities in society.

“On balance the answer has to be that we should welcome new potential investment and the opportunities it may bring to provide more housing that is desperately needed today.

“The cry to ‘get Britain building’ is to be commended, but it’s no good building homes that people either can’t afford to live in or worse can’t afford to maintain – it’s long term social suicide as it will lead to more blight, more poverty, more homelessness and a bigger crisis.”