Category: Social Housing

Budget 2017: housing and development

When all is said and done, it all comes down to Brexit. The chancellor ‘Spreadsheet Phil’, as his colleagues none-too-affectionately call him, has his hands effectively tied until the government decides how they are going to extricate the country from the European Union.

On many of the major sectors of the economy – housing included – all cabinet ministers can do is tinker round the edges. Governments in recent decades have become adept at tinkering around the edges of housebuilding; it is pretty much all they have really done since the last great wave of last century.

In reality, the chancellor Philip Hammond was always going to be the story of this autumn budget whatever he said at the dispatch box this week. If this is to be his last time he gets to be the centre of attention by waving around a little red briefcase at photographers, then he did about as well as could be expected given his lack of room in which to wiggle. Perhaps, in hindsight, he had already done all his wiggling earlier this week with the announcement by the Office for National Statistics that it would reclassify housing associations as private bodies to get £60 billion of debt off the public books.

Even though the speech focused on housing, some of his biggest manoeuvres were swiftly put down by a combination of the stock market and the Office for Budget Responsibility. Moving the stamp duty threshold to £300,000 would see prices increase and ‘mainly benefit property owners’, warned the OBR. These pesky independent analysts also refused to lift their predictions of new homebuilding despite Mr Hammond’s announcement of £15.3 billion (in total £44 billion) being provided explicitly for that purpose. And the announcement that housebuilding companies accused of landbanking will be subject to not only an official review but also potential intervention saw their shares tumble.

However, Mr Hammond received a softer landing from the industry itself. The National Housing Federation praised a ‘good signal of intent’ but urged ministers to make more land available for building. The Chartered Institute of Housing welcomed the ‘ambitious new target’ of 300,000 new homes per year and pushed for more social rented accommodation. The LGA asked for more powers to be devolved to councils while the Home Builders Federation said the Budget would help stimulate demand but added that ‘more needs to be done’.

But what though? Short of locking up his Cabinet adversaries and most national press proprietors, throwing hundreds of billions of pounds into construction projects and sending a pleading letter to Brussels withdrawing the UK’s triggering of Article 50, it is hard to see what Mr Hammond could do to resolve his problems. To paraphrase former US president Bill Clinton: ‘It’s Brexit, stupid.’

The housing Budget at a glance:

  • £15.3 billion in new financial support for house building over the next five years, taking the total to at least £44 billion. This includes £1.2 billion for the government to buy land to build more homes, and £2.7 billion for infrastructure that will support housing, £8 billion to support private housebuilding and the purpose built private rented sector
  • Stamp duty threshold for first time buyers to move to £300k. The first £300,000 on properties worth up to £500k will also be scrapped
  • Pledge to create five new garden towns
  • £1.5bn to speed up the payment of Universal Credit to claimants with special flexibility for claimants on housing benefit
  • Right to buy for housing association tenants to go ahead with a one-year £85 million pilot from July 2018 in the West Midlands.
  • Council borrowing caps in “high-demand areas” to be lifted
  • An extra £125m to help private sector tenants struggling to pay their rents
  • New money into Home Builders Fund
  • Extra £2.7bn for Housing Infrastructure Fund
  • A total of £300m for estate regeneration
  • £1.1bn on unlocking strategic housebuilding sites
  • Three new Housing First pilots announced for West Midlands, Manchester and Liverpool, a total of £28m
  • Councils to be given the power to charge 100% council tax premium on empty properties
  • A consultation to barriers to longer tenancies in the private rented sector
  • £38m for Kensington & Chelsea Council for mental health and counselling services,
    regeneration projects in areas surrounding Grenfell Tower and a new community space
  • £125m increase in Targeted Affordability Funding for Local Housing Allowance claimants in the private sector struggling to pay rent


Prime minister’s party conference speech: housing sector reacts

Forget the tumbledown stage set, the P45 prankster and the bad cough that dominated news coverage of the prime minister’s Tory party conference speech – did the policy proposals she outlined follow this pattern of mishaps or is the housebuilding industry set for a renaissance?

The response to the measures from those within the industry, commentators and the media can probably be best summed up as has been a mixture of underwhelmed and disappointed.

The headline figure was of course the £2 billion more in funding for affordable homes; taking the total amount of potential funding under the Affordable Homes Programme to more than £9 billion although exactly what this money will support and where remains unclear.
There is also no guarantee, in the announcement at least, that the money will actually be used – the government statement just said the extra funding ‘can supply around 25,000 more homes at rents affordable for local people’.

Other measures included a pledge to set a long term rent deal for councils and housing associations in England from 2020; that increases in social housing rent will be limited to the CPI plus one per cent for five years from 2020; and that the money would also go towards social rent as well as affordable rent.

Whether these measures are a ‘watershed moment that will make a real difference, ‘chicken feed’ or just not the package of measures needed to tackle the housing crisis depends on who you speak to.

Housing associations, for one, appear keen to get their hands on the money. David Orr, chief executive of the National Housing Federation, said they were eager to work with the government. ‘The additional £2bn will make a real difference to those let down by a broken housing market. Building homes for social rent will make work pay and help bring down the housing benefit bill in the long run by moving people out of costly private lets,’ he said, while at the same time nudging ministers in the small of their back: ‘Improved access to finance and land will see housing associations able to unleash their full potential, building on the 48,000 homes they started last year.’

Lord Porter, Chairman of the Local Government Association, sounded like a man hopeful of progress yet one used to policy announcements that deflate with a loud ‘pppfffffttttt’: ‘It is clear that only an increase of all types of housing – including those for affordable or social rent – will solve the housing crisis. A genuine renaissance in council housebuilding would increase housing supply, boost home ownership and reduce homelessness.

“Every housing market is different and the only way councils will be able to significantly deliver the new homes we need is if they are given genuine powers to invest in housing that meets the needs of communities in every town and city across the country.

“This means the ability to borrow to invest in new council housing, to keep 100 per cent of Right to Buy receipts to replace sold homes, certainty over future rents, powers to make sure developers build approved homes in a timely fashion, and adequately funded planning departments so that they can cover the cost of processing applications.”

Builders also sounded a note of caution – “If we are to address our chronic shortage, we need to build more homes of all types and tenures. We have seen huge increases in supply in recent years but the industry is committed to working with Government to build even more homes in the future,” the Homebuilders  Federation said.

As for the think tanks, they were even more underwhelmed. Michael Oxley, director of the Cambridge Centre for housing and planning research, put it in a much less politically restricted way: ‘It’s chicken feed. It would have to be an awful lot more than £2bn for there to be a lot more council housing built.’ Luke Murphy, senior research fellow of the left of centre IPPR, said the schemes to help people on to the housing ladder were still better funded than those aimed at renters, adding: the government has not yet committed to reforms, particularly to the land market, that could help fix the housing supply system.

Speaking of the right to buy scheme, what was plain in this week’s announcement was that, er, no one was speaking of it. This is a question that needs resolving sooner rather than later if this latest attempt to break the housing deadlock is to be more successful than its predecessors. Ministers may well have difficulty persuading councils to build more homes if they are just going to be sold off with the Treasury as the prime beneficiaries even with the small matter of a potential £2 billion carrot dangled in front of their eyes. With the seemingly never ending turmoil at the top of government, will this really be the rebirth of housing policy? It seems unlikely.