Monday, 16 November 2015

Crunch time for housing

We have a rapidly growing housing crisis. 

I had to remind the Conservative Secretary of State this week that I had been previously been critical of the former Labour government for not building enough homes, but that the biggest problem was that this last Conservative-led coalition government had built even fewer. 

David Cameron has promised that 1 million new homes will be built in this parliament. Let me tell you that there is not a cat-in-hell’s chance of that happening unless the government does a complete u-turn and invests in new social housing for rent, by councils or housing associations. There is no sign of that happening.

Owner-occupation is falling rapidly. The proportion of households who can actually afford to buy is falling rapidly. The number of people in their 20s and 30s who are staying home with their parents is rising day-by-day. Homelessness is on the increase. Low income families are being forcibly re-housed from higher rent areas, away from their jobs, their children’s schools and their families. On nearly every indicator, the problem is getting worse each and every day.
So, what is David Cameron’s response?

First, he has stopped councils from requiring developers to include affordable homes in new build schemes. He has replaced this policy with his Starter Homes’ initiative. And, do you know the price of these Starter Homes – up to £450,000 in London and £250,000 in the rest of England. Anyone who thinks most young families can afford £250,000 let alone £450,000 has simply lost touch with reality.
Second, he has taken decision-making, about where these homes should be, away from local communities and councils and moved to Whitehall. So much for localism!

Third, he’s introduced right-to-buy for social housing tenants, but it is absolutely clear that there will not be one-for-one replacement, and the discounts are to be funded by forcing councils to sell more homes. Even Conservative MPs are lining up in droves to object, asking for exemptions for their communities; those in rural areas say this policy will lead to the end of any affordable homes for rent in vast areas of the country.

Fourth, Cameron is imposing new rent control arrangements on both councils and housing associations – tearing up existing arrangements without notice – which will cut the number of new homes they can build by thousands. The independent Institute for Fiscal Studies (IFS) now says that most social housing tenants would not benefit from any rent reduction, but the policy will benefit the exchequer. 

The consequence on new house-building is also dramatic. The government’s own Office for Budget Responsibility (OBR) predicts that 14,000 fewer social sector properties will be built between now and 2020–21 as a consequence. Locally, Sheffield Housing will lose £27m over 5 years and South Yorkshire Housing Association will lose £7m.

And, just to rub salt into the wounds, Cameron and Osborne have now confirmed that they believe that two hard-working adults each earning the Living Wage is to be defined as having a High Income for which it should be rewarded with a significant increase in rent.

From April 2017, social housing tenants with household incomes above £40,000 in London, and above £30,000 elsewhere in England, will have to pay more rent. IFS estimates that more than 250,000 households will be hit. The details are yet to be revealed, but we could see some households getting a £1 annual increase in income being forced to pay a £1000 or more in additional rent.
It’s crunch time for housing. Far from addressing the challenge, Cameron just keeps adding to the crisis.