Business secretary vince cable and housing minister Grant Shapps search for a boost to housing supply
In June, the business secretary Vince Cable invited a group of housing experts and the housing minister Grant Shapps to the Department of Business Innovation and Skills to discuss ideas to boost housing construction.
I was there. Cable wanted to know whether there was any prospect of stimulating economic recovery through investment in housing in much the same way as housing and infrastructure investment brought to an end the great depression of the 1930s - only this time, without increasing the public sector borrowing requirement. And for those hoping for ‘Plan B’, an agenda for economic growth and a relaxation of austerity measures - forget it, the cuts are going ahead.
In the ensuing discussion it struck me that two propositions stood out as attracting consensus from the assembled group. Firstly, a programme of rental guarantees as stimulus to kick start a new market in privately funded, purpose built, high quality private rental accommodation. Secondly, simplification of standards and guidance to speed approvals and reduce costs, linked to improved consumer information in the form of clearer labelling.
Cable said he was there to listen, and not to make pronouncements, but it seemed to me on the basis of reaction from the ministers and their officials that these were propositions we may well be hearing more about from government. So, walking away, I fell to speculating about how and where it would be best to make start and I concluded that London would be the place to pilot both of these initiatives because:
- London has uniquely effective coterminous governance of housing, planning and regeneration in the form of the GLA.
- It has the market and the values to tempt early adopters from the institutional investment community.
- Boris Johnson has the political persona to champion such a challenge (and uncanny resemblance to a previous champion of urban regeneration - see below!).
The combined effect of foreign investment in London’s housing and the Bob Kerslake’s fiscal stimulus package (now coming to an end) has ensured an industry capable of delivery - though failure to replace the missing £4bn of public investment over coming years threatens this.
The opportunity is a new housing offer in terms of tenancy, service and built form that would be emblematic of the Zeitgeist - just as the Mansion Block era was born at Albert Hall Mansions with the Great Exhibition at Kensington Gore. We have described this opportunity in our blog.
The opportunity is a new housing offer in terms of tenancy, service and built form that would be emblematic of the Zeitgeist - just as the Mansion Block era was born at Albert Hall Mansions with the Great Exhibition at Kensington Gore
Why does a commercially sound idea need a political champion? Because the investment community needs to know what it’s getting into. Political leadership is required to create a favourable context for private investment to flourish. My recipe for Boris Johnson’s Housing Challenge would be:
- High level and consistent political endorsement of well regulated private rent as a social good.
- Creating partnerships for disposal of public land on deferred or preferential terms.
- Challenging the industry to come forward with innovative operators (Where is the Stelios of Private Rent - EasyLet).
- Setting entry conditions on price and service level.
- Brokering partnerships between politically aligned Local Authorities, Entrepreneurial operators and Institutional investors.
- Reduceing costs through de-regulation of product, and reduced planning obligations.
- Endorsing the concept of well managed, smaller and more adaptable accommodation - bookable space and added value services.
For similar and related reasons, London is the place to start with decent labelling of the housing product, long overdue and now at last being lobbied for widely by organisations such as the Housing Forum and the RIBA. Moreover, labelling is the place to start with de-regulation, because well informed consumers capable of making educated choices are a pre-requisite for the abandonment of swathes of meddling bureaucracy.
Francis Maude observed in his keynote address to The Government Construction Summit that standards are the enemy of innovation. And innovation is what we need if we are to increase quality, reduce costs and boost supply of housing. So when I asked Mark Prisk, minister for business and enterprise, whether he favoured labelling as a way of creating market pull and providing policy makers with a lever for rewarding parsimonious users of space and energy, he fully concurred.
So if it proves too much for Eric Pickles and the DCLG to get around to a national system of consumer labelling for housing (An EU Directive will require UK Legislation to enable this from next year anyway), Boris Johnson could make political capital by getting ahead and instigating prominent and clear identification of floor area and energy performance wherever homes are advertised in the city – the perfect antidote to Hobbit Homes!
Ben Derbyshire is managing director at HTA.