Far from conservative, the new government could see a housing revolution
The dust is still settling on an election that shocked the pollsters. It’s also left the affordable housing sector reeling. The headline catching Right to Buy for housing associations policy is one that subject to legislation and a potential battle in the courts could become a reality. It’s been suggested that the Conservatives didn’t expect the policy to last a negotiation with a coalition partner. It made great politics, especially in a number of key marginals. But not great policy.
Well, a majority Conservative administration now has a manifesto pledge that might be of questionable delivery but is not one that can be quietly long grassed. And my guess is that actually there really is a desire to make it happen. Why? Because it speaks to an ideological view that home ownership should be the preferred option and that as in parts of continental Europe, renting should be a transitional or temporary form of tenure for either the young or those who are not yet able to afford to own a home.
It is a throw back to a Thatcherite world that constantly referenced rewarding aspiration as the best catalyst for economic growth and wider wealth creation.
Right to buy fails to deliver new supply and has the risk of stifling growth not stimulating it
A throw back it might be but already the crop of potential future Labour leaders are using this language in their new lexicon.
So I expect it likely that some form of right to buy or government supported equity share model will be a significant part of the affordable housing landscape. And it will transform the housing sector within a generation. We’ll speak of market and subsidized home ownership and of market and sub-market rent and it could be provided by traditional housing associations and house builders. Help to buy already has private house builders receiving government subsidy. Homes will also be provided by new entrants to the housing market, including long term investors and short term opportunists.
Whether this is a good thing or a bad thing, the debates will be endless.
However, two things that any government and particularly this government will need to work through. Firstly is it actually the priority to offer a public subsidy to a publically subsidized tenant, when there is a whole growing generation of poorly housed and expensively charged private renters who would dearly love to be given upto a £100,000 to make their first step on the housing ladder.
Second, right to buy fails to deliver new supply and has the risk of stifling growth not stimulating it. Ideology to one side, shared ownership or portable discounts would seem a more productive way to achieve both a home ownership and increased supply revolution.
Steve Douglas is a partner at Altair