As the UK housing shortage comes closer to crisis point the government is rolling out a number of policies to make affordable homes available. But is it making the problem better or worse?
A housing shortage in the UK has been apparent for a number of years, and is particularly acute in the urban conurbations that are key to the nation’s economy. The challenge which the government and developers face is how to manage this, especially where key workers cannot access the housing market.
Official figures show that more than 12,000 social homes were sold off in 2014/15 and that local authorities plan to replace fewer than 2,000. Over a third of the properties have been bought in London, with tenants being able to take a discount of up to £102,700 against the market value, and up to £77,000 elsewhere in England.
While the government is pleased to have increased the number of people fulfilling their aspirations to become homeowners, questions remain: Who is going to pay for the replacement homes and what form will those homes take? Most importantly, how as an industry are we going to be able to produce the number of new homes required, irrespective of tenure type?
Now the government has announced that it will extend the right to buy to those socially renting housing association properties on the same basis, there is considerable concern that even more social homes will be lost and not replaced.
Former Labour housing minister John Healey says that if George Osborne presses ahead with his controversial right to buy scheme it will lead to a shortage of affordable homes that will allow landlords to put up rents and leave taxpayers having to pay billions of pounds more in housing benefits – but is he right?
The opposition believes the number of affordable homes available will decrease and boost the cost to local authorities of housing the homeless, especially as there are no clear plans to show how these homes will be replaced
Possibly compounding the reduction in available affordable homes through the extension of right to buy, the government has a new initiative called the Social Mobility Fund, which will be offered to tenants from April 2016. The details are still emerging, but indications are that £84m has been set aside to offer social tenants cash incentives of up to £30,000 in London and £20,000 across England to buy a different home on the open market, thereby releasing their existing affordable home back onto the market.
The initiative will be administered by local authorities who will be invited to bid for a proportion of the fund, which can then be offered to their tenants. According to the government this initiative is to help those that cannot afford or do not want to exercise their right to buy on their existing properties, such as older tenants seeking to move into more appropriate accommodation. While this may release more affordable homes back into the mix, one suspects it will not be enough to cover the number of right to buy purchases and address the increasing need for affordable homes.
The opposition believes that, in overall terms, the number of affordable homes available will decrease and therefore boost the cost to local authorities of housing those in need, especially as there are no clear plans to show how these homes will be replaced through the traditional Section 106 route.
This issue is further impacted by the starter homes consultation, where the government is exploring the following:
- Local planning authorities should not seek Section 106 affordable housing and tariff-style contribution on starter homes
- Local planning authorities should exempt the homes from the Community Infrastructure Levy
- The opportunity to introduce a new National Exception Site Planning Policy to enable starter homes to be built on underused or unviable commercial or industrial sites not currently identified for housing
This is supposed to allow developers to offer starter homes to be built and sold to first-time buyers only on these sites, at a minimum 20% discount below their open market value.
It is likely that these initiatives will continue to stimulate the housing market for developers, but is it appropriate that this will also attract housing associations to go further down the route of open market developments in order to fund their social housing requirement? Is this the right thing to do when they are traditionally not developers? Is it a distraction to their core role? How will local authorities react to the lack of planning powers to enforce on site delivery of social housing and still address the increasing need for affordable homes in their areas?
Perhaps we should be pushing government to fund social housing centrally from the receipts that the right to buy policy has received already. It has been reported that some £358m has been raised through right to buy since its launch, but there is little information regarding where these funds have been allocated.
It is also going to be interesting to see how local authorities are going to be able to “pepper pot” tenures across new developments, especially if the starter home initiative
As always, resolving the issue comes down to finance, resource, capability and effectiveness. Will the fundamental concern that we are not building enough new homes be addressed through any of these initiatives?
Debbie Aplin is managing director of Crest Nicholson Regeneration