Un-affordable housing
Critiquing solutions to affordability - by Peter Lord
A few weeks ago, we argued that it would take a lot more than improving housing supply to fix a crisis of affordability, especially for first-time buyers. In response to this, we were literally inundated with one email asking us if we were such clever-clogses, just exactly what would fix Britain's problem of housing unaffordability.
Well, Angela from Ashton-under-Lyne, we have had a think about this and every solution has its problems. Nonetheless, a solution must be sought as the extent of the problem is profound, with a mean property now costing £282,000 across the UK. The average first-time buyer will spend £249,000 on their property and is aged somewhere between 32 and 34, depending on your source (rising to 36 in London). This is even with 57% of first time buyers receiving help from ‘the Bank of Mum and Dad’ to purchase their property, a 10% increase on the previous year.
Build more homes
At the heart of Labour's housing policy has been the commitment to building 1.5 million new homes in this Parliament. The Government's housing target is not only radical, it is popular, according to YouGov, which found that 62% of Britons are generally supportive of a ‘large increase’ of new housing. Home-building is also clearly a growth sector, as it was revealed this week that housing, including student accommodation and later living, attracted the largest amount of real estate investment for the third quarter in a row.
Building new homes therefore enjoys political enthusiasm, public will and financial investment. Nonetheless, more homes does not necessarily equal cheaper homes. We have written before on how Labour's mortgage guarantee scheme could put an upwards pressure on prices, possibly cancelling out any benefit for those it is designed to help, while driving up prices still further for others. We have also discussed the basic reality of supply and demand; while 1.5 million new homes is definitely ambitious, it would not be enough to prevent housing being a sellers' market, with high prices in the interests of developers.
On top of this, the sector is questioning the practicality of delivering such homes, with Redrow’s CEO Steve Morgan warning that the workforce capacity for more building ‘is just not there’.
Build more affordable homes
Building more affordable homes, including social rent and council homes, is central to Labour's vision for housing. However, there are acute challenges to the funding for such homes, with housing associations (the biggest developers of social housing) warning that a 'long-term plan' was needed to fund social homes. On top of this, existing affordable homes programmes haven't been an unqualified success; the Greater London Authority has found that the Mayor of London’s Affordable Homes Programme only started work on 150 homes between April and June, with only 71 homes completed during that time.
The i reports today that growing numbers of developers and local authorities are switching from delivering affordable homes for social rent under Section 106 agreements to home ownership models, due to a lack of financial capacity from social housing providers.
Furthermore, the affordability of affordable homes is in question, with the official definition of 80% of market rent still proving punishingly high for many.
Build new towns
Opinion within the Social Housing Weekly team is divided on the merits of more New Towns. Nonetheless, they form a key part of the Government's agenda. While the benefits are clear (fewer planning constraints, lower land values) the disadvantages are equally glaring. It is hard to see how these towns can be simultaneously located where they can take advantage of the benefits above, whilst also being sufficiently close to key existing metropolitan centres to suit potential occupants. Furthermore, analysis by Centre for Cities shows that the Government’s focus on New Towns could put it at risk of missing its housing delivery target. The think tank has said that the Government will have to deliver more New Towns than ever to even ‘make a dent’ in the 1.5 million homes target.
What then is the solution? Well, in short, it has to include all of the above. Or, to paraphrase my inimitable colleague Harriet - don't ask us mate, we just work here!
