Social Housing Weekly - 29 July 2024

Bringing down the house (prices)

How to bring house prices down? Build more houses, stupid. Or is it that simple? This week, Peter argues no, it is absolutely not that simple - and the kicker is, he is probably right. Us agreeing? A real Shyamalan twist.

That doesn't mean I don't advocate for massive housebuilding - public and private. I do - it is essential because we simply do not have enough homes. I see it as a necessary, if not sufficient, part of addressing the shocking cost of housing for everyone in the UK. However, we do need to acknowledge that 1.5 million new homes does not mean that prices will immediately plummet - and if they did, it would be a pretty seismic event for the UK economy which has been built on the premise that housing should appreciate, not depreciate in value.

Apart from anything else, as I mentioned last week, it rather matters where you build them. I don't think its true that people will flock from their existing urban centres (and I've been strongly reminded by a friend that I should have included Liverpool in my list of these last week) to "garden cities" unless you can guarantee a vibrant cultural offering as well as excellent transport connections to work.

There is also the matter of what you build. For sale, institutionally-backed build-to-rent, 'affordable' rent, council housing, shared ownership, et al, will have a place. What's quickest to build - and therefore help a government to hit an ambitious target, won't always be what's most needed in a given community. And a manifesto that frames housing purely as a driver of economic growth, with a laser-like focus on first-time buyers, doesn't bode well for people for whom the rent is too damn high. 

Let's not forget either that efforts to help young people buy have driven prices up before, as we saw with the Conservatives' help-to-buy policies. Investors that are badly needed to fund new housing developments are also incentivised to drive prices up, not down, to increase their profit. What's in it for them if prices for sale go down, unless they drive prices for rent up higher, and vice-versa? 

So if we want to drive prices down, but not put off the big investors we will need to fund the delivery of new homes, what's the answer?

Don't ask me, I'm not the Housing Secretary! Fixing the housing crisis is a *little bit* above my pay grade...

Nonetheless, starting with building more homes is a good idea. But it is just the start and more nuanced policy will need to follow if we are truly to get housing costs as a percentage of income down to a place where disposable income is once more a concept available to the younger generations.

Harriet Shone

LCA Director

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Launchpads and millstones

Unpicking Rayner's vision for housing delivery - by Peter Lord

New Housing Secretary Angela Rayner has not been slow to extol the virtues of the government's plans for housing and planning, with ambitious housing targets to solve the housing crisis. Rayner states that delivering social and affordable homes at scale is her "number one priority" calling for the planning system to a be a "launchpad", rather than a "millstone". I think this vision bears closer inspection; what does "solving the housing crisis" actually mean, and how will Labour's plans for new homes contribute to it?

One obvious test would be affordability. As Peter Apps pointed out last week, linking an increased housing supply with lower prices for buyers, especially first-time buyers, is tenuous to say the least. Demand side policies, such as Labour's mortgage guarantee scheme, could put an upwards pressure on prices which more than cancels out any benefit from increasing supply. Add to this the dominance in the market of volume builders whose business model relies on profit, and it is hard to see the significant and sustained downwards pressure on house prices that would transform Britons' view of housing affordability.

Of course, let us not pretend that a significant drop in house prices would be without its (significant) downsides, or that it would do anything to help those for whom home-ownership is a distant dream. Harriet and I represent that relatively fortunate group of young people* who purchased homes** in Greater London in our twenties, something which is not a given for many newly-minted graduates in the capital.

The other persistent facet of the housing crisis is the condition of the social and privately-rented housing stock, especially following the recent survey from Citizens Advice, which has found that 45% of private renters are living in properties with damp, mould or excessive cold. With over 4 million households currently living in social housing, and 1.2 million on waiting lists, it is hard to see new homes being an appreciable part of the solution. This is before we even consider the 4.6 million households living in the private rented sector. For someone living in one of these tenures (which, incidentally, includes a disproportionate number of young people) the prospect of 1.5 million new homes in this parliament may feel like a gesture that may (possibly) help somebody else...

* Hanging onto that "early thirties" category for as long as possible

** No, not the same home. Can you imagine the arguments?

Housing in the headlines

NPPF updates expected tomorrow

The Observer reports that Secretary of State Angela Rayner is to announce the Government’s proposals for updates to the National Planning Policy Framework (NPPF) on Tuesday 30 July, with a consultation launched on the same day.

Labour unveils its own vision for updating nutrient neutrality laws

The Government has proposed a new model for environmental protections which could allow developers to begin new housing projects before agreeing environment mitigations during construction, rather than as a prerequisite to planning permission like the current nutrient neutrality system. Housing Secretary Angela Rayner and Environment Secretary Steve Reed have written to environmental groups warning that the ‘status quo’ on planning is ‘not working’, and that proposed changes would be included in the upcoming Planning Bill. The model could see the creation of off-site environmental mitigations such as wetlands, forests and wildflower meadows to offset development.

Audit Office finds government still lacks strategy on rough sleeping

The National Audit Office’s review of Ministry for Housing, Communities and Local Government policies for tackling homelessness and rough sleeping showed that the Government ‘still has no strategy or public targets’ for reducing the number of homeless households. With temporary accommodation costing £2.44bn for local authorities in 2022-23, the NAO assessed that 60% of councils’ total gross expenditure on housing services was used for tackling homelessness, a 25% increase since 2010. The number of people experiencing homelessness is at its highest point since records began, surging to 112,660 households in December 2023, an increase of  23% since 2018-19.

Key government advisor calls for coordinated policy to deliver new homes

Dame Kate Barker, author of the seminal 2004 Barker Review of Housing Supply, has called on the new Government to ensure cross-cooperation in delivering new homes, supported by a strategic planning approach and effective use of public funding. As part of the Radix Big Tent Housing Commission, Barker has recommended the Government create a new structure to oversee coordinated housing delivery policy while supporting devolved spatial planning at sub-regional levels.