An initial response to the Government’s White Paper on Housing
Posted on 9th February 2017
There can be little doubt in anyone’s mind that the UK is in the midst of a severe housing crisis and so the Government’s White Paper on Housing, which has been promised for some time, is a welcome development.
The Government’s stated commitment on previous occasions to home ownership has ignored the fact that huge numbers of people, both working and those on benefits simply could not ever afford to own their own home. In 2016, the cost of buying home had risen to 10 times the average salary in many areas of England and Wales. The supposedly “affordable” starter homes which offered a 20% discount, were ironically, always a non-starter. It is notable that these scheme has yet to get off the ground.
It is encouraging to see that the White Paper has moved away from the unrealistic ideal of home ownership for all and appears to accept the need for proper affordable rented properties. At Hodge Jones and Allen we regularly represent tenants in both social housing and the private rented sector. We also regularly represent those who are living in temporary or unsatisfactory housing or who are homeless or languishing for years on waiting lists.
So how could the new provisions affect these people?
LONGER TERM PRIVATE TENANCIES
The Paper promises to work towards the private rented sector offering longer term tenancies. In 2014, 4,588,000 households in England were privately rented. This amounted to 19.7% of all households and a 44% rise since 2004. The need for security is clear and the current 6 month or 12 month fixed term tenancies simply do not provide that. There has been talk of working towards 3 year fixed term tenancies. What is not clear is whether this will affect all private tenancies or how this will be enforced. Provided this can be imposed and enforced and provided it affects a sufficient number of properties, this is a welcome development.
BUILDING HOMES AND AFFORDABLE HOUSING
The Paper makes a further commitment to building more affordable homes. In 2015 the Government pledged to build 1 million new homes by 2020, a target which they are already well behind. The new pledge which accompanies this paper is for around 250,000 new homes per year. If achieved this will go some way to alleviating, though not resolving the crisis. We will be forgiven for our cynicism however given the poor track record in this department.
It is unclear from the Paper what the target for affordable home building is. One would hope this makes up the majority of the 250,000 but again the track record in this area gives cause for doubt. In the year to end of March 2016, 32,110 affordable homes were built in England, a major reduction from 66,600 the previous year. Neither figure constitutes anything like enough affordable homes so there would need to be a significant improvement on this.
There is also the question of what does “affordable” mean? Of the 32,110 built in 2015/2016 only 20% were at a social rent. The rest constituted properties at 80% of the market rent. Figures in 2016 showed average rents in the UK of £764 a month, while in London this rose to £1,543. Even 80% of these figures is clearly going to be a significant struggle for many working families.
WHAT ABOUT SOCIAL HOUSING?
The figures above show that there remains a dire need for more social housing as for many this really is the only genuinely affordable option. Social housing has been steadily declining for many years due to the combined effects of right to buy and lack of building. Between 2004 and 2014 the numbers of local authority homes dropped by 666,000. This is a staggering number and indicative of a drive to move away from council housing altogether. The fact that at the same time the housing crisis has significantly worsened suggests that the solution really is staring us in the face. Despite this the White Paper makes no firm commitment to social housing other than giving local authorities powers to build more homes and talking of a rent policy enabling social landlords to borrow against future income. How will they ensure these are social homes and that these powers are properly used? With local authorities so cash strapped that they are having to increase council tax just to pay for social care, where is the incentive to build social homes rather than selling off their land to the highest bidder?
There needs to be a clear firm commitment to building more social homes on an annual basis together with an adequate pot of money to fund this. The White Paper does not provide such a commitment.
SOME OTHER POSITIVES
The White Paper also discusses how to deal with the 200,000 empty homes, which is a scandal. The Paper refers to providing local authorities with incentives to utilise these properties and the power to impose a council tax premium of up to 50% where a property has been left empty for over two years. These provisions are not new however and the Paper talks only of continuing to support Local Authorities in continuing to reduce the vast number of empty properties. We would like to see perhaps an empty home tax or a ban on selling to overseas investors until every person in Britain is housed in suitable and affordable accommodation but perhaps this is too much to hope for.
Plans for land to be used more quickly and effectively by requiring builds to be at higher density and to be started within two years of the grant of planning permission, are also welcomed.
Overall, it is encouraging to see a proper recognition of the need for more affordable homes to rent in the UK. We remains concerned however as to how the plans will take effect and whether the pledge to build affordable homes really does mean what it says. The shadow housing minister’s comment that the proposals are “feeble beyond belief” may seem somewhat negative but the Paper does appear more concerned with general proposals than specifics and that to some extent more questions are raised than are answered.
It is unlikely too that these proposals, even if the specifics are worked out, will provide the much needed solutions for all our clients even on a long term basis. We would much prefer clearer proposals to build more social housing, reduce private rents to an acceptable level and guarantee longer tenancies. But with this Government we must take what we can get and the White Paper is certainly better than nothing.