The first green paper of spring

Labour got there first. Their social housing green paper is out, with a not at all connected to the local elections launch at the LGA’s offices.

Anyone reading my blog over the last few months will not be surprised that much of what is in the paper is very welcome. But as a serious and relatively complete policy document there is always going to be some critique (rather than criticism, I hasten to add) to undertake in order to understand it fully. This is especially true as the paper reads like a set of policies that are, in a sense, shovel ready. So this critique is meant as a compliment- this is exactly what I would do if it was a green paper from a government.

I suspect that much of this has been due to the forensic and policy-focused approach of John Healey, who has both always been impressive in housing and has had the brief (on and off, slightly) for long enough time to really get to grips with it. There is an argument for giving ministers (and their shadow counterparts) long periods in posts in order to understand the deeper issues and John Healey is the proof that it can work. Perhaps the government should take note.

There is a huge amount of detail in the paper, so I want to pick out a few bits. Firstly I’ll look at some of the major positives (of which there are a few!) and then look at where there are gaps or opportunities to do things a little bit differently than suggested.

So, the positives. Labour have set a clear (if amazingly round) target for the delivery of new social housing. The government’s social housing green paper has mostly been framed around improving matters for existing tenants, not creating new tenants. That’s why the JRF have been so clear in trying to push for new homes alongside other changes- a battle I’m not sure they are winning with the current government.

Delivering 100,000 new affordable homes a year will be a challenge for any government and it will take a significant effort from local authorities, housing associations and other providers of social housing to achieve. I believe the will is there, even in areas not wholly committed to large scale housebuilding, but a target like this will require a herculean effort from the social and building sector to see through.

Moving on to the definition of “affordable housing”, the green paper suggests getting rid of the 80% of market rent test. Good. What replaces it is slightly more interesting. Whilst trumpeting a new average income based living rent the “core” of the affordable homes programme will be the good old formula rent. That’s not a bad starting place, but the formula only has loose ties with affordability, so it is worth considering if there are other options available.

The paper is positive about the role of housing associations, both as a not for profit service for their tenants and as one of the ways to create new social housing. There have been previously been concerns about Jeremy Corbyn’s support for housing associations, so it is good to see real inclusion of them in these plans. Yes, that comes with some additional requirements, inclusion in freedom of information legislation for one thing, but that seems to be a small price worth paying so that they can play a part in large scale social house building.

No-one will be surprised that suspending right to buy (preferably off a cliff) and scrapping the bedroom tax are welcome. Both create significant issues and cannot sensibly be justified- as the paper suggests- social housebuilding is likely to reduce the overall benefit bill.

Moving onto something the paper doesn’t do- I’m certainly relieved that it doesn’t try to reinvent the wheel when it comes to funding new social homes. The key issue is not that new homes are too expensive to be built by local authorities; they usually make a surplus over their lifespan. It is that there is an arbitrary limit on the amount councils can borrow, even though they are sat on huge assets (the very homes they currently let out!).

The current government has repeatedly, maddenly, tried to put forward different ways to fund selective council house building, usually through one off loans or grants, whilst keeping the purse strings themselves. This allows them to appear to be the ones making the decisions whilst touting a very big number (usually £X million, so not actually that big in housing terms!) and simultaneously refusing to allow local authorities to borrow off their existing assets. So it is great that the paper suggests the main way for new council homes to come about is through borrowing up to the prudential limit. That is, in a way, all that is required for stock owning local authorities with a desire to build.

Helping councils that have transferred their stock to a housing association to build a new generation of council housing is positive. Government loans will allow them to build up (literally) assets which they can then borrow against. What might be needed is provisions or guarantees that this new stock won’t itself be transferred at some point in the future, negating the whole process.

In terms of wider financing, the paper is sensible (but brief) in suggesting other sources of funding, including institutional schemes like pension funds, could be harnessed for housing associations. There is nothing wrong in any of that, but it is worth remembering that pension funds will put money where they can make money- if there is another, better opportunity for them then they will go elsewhere. Certainly funding affordable housebuilding is likely to be low risk, but will it have the returns of other investment opportunities?

Which brings us to things with (in my view) slight alternatives to the policies laid out. Firstly, the paper is looking to set targets for local authorities building social housing, almost as a subset of the objectively assessed need I’ve spoken about before. They’ve not outlined how that would take place and I worry that trying to force councils who don’t want to build affordable housing will take focus, time and money away from providing for councils who do. If they try and split the 100,000 a year based on some affordability calculation (as with the government’s proposed OAN measure) then areas who may be less able to find sites, have less recent experience of building to date and overall willing to build quickly may have a higher target.

It is unclear what the sanction would be for authorities that don’t meet their targets. The paper (rightly) talks more about incentives than threats, but if they are serious about every area delivering social housing then threats may eventually have to be issued, much as they are currently over local plan adoption. What the mechanism for this will be remains to be seen.

The best alternative for me, at least to begin with, is to work with those who want to build. Get up to scale with social house building in those areas who will relish the opportunity and hope that those remaining will be converted either by showing it can be done or by political pressure from their own residents who see it happening elsewhere.

The green paper is also a touch vague on how a Labour government would actually close the viability loophole. There’s talk about boosting support for councils to prove schemes are viable with affordable housing with independent viability experts to sweep in. I’d worry how liable those independent experts will be to regulatory capture, especially as you would expect that they will be drawn from and potentially looking for work from, existing builders.

It is worth remembering that the government has threatened (however idly) that it could go further and set affordable proportions or payments centrally. There is an opportunity for Labour to outmanoeuvre them and promise to shut the viability door once and for all. Perhaps there were concerns about appearing to knock big builders (something it is counterintuitively easier for the conservatives to do) but the outcome looks less like closing the loophole and more like bolstering one side against the other whilst keeping the rules by and large the same.

The clawback clause does do a bit of work to cover this, but balance sheets are often malleable to what the company creating them wishes to show. It would take either extremely well written rules or forensic auditing to check whether companies have made additional profits on individual sites or not.

Another way the paper is vaguer than I would like is on supported housing reform. Yes, the government’s current plans don’t have the support of the sector and yes, a period of talking to them again might be required. But we have been in this limbo for years and the can does keep being kicked down the road. I think any government has enough options laid out infront of them, it needs to make a decision and see it through. That’s going to annoy some people- potentially older people who may have to pay more either in life or in death. That’s politics.

Finally for this (short!) section on alternatives, the paper is clear that it wishes to see different households knitted together into a mixed community, but is short on a mechanism for how this is achieved. For private sites there are plenty of opportunities to achieve this, mostly around the rules governing how the affordable homes do not differ from the other homes and are not located in one cluster away from prying eyes. For new social housing sites, which will clearly be a growth industry if the society seen in the paper comes to pass, it is a little bit less clear.

Yes, having a range of the affordable tenure types mentioned in the paper will do a bit as will a supply of new council homes being available not just to those who desperately need a home, but without a mechanism to achieve mixed communities I think it is potentially over-optimistic to think they will appear organically. How this will be achieved, how large scale council or joint built sites can be attractive enough to want potential owner occupiers to move into will be a challenge and one that needs to be considered deeply before the concrete is mixed.

So, overall, lashings of positives and much for a future government to get their teeth stuck into. You can only hope the government are looking over their own draft social housing green paper and wondering if it matches this one in terms of its ambition and clarity (prediction: it won’t). Whilst deliverability is key I think there is enough substance in the paper to make many of the proposals possible and, frankly, aiming high is better than not aiming at all.

And still high rise

High rise blocks. For good or ill they are on the agenda. The tragedy at Grenfell has highlighted that at least some recent re-furbs have been done poorly and in a way that increases fire risk. But many thousand people live in high rise blocks across the country and, whatever some Birmingham Conservatives might think, the buildings are likely to be here to stay in the long run.

So, getting away from the need to ensure they can contain fires (something bare concrete blocks are actually quite good at!) what is the issue with high rises, particularly council and housing association blocks? Firstly, we have to admit that a minority of blocks were poorly designed and constructed and that no amount of refurbishment apart from complete gutting or demolishing will make them adequate to live in. Those blocks should not stand the test of time. Bodged refurbishments need to be improved and if risks have increased by refurbishment (as it appears they were at Grenfell) then this need to be reverse quickly.

Moving on from this, the upkeep of blocks is best described as “hit or miss”- some communal areas in blocks are well looked after, both by the tenants and the housing management and some, well, aren’t. Crucially, the need to foster both an active community spirit and adherence to fire regulations in communal areas is key to making blocks livable and safe.

Next, when blocks were built there was fewer qualms about families with children living high up. Most point blocks were built with at least two bedrooms with the expectation that a family would be living in them. Nowadays families with children quite rightly won’t usually seek this kind of accommodation and are likely to reject it if they are offered it, or stay there for a short time before moving to somewhere more appropriate. To be fair to the Brum Tories, it does sound like there is an issue with children being accommodated at height in the second city, but their approach seems to be knock them down and start again, rather than relocate and consider what else can be done with the blocks.

Thirdly, if families aren’t going to use the blocks then who will? Recognising the problems relating to families quite a few councils started putting single people into two bedroom high rise flats, but along came the bedroom tax and put anyone in this situation claiming benefits at a disadvantage. Who knows how long the bedroom tax will be in existence. Unlike the blocks themselves they are simply legislation- a government could overturn it very, very quickly if it chose to. But until that happens single claimants of working age are rightly pretty concerned about creating a liability they cannot afford.

Next and on to a more general point, but amplified by people living cheek by jowl and with communal spaces in high rises, is that with significant demand for affordable housing someone (usually under choice based lettings a computer) has been deciding who qualifies for the next available house. In many areas, this means most if not almost all lettings are to people with one form of priority need or another. Filling a dense space with people who, for one reason or another, have a vulnerability and many of whom who have experienced homelessness (in one form or another) is possibly not always great housing management.

Finally for this sketch, quite a few of the older high rise blocks were built in the middle of larger council estates. If people are tempted to move into them they either have to have no issues with that or overcome those issues, potentially by experience of the area at its best.

Over time these issues have interacted in order for some blocks to see a vicious circle. Families moved out and only those topping the housing queue could get a house. Those bidding (or, pre-CBL, those being placed) were likely to be relatively desperate for a home. Communal areas were neglected or vandalised, if not cleaned up then they would get worse. The sort of tenants who may act with community spirit eventually became and exasperated and moved out. Most flats were filled, but with the advent of the bedroom tax it became hard for working age people to consider moving in, so some were left empty. Empty flats led to concerns from neighbours, some of whom moved out. And so on.

It is worth remembering that a significant amount of money has been spent on many high rise blocks, firstly to get them up to decency standard and then to make them nicer places to live. But the logic I have until now outlined potentially shows that there is a need to treat high rise blocks as a bit of a special case that needs some special answers.

What I’m about to say next isn’t new and I certainly don’t want anyone thinking it is my idea. But there is an answer staring us in the face for at least some of the blocks. If households with children and single working age people cannot be accommodated, who does that leave?

I’ll ask another question: who is sitting in larger properties that could be used by families, perhaps as they have children who have moved out, who may have gardens they want to maintain but struggle, who would like to take part in communal activities close to their home and would by and large respect and maintain shared spaces? Who doesn’t need to worry about the bedroom tax?

Indeed there are plenty of examples of councils and housing associations using recently refurbished blocks as general accommodation for older people. Absolutely fundamentally, what doing this means is that you have to ensure the lifts keep going at all costs (lift engineers can be expensive!) and maintain communal spaces so that people can live and socialise under the same roof.

This shouldn’t be about forcibly moving people out of their homes, rather creating exactly the kind of private living space with communal facilities that many private providers are showing many older people want. If you can make high rise blocks desirable to live in for older people then you can free up other homes, provide a decent and long term place for people to live and ensure the co-location of services around those who need them and social activities for those who want to take part in them.

Another option (again, not my idea) is to let people be a bit more free with who will be renting with them. Allowing house-shares for younger people actually fits with what the government were trying (badly) to achieve with the bedroom tax. Yes, this doesn’t necessarily get away from some of the issues I’ve listed above but it does offer another opportunity rather than letting blocks dwindle away until a politician decides it is time to knock them all down and start again.

So let’s be clear, there are clear opportunities for what to do with high rise blocks that break the vicious circle. Just because they are not suitable for families doesn’t mean that they need to come down and be replaced. With a bit of lateral thinking and investment early in the process high rise blocks (excepting those too poorly built to last) can be something to be saved, lived in and cherished.

Since you are doing sensible things…

And hooray! The 18-21 year old restriction on housing costs in Universal Credit is gone! This seems to be a big win for common sense, backed up by major charities and other sensible folk who knew it was a ridiculous policy.

I worked for a young person’s charity a while back (when this possibility was first mooted) and it was clear even then what a nightmare it would cause. In fact, it was not only obvious, we had first hand (daily) experience of trying to convince the DWP that people were estranged from their families in order to claim income support whilst in education. This was usually young people who had been kicked out (sometimes literally) by their parents.

Sometimes getting these decisions made in the young person’s favour was easy, sometimes it was hard. But we almost always were successful. Why? Because a young person doesn’t swan off to a hostel, get accepted for housing association or council housing or sleep on the streets for no reason. They certainly didn’t do it for the pittance paid by income support, although that money meant that they could continue with their education and seek to overcome the challenges they’d met in their life so far.

I suspect this particular Easter present is a one-off, but in my own optimistic way, I hope this could be a time of government accepting sensible changes to policies for young people.

So here are some suggestions on what it can do next:

  • Increase the under 25 rate of universal credit to the same as the 25 and over rate. What happens when you reach 25 that suddenly means your expenses go up? Beats me, but the under 25/ 25 and over distinction in benefits has been around for ages. Too long. In 2018/19 the standard allowance for a single person under 25 is £251.77 a month. For someone 25 or over it is £317.82 a month. That’s £66 a month. The couples it is £103. This is for no other reason than tradition (well, and saving money, and some nonsense about needing to provide an incentive and the rates of national minimum wage). Which brings me on to…
  • Remove the minimum wage distinction for under 25s. The escalator on the minimum wage is about trying to allow companies to invest in new (young) staff. However, it can also look like a way to pay younger people less, even as they take on more and more responsibility. So having the same floor of post mandatory education income for all would be a great way to help young people get a start in life. And you know what- higher incomes means less dependency on benefits like universal credit and means potentially more taxes for the government: win win.
  • Restore the work allowances in universal credit for everyone, including young people in order to, in the words of someone I vaguely remember repeating ad nauseam, make work pay.
  • Remove the shared room rate cap for single private tenants under 35. Did you/ do you want to live in a shared property until you are 35? I thought not. The most worrying thing about this policy is that it forces young(ish) people to live cheek by jowl even if they are very vulnerable. This creates its own knock-on issues for landlords, social care, police etc. etc. The rate used to be 25, but the government made it 35 for reasons perhaps not related to sheer spite. It could be changed so the amount paid relates to the actual accommodation the person is living in- perhaps with a bedroom tax type reduction for young people on benefits who somehow convince a landlord to let them rent an 8 bedroom mansion to themselves. Oooh, someone mentioned the bedroom tax…
  • Get rid of it [the bedroom tax, weren’t you reading the last point?]. Of all the silly, pointless, nonsensical policies ever imagined, forcing people to pay because social landlords had historically not built one bedroom properties is about the worst. Or forcing them to pay because they have health problems and need to use a different bedroom to their partner. Or so on. Social landlords didn’t give young people (or not-young people) bigger homes because they were frittering away their stock, they did it because that was all they had and there was a housing need to be met. If the government wants people to live in the right size houses it could build some.
  • Get rid of the 2 child limit. Yes some younger people have more than two children. Do we even need to discuss this one? The one with the form to tell the government that your child is the outcome of a rape? No, good.
  • And the benefit cap. And the other benefit cap. Yup, both of them.
  • Do you have any you want to add? Let me know and I’ll think about putting them in.

Now, here comes the punchline. With the exception of the minimum wage change (which, I repeat may save the government money) each of these would end up costing the government -or at least the benefit budget- money. The thing about the under 22 housing rule was that it was so poorly thought through and so few people actually were caught in it that it most likely cost more to administer than it saved. It certainly will have cost more when looked over the whole of government’s budget, especially when social care, homelessness, family support, etc. budgets are considered.

This policy was one of those that was created to meet a perceived problem, not a real one. The government could say they were doing something about the legion of indolent young people who could simply just move home, without recognising that this was actually a tiny to non-existent part of the overall number of claimants.

So let’s celebrate that the government has seen sense. But the sense that they have seen is that this policy was costing them money. Until they start working their way through the list above I’ll not be convinced they have suddenly decided to support young people through the benefit system.

Inviolable viability

Right, are we all enthused and ready to go? Viability is dead: long live, um, something that looks a lot like it.

Before I am accused (again) of cynicism approaching apocalyptic levels, let me first say, the fact that the government are trying to do something about viability is positive. I’ll try and get into what I think it means in a bit, but given the amount of bluster about the policies I think it is worth actually trying to get down on paper what the government are proposing.

Under the current system, many local plans include a brief sketch on what requirements a site might have for affordable housing, education facilities, green space and other bits of infrastructure. Nowadays this is split between in section 106 agreement (which is negotiable) and in many areas Community Infrastructure Levy (which isn’t). But the real tooth and nail side of what is required for a site comes during the planning application, where the need for infrastructure, followed closely by the developer’s ability to pay for it out of the eventual sale of homes is bashed out.

The developer gets to use the price they paid for the land (however inflated that is by the prospect of planning permission) and lots of other bits and bobs go into their very detailed spreadsheet to prove their point. The local authority then makes a decision based on the agreement. If agreement can’t be reached within a set timescale, or if the application is refused because the developer’s won’t budge then it can go to an appeal where an inspector and, eventually, the secretary of state can decide upon the merits of the application. Parties who feel (legally) hard done by can apply for judicial review, which can and does quash decisions and demand a rehearing.

In the new system, first proposed last year and now laid out in slightly more detail, the major discussions about the viability of sites will take place during the plan making process. I’ve written before about this process; one of the positive things about centrally suggested targets is that the massively long-winded process of establishing housing need can be removed, which would have made the local plan process quicker. But reaching an assessment of infrastructure need and viability for every site included during the process and coming to an agreement of this with developers, is going to be a huge and time consuming ask. Developers will no doubt (and quite understandably, from a business point of view) use the local plan process to try and extract the best deal for themselves at this point, rather than further down the track.

Yes, in the end it is the local authority that draws up the local plan, but developers will go into the local plan examination (where a planning inspector in effect decides whether it is “thumbs up” or “thumbs down”) with all of their legal arguments, expensive lawyers and fabby dabby spreadsheets ready to prove their point. Those spreadsheets will now be public and use something approaching a set methodology, which is a huge victory for transparency campaigners. But it doesn’t necessarily mean that a small band of local campaigners doing this in their spare time will be able to outwit a company whose profit levels are at least partly based on extracting just this kind of victory. Many council planning departments, often stung by large costs if they lose judicial reviews or appeal cases, will be very cautious of pushing hard if they know they may not win.

Another good(ish) thing is that the land value being proposed for viability assessments is not the price paid for the land, but some inbetween figure. As Shelter have commented, given recent land sales have possibly been inflated by the current market, the new assessments might be higher than you might hope. It is a step in the right direction, but the wording- particularly that the land value should be set at “the minimum price at which it is considered a rational landowner would be willing to sell their land” means this could all fall down rather quickly. If that’s the case there is nothing to stop landowners working collectively to ensure prices remain high.

This all means that the local plan process becomes longer than it would have been and there is no guarantee this will lead to additional affordable accommodation. The government may be hoping land prices will fall as a result of this change, which seems hopeful and best and naive at worst.

The government are stating that once the local plan process is complete (however long that takes) that will be that. But of course, they have to (and to their credit, have) considered the other situations, for example when a site outside of the local plan comes forward. Or, indeed, the economic world changes significantly and developers are suddenly significantly more or less able to pay. In that situation local authorities will have to work with developers to assess or reassess these agreements.

There will be disagreements, claims will be lodged and eventually a set of precedents will be made about what counts as a change and what doesn’t. Unless there has been a big change in developer’s business plans this will then become the new normal. They will use the precedent to turn the drip into a flood. That’s not a criticism of developers- they are acting rationally. It is a criticism of the proposed system. It gives them an inch of wiggle room and expects they won’t take a mile. As with my previous post, I confidently predict we’ll be back in the same situation with viability and affordable housing within a few years.

BUT! The government have added a backstop- with a not very discreet threat for a system where “contributions to affordable housing and infrastructure to be set nationally, and to be non-negotiable”. Given my previous comments you’ll not be surprised that I like the second part of that. I would much prefer a system where the connection between overall viability, developer’s expectations of tidy profits and affordable housing is broken. I don’t see why it would make sense for this to be set nationally, when practically everything else in local plan making is, um, local. Neither Theresa May or Sajid Javid mentioned it in detail in their speeches, so I think this was only planned for certain eyes only. It’s a threat to developers of what could happen if the system doesn’t work and in my opinion a pretty idle one, much like the threat to end help to buy.

The proposals I sketched out in my previous post would be stronger than those being threatened by government and they should feel free to use them if they would like. But given I don’t think they have much intention to actually do this I won’t hold my breath.

So we have been promised another revolution only to see some generally positive but not exactly world-shattering reforms. Before too long we have to ask ourselves why this is? Do ministers over-sell proposals that they know are milquetoast? Are they convinced that one more set of changes will push the housebuilders over the edge to become the sort of civil minded operators the government want them to be? Are they making comments based on what they hope newspapers will report rather than what will actually make a difference?

The key issue, in a way, is that government is stuck. Changes since the late 1970s mean that the major housebuilders are the only people who can deliver at scale. The government seems willing to pay lip service to other forms of building, but know that these can only take off with either significant government investment, underwriting loans and subsidy (for small builders, community housing, housing associations, etc) or local government debt (for council housing).

Another option would be development corporations, often used for new towns but theoretically usable anywhere. This would involve local authorities, builders, landowners and trades coming together to create new homes. The corporation could be structured to prevent perverse incentives (including a risk of chummy contract-giving between the partners) and provide incentives for actual building. The builders wouldn’t like this as it threatens their ownership of large parts of the process, but it is something more akin to a revolution than some (admittedly positive) tinkering with viability.

The government are right that there is no silver bullet to ending the housing affordability crisis, but I do wish they would put away the rubber ones.

As a final note, is it worth remembering that the government has consistently said that the first report from the Letwin review will be coming with the Spring Statement next week. This wasn’t mentioned in either speech (Sajid Javid referred to the publication of the full report at the (Autumn) Budget), so I will be very interested to know whether something will be released and what it says.

Build to rent or build to build?

Build to rent, is it a way to get some top quality new rental housing or just another brick in the wall? There’s plenty of chatter about this new type of development coming forward, but what is it, what does it mean for the planning system and affordable housing and what will happen as the market matures?

Build to rent is in many ways something new. Large scale investors like pensions schemes are seeking ways to find returns and have hit upon the idea of having their own property portfolios. These aren’t mom and pop landlords with a property here and there, but organisations who have the ability to buy and sell entire buildings and blocks on a whim. But there is part of the problem- they like the idea of rental income from assets that grow in value over time but don’t want to have to deal with the issues relating to having leaseholders or other owners to get in their way.

What they’d prefer is a nice clean, wholly owned asset that can be theirs outright, traded easily and the rental returns known. This kind of housing doesn’t exactly exist in the UK (or in many places in the world) and the most obvious way to create it is to build it. So yes, there is hundred of millions of pounds floating around right now looking for investment in housing- hooray!

But that money doesn’t particularly care where it is investing, as long as it can get the best return for the investors. Where the best deal is might relate to the rents that can be expected, the land cost, the costs associated with planning and who will let them build exactly the kind of block they’d like to see. Manchester of Salford, Leeds or Bradford, London or Colchester, Milan or Barcelona- what matters to them, quite reasonably, is where the net return is highest.

Of course all housebuilders are like this to an extent, but whereas traditional builders are looking for a pipeline of land across a range of sites, from city centre to the surrounding countryside, to buy develop and then sell, build to rent developers are looking for inner city properties where the principle of development has been agreed since Victoria was on the throne where they can buy the land, build the asset and then hold it as such, selling on the whole unit at the appropriate time.

With traditional housebuilders the key issue fought in the planning system is where homes will be built. With build to rent the key issue is what homes will be built. As I mentioned above, the need for a nicely packaged up unit precludes anything quite as messy as sales of flats to a housing association or even something as messy as shared ownership or even, shock horror, someone else owning a property in their building! It would be bad for the portfolio to have a couple of appendages and provisos thrown in with any sale and therefore reduce the market value of the asset.

Many authorities in the UK, including big cities need significant amounts of new housing. This is both due to a genuine requirement to meet the needs of their residents and because they have more or less objectively assessed needs that are required to keep their planning system ticking over. A developer, whoever they are, turning up and stating that they are interesting in building a few thousand homes on underused or unused city centre sites is a godsend.

So let’s say you work for the planning department and a developer comes in saying just that- they want to build thousands of properties to rent. But there is a catch. Firstly, they are also talking to a few other cities and can only really decide on one or two locations to build at the scale they want. Secondly, their business model doesn’t really allow them to have affordable housing on site, so could they pretty please just pay cash instead? Thirdly, like all other developers, costs are high and profits are low, so they might not be able to pay all that much towards affordable housing anyhow. Fourthly, they operate in a cut-throat market where information is king, so please could any negotiations and agreements be held in secret?

Now, generals are always fighting the last war, but you’d hope planning departments are a bit quicker off the bat than that. Because let’s be clear, the opportunities for significant new developments are enough for authorities to have to consider changing their rules to keep ahead.

Earlier this week I praised Jennifer Williams’s recent article on affordable housing in Manchester. One of the key things behind the continued growth of city centre housing in Manchester -but also the complete lack of on-site affordable housing- is the willingness to get in front of the curve for build to rent. You can’t apply planning rules just for certain types of investments though, so every developer gets to play the same game- offsite contributions for affordable housing (sometimes called commuted sums), confidential viability reports, excellent but private shared spaces without significant contributions to public spaces.

Perhaps “race to the bottom” is too strong a term, but I think we need to see that Manchester is the outrider for city centre housing outside of London and look at the impact build to rent is having there.

As I’ve mentioned before, commuted sums as opposed to affordable housing onsite isn’t necessarily a bad thing, although there is a need to prevent areas from becoming ghettos of either rich or poor households. Councils or housing associations can use that money to invest in their own large scale schemes rather than a smattering of housing here and there and the smart ones could create their own mixed schemes with market and affordable homes side by side.

But no payments, or money that disappears into the ether through a viability process or into an “affordable housing saving fund” that never gets spent is never a positive thing. Development after development in or near a city centre without public space is also not great.

As with my previous comments on viability, I’m coming round to the view that no process framed around negotiation will actually be able to put the genie back in the bottle. The changes to the national planning policy framework may make some temporary difference, but I am going to firmly predict that a small army of lawyers and consultants will put us back to where we are now within 5 years. Amending viability simply isn’t enough for affordable housing, the goal must be to remove the connection between the two.

What might be better is putting affordable housing into some form of tax like the existing Community Infrastructure Levy. An amount could be worked out from the average square footage of a proposed development (or sale price of properties if you’d rather) and this could be paid to the council for them to build affordable housing (either directly or by housing association grant), with clear accounting to show this is done. A developer who wants to reduce this bill could offer a number of homes in payment for their charge, but this would be at affordable house prices rather than the full purchase price of the property.

Another change would be for local authorities to work together to set clear boundaries on what they will and won’t accept. Hopefully I’ve shown that there is an oblique strategy, perhaps even an unintentional one, to change the planning system in order to fit it around build to rent. If larger local authorities, for example the metro mayoral cities and the English core cities came together to set out what they would like their planning system to look like, they could seek to insist on published viability statements and set affordable housing quotas. This could stop developers trying to play one city off against another, but it of course comes with a healthy reward for cities going back on the agreement.

It remains to be seen how this new market will mature. As I mentioned at the start of the piece, one of the reasons investors are looking to build is because there aren’t currently the type of properties available for them to invest in. Of course there are other benefits to putting value into a bare bit of earth, particularly the one shared by more traditional housebuilders that this will appreciate the value significantly.

But once there are a raft of new build to rent properties available, will investors keep on building, or will they be happy trading the buildings that exist between each other? I’ll put that another way- there are plenty of shares that come onto the stock exchange, but the vast majority of the role of the exchange is to trade existing shares. Buy low, sell high, or at least buy for a lower price than you sell for! It is fair to say pension schemes dabble in the markets, usually in long term investments, so they are likely to be quite happy to think this way about property as well.

Sure there will be property managers who actually do things like sort out repairs and they won’t be affected by these shenanigans. The average tenant won’t notice ownership changing, perhaps the brass plaque outside the door will occasionally morph overnight into something new. But from a housing supply issue, we have to consider whether build to rent will be a major builder for many years to come or -once there are enough properties to play the asset appreciation game- whether it will be a niche portfolio for certain schemes to hold and trade between themselves.

If it is to be a major source of new housing then the issues seen in Manchester might be heading to a town near you on a large scale. If it is the former, then are the changes (or resistance to changes, such as publishing viability reports) being made to local planning systems (for all developments, remember) worth accepting for a limited local reward?

Rough sleeping and smooth sailing

I wish I could move on from talking about housing on this blog. But stuff keeps on being proposed that piques my interest. The latest such thing is the Labour announcement on housing for rough sleepers.

This was announced on Sunday, perfectly to fit in with the Sunday newspapers and interview circuit, but I wanted to have a couple of days to have a think about it and what it really means. You see, I cannot imagine anyone would have any issue with more homes for those with recent experience of sleeping rough, in particular as much of the evidence from housing first suggests that this can make a difference in people’s lives.

But it is worth having a look at the policy, because there is something interesting going on. In brief, the wording around the policy announcement looks like it is about housing supply, but in actual fact it is about housing allocations.

So let’s quickly run through what’s been said. Labour is proposing that it will seek to provide 8,000 houses for people with experiencing of sleeping rough, both as part of their existing commitments and as an immediate implementation of the housing first policy.

The government currently have pilots of housing first, which is essence is about providing people with long term accommodation before seeking to overcome any other issues that may be causing homelessness. It has many fans (the author included) but crucially it is about not only providing accommodation but also a significant level of support in order to access services in order to prevent a return to the streets. As Jeremy Swain has recently reiterated, there are factors in returning to homelessness that have to be overcome and experience states that includes intensive work from professional agencies seeking to keep people in the home.

But where are the homes to come from? The Labour press release states quite clearly that instead of building new accommodation, which will take time, they will be seeking agreements with housing associations to provide homes as they become available and replace them with newly built homes from their aspirational social housebuilding programme.

So the homes are existing affordable accommodation (whatever that means!) from registered providers that you would expect to have gone to someone else in need if they were not used as part of this scheme.

Let’s put that a different way. You run the allocations for a housing association. You have a 1 bedroom home become vacant and have to choose between:

  • A rough sleeper.
  • A disabled single person living in an unaffordable privately rented home.
  • A disabled couple living in a privately rented home in severe disrepair.
  • A vulnerable young person living in temporary accommodation who has not slept rough.

Now, each of these households is likely to meet the legal definition of homelessness and indeed for priority need. Exactly who gets the property will depend on the allocations policy of the association or, if the work with a local authority, the council’s own allocations policy.

What Labour are saying is that they will prioritise the rough sleeper over the other households and apply this nationally so that allocation policies will only apply after the need is met for rough sleepers. That’s a policy decision and it isn’t a bad one per se, but it needs to be understood as a decision on allocations. Using that home for a rough sleeper will take it away from someone else who also needs it- someone is going to get it and someone is going to not.

Of course Labour have also made a commitment for a huge increase in the number of affordable homes, but as the press release says, this will take time. So those households will have to wait longer than they might otherwise have done. Again, that’s a policy choice and not an unreasonable one, but moving other households further down the queue has to be understood as a consequence.

What would be a worry is if these policies aren’t tied up together. Any government is used to getting some of its policies through and not others, so I can easily see a situation where the rough sleeper policy comes forward (it is, after all using existing properties) but the policy of building affordable homes stumbles along the way or is delayed. Even governments that are very quick off the blocks (1945 and 1997, I’m looking at you here!) have some things that go on the back-burner or hit unexpected consequences. If you have taken on homes on the guarantee that you will replace them then there is a need to complete both sides of the bargain.

Another comment to make is why this is only housing association homes? The present government almost came unstuck when it tried to introduce right to buy for housing associations. It is unclear why policy makers from different parties see housing association properties -homes built by non-governmental bodies overwhelmingly for the public benefit although often funded by public subsidy- as theirs to dip into when they feel like it. I’m not sure if the sector will be up for another round of tough negotiation, especially to provide a service many of them feel that they do anyway.

As I mentioned above, the key issue will be the level of support that come with rough sleepers into the new homes. There’s no mention of that in the release, or how it will be funded, although it is fair to say that many rough sleepers already receive a significant level of personal support, so this may be that the organisations who currently work with them will continue to do so, hopefully with some level of financial backing from government. The alternative is a replication of what has happened many times previously, where the settled accommodation breaks down and people return to living on the streets.

Another way to provide homes for rough sleepers would be to buy up homes from landlords with buy to let mortgages looking to sell vacant properties (or, even better, empty homes), perhaps on the “we buy any car” approach of a quick sale for a below-market price. The homes could then be improved and made tenant-ready quickly (providing opportunities for local tradespeople or for skills training). This removes the “robbing Peter to pay Paul” aspect of the policy whilst still ensuring a quick turnaround for those who need homes. It’s not a new idea either, it is something quite a few councils, charities and other organisations do, but government backing could make it much larger and more effective.

In his interviews on Sunday Jeremy Corbyn also returned to the idea of compulsory purchase of high value homes “deliberately kept vacant”. Now, he hasn’t provided a number for how many properties he thinks would be involved and I would think it would be very hard to for local authorities to prove mens rea in cases of empty homes. That word “deliberate” sticks out like a sore thumb to me. With a requirement to prove why a home is being kept empty I don’t think it will lead to many compulsory purchases, so it may be an attempt to put the wind up financial speculators rather than a policy that will make a huge difference on the ground. Of course we’d have to see the final policy, it could exclude that difficult word “deliberate” and have some impact on some homes.

So the housing first announcement is another piece in the jigsaw. There are other ways to achieve a quick expansion of homes for housing first, most notably working directly with local authorities or housing associations rather than trying to buy up housing from the latter. If Labour are serious about their affordable housebuilding plans and are willing to put in the resources to pay for it then this may be one small but important cog in the machine. What we must not forget is that providing a home is not sufficient to keep someone off the streets- it is just the first step and the ongoing support that person receives is just as significant as the roof over their head.

The long tail of affordable housing and how it can wag again

How fast do you have to run to stand still? And do you really have to run twice as fast as that to get somewhere else?

It’s a question we’ve been grappling with ever since the Red Queen posed it and none more so than with affordable housing.

Well, that was a question I was going to try and look at in this post. But then I found out that not only are they susceptible to a bit of genial name-calling, Shelter also have access to a time machine and have gone back to 2014 to write essentially the same post.

What’s a naptime blogger to do then? Well, it would be helpful to see what has changed since then and maybe have a think about the current trends in net affordable house building.

But first we have to draw a pretty big distinction between affordable housing and “affordable housing”. You see, in most areas when you think about affordable you consider whether someone’s income can cover the cost of the item. Not so in housing, where the government’s definition of “affordable” relates to the market price- the definition of affordable rent is 80% of the market rent in the same area.

This might not seem like a terrible thing and in some areas it just so happens that 80% of the market price is within an affordable range for a relatively low income family. But in reality that’s more of a happy accident than an outcome of wise policy making.

It didn’t used to be wholly this way. Most social housing rents were traditionally set based on the actual costs of paying for the property and its upkeep, with landlords (local authorities and housing associations, in the main) given very broad parameters to set rents. Whilst in power Labour argued that this led to wildly different rents for what was in effect the same house and, through controlled increases in rent, tried to get all social providers to roughly the same rent for the same property- called a “formula rent”. This equation looked at the price of the house and also the median earnings in the area. But it was only a proxy to allow for equalisation in the medium-run.

And it didn’t get there, because Labour slowed down the process and then the Conservatives came in and chose to increase and then reduce social rents at the same rate for everybody. Only now are they looking to allow authorities to increase rents again. This means rents are still quite divergent between providers and between areas.

So, and I can’t be clear enough about this, neither social rent on older stock nor affordable rent really have any direct connection with affordability built in. Social rents are by and large lower (in many areas far lower) than affordable rents and are therefore more affordable. But there is no real mechanism to ensure that stays the case. New social rented homes (those few that are built) often have rent set at the formula rate, but then affordability is only one consideration among others.

When the new “80% of market” definition came along most providers didn’t immediately switch all of their properties to it when a new tenant moved in. What many did was make newly built homes (usually by developers as part of s106 agreements) available for affordable rent as a way to cross subsidise other, more affordable housing. Indeed, until recently building for affordable rent was required through the government’s affordable homes programme, meaning councils who couldn’t borrow (because of central government limits) had no other choice than to build homes for “affordable rent”. Collectively, although mostly for the legacy reasons, this means that the vast majority of affordable homes available today are at a social rent. That’s the good news.

The bad news is the number of new build social rented homes has fallen year on year, from nearly 40,000 in 2010/11 to 6,800 in 2015/16 (with even fewer provisionally accounted for in 2016/17). The number of right to buy completions has been edging up since 2011/12, both when the financial crisis was bottoming out (and when low income households were more able to get mortgages) and when the government significantly increased the amount of discount a household could receive to buy their home. What’s more, as most new affordable homes won’t yet have a right to buy discount, we can safely assume these were almost all social rent homes sold.

Screenshot 2018-01-23 at 3.28.16 PM

So in 2015/16 more than 3 homes at sold under right to buy for every social rent home that was built. Even if you add affordable rent into the mix there are only 1,358 more homes being built than lost. And what’s more, whilst there should be 1 for 1 replacement of homes sold under right to buy, that has never been the case, looks like it will be a very long time until it is the case and if it does happen it will by and large affordable homes replacing social homes, thus adding little to the mix of truly affordable homes.

Put that another way, since 1991/92 there have been 215,000 more homes sold under right to buy than new social rented homes built.  That’s more homes than there are in Bradford.

This is also the case with affordable housing in parts of new developments. Where “affordable homes” are agreed as part of s106 agreements, they often either become “affordable rent” or an intermediate option that is most likely shared ownership. More councils are starting to accept payments in cash for off site provision in lieu of affordable accommodation, which at least means councils can build what they want but does lead to worries about the ghettoisation of “rich areas” and “poor areas”.

Of course developers are hit and miss when it comes to actually providing affordable homes as part of their developments. As part of the planning process they are able to argue that they cannot make their scheme viable with the level of affordable accommodation set by the local authority. This means they are able to negotiate, often significantly or to zero, the amount of affordable housing on the site. Of course every single site can be just about viable at the same time as the heads of the developments earn £100 million bonuses.

In fact it is fair to say that there is something more than a cottage industry set-up to help developers argue their case for lowering affordable housing requirements through the viability process. Perhaps we could call it a 6 bedroom, triple garage industry?

The recent government consultation on viability (amongst other things) goes some way to address this, effectively saying that the local plan is the place to be clear about viability of individual sites and once agreed there is little reason to change it. There are however a couple of issues with this. This first is that councils will take time to update their local plans (remember it is a process that is measured in years) so the current system will remain in each area until they have (or are at least approaching) a replacement plan. The second is that there will still be flexibility in the system (for example by judicial review on the reasonableness of individual decisions) for developers to tease open a loophole or two that they can then drive a bus through. Followed inevitably by bus lane markings and an open highway. Perhaps this is the world-weary cynic in me, but I fear the approach laid out there will lead us back to the same situation in 3-5 years.

Given that developers see having lawyers on a retainer as part and parcel of the industry, I would rather something that looks more like a hard to avoid tax than an easy to evade agreement. Yes, that might mess with their business case and yes, that will meant hey might have to change their modus operandi to suit the new circumstances. Given that might have as many positives and negatives it is a risk I’m willing to pay.

So councils are at the limits of what they can build, when they and housing associations do build they often choose (when they have a choice) to go for affordable rent. When developers build they often try to limit their affordable accommodation and when they do build it what is made is usually “affordable rent” or another type of intermediate accommodation. So where does that leave those who genuinely need truly affordable accommodation?

I fear trying to create a new type of rent level will just lead to another competing layer in the market. Removing “affordable rent” from what counts as affordable rented accommodation, especially under s106, would help restore some sense. Whilst councils are free to set terms in their local plan I think it would make sense for discussion on affordable accommodation to be based on what proportion of people in the local area could afford to live in the agreed accommodation. So if “affordable rent” stays, it could be renamed “rent that X% of people locally could afford to pay”.

Local authorities and most housing associations truly do want to build genuinely affordable homes, so giving them the powers to do borrow and build will make a huge difference in building of new affordable homes. Central government continuing the move away from “affordable rent” will allow councils and housing associations to build homes at a rent they think is appropriate and needed in their local area.

Finally, without wanting to sound like a scratched record, the bath will only fill if you put the plug in. Right to buy is leeching away truly affordable housing, giving some households a cash injection (when they sell the homes) and giving a number of private landlords an unearned field day as they swoop in, buy a former council home on the cheap and move in tenants paying market price. In a way, it would be better to give the tenants the discount to buy another house, at least then the landlord wouldn’t have to go through the cost of building a new property, although it wouldn’t help take the steam out of the wider housing market.

It would take many years for the total supply of social housing to dry up, but if we don’t look to do something more about it now then it could still happen. Given the need that clearly exists for affordable accommodation, that would be a huge mistake.

Empty homes, vacant stats and a bugbear

Happy new year! And don’t the Liberal Democrats know how to celebrate, with a widely reported press release calling the number of empty homes in the UK a “scandal”.

Now, I’m not party political in this blog. Yes, I spend a fair amount of time critiquing the government, but that is because they are the government. They are the ones able to see their policies come to fruition on a national scale, so it shouldn’t be too surprising that I want to look at that. But something caught my eye in the Lib Dem release, something that gets my goat every time I see it, no matter which organisation it comes from.

Let’s get on the same page first- using some simple language. Empty homes aren’t great and bringing them back into use is a good thing. I don’t disagree with the main conclusion of the release, that Councils need further powers to bring empty homes -the vast majority of which are privately held- back into use. However, when you actually dig into the data, there is some richness that has been missed and indeed some uncomfortable truths about where empty homes are that means policy directed only at solving this may not be completely successful.

Others have quite rightly pointed out that the numbers seem large, until you compare them with the total national housing stock, or indeed the numbers of new net homes the country actually requires. I’m not going to repeat those unnecessarily, but they are important points to make. Every single long term empty home could be brought back into use without making a really significant dent in the ongoing housing need for the country.

What I really want to talk about is the relative size of local authorities and why it makes comparing overall numbers particularly pointless. The press release goes into detail of the areas with the highest number of empty homes, citing Durham, Leeds, Bradford and Cornwall as the areas with the most empty homes. That may be true, of the places that replied. But what that doesn’t understand is that local authorities have huge differences in population and numbers of dwellings. So comparing absolutes for these areas is bound to lead to larger areas having more of a wide variety of variables.

I’ll put it another way. Let’s say I run a cat charity. I want to put out a press release saying which area is the “most cat loving”. So I write to the cat department of every local authority asking them how many homes have cats in the area. I dutifully get the answers back, put them in a spreadsheet and what do you know, the “most cat loving areas” are Birmingham, Leeds, Glasgow, Edinburgh and Liverpool. Why is that? Because they are the local authority areas with the biggest populations and number of households.

So one area has a higher number of empty homes than another, but what does that mean? Are we to expect to see more empty homes if we take a walk around the streets? Of course not, if there are 3 times the number of empty homes, but the authority is 10 times as large, then it looks to me like public policy is better focused on the smaller area.

So, in my opinion, what the authors of the press release should have done is work out the proportion of empty homes compared to the number of dwellings in the area. I don’t know why they didn’t; the figures are freely available for England, Scotland and Wales. I do know it takes about 2 hours to manually copy and paste them across into the spreadsheet, because that’s exactly what I did.

Here’s my version of the press release statistics, with sheets reordering the list of local authorities based on the proportion of vacant homes and the proportions of 5 year and 10 year vacant homes. This makes for some much more interesting and frankly depressing reading.

The 10 areas with the highest proportion of empty homes are:

Screenshot 2018-01-04 at 2.12.52 PM

And here is the proportion at 5 years:

Screenshot 2018-01-04 at 2.13.30 PM

And here it is at 10 years:

Screenshot 2018-01-04 at 2.14.10 PM

I’m not quite sure what is happening in Wycombe and Chiltern (this might be related to the law of small numbers), but the rest of the list looks somewhat familiar. All the original “big four” have dropped out apart from Durham and that looks in keeping with what could be an actual issue. Scottish, Northern, Welsh, Midlands, former strong working communities now de-industrialised, towns not cities, with relatively low house prices dominate the lists.

It is almost like the proportion of empty homes is a symptom of another problem rather than something that can be solved in isolation. So going on about empty homes in isolation might not be the best thing to do, when the issue might well be depopulation and corresponding low house prices.

The other thing to repeat is look at how small those figures are. Outside of Shetland (which will be an outlier due to its tiny overall size and living conditions) the areas with the highest proportion of empty homes after 10 years is less than one in 300. Yes, people get very upset if that one in 300 (or less) happens to be next door to them, but we do need a bit of perspective when thinking about policy.

This puts the over-simplified conclusion of the Lib Dem release under some doubt. If empty homes are a blight and a waste (and they are!) then the areas with the highest proportion of them must be the areas with the biggest proportions of blight and waste. But perhaps what is required is not just Councils taking over empty homes, but wider and more thoughtful approaches to improve the economy of those areas and give empty homeowners a reason to want to bring them back into use.

There’s a couple of other flaws with the release, the most major being that a large number of Councils aren’t included. Both Manchester and Birmingham (Councils, not the whole conurbations) manage to not be included in the release, most likely as a result of not getting the FOI response back before the Lib Dems wanted to issue it. Sure, that can only increase the overall number of empty homes, but it can change the overall proportion of homes and looking at the government’s figures suggests that Manchester especially has an interesting (and positive) story to tell about bringing empty homes back into use.

Which brings me onto the final point of concern about the release, which is the over-reliance on looking at Empty Dwelling Management Orders (EDMOs) on bringing empty homes back into use. The Lib Dems have actually asked Councils how many homes have been brought back and how many EDMOs they have used. The only thing that they have reported is the proportion of Councils using EDMOs. When you actually look at their own figures, what you see is that areas like Leeds (although be careful about proportions rather than overall numbers!) and Newcastle are bringing the most empty homes back into use and they are doing it without significant use of EDMOs!

Clearly, if the press release authors wanted to look at bringing empty homes back into use, if they really wanted to understand what worked and what didn’t then they might have asked the areas doing best what was happening. I’m sure (in fact, I know) both of the Councils in these cities have been trying very hard to bring down the numbers. But at least part of the answer might lie in the fact that both these cities have inward investment, public and private and improving economies.

Which takes us back to the earlier point- perhaps what this data is showing us is the solution to empty homes is found in improving the wider economy of de-industrialised areas, particularly towns, as well as individual measures on housing.

Assessed need and its objectification

It must be Christmas because I’m talking about planning again! Not only that, but going back to the topics of one of my first posts– the attempts to estimate of how many houses we need.

Reading Inside Housing the other day I came across a slightly strange article title: ‘More than 30,000 new homes were in areas where they were not needed, according to government formula’. Is that true, I thought to myself and, frankly, what could it possibly mean? Follow me on a little circle and I’ll try and explain, hopefully trying to demystify quite a lot of planning-speak as we do so.

First off it is worth reminding ourselves where we are. For a longer explanation, feel free to look at my earlier post. Under the current rules, local authorities have to investigate their own housing need and convince an inspector that the methodology they have used to calculate housing need (and the answers that follow from this) are accurate. Some authorities convince inspectors, some don’t. There are very few hard and fast rules to this, other than bring as much evidence as you can and explain why you did or didn’t include everything you can think of. The total amount for the country is therefore an accumulation of what each local authority has decided.

The government are proposing a new methodology that is consistent across England and can be worked out fairly quickly and easily. Crucially, instead of accumulation, the government has effectively sought out a way to distribute a national figure for housing growth (between 225,000 and 275,000 a year, more on this below) and then worked out a methodology that achieves this and spreads the national figure over the country.

So the first and absolutely clunkingly obvious thing to point out is that these methodologies are different. They may try and measure the same thing, but they go about it in completely different ways and we shouldn’t be surprised if they come to different national and local conclusions. One seeks to try and make each local area right, probably with a bit of leeway and then accumulate them nationally to something possibly right-ish with lots of leeway. The other tries to take a national view and then spread it about the country, using a crude (but therefore easy to understand) measure of affordability to do so. It is consistent and easy to understand, but as a consequence of being crude, more likely to be wrong for each individual local authority area.

Is there one that is more right and one that is more wrong? Well, in terms of trying to work out how many households there will be in, say, 15 years time, there probably is. Indeed, you only need to look at the work of Andrew Lainton to see an impressive attempt to try and find an even better, consistent, relatively easy to understand methodology.

But even the most spreadsheet happy statistician would have to accept that all they can try to achieve is a good estimate. Frankly, we may only know which was more right when we get there and even then the outcome is likely to be predicated on the actions taken until that point (because creating homes can also create households!).

Let’s put that another way- the numbers the government are using are a little bit fudgey. To begin with, the 225,000 to 275,000 range is quite large; 50,000 homes a year difference between them! The figures come from February’s white paper, with a footnote stating where these numbers come from. This includes the 13 year old Barker Report, which even Kate Barker herself has incredulously commented upon it still being used.

I’m not saying these numbers are wrong, I’m saying there is a 22% difference between 225,000 and 275,000. But what matters isn’t that the number is exactly right, but that local authorities have an idea about the housing need in their area that is seen as required and are actively doing something to meet it in a reasonable and plan-led way.

I’d much rather a good but not perfect guess now, rather than an exact answer some time in the future. And yes, that goes for distribution across areas as well as well as for the national figure.

The alternative approach, the one we have had for the last few years, is to have argument on top of argument about what the actual number, down to the last digit, should be. Local plans have been kept in a form of hiatus for years as these arguments progress. What this has meant, as I’ve detailed in my previous post, isn’t no development, but development where housebuilders want (apart from the green belt) at a rate that suits them.

But what about these 30,000 homes that “weren’t needed”? What the report goes on to say is that this is the difference between the additions to housing stock in the last year and what the same local authorities would have as their targets under the proposed new methodology. Hopefully, you’ll be able to see where the mistake (known or otherwise) is there.

Firstly, the new methodology hasn’t been implemented yet (the government are looking at the consultation responses) and even if they were almost all local authorities haven’t had enough time to update their plans based on the new proposals. Secondly, these were almost certainly homes that were needed in one sense or another not least because the housebuilders, who effectively control the market for new completions, knew they could sell them. Thirdly, the targets are really minimums, with a reasonable amount of over-supply having the potential to offset other years that might be leaner. An area that only just meets its target every year is in for a shock in a low year!

So I can’t quite see what the issue is with the fact that in some authorities some homes are being built. There is much to be critical of the government for in strategic planning. Most notably, making local authorities wholly responsible for builders failing to deliver new homes whilst denying (or at least kicking the can down the road of giving) them the powers to actually do anything about this. Such powers inevitably include letting councils actually build new social homes for rent at a scale that would help alleviate some pressure.

In essence the long discussions about housing numbers have got in the way of delivering homes and taken up a lot of conversation time that could have been spent looking at what could actually help deliver homes, particularly affordable homes (for sale or rent), where they are needed most.

But hopefully what I’ve gone some way to showing is that whilst assessments of need are more or less arbitrary -and the government’s proposals are at the “more arbitrary” end of that- what really matters is that there is a clear and achievable challenge for everyone involved in housing supply to meet and time and space to come to real and actual ways to achieve them. The alternative is essentially a parlour game, where anyone with a spreadsheet and a set of range calculations can have their two pennies.

I’m happy to take part in that game, but would also like to see some decent homes built at the right prices in the right places first. If setting a clear figure and empowering people to get out and build according to a plan can achieve that then let’s get on and do it.

Please please please Letwin get what I want

It would be the first time. So, are we all enjoying the post-budget lull? It is quite possible that Philip Hammond will be off our TV screens for a little while (at least on things relating to his brief) as the world returns to worrying about Brexit.

In my previous post about the budget I tried to outline why I would be concerned about any policies announced that would have a long lead in time. Frankly, I’m worried the government, in its current iteration, won’t last long enough to bring in the longer term policies it announces.

So the news that a major part of the “housing budget” will be another review into turning planning permissions into homes, this time chaired by Sir Oliver Letwin, is a particular worry. It has been given a short period to assemble and write up its conclusions, with the demand that it should have published the results by the Spring Statement (March 2018).

Even then, it looks like a tall order for the government to stay in its current guise. Who knows what might happen in the next few months and, as experience has taught me, I won’t be celebrating any positive policy changes until they are enacted or implemented.

Of course Sir Oliver won’t have to necessarily commission new bits of research, he could just look into what has already been proposed and choose some options. He could look at the Barker Review, the Calcutt Review, the Lyons Review, the most recent Parliamentary briefings on housing supply, their own white paper and the Farmer Review, looking into skills shortages and demographic change. Plus plenty of others (feel free to tell me your favourite!).

Indeed, Sir Oliver has a veritable smorgasboard of options available to him. What needs to happen is for the government to actually take some of them and implement them. Which is where the problem lies.

For the government seems very keen to offer further demand measures whilst not really combatting the need for supply. Put simply the government’s approach since at least Eric Pickles’s days has been to force councils to release more sites whilst posturing and taking tough to housebuilders whilst doing very little to change the market to strongly incentivise or directly create steel toe capped boots on the ground. This has led to the situation where developers have lots of options on which site to choose, but no time or incentive to actually build much faster than they are already.

This approach was evident once again in the budget, with limited support for council building (£1bn seems like a lot of money but it spreads very thinly over the country) and lots of loan underwriting and guarantees. As if all housebuilders need is the final push to get them over the line on individual sites. If only they had share issues or assets they could borrow against.
It’s actually been a common point of my last few posts- political will is required to move beyond this and that means deciding to directly impact some negatively in order to help others. It’s as true with unrepentant city centre drivers as it is with housebuilders.

Trying to capture and reinvest land value uplifts (which is rather popular at the moment) would stop those who have land to sell from receiving the full market price. Robust compulsory purchase order powers (or use it or lose it), joint partnerships or new homes corporations will take business and/or profits away from existing housebuilders. Reducing house prices (however that is achieved) or reducing the rate of growth of house prices would impact people who already own homes.

Indeed, what the government seems incredibly shy of is actually using an arm of the state to directly build homes at scale. Yes, local authorities have been very adept at setting up joint ventures and yes, the government has some small scale schemes like the accelerated construction scheme. But at present these don’t add up enough to a significant market intervention. More funding, especially to cover start-up costs (you’d hope building would be self-funding quite quickly) are required in order to allow one bit or another to build at scale in a way that competes with existing developers.

There’s a word for this kind of decision making. That word is politics. Politicians are accountable to us as voters, but that isn’t the same thing as them needing to please each individual person by each individual decision.

So Sir Oliver, and by extension the government, don’t have to venture very far to solve the particular puzzle of increasing housing supply. Indeed, they have everything they need.

What they want to do, and what they are struggling to find is a way is to achieve, is creating supply without upsetting anyone else, particularly existing homeowners, landowners, landlords or those whose supposed purpose is to build houses on land. But in the real world that is very often simply necessary. It’s a puzzle of their own making, in their own heads and if they could see beyond it they would be able to deliver positive changes.

We’ve come full circle in a way. The government need to make a decision; they have the policy options laid out infront of them. But choosing not to choose is about the worst thing they can do. More delays and half measures make building the right homes in the right places at the right prices significantly more difficult.