Coronavirus has forced all of us to re-evaluate what is important - as individuals, households and organisations. Has the time finally come for a no-preconceptions debate about the future direction of housing?
The facts are that housing of all tenures is generally harder and more expensive to access; home ownership will remain out of reach for many under the current system; social housing landlords cannot provide decent homes at accessible rents to all the low income households that need them. That those households include many of the key workers who have been trying to keep the nation alive and operational is an uncomfortable truth.
Published just as we went into lockdown, the Affordable Housing Commission’s report “Making Housing Affordable Again: Rebalancing the Nation’s Housing System”, ought to be required reading for us all. It asks key questions and makes thought-provoking recommendations.
What is affordable housing? Who is it for? Who should provide it? What could make it more affordable? Would a rebalancing of Government investment away from the private sector to the social rented sector make any material difference to affordability and supply?
The report suggests a new definition and measure of affordability, enhanced utilisation of the professional build to rent sector, capturing land value, recasting the Right to Buy (RTB), regulating private rented sector (PRS) rents as well as measures to improve the position in the mortgage market of first time buyers relative to buy to let landlords.
Whilst there is general cross-party agreement on the need for more affordable housing for those on average incomes and below, the report illustrates how the current system carries us, like a riptide, further away from that goal. The growth of the PRS and its contribution towards housing market stress are one of the report’s most sobering analyses.
Since 1988, the PRS sector has almost doubled in size and represents 1 in 5 homes. Conversely, the social housing sector has halved and is now the smaller of the two. The causes are well known - contraction in council house-building, declining housing association outputs resulting from diminished grant funding; the associated switch to Affordable Rent; and, critically, the loss of 2 million homes under the RTB.
The reduction in available social rented homes means more low income households have to rely on the PRS, ironically occupying some of the thousands of homes sold under the RTB.
PRS rents are, on average, twice as expensive as social rents, with lower quartile PRS rents almost 30% higher than their social rent counterparts. Higher rents mean a bigger hit on public finances. The PRS now accounts for over 37% of the overall housing benefit bill, yet represents only 20% of homes.
Unless the system is changed, that figure will continue to increase. The Exchequer’s frustration with the rocketing benefit bill is undisguised, so policies which operate to bolster the PRS and further reduce social housing numbers appear perverse in the extreme. Equally perplexing is the generally unremarked fact that the level of public subsidy applied to homes exiting the sector under the RTB at an average £60,000 discount exceeds the grant payable for a new shared ownership home (£39,000).
Unsurprisingly the report calls for an increase in social rent homes and recognition that grant funding offers better social and economic returns than housing benefit - including long term tangible assets upon which funding to support further delivery can be secured.
Above all, the report provides the basis for a much wider and potentially transformative vision for affordable housing - one that views it as an investment rather than a cost, that aligns it with empirical need, that invites a wider view of who could provide it, that challenges the public and private sectors to collaborate more in its financing and delivery and that forces us to confront the illogicality of the status quo.
If now is not the right time for that debate, then when will be?
Our contribution to the debate
We want to help ensure that this chance of a radical re-think is not lost. Experience tells us that it is one thing to identify the problems, but quite another to devise practical solutions.
We have been through the report's recommendations and drawn together a multi-disciplinary team to formulate ideas and ways to address the issues. Over the coming weeks we will be publicising a series of insight pieces, webinars, podcasts and other initiatives. Each one will focus on a recommendation in the report. Some will be 'blue sky' and some will be very practical, but all will be informed by Trowers' deep engagement in housing issues over many decades.
The team is led by Tonia Secker, Head of Affordable Housing, and Ian Doolittle, a leading specialist in public sector housing.
Our first piece suggests a simple way of accelerating the development and/or acquisition of new council homes by cutting through the regulatory and consent issues which can bedevil much-needed schemes. Click here to read the article.
Future pieces and initiatives will consider affordability, funding, the right to buy, housing conditions (including building safety), housing for older people and so on.
We look forward to engaging with many clients and contacts in the housing sector.
If you have any general queries or ideas we should be very pleased to hear from you.
