There are plenty of idea for ways to boost the housing market, but the chancellor needs to decide which to pursue
Over to you, Mr Osborne
George Osborne is desperate for ways to get the UK economy growing again. Two housing plans which were published this week will definitely catch the eye of the beleaguered chancellor. But are they worth the paper they’re written on?
The first, published by right-leaning think tank Policy Exchange, called for the 20 per cent of social homes in England which are worth more than their regional medians to be sold off as they become vacant. The proceeds from these 818,000 homes would be used to build more homes in total, but in cheaper locations. The argument is that this would see around £6 billion spent on building 80,000 affordable homes each year. The attraction of this approach are clear: an immediate economic fillip which would dramatically boost housing supply. There is a decent chance the government will explore this further in its upcoming housing strategy paper. It should tread carefully, however. Alongside the obvious issues around only allowing poor people to live in cheap, out of town areas, miles from economic opportunities, there is the concern that once sold these properties and the strength they bring to social landlords’ balance sheets cannot be replaced.
A better bet comes from a report into investment in the private rented sector by finance expert Sir Adrian Montague and first revealed by Inside Housing in June. In it he tackles concerns over the barriers to attracting institutional investors, such as perceived lower returns and the availability of appropriate investment opportunities. Social landlords will balk at talk of allowing councils to waive affordable housing requirements on new developments and of the government providing loans to encourage investment. Smart housing associations and councils, however, will see the opportunity here, much as Thames Valley and Manchester Council already have with their respective private rented sector schemes.
The government has no more money to invest in housing, but pension funds do.
Mr Montague not only plots a path to accessing these billions of pounds, but sees a key role for social landlords in achieving this with their land (councils) and balance sheets (housing associations). Once again, over to you, Mr Osborne.