Tuesday, 29 July 2014

Inside edge

Eric’s ladder

Thu, 15 May 2014

The boast from ministers is that Help to Buy really is getting Britain building - but is it enough?

The narrative according to Eric Pickles is that the coalition ‘inherited a situation where builders couldn’t build, buyers couldn’t buy and lenders wouldn’t lend’. Now, thanks to Help to Buy and the reinvigorated Right to Buy, ‘we’re ensuring that anyone who works hard and wants to get on the property ladder will be able to do so’.

Not to be outdone, housing minister Kris Hopkins said the housebuilding figures for the March quarter of 2014 were the result of a ‘massive government effort’ and even took credit for a 23-year high in council house building. And the DCLG press release comes complete with a statement from Stewart Baseley of the Home Builders Federation that the extension of Help to Buy 1 ‘is allowing the industry to plan ahead, rebuild capacity lost in the downturn and deliver the homes the country needs’.

The truth, as ever, is a bit more complicated. The graph below shows what’s happened to starts and completions since the end of 2006. I’ve used quarterly 12-month rolling totals to reflect the trend.

What it shows first is the dramatic impact of the credit crunch, with starts slumping from over 180,000 in 2007 to just 75,000 in mid 2009. A recovery followed in the wake of Labour’s housebuilding schemes.  Completions inevitably lag starts and show a delayed and less volatile trend. 

In phase one of the completion, starts and completions both proved impervious to all government attempts to kickstart them. Up to the end of 2012 they flatlined and even drifted lower than the levels the coalition had inherited.

A strong recovery in starts began from the end of 2012 and has accelerated through 2013 and the first quarter of 2014. The launch of Help to Buy 1 in April 2013 has to be a factor but it’s difficult to separate out its impact from that of previous schemes such as Funding for Lending and the general recovery in the economy.

So far, so good for Pickles and Hopkins. The surge in starts (the March quarter total is 31 per cent up on a year ago) reflects obvious confidence from housebuilders that they will be able to sell their homes and completions too have at last begun to rise (12 per cent on a year ago, even though the March figure is actually down 3 per cent on the previous quarter).

Look at the graph again though and you’ll see that the recovery so far is actually no stronger than the Labour bounce in 2009 and 2010. Comparing what’s happened under the two governments, the first 15 quarters of the coalition have now seen the completion of around 420,000 homes. However, Labour’s last 15 quarters saw 475,000.

And then compare that to the new homes that are needed to meet demand and keep house price inflation in check. To meet the ubiquitous 250,000 a year target (which may now be an underestimate) the last 15 quarters should have seen completion of more than 900,000 homes. The new homes deficit has therefore grown by another half a million homes under the coalition.

On the assumption that the recovery will continue, the current starts and completions will almost certainly see further increases in the months to come. Savills forecasts that completions could rise to around 167,000 by 2018, which will be back to just below the peak seen before the credit crunch. However, that will still be well short of 250,000.

As I’ve blogged before, the government is helping some people to buy but rising prices are excluding many more from ownership. Figures also out today from the Council of Mortgage Lenders show that the number of first-time buyer mortgages is up 24 on a year ago. However, house purchase loans to buy to let landlords are up 46 per cent.

Far from ‘ensuring that anyone who works hard and wants to get on the property ladder will be able to do so’, the government’s record on housebuilding will send the ladder even further out of reach. 

Making the case

Tue, 13 May 2014

Why do we need social housing? The answer may seem obvious on this website but too often elsewhere the one you’ll get is ‘we don’t’. 

It’s a theme I’ve blogged about repeatedly over the last few years as social housing has been eroded from within and overtaken from without by the relentless rise of private renting. As coalition ministers never cease to remind us, the sector shrank by 420,000 in England under the last Labour government, but their own policies are merely accelerating the decline while they blur the distinction between affordable and social.

Former housing minister John Healey summed it up bluntly like this in December: ‘If social housing’s own won’t stand up and speak out loudly, then present policy will prevail by default.’ As my fellow IH blogger Colin Wiles has explained, social housing professionals formed the campaign group SHOUT (Social Housing Under Threat) in response. It’s already made a submission to the Lyons Review arguing that half of Labour’s promised 200,000 homes a year should be social housing. If you’re not already, you can follow the campaign on Facebook and on Twitter

In the meantime though, relentlessly negative coverage continues on TV. The intro to last night’s flagship 7pm news programme on Channel 4 was its controversial ident of the Aylesbury estate. Channel 4 News would not tolerate distortions like the artificially inserted clothes lines, shopping trolley full of rubbish and Sky dishes but Channel 4 itself continues to resist a campaign by residents to #changetheident and show their alternative more positive version.

Channel 4 is of course also the home of shows like Benefits Street and How to Get a Council House. Three housing professionals in Wales were so annoyed about the second series of HTGACH that they set up the Council Home Chat campaign to counter the stereotypes. If you’re not already, you can follow the campaign on Twitter and read myth-busting blogs by people who live, work and believe in social housing here.

Campaigns defending the principle of social housing and fighting back against negative images of it are in some ways two sides of the same coin. But there is also a deeper battle of ideas that the people who would answer my initial question with ‘we don’t’ think was won long ago. For them social housing is either old-fashioned or politically and morally undesirable or just economically inefficient. It may be a minority view but this is the thinking that lies behind both the slow death of social housing and the negative images on TV and it badly needs debunking.

A good place to start is with the two latest policy essays from the Chartered Institute of Housing from Steve Hilditch and Keith Exford. Between them, and coming from different angles, they make some important points.

As a housing campaigner and editor of the Red Brick blog, Steve’s staunch defence of social housing will come as no surprise. However, he also confronts many of those anti-social housing arguments in explaining how we got from a position of ‘the housing crisis is nearly solved’ at the start of his career in 1976 to a new crisis now. Perhaps above all:

‘We have failed to match the distribution of prices and rents in the housing system to the distribution of incomes. Inequality has grown and so has insecurity: the number of people with very low incomes in the “flexible labour market” with zero-hours contracts, casualised labour, irregular self-employment, and part- time work. The correct housing policy response to these changes is that homes need to be cheaper not more expensive.’

Steve explains what’s gone wrong in housing policy over that period and the rise of the perceived wisdom that social housing tenants are ‘subsidised’ even as the actual subsidy goes to ‘the least efficient and lowest value-for-money sector, private renting’. Along the way he raises questions about the commercialisation of larger housing associations and who social housing should be for. He concludes that: ‘Over the last 35 years it has had the life squeezed slowly out of it by ideology and bad policy. But it can be reinvented. And the benefits of doing so could be great.’

Keith Exford’s essay starts by asking why housing policy in general, and policy on affordability and rents in particular, is such a mess. As chief executive of Affinity Sutton, he quotes the example of one of its estates in Islington where the amount tenants pay varies from an £80 per week ‘fair rent’ to a £290 per week ‘affordable rent’.

But he also makes the point that ‘it is arguably impossible to improve affordability through rent levels alone. If for political and economic reasons we are prepared to countenance low incomes then high housing costs can only be defrayed through subsidising rents.’ And he argues that the ‘obsession in some quarters’ with expanding private renting ignores the fact that British pay rates are too low to make market prices affordable without housing benefit.

With no official government policy on affordability and rents, Affinity Sutton commissioned its own research to help it frame an affordable rent policy. ‘It is already clear that devising a market rent-related rent policy to help those on the lowest incomes is challenging to say the least,’ he says. ‘The “target rent” approach, which takes into account the housing market and lower incomes, may not be perfect but it at least offers a sensible starting point for a more logical approach.’

Other research shows that supply-side subsidy for social rents offer the best long-term deal for tenants, taxpayers and providers. He argues that a mix of social rents, affordable rents and market rents is the way forward in contrast to current policy. And drawing on the IPPR’s work on bricks and mortar subsidies he concludes: ‘Spending 95p of every housing pound on benefit just doesn’t make sense, does it?’

Both essays are worth reading in full. The detail of their argument may differ in some respects but both make the crucial link between housing and the labour market, rents and people’s ability to pay them. What both show, I think, is that the underlying case for social housing is not just as strong as ever but even stronger now than it was in an era of full employment and high wages. 

Why do we need social housing? The answers are there. Now people beyond this website need to hear them. 

Discretion and discrimination

Mon, 12 May 2014

Shocking new figures published by Inside Housing reveal yet again the holes in the safety net provided by discretionary housing payments.

On one level it beggars belief that in the last financial year councils turned down 70,000 requests for help from tenants facing cuts in their housing benefit and returned £9 million of DHP funding to central government.

On another, it’s no surprise that a system devolved to local authorities facing their own budget cuts has experienced problems or that one based on local discretion has varied so much between different areas.

I have two big problems with the system but neither is the one today’s Daily Mirror highlights from IH’s report: the north-south divide in the help given to Westminster and Liverpool. All kinds of government funding is tilted in favour of the well-heeled Conservative south of England but in this case it seems to reflect the fact that DHPs do not just cover the bedroom tax. High-rent areas of London face the biggest impact from the bedroom caps and benefit cap.

My first problem is perhaps an inevitable consequence of a discretionary system. A national benefits system based on rights and entitlement becomes a local one based on value judgments about who deserves help.

Is it a coincidence, for example, that North Lincolnshire spent the lowest proportion of its DHP budget in the country (just 15 per cent) and refused the second highest proportion of claims (63 per cent) when it had a policy of refusing grants to tenants who make the wrong ‘life choices’?  As Cllr Rob Waltham, chair of the health and wellbeing committee, told the BBC last year:

‘We all make life choices, whether we go to work, or we can or can’t go to work. What we ask them to do is to reprioritise their spending. If their spending includes satellite television, if it includes smoking then what we say to you is we can’t give you extra taxpayers’ money to support you to continue to make those life choices.’

The data attached to Pete Apps’s Inside Housing story reveals that another two councils in the same county – North East Lincolnshire and West Lindsey – spent the second and third lowest proportions of their DHP budgets.

However, Vale of White Horse in Oxfordshire turned down an even greater proportion of claims (66 per cent) than North Lincolnshire, while East Hampshire took third place with 61 per cent of claims refused.

At the other end of the scale Cheshire West managed to spend all of its DHP allocation plus a bit more and turned down nobody for help. Another three councils – Craven, Stratford on Avon and Derbyshire Dales – turned down less than two per cent of applicants.

In between there is huge variation between different councils which I’m guessing is based not just on their treatment of spending but also income, and in particular whether councils disregard disability benefits or not. 

Politics does seem to come into this too. Analysis by Jed Meers for his PhD thesis shows the political make-up of a local authority does makes some difference to its treatment of bedroom tax victims. Conservative councils appear to be spending less per bedroom tax case than Labour ones. However, the picture is complex: councils with no overall control were more generous than Labour ones; and both North Lincolnshire and Cheshire West are Conservative-controlled.

Jed also highlights the fact that many authorities also apply elements of conditionality to DHP awards, such as a commitment to seek work or alternative accommodation or to reduce spending. ‘in appealing to a form of localised knowledge the government have also appealed to some extent to a localised morality and politics,’ he says. To me this bears more than a passing resemblance to the system that existed before the post-war welfare state.

My second problem is not so much with the DHP system itself as with the attitude of senior judges towards it. While many first tier tribunals have found in favour of tenants, both the High Court and Court of Appeal have found for the DWP. Judges ruled that the bedroom tax does discriminate against disabled people but that the secretary of state had justified the discriminatory effect of the policy and their needs were being met through DHPs.

The DWP will no doubt stick to its line that the DHP system is appropriate and designed to respond flexibly to local circumstances. However, these new figures show that what is presented as flexibility from above looks very different from below.

How long the courts will continue to accept the system at face value remains to be seen. Significantly, the all-party work and pensions committee recognised the same inadequacy in a report published last month calling for significant new exemptions from the bedroom tax. The MPs argued that local discretion ‘is resulting in access to DHP funding depending heavily on where a claimant lives’.

Local discretion is of course being turned to national political ends in Scotland. With permission from Westminster, the Scottish Government is using DHPs plus its own resources to mitigate the impact of the bedroom tax in full. While that may not be quite as simple as it sounds (what happens to tenants who need DHPs to make up for other cuts in housing benefit, for example?), will tenants in the rest of the UK continue to face a postcode lottery?

Control speak

Fri, 2 May 2014

Labour’s bold move on private renting seems to be working as politics. Will it work as policy?

I’ve never been to Venezuela or Vietnam but, with due deference to Grant Shapps’s expertise on their housing systems, I do have a few observations to offer.

The Conservative chairman compared Ed Miliband to Hugo Chavez in a ludicrously overblown reaction to the Labour leader’s speech yesterday. Free market think tanks like the Institute of Economic Affairs and right-wing commentators like Fraser Nelson and Harry Phibbs joined him in condemning Labour’s supposed plans to introduce rent controls.

A quick glance at what Labour is actually proposing reveals that it owes far more to Ireland and Germany than Venezuela and Vietnam:

  • A ban on the outrageous fees letting agents charge to tenants, which Labour says will save them an average of £350.
  • A default three-year tenancy, from which tenants can give one month’s notice after the first six months
  • The rent to be freely negotiated at the start of the tenancy with annual increases after that based on a benchmark such as average market rents.

This demonstrably does not amount to the ‘rent controls’ described by Shapps and the right-wing think tanks. Nor will it necessarily lead to a fall in supply: the private rented sector in Ireland grew rapidly after it introduced very similar four-year tenancies with annual rent reviews based on market rent in 2004. And it’s actually more timid than the policies advocated by German chancellor Angela Merkel in last year’s elections. 

As for ‘rent control’ what about the way that the market already operates for the eight million households who currently rent their home in England?

The rents of four million social housing tenants rise by a formula linked to inflation (currently CPI plus 1 per cent). That could definitely be described as rent control but far from restricting new supply it is a vital mechanism underpinning it. Over the last few years social rents have actually risen faster on average than private rents.

In the private sector, there are still a dwindling number of tenants on pre-1989 regulated rents (120,000 in 20087/08, the most recent figure I can find). The Conservative-led coalition has introduced caps on the rents eligible for housing benefit of another 1.6 million private tenants. The bedroom size caps were explicitly designed to reduce the rents charged by private landlords.

So, depending on your point of view, the rents of around 5.7 million tenant households are controlled in some form. ‘Rent control’ has many forms. You could even argue that it applies to the remaining 2.3 million households on assured shorthold tenancies and not on housing benefit. As Duncan Stott pointed out on twitter yesterday, his rent is set and cannot be increased for the duration of his six-month tenancy.

Politically, the row about rents is part of a more fundamental division between the parties about intervention in markets. The Conservatives prefer to subsidise ownership (and boost house prices) through Help to Buy. My guess is that Labour’s new policies will resonate with younger voters who are private tenants. As two indications, see these blogs by Tim Stanley in the Telegraph and Daniel Knowles in The Economist. Neither publication is known for its support for Labour or rejection of free markets, but both are broadly supportive of Labour’s announcement.

It remains to be seen whether this will amount to the big electoral boost for Labour envisaged by its more optimistic supporters – they will have to be registered to vote first – but it does have political appeal. As with capping energy prices, the Conservatives can’t seem to decide where this is Marxism or a gimmick but they may find it is also popular.  

But will it work as a policy? On the economics of interventions in rental markets, see this excellent blog by Alex Marsh. On the history, I’m planning a separate blog soon. Here are a few thoughts about the policy issues in the meantime.

It was noticeable that, unlike previous Labour policy documents on private renters, there were no endorsements from people in the property industry. There was even an embarrassing intervention from the RICS denying that is working on the benchmarks that the Labour press release implied would be the basis of rent setting. Hostile reactions from the landlord organisations and letting agents were only to be expected but like the energy companies before them they will come across as self-interested.

The more serious threat is the one to investment. When it came to office in 1997 one of the reasons Labour was careful to say that it had no plans for major changes on private renting was that it feared spooking the institutional investors supposedly considering a move into the sector.

Exactly the same argument is being made now at a time when Build to Let at last shows some signs of getting off the ground. One of the most thoughtful reactions from the industry has come from Ian Fletcher of the British Property Federation:

‘There are many institutions investing in UK housing, or on the cusp of it, that will be feeling extremely nervous this morning. Those who are investing already are very receptive to offering longer tenancies and many are doing so and the Labour Party’s aspiration on that in itself is not objectionable, but the rent control aspect of this announcement makes no sense. Good landlords will be getting a perverse message that if you are providing a premium product the most you can expect is the ‘average’, whilst bad landlords with sub-standard accommodation can find another justification for charging over the odds.’

That is a genuine concern and it will raise fears that Labour could go further in future. However, any damage to confidence has probably already been done. And the counter-argument – that Labour should do nothing for fear of spooking investors – is exactly what has led to the rise of buy to let and insecurity for tenants.

As Ian Fletcher goes on to say, it also means Labour has to be more forthcoming about how its new policies will work. This is the crucial point: any new system will involve a compromise between protecting tenants and allowing the market to operate and the question is where it is struck. The similar policies proposed by Eric Pickles last year signalled that he knows there is a problem but seem unlikely to achieve much because they are voluntary.

In contrast, Labour plans to legislate for the new tenancies and to ban letting agent fees. However, the detail that has emerged so far includes important flexibilities. The three-year tenancy will begin with a six-month probation and the landlord will be able to terminate the contract for reasons such as rent arrears or anti-social behaviour. After that landlords will be able to terminate with two months’ notice on the same grounds or if they want to sell, refurbish or change the use of the property.

However, some shorter-term tenancies will continue. New tenants like students and people on temporary contracts will be able to request shorter lets with the landlord’s agreement. Landlords contractually obliged to offer short tenancies by the terms of their buy-to-let mortgage will be able to continue to offer them if the mortgage was taken out before the start of the new system.

All of these seem sensible provisions that should go some way to allay the fears of landlords and others in the property industry. However, it’s not hard to see that they could also be the basis of some gaping loopholes in the legislation. What would happen, for example, if banks simply refused to change the terms of their buy-to-let mortgages because they want quick possession? What’s to stop a landlord lying about sale or refurbishment plans or not so subtly implying to a new tenant that they should ‘request’ a shorter let.

The politics of this will be fascinating over the next 12 months. If they help Labour win, the devil will be in the policy details. 

Decision time

Thu, 1 May 2014

It’s May 8, 2015. A new government takes office promising that housing will be a priority. But can we be sure they will deliver?

They may have different means in mind but all of the major parties are apparently committed to the same end: Yes to Homes. Whoever wins in a year’s time faces an uphill struggle to boost output from the current miserable levels.

A report published today by Shelter and KPMG sets out a road map for how the new government can get from there to the promised land of 250,000 new homes a year by 2021. It begins with two significant and symbolic acts by the new prime minister on day one - the appointment of the housing minister to the Cabinet and a declaration that building more homes is a ‘national priority’ - and it continues with a programme for the first 50 and 100 days and each year of the new government. The full report is here and a shorter web version here.

Housing is plagued by simplistic solutions. We’re told that the crisis can be resolved if only we liberalise planning, or build new garden cities or bring empty homes back into use. The truth is that, whatever the merits of each of these proposals, none of them will be enough on their own. A silver bullet may be enough to stop a vampire but don’t expect it to solve the housing crisis without liberal doses of garlic, nails to hammer down the coffin and plenty of money, bricks and mortar.

It’s a point that applies in spades to the politics of housing since there’s nothing that politicians love better than simplistic solutions, preferably ones that can be communicated in (sound) bite-sized chunks. Vague promises made during election campaigns and in housing strategies and white papers usually turn out not to count for very much when the election comes round again. And the problem is amplified by the disconnect between the long timescales required for solutions to work and the short ones dictated by the five-year electoral cycle. What politician wants solutions that only reap political dividends for the next government?

The report from Shelter and KPMG does not pretend that tackling the housing shortage will be easy or simple. Real action means tough choices – not the empty ones that feature in political rhetoric but real ones about the policies and resources needed to get more new homes. But the alternative is worse. The headline warning is that house prices could quadruple within 20 years and half of the under-35s could be living with their parents if the new government fails to act.

In a message addressed to David Cameron, Nick Clegg and Ed Miliband, the report warns:

‘If the next government shies away from showing the strong leadership needed, having a home of your own to rent or buy affordably will become a distant dream for an increasing number of people in this country. rents will rise and homelessness will increase.the economic recovery will be held back by high housing costs, an immobile workforce and unstable housing markets.’

The plan is one of the most comprehensive I’ve seen and gets to the heart of some crucial issues that get ignored or glossed over in the rush for simplistic solutions. Here are some that caught my eye:

Land is the crucial issue not planning. The report proposes that planning authorities be given the power to designate New Homes Zones where development will happen with no taxes on the site and on land acquired at closer to existing use value than residential value. The land market should be opened up with far more data on who owns it and the prices they paid for it.

Garden cities are important – but they won’t contribute much in the next five years. The report calls for five of around 30,000 homes each with construction to start within the lifetime of the next parliament. But each will have a development period of 15 years and they will only begin to contribute around 5,000 homes a year by the end of it.

We need a new housebuilding model. Delivery has become ever more concentrated in the hands of a few large housebuilders with little incentive to increase output. The report rightly links that to the residual land value model, under which the price of existing homes dictates the price firms pay for land, increasing the price they pay and reducing quality. It calls for new incentives for small and medium sized builders, including Help to Build guarantees diverted from Help to Buy, and sites in New Homes Zones and garden cities set aside for small developers and custom builders.

Design standards will level the playing field. In contrast to the current rhetoric about cutting ‘red tape’, the report argues that clear national rules on the minimum size of new homes will help developers by giving them confidence that rivals will not be able to bid more for land by squeezing in as many smaller homes as possible.

Investment in affordable housing is crucial. On top of the familiar arguments about the wider economic benefits and returns to the Treasury, the report points out that increased spending will have an immediate impact on the ground. It calls for an extra £1.2 billion a year of public spending matched by private funding and the existing AHP to bring total investment to £15 billion over the next parliament. Half would be for social rent, a quarter for intermediate rent and a quarter for affordable home ownership. The money could come from soaring stamp duty receipts, tackling tax evasion by private landlords and reforming the new homes bonus.

So are new ways to finance house building. The report recommends a Dutch-style Housjng and Infrastructure Bank plus joint venture land deals and institutional investment. One intriguing proposal is a Housing ISA, where depositors would get a state-guaranteed tax-free return and the money would be let out as low cost, long term loans to affordable housing providers.

We need the rebirth of council housing. We’ve never come close to 250,000 homes a year since local authorities were prevented from borrowing after 1979. After bi-partisan moves to loosen the restrictions, the report recommends gradually raising HRA borrowing caps and eventually reforming the borrowing rules on European lines.

Green belts don’t have to stay as they are. That doesn’t mean abolishing them either. The report argues green belt swaps and reviews have huge potential to deliver more homes.

I’m guessing that almost everyone will find some things to quibble with in this report. One of mine would be the implicit assumption that funding for affordable housing can be scaled back once we reach 250,000 homes a year. That was the figure that the Barker report said was needed to bring house price increases back to the European average, not bring them down. Affordability will continue to be a problem.

However, taken as a whole, this is a blueprint (or redprint or yellowprint) for what all the parties say they want to achieve after 2015. Some proposals will appeal to some parties more than others but the fundamental question remains. How serious are they about the housing crisis?

Adjust your set

Wed, 30 Apr 2014

In case you missed it, How to Get a Council House is back – and so is the controversy about TV stereotypes and the hashtag on Twitter.

The second series of the Channel 4 show focuses on the London borough of Tower Hamlets and people affected by the benefit cap (two weeks ago), applying as homeless (last week) and in temporary accommodation (this week).

As with the first series, it’s provoked some strong reactions and it almost feels like we are in two different countries when I look at Twitter.

Outside my Twitter stream, there is a wave of bigotry waiting to be unleashed on anyone who appears on the show at #howtogetacouncilhouse and seemingly complete ignorance about what the housing and homelessness system is trying to achieve.

Inside my stream there is outrage at the programme’s portrayal of the system and the reaction to it. The show has also inspired a rival hashtag #councilhomeschat (and twitter account @Councilhomechat) that is fighting back with positive stories and videos about social housing and the people who live in it. You can sign up to its Thunderclap campaign to counter media stereotypes here and check out the blogs and videos at councilhomeschat.wordpress.com.

In the wake of Skint, Benefits Street and all the other exploitative programmes on Channel 4 and copycats on Channel 5, it’s hard not to sympathise. How to Get a Council House is a crass title for a programme in which very few people ever do get one, but one that seems designed to provoke social media chatter to generate viewing figures.

Yet, as with the first series, I’d argue that HTGACH includes real documentary as well as a dodgy premise and a genuine point that is not the one being made by the jolly commentator. It’s hard not to admire the frontline housing staff doing a job that I couldn’t do in impossible circumstances and wonder about the point they are making about their work. Different editing of the same footage, plus a different title, would have produced a very different programme.

The message coming across loud and clear from Colin Cormack and his team at Tower Hamlets is that a combination of welfare reform and the social change are making the borough a no-go area for people on benefits and low incomes. Despite all the government’s claims to the contrary, we are seeing social cleansing in action (and those are the words of a letting agent in the first programme, not mine or anyone at the council). You have to be watching closely to pick it up because of the way the programme title dictates the angle but it is still there.

So, as with the first series set in Tower Hamlets and Manchester, I find myself in two minds about How to Get a Council House. The negative side kicks in before the programme even starts: before the first episode the controversial C4 ident of the Aylesbury estate complete with inserted litter, graffiti and Sky dishes set the tone. Channel 4 must be well aware of the campaign against it by residents who have produced their own more positive version, so using it in this context smacks either of lazy complacency or of simply sticking two fingers up to its critics.

Then there’s the way the issues are presented. Channel 4 summed up the programme in a tweet last week like this:

how to

The A&E for housing? That may seem like a good description of the homelessness safety net but if this was a real A&E, what about the rest of the hospital? Patients would be on trolleys out into the car park because all the other wards were packed. The phrase caught my attention because it was also used by Julia Unwin of the Joseph Rowntree Foundation in a speech I blogged about last week. She was warning about the consequences of treating housing as something only to be provided at the point of need. 

Another problem I have with HTGACH is that it never seriously addresses its title. Somewhere in the six episodes there must have been a chance to look at why virtually no new council houses have been built in the last 30 years or at the number of old ones now owned by private landlords. It’s all too easy for viewers to confuse council housing with temporary accommodation and private flats and to think that housing benefit is going to the tenants rather than to the landlords. Lack of context like this means negative stereotyping can gain ground.

That’s a shame because the raw material for a much better documentary about housing keeps breaking through. The first episode, for example, shows that the social cleansing that the government denies and the out-of-area placements discouraged in official guidance are already happening. The welfare reform officer says bluntly: ‘Nobody who’s benefit dependent and not in a permanent property is going to be able to afford to live in Tower Hamlets. This is going to happen in the next six to 12 months.’ A lettings agent says that: ‘The people with money are pushing the poor out of Tower Hamlets. It’s kind of a cleansing of the poor.’

One single parent is told that she will almost certainly be moved out of the borough (‘it will be a big move, not round the corner’) and sums it up as ‘moving 20 miles away from anything I’ve ever known and bringing up my four kids in isolation. I can’t control my future or my children’s and that boils down to making me feel like a bad mum’. At the last minute she gets offered a new housing association flat in the area. ‘We can leave all the stress behind and start being happy,’ she says, a comment that says everything about why social housing is so desperately needed.

Another single parent is being evicted from her private rented flat because of the benefit cap and eventually gets temporary accommodation in another flat. Ironically, when she is trying to ‘get a council house’ both of the flats look like they are ex-right to buy. Her rent will be £338 a week and her housing benefit after the cap is £217, but DHPs will cover the balance for now.

And the last word in the programme goes to Colin Cormack, who sums things up as:

‘What’s happening is people are renting in the private sector, they have some reliance on housing benefit, welfare reforms are coming in that limit the person’s benefit entitlement, landlords are evicting those families, they come to the council, and the public purse has to pay significantly more to assist that family.’

That’s a pretty devastating summary of the impact of welfare reform and our failure to invest in social housing and it’s all the more powerful for being expressed in an almost matter-of-fact tone by someone on the frontline. Despite my problems with it, HTGACH shows that what we all warned about is happening through the stories of real people. But it also left me wondering whether a viewer who knows little of housing and welfare reform would get all that.

So for me How to Get a Council House is much better than Benefits Street but it still shows how firmly established the negative stereotyping of tenants and people on benefits has become. Channel 4 and its programme makers need to be challenged but is that alone enough? The same attitudes about social housing and the welfare state run right down from Iain Duncan Smith to the bile on twitter. The rest of us need to do a much better job of communicating the positive case for both, why they were created in the first place and why we need them now.

Here’s hoping that the positives outweigh the negatives in tonight’s final episode. 

New regime for mortgage lending

Mon, 28 Apr 2014

Will the new mortgage rules tilt the playing field even further in favour or the housing haves and against the have-nots?

On the face of it’s hard to argue with the idea that lenders should check whether borrowers can actually afford their mortgage before they make the loan. But is it quite that simple?

After a long consultation, the new Mortgage Market Review (MMR) regime finally came into force on Saturday. The aim is to prevent a repeat of the irresponsible surge in lending seen before 2007. The lax rules then were symbolised by the self-certified mortgage, or liar loan, which is now banned.

However, the change does not herald a return to the old days when lenders would only give mortgages of up to three times earnings for an individual or 2.5 times earnings for a couple. As the BBC’s Andrew Verity showed on Newsnight on Friday (19 minutes in), it could well be possible to borrow more rather than less under the new system: couples can get a loan on a multiple of five or even 5.5 times their joint income.

Instead, borrowers will have to submit to forensic scrutiny of their spending plus a stress test to check that they can afford their repayments if interest rates rise. Again both seem sensible and, if there are fears of a hiatus in the market as a result, a stricter test of affordability ought to help dampen down house price inflation.

But if the MMR could help prevent some of the problems seen before 2007, is it appropriate for the market conditions of 2014? And who will gain and who will lose out as a result?

Affordable for who? The MMR tests affordability in terms of spending as well as income. The logical response for borrowers will be to cut their spending in the three months before they apply (much as they may have to once they start paying the mortgage) but that may not be possible for everyone. Couples with children who are both working cannot suddenly cut their spending on childcare. The impact of that was shown in one bank’s test quoted in The Guardian: a couple with no children each on £35,000 a year would be able to borrow £329,500; the same couple with children would only be able to borrow £205,600 once childcare costs were assessed.

Cash is king. New mortgage rules will have no impact on cash buyers, who now account for over 35 per cent of home sales compared to just over 10 per cent in 2004 and around 25 per cent at the end of 2007. They could now have an even bigger advantage in the market.

Foreign buyers. The argument continues over whether buyers from overseas have inflated the whole London market or just the top end. However, as Sky’s economics editor Ed Conway blogged last week, it could be a mistake to assume that all of them are Russian oligarchs and Saudi princes buying property outright. It’s unclear how many overseas buyers are using overseas mortgages to buy homes in the UK but it is clear that these are not covered by the MMR.

First-time buyers. Existing home owners with a deposit of 25 per cent or more already enjoy far cheaper interest rates than, for example, first-time buyers able to put up 5 or 10 per cent. It’s not hard to predict whose spending lenders will scrutinise more closely. One result could be longer mortgage terms for first-timers, which cut the monthly repayments but obviously cost more over the life of the loan. The MMR does not ban interest-only mortgages but they will be much harder to come by without proof of a means of repaying them.

Changing employment. The self-employed and people on short-term contracts could suffer most from lack of access to home loans. They will not only be unable to get a self-certified mortgage but they will also face far greater scrutiny of their income and expenditure, with lenders likely to demand three years of accounts and HMRC certificates to go with them. There are now 600,000 more self-employed people than there were before the recession and if they are not already on the housing ladder they are going to find it much, much harder to get a mortgage.

More private renting. All of this will reinforce existing trends in housing tenure, with home ownership continuing to fall while the number of private tenants rises. Savills argued over the weekend that the MMR will further erode mortgaged ownership and predicts that another million households will become private renters in the next five years.

More buy to let. What’s bad news for frustrated buyers looks like yet more good news for the landlords whose tenants they will become. As Steve Wilcox pointed out in this year’s UK Housing Review, buy-to-let landlords already enjoy major advantages over first-time buyers: their mortgage costs are cheaper because they use interest-only loans; and they can offset those costs against their tax bill. Housing benefit also guarantees a significant proportion of their rents.

By coincidence, buy to let was 18 years old over the weekend. A report released over the weekend by Paragon Mortgages estimated that landlords have enjoyed an average return of 16.3 per cent a year since 1996. Past returns are of course not necessarily a guide to the future, and Paragon has an interest as a leading lender to landlords, but that is more than double the return available from shares or any other asset class.

There are no prizes for guessing which key part of the mortgage market will not be covered by the MMR or by the forthcoming European mortgage directive. It’s an issue I blogged about when earlier drafts of the MMR were published. It has already led to concern in the industry that people could attempt to evade the new rules by applying for a buy-to-let loan on somewhere they intend to live themselves. There are also predictions that buy-to-let lending will rise as banks look to make up a shortfall against their lending targets caused by the MMR.

However, the more fundamental impact could be felt by the housing system as a whole rather than just the mortgage market. The new rules make it even less likely that young renters, especially those with children, will be able to borrow enough against their income to get on to the housing ladder. Buy to let effectively transfers that borrowing capacity to someone else: the rent they will be forced to pay will become the income stream to repay the mortgage of a buy to let investor. And, as I blogged earlier in the month, the rise in house prices since the launch of Help to Buy means that far more would-be owners have been priced out than have been priced in through the government scheme.

Proper regulation of the mortgage market is essential to avoid a repeat of the crisis of 2008 or even that of 1992. The launch of the new system follows a long consultation aimed at striking the right balance between protecting borrowers and allowing the market to function effectively. However, partial regulation risks merely triggering yet more gains for the housing haves at the expense of the have-nots.  

Full value

Tue, 22 Apr 2014

With 13 months left until the general election, how can housing demonstrate its economic, social and political value?

Ruth Davison of the National Housing Federation was in no doubt speaking to the annual conference of the Housing Studies Association in York last week. ‘It’s time to stop researching and start broadcasting,’ she told the assembled academics.

I’m not sure anyone in the audience was ready to go quite that far, but her underlying point was well made. The evidence about the beneficial impact that housing can have across a vast range of fields is out there and the political parties seem at least for the moment prepared to listen. So why not shout about it?

The evidence and the politics both emerged in a debate chaired at the conference on ‘who is best placed to judge the value of housing – the state or the consumer’. It produced some expected and some very unexpected results.

The event brought together Bristol University professor Alex Marsh, Vidhya Alakeson of the Resolution Foundation, CIH president Paul Tennant and Conservative councillor John Moss. To add a bit of context, Alex also writes a must-read housing blog, Vidhya leads the RF’s work on housing which includes recent reports on build to rent and shared ownership, John is a regeneration consultant who co-authored an influential report for Localis that foreshadowed many of the coalition’s housing reforms and Paul is of course also group chief executive of Orbit.

The debate inevitably produced as many questions raised as answers. Value is a slippery word that can mean many different things and the basic question raises others about the role of markets and governments, whether we should subsidise homes or people and the future of social and affordable housing.

Alex Marsh analysed the different ways of looking at value and the conditions under which the state or the consumer is better placed to judge it. With growing evidence that supply subsidies are more efficient over the long term, can we come up with new ways of targeting them such as revolving funds? You can read his contribution on his blog here.

Vidhya Alakeson used the bedroom tax as a particular example of how leaving things to the market doesn’t work and economic incentives for people to move have failed. In the wider market people on low and middle incomes are left with no housing choices in today’s market.

John Moss put the pro-market, pro-welfare reform case. He conceded that the under-occupation penalty was ‘a little crude perhaps’ but had most of the audience wincing as he implied that 30 per cent of under-occupiers are unlawfully subletting and London council flats were full of bankers.

And Paul Tennant put the case for value that goes beyond money alone. ‘Value is how I feel about where I live,’ he said. Government had to recognise how much housing associations were generating from their own resources and the dangers of driving down grant so that people were either priced out of homes or priced in to a poverty trap.

The desperate need for new supply was the common ground between them even though there was disagreement about the means. For Paul Tennant, it’s land rather than planning per se that is the problem, where John Moss sees the post-war planning system as the villain of the piece and put a thoughtful case in favour of the coalition’s reforms and estate regeneration. However, he also spoke strongly in favour not just of new towns and community land trusts but of using compulsory purchase to buy agricultural land at agricultural prices.

Disagreements may continue about many things but when a Conservative makes that argument you begin to think that radical solutions really can be found.

Which is just as well, because the conference also heard a grim warning from Julia Unwin about the dangers of allowing housing to crumble as the fourth pillar of the welfare state.

The chief executive of the Joseph Rowntree Foundation argued that providing housing only at the point of need – using housing as a form of A&E – would not deliver thriving communities let alone help tackle the complex problems of an ageing society.

One of the proudest achievements of the welfare state had been to break the link between squalor and poverty but now we were in danger of reverting back, she argued. The changing nature of work meant that it was no longer a route out of poverty, in contrast to government rhetoric on welfare reform.

And she warned that the 2015 comprehensive spending review could turn out to be even more important than the general election: unless it came up with the right policies all the conditions were there for housing associations to start vacating the territory of housing the poorest.

If that was a sombre closing message, the conference itself showed that housing research seems to be in pretty good health. This blog covers only a couple of the plenary sessions with no space for workshops that featured contributions from across the academic spectrum and around the world and some talented young researchers coming through to join the veterans of the scene.

As Ken Gibb points out, all that attention may in part reflect the scale of the current housing crisis but his blog gives a flavour of the breadth of the research that is going on. The conference programme shows the many different ways of looking at value. 

It’s clear that the electorate and therefore the politicians sense there are questions that need to be answered urgently. The temptation to offer simplistic solutions to problems that are complex and inter-related is equally clear: the latest #howtogetacouncilhouse twitterstorm shows how many people think housing is part of the problem.

The continuing challenge – for everyone, not just researchers – is to show the value of housing in providing the answers.

Housing review offers complete picture

Tue, 15 Apr 2014

As ever the new UK Housing Review offers a mix of authoritative statistics and some fascinating new insights on housing across all tenures.

Published this week, the 2014 edition of the bible for housing types edited by Steve Wilcox and John Perry mixes a compendium of statistics plus several chapters of expert commentary. It’s also one of the few publications to compare housing in the different nations of the UK. All that’s missing is an index.

Reports elsewhere have highlighted the bias in the mortgage market towards landlords and the threat to the affordable homes programme after 2015 but I’ve picked out three more themes to illustrate the breadth of what’s on offer in the review.

1) If you think we’ve got problems…

This year’s UK Housing Review includes a detailed chapter on the housing situation in Ireland, which author Eddie Lewis likens to ‘the last reel of a disaster movie’.

To UK eyes there are some familiar trends and some very unfamiliar ones and the comparison says much about housing in both countries. Consider, for example, this graph on housebuilding.

building

Housebuilding in Ireland peaked at 93,000 in 2006 and slumped to just 7,500 last year. But Ireland’s population is 4.5 million against England’s 53 million: if we had built the same number of homes per head completions would have peaked at an incredible 1.1 million. The equivalent of the Irish slump would have been 90,000, which is only a little short of what we are currently building.

That says much about the speculative building boom in Ireland, with completions far outstripping demand, and it also helps explain the 50 per cent slump in house prices there following the boom. However, it also shows just how unresponsive the English housebuilding model is to market conditions.

2) The income gulf between tenures

Once upon a time there was little difference between the incomes of council tenants, private renters and outright owners and even people buying with a mortgage earned less than twice as much. This graph from the review shows how that has changed over the last 40 years.

Gulf

It shows the incomes of people in other tenures relative to those of council tenants. The introduction of the right to buy explains the growing gap in the 1980s as the proportion of working households declined in the social rented sector.

However, as the review points out, this proportion has not declined any further since 1991 but the gap with private tenants and outright owners continued to grow until 2004 and the gap with homebuyers is still rising.

The graph illustrates not just the rising inequality highlighted by Danny Dorling in his recent book but just how far we are running to stand still or go backwards with ‘affordable’ housing.

3) When is a bubble not a bubble?

The third and final graph taken from the review shows house prices and mortgage costs in relation to individual earnings.

HPI

Note how the two were broadly similar in the boom of the late 1980s but have since grown apart thanks to lower interest rates. Mortgage costs were getting close to the peak of the late 1980s during the latest boom but have since fallen back again thanks to record low rates and schemes such as Funding for Lending. In contrast, house prices are back at their 2007 peak.

For Steve Wilcox this is clear evidence that any talk of a housing bubble outside London is nonsense. However, does the gap between the two measures also show the potential problems stored up when interest rates eventually rise again?

The full version of the UK Housing Review is available to order from the CIH. Previous editions are online here.

Help or hindrance?

Fri, 11 Apr 2014

So a year in to Help to Buy, who has it helped and what has the impact been so far?

Those are the questions I set out to answer in my feature in this week’s Inside Housing. It concludes that the limited number of Help to Buy transactions seen so far cannot have been enough on their own to account for what’s happened in the market in its first year. What’s been far more significant is the impact on the behaviour of buyers, sellers and housebuilders of a signal from the government that it will do everything it can to generate a housing market recovery. That, combined with a range of other government policies (and non-policies) and the favourable environment of record low interest rates, has duly produced one.

Culture secretary Sajid Javid did not seem to convince many people in the Question Time audience last night that there is no housing bubble. As financial secretary to the Treasury until Wednesday he was intimately involved with Help to Buy so he should be in a position to know. But his ‘inconvenient facts’ about low inflation and prices still being below their 2007 peak prompted incredulity from the rest of the panel. You might expect that from Billy Bragg and Harriet Harman, but the most telling put-down came from advertising boss Sir Martin Sorrell, who pointed out that the fact that prices are rising so quickly at a time of low inflation is more rather than less evidence of a bubble.

However, there is new evidence today the CIH’s annual UK Housing Review that the problems in the housing market go a lot deeper than Help to Buy and have been brewing for much longer than the last year. The average first-time buyer house price has risen by 120 per cent since 2001 while the cost of their average mortgage has risen by 110 per cent. While mortgage payments are more affordable than at the peak of the market in 2007, that is only thanks to record low interest rates: the ratio of the average mortgage advance to incomes is now almost back at peak levels. And remember that 2007 was the peak of one of the biggest bubbles in housing market history (one that did not fully deflate) rather than the benchmark of normality implied by Sajid Javid.

Add the long-term under-provision of new homes, a broken model of housebuilding, a tax system that encourages investment and speculation in housing, the rise of buy to let and London’s global status and you have the much larger backdrop for Help to Buy.

There was much that I had to leave out of my piece in the print version of Inside Housing and lots more that I did not have space to examine in any detail. This blog is an attempt to fill some of those gaps and bring the story up to date with some of the stats published since the article went to press:

  • The numbers so far. The first 11 months of Help to Buy 1 (equity loans) saw 16,465 properties bought in England (schemes in Scotland and Wales started later). The first four months of Help to Buy 2 (mortgage guarantees) saw 2,572 completions. Those 19,037 transactions supported by Help to Buy compare to 1.1 million in the market as a whole so they cannot be enough on their own to explain the rise in house prices. In addition, more than three-quarters of them were outside London and the South East, the regions that have seen the strongest price growth. However, house prices are fuelled by expectations for the future as well as current supply and demand and the impact of Help to Buy is about the signals it sends out as well as the deals completed.
  • First-time buyers. Around 88 per cent of households who’ve benefitted from Help to Buy have been first-time buyers. Assuming two buyers per household, that’s just over 30,000 people. However, calculations by the Priced Out campaign suggest that the increase in prices since March 2013 had put home ownership beyond the reach of more than 250,000 renters by the end of January. Based on the Office for Budget Responsibility’s forecast for prices and earnings, that figure will be 450,000 by the end of this year. These are national figures that do not take account of huge variation between prices in different regions but even so they beg a very big question about the ‘help’ in Help to Buy.
  • Help to Buy 1. The saving grace of the equity loan scheme is that it only applies to new homes. The government has been quick to claim credit for the 23 per cent increase in housing starts seen over the last year even though completions are still flatlining. Help to Buy has supported a much greater proportion of sales of new homes than in the market as a whole. However, the big unanswered questions are how many of them would have been built anyway and how far housebuilders have simply used Help to Buy to scale back their own discounts and sales incentives. The rise in the share prices of the major housebuilders over the last year suggests that the City thinks they will do pretty well put of it.
  • The land market. Housebuilders hailed the unexpected extension of Help to Buy 1 from 2016 to the end of the decade as ‘providing certainty for the industry’. The danger is that the only certainty will be rising land prices. The Knight Frank Residential Development Land Index shows that land prices fell slightly in 2012 but rose 7.1 per cent in 2013. We now know that the taxpayer will back new home sales until 2020, giving landowners every reason to hold out for as much as they can get for their sites.
  • Help to Buy 2. The mortgage guarantee element of Help to Buy is bigger and far more controversial than Help to Buy 1. It’s been decried for stoking up demand while doing little about supply and for potentially leaving taxpayers on a £12.5 billion hook if it stimulates a boom and then a bust. However, the evidence so far suggests that the impact may be less than feared. Even taking account of the time it took for mortgage lenders to get up and running following the accelerated launch in October, 2,572 sales in four months is a long way from initial estimates of up to 190,000 a year. One reason for that, highlighted by figures from Hometrack, could be that Help to Buy 2 mortgage rates look very expensive by comparison with renting and other ways of buying. Another is that 90 and 95 per cent mortgages are now available outside of Help to Buy.

However, all of this assumes that Help to Buy actually is a housing policy and that the real aims are to help first-time buyers and boost housebuilding rather than existing home owners and the government’s electoral prospects. As Sir Martin Sorrell put it on last night’s Question Time: ‘Help to Buy was a political move. It was done in order to stimulate electoral support because it will be extremely popular. The problem is be careful what you wish for.’

Frank words

Wed, 9 Apr 2014

Getting the same criticism from different people is usually a sign you’ve got something wrong. How about for IDS and the DWP?

Three different reports published this morning amplify earlier warnings about the implementation of the bedroom tax, the wider impact of welfare reform on tenants and landlords and the prospects for universal credit. But it would surprise nobody if the work and pensions secretary saw them as yet more evidence that his reforms are a success.

Two of them come from the Joseph Rowntree Foundation (JRF). Steve Wilcox finds that what he neutrally calls the ‘housing benefit size criteria’ has affected fewer people than expected but that half of those are in arrears and 100,000 who want to downsize are trapped and unable to move. Anne Power concludes that welfare reforms may end up making tenants more, rather than less, dependent and are making them more vulnerable.

The third is from the work and pensions committee and warns that it is still not clear that universal credit will work. The MPs on the all-party committee think that implementation will be delayed even further and have some strong words about Iain Duncan Smith’s attitude towards their scrutiny.

It is of course less than a week since the work and pensions committee published its highly critical report on the bedroom tax. The JRF report identifies many of the same weaknesses in the policy and options for reform.

On top of concerns about the operation for discretionary housing payments (DHPs), the shortage of smaller homes for downsizers and the extra costs imposed on landlords, it also identifies concerns about the size criteria, including a failure to specify minimum sizes for single or shared bedrooms.

It also puts the bedroom tax into perspective by pointing out almost three-quarters of households in Britain under-occupy their homes based on the size criteria. Of these, just 3 per cent are the working age social housing tenants on housing benefit.

Thanks to a fall in the numbers affected, the report concludes that DWP may make direct savings of around £330 million in 2013/14 net of DHP costs, £115 million less than originally expected. It adds: ‘Those savings will decline over time, but they have been achieved at considerable costs for tenants and landlords.’

Options for reform include:

  • allowing an extra bedroom for households with someone on higher rate DLA
  • clearer provision for households with carers and shared responsibility for children
  • stronger guidance abut the treatment of DLA awards in income assessment for DHPs
  • reforming the DHP system to allow longer-term awards
  • introducing minimum sizes for single and double bedrooms based on the statutory overcrowding provisions
  • increasing the bedroom standard to one bedroom above the current standard
  • requiring landlords to offer suitable alternative accommodation before applying the size criteria.

Many of these changes were also recommended by the work and pensions committee last week and some were in the ultimately unsuccessful House of Lords amendments to the Welfare Reform Act. The agenda for bedroom tax mitigation is now pretty clear if anyone wants to implement it.

The second JRF report is based on interviews with tenants and landlords about the combined impact of all the different welfare reforms affecting social housing. There are obvious and alarming financial impacts – tenants cutting back on food and heating, relying on food banks and extra costs undermining landlords’ ability to build new homes – but non-financial ones too.    

For tenants, the whole system harder to navigate, the private contractors running larger parts of it are distrusted and the ‘digital by default’ approach to accessing benefits is causing anxiety.

For landlords: ‘To ensure viability, housing associations are intensifying scrutiny of new tenants’ finances. Some of the poorest applicants (whether in work or not) are being rejected and told to apply elsewhere.’

And for the DWP: ‘It is possible that welfare reform will cost the government more as reliance on private renting grows due to social housing shortages, leading to higher housing benefit costs. Costs for extra support also go up for housing associations, councils, and tenants.’

The work and pensions committee report shifts the focus from reforms that have already been implemented to the biggest of all, which famously has not been. Universal credit was meant to begin for all new claims from October last year but as of March 20 this year only applied to 4,280 people with the simplest sort of claims.

Much of the report covers the same ground as the National Audit Office on the delays and IT problems that have dogged the project. The DWP changed the timetable significantly in July 2013 and again in December 2013 and the whole process will not be completed until after 2017. However, the committee concludes:

‘Whilst it is essential to ensure that the system works effectively for claimants before it is extended, DWP needs to be clear about all the implications of the delays. Due to the very slow pace of the roll-out to date, it is difficult to envisage how the volumes required to meet the most recent timetable can be achieved.’

The MPs also take the DWP to task over ‘regrettable’ waste in the two parallel IT systems for universal credit and urge it to detail financial support to local authorities to cover the additional costs of the administration of housing benefit up to 2017. Lack of clarity on the Local Support Services Framework for vulnerable claimants is also ‘regrettable’.

However, for me the most remarkable section of the report is about Iain Duncan Smith personally. At a hearing in February when members challenged his lack of disclosure of key information about the problems the DWP was encountering, he told them:

‘I do not have to tell the committee everything that is happening in the department until we have reached a conclusion about what is actually happening. I will take those decisions myself and account for the decisions that were taken, and I have done that.’

He added that ‘I do not think this committee can run the department’.

The all too obvious tension arose after a series of delays in IDS’s appearances before the committee and a number of occasions when major changes to universal credit implementation were announced just before he did. The MPs say ‘effective scrutiny by select committees relies on government departments providing them with accurate, timely and detailed information’ and ‘this has not always happened to date’.

Coming on the day that Maria Miller had to resign in part over her high-handed response to scrutiny, this is powerful stuff. Remember too that this report comes from a committee that supports the general principles of universal credit and on which coalition MPs are in the majority. In that context these are very strong words indeed:

‘It is not acceptable for ministers to provide information about changes to major policy implementation to this committee, and indeed to parliament and the public more broadly, only when forced to do so by the imminent prospect of being held to account in a public oral evidence session. We recommend that, in response to this report, DWP sets out how it will improve the frankness, accuracy and timeliness of the information it provides to us, to ensure that it meets the required levels of transparency between the government and select committees, and that we are not hampered in trying to carry out our role effectively.’

Landlords and tenants coping with the disaster of the bedroom tax and uncertainty about what could yet prove to be the disaster of the universal credit deserve nothing less.

But frankness, accuracy and timeliness are not often evident in the approach taken so far by a minister who responds to inconvenient facts with ‘I believe I am right’ and a department that polishes its discredited responses with each new setback. Reports are ‘simply wrong’ while policies are ‘very clearly working well’. 

 

Paying the rent

Tue, 8 Apr 2014

The affordable v social debate took centre stage in the Commons yesterday and also emerged as an issue in the prospectus for new borrowing for council housing.

Communities and Local Government questions initially saw the usual routine in which a Labour MP asks a question about social rented housing and coalition ministers boast about the affordable homes programme.

Yesterday was different. Perhaps it was because Labour’s Heidi Alexander challenged the obfuscation directly:

‘I asked the Minister about social rented housing, not just affordable housing. The truth is that this Government do not want to build social housing; they want to decimate it. Will he tell me why the number of social rented homes being built in London last year was roughly one tenth of the number being built in the capital in 2009?’

And perhaps it was because the minister answering the question was not the housing minister Kris Hopkins but his fellow junior communities minister Stephen Williams. Hopkins seemed to be confined to questions about private renting and self build and, disappointingly, was not asked about his contention on Newsnight that rising house prices are ‘a good thing’.

As a Lib Dem, the affordable/social distinction is perhaps more sensitive for Williams than it would be for a Conservative.

He boasted that: ‘We will be the first Government to leave office at the end of a Parliament with a greater stock of affordable homes, including council houses.’ Not only that but the DCLG and Treasury had just published the prospectus for £300 million of extra borrowing to allow councils to build new homes.

His reply to the next question – ‘I stress yet again that this Government are committed to building new affordable homes, including social homes’ – prompted Alexander to shake her head and Williams to add:

‘I remind her that the latest statement on housing policy from her own party says that it wants 100,000 new affordable homes, of which half would be shared ownership, 35 per cent would be affordable and only 15 per cent would be social rented homes. She should have a word with those on her own Front Bench.’

This was indeed the breakdown specified by Labour after Ed Balls’s conference speech in 2012 but it also misses out an extra 25,000 social rented homes on top of that financed by a tax on bankers’ bonuses. The balance between affordable and social in the final programme may depend on the outcome of the Lyons Review. 

Shadow housing minister Emma Reynolds challenged Williams on the coalition’s 60 per cent cut in the affordable homes programme and the watering down of section 106 agreements. ‘Was it a surprise to the Minister that last year they built the lowest number of homes for social rent for more than 20 years, or was that in fact the Government’s plan?’

Williams replied that ‘I do not recognise those figures’ and said the coalition was delivering ‘the fastest rate of building in 20 years’. And he evaded the question about section 106 by saying it was all a matter for local government.

Reynolds hit back that: ‘The truth is that this Government are not building social homes: Labour councils across the country are out-building Tory and Lib Dem councils.’

Former Lib Dem communities minister Sir Andrew Stunell brought up the issue again later, asking what steps he was taking to increase the supply of social housing. ‘The Government have one of the most ambitions programmes of delivery for affordable and social homes of any Government,’ boasted Williams. 

And Stunell raised what the Lib Dems see as the real point when he followed up by asking: ‘Will he join me in congratulating Stockport Homes on opening its 4 millionth social and affordable home for rent? Does he see that as a really stark contrast with the performance of the Labour Government in reducing the housing stock by more than 400,000?

I was puzzled by that ‘4 millionth home’ reference as there are only 120,000 homes in the whole of Stockport. However, it seems to be a reference to what Stunell and Williams have claimed was ‘the historic moment’ when England’s affordable housing stock went back above four million when they opened one in the town. For all that he is correct about Labour’s record, it seemed pretty desperate stuff but it produced this pledge from Williams:

‘It is certainly the case that this Government, at the end of this Parliament in 2015, will be the first for generations to leave more social and affordable homes in stock than we found five years ago in 2010.’

If that does prove to be the case, it will be because because right to buy sales will not have had chance to recover following the increase in discounts and above all because of the controversial switch from social to affordable rent.

As Colin Wiles blogged last week, the result is that we are building affordable housing that in the most expensive parts of the country isn’t affordable at all. His FOI requests revealed that the average ‘affordable’ rent for a three-bed home is £191 per week when even the Living Wage assumes a rent of £115. Disturbingly, neither the HCA or GLA could provide any information about the number of existing social rent homes converted to affordable rent.

Yesterday also saw the publication of the prospectus for the extra £300 million of local authority borrowing announced in last year’s Autumn Statement. At the time this was seen as a Lib Dem gain in return for allowing the Conservatives to increase right to buy discounts. However, it soon became clear that not only did the extra borrowing only apply in the next parliament (£150 million in 2015/16 and 2016/17) but also that there were strings attached, especially on the sale of ‘high-value’ existing stock.

The prospectus confirms all this. The government expects the £300 million to deliver 10,000 new affordable homes and a cost of £30,000 per home implies a high proportion of ‘affordable’ rent. And in the introduction Kris Hopkins says that:

‘The Government wants to see active asset management and the disposals of high value vacant stock forming part of any bid as well as public sector land being brought forward – councils should be using their land proactively and not just mowing it.’

The prospectus continues:

‘As part of a local authority’s wider approach to asset management, local authorities are required to consider the contribution that disposal of some vacant properties (both within and outside the social housing sector) can make to support the delivery of new homes. This could include homes that are uneconomic as social housing properties and homes with particularly high market values where greater value to the business could be achieved if they were sold and the receipts reinvested in new housing.

‘Already some councils are taking a positive approach to asset management. Others are not. We believe asset management is a necessary part of social housing for all providers. All bids must show how they have considered the contribution of land and receipts from the disposal of stock, including, in particular, high value vacant stock. If contributions from land and asset disposal are not part of the bids local authorities must explain how they have arrived at this conclusion.’

There are limits on conversions. Borrowing caps will remain in place and the prospectus says that the government does not receive bids funded ‘on the back of additional borrowing capacity provided by conversions to affordable rent’. However, they only apply to local authorities. Where councils are working with a housing association on the proposed scheme, the association ‘is encouraged to consider conversions to affordable rent to generate additional financial capacity

In addition the prospectus sets out the process to allow local authorities to claim housing benefit subsidy above the limit rent for affordable rent properties.

And ‘a primary metric for assessment of value for money will be the level of additional Housing Revenue Account borrowing requested to deliver the scheme as a whole and per new affordable housing unit’.

In summary, it seems that an apparent concession to council housing could in fact see an even greater shift from social to affordable rent.

As the argument between the parties about social and affordable housing continues ahead of the election, that makes it all the more vital that we don’t allow the distinction to be forgotten.  

One size does not fit all

Wed, 2 Apr 2014

Today’s report from the work and pensions committee is an all-party challenge to the fundamental principles of the government’s reforms of housing benefit.

To my mind it is the most serious attack on the bedroom tax, the benefit cap and a swathe of other reforms since the government was forced to overturn House of Lords amendments to the Welfare Reform Act on the grounds of financial privilege.

But you would not guess it from reports in the national media this morning. On Radio 4’s Today programme it was only judged the third most important select committee report of the day and the second most important housing story behind the Nationwide house price index. It’s also downplayed elsewhere with headlines about ‘distress’ and ‘hardship’ or even stolen by Tim Farron rather than about the committee’s call for wholesale changes that could benefit hundreds of thousands of people.

That could be because most outlets have already run bedroom tax stories connected to yesterday’s first birthday (Today’s was last week). It could also be because there is no single eye-catching recommendation in the report that makes for a big headline.

Instead the MPs make a series of smaller recommendations. Their combined impact may be harder to grasp but, taken together, they undermine both the policies themselves and the government’s reliance on discretionary housing payments (DHPs) as its main line of defence against any criticism of them.

Take the social sector size criteria (the neutral name the MPs agreed to use for the bedroom tax). The committee split on party lines to reject a Labour attempt to recommend that it should be scrapped. However, the report highlights the impact on people ‘who are unlikely to be able to move house or enter work’ and recommends:

  • An exemption for disabled people living in homes that have been significantly adapted for them
  • An exemption for all households that contain somebody who is in receipt of the higher level mobility or care component of disability living allowance (DLA) and personal independence payment (PIP). If the government is unwilling to do this, it should exempt adults unable to share a bedroom because of their severe disabilities or who need a room for medical equipment or for a carer, including a partner who is a carer.

The Chartered Institute of Housing is still calling for the bedroom tax to be scrapped but it estimates that these measures would exempt around a third of households currently affected. Some people put the figure even higher.

However, the recommendations on the social sector size criteria do not stop there. They also include:

  • A detailed assessment of the available social housing stock in each local authority area. Where there is clear evidence there is insufficient smaller stock, the government should consider allowing affected households more time to adjust before the reduction in benefit is applied. Where a household is under-occupying but there is no suitable, reasonable accommodation available, the reduction should not be applied.
  • The government should use the DCLG standard of bed spaces rather than the number of bedrooms to determine whether a household is under-occupying. This will address cases where two children are being expected to share a room that was designed for one child.
  • The government should produce a full cost-effectiveness review of the policy by March 2015, including DHPs and costs incurred by local authorities and social landlords to assess the overall impact on the public purse.
  • The government should consider allocating extra funding to social housing providers in areas where significant extra costs are identified to mitigate the impact and ensure that capacity to build new homes is not compromised.

On the benefit cap, the MPs warn that it is ‘having a negative impact on some vulnerable households who were not the intended targets’. They recommend:

  • An exemption for full-time carers living with a disabled adult who is not their partner
  • An exemption for households in temporary accommodation ‘because these claimants have no choice about where they are housed and few options for reducing their housing costs’.

In both these cases, they explicitly reject the government’s argument that DHPs are a better way of helping people than exemptions. In the first case, they say that: ‘DHPs cannot act as an effective long-term mitigation because they are intended to be temporary and not all carers in this situation are considered to be eligible.’ In the second, ‘local authorities often then have to fund the difference between the capped benefit paid and the rent due, and so there is likely to be no overall saving in public funds from the inclusion of these claimants in temporary accommodation within the scope of the cap’.

The MPs broaden the attack on DHPs in a section of the report on transitional protection and warn that the discretion allowed to local authorities ‘is resulting in access to DHP funding depending heavily on where a claimant lives’. They are ‘especially concerned’ about councils means testing disability benefits when they determine eligibility and recommend new government guidance that they should be disregarded.

They say discretionary help is inappropriate for people including those with disabilities who have ‘little expectation of finding work or moving house’.  Responses other than DHPs, preferably the exemptions recommended in the report, should be used to support claimants facing long-term hardship because of the reforms. If the government does not accept the exemptions, then it should increase funding to prevent hardship.

All of these recommendations are a fundamental challenge to government policy. All along ministers have resisted any idea of exemptions from the policies beyond those agreed at the start (people of pension age for the bedroom tax, people receiving working tax credit and a limited range of other benefits from the benefit cap). Just about the only exception to this, an exemption from the bedroom tax for severely disabled children who are unable to share a bedroom, had to be dragged out of them after defeat in the High Court.

DHPs have been not just their chosen alternative but their main line of defence against criticism of individual cuts. They are also one of the major reasons why first the High Court and then the Appeal Court rejected legal challenges against the bedroom tax and benefit cap and decided that discrimination against disabled people and women was lawful.

A DWP statement after the hearing demonstrated only too clearly how DHPs have become their main line of defence for their housing benefit reforms: ‘Reform of housing benefit in the social sector is essential to ensure the long-term sustainability of the benefit. But we have ensured extra discretionary housing support is available for vulnerable people.’

The work and pensions committee has now said loud and clear that discretionary help is inadequate. Reading the report under embargo yesterday, I wondered what the DWP’s response would be. It can hardly fall back on its second line of defence – the accusation of partiality it used against housing associations and University of York researchers – when the committee has a coalition majority (five Labour MPs, five Conservatives and one Lib Dem).

Judging from the Today programme’s scant coverage of the report this morning, it seems to be continuing to rely on the line about discretionary help and hoping that nobody will notice it no longer has any clothes. Another option might be to use the lack of media coverage and simply ignore the report and its recommendations.

It would be a tragedy if that happened. This is a major report that goes well beyond what I have room for here, with major recommendations on the local housing allowance, council tax support and the universal credit as well as the points I’ve highlighted. The housing organisations that contributed to the report have convinced an all-party group of MPs that major changes are needed. The pressure on the DWP needs to be intensified. 

Many unhappy returns

Tue, 1 Apr 2014

Stop carping, you lot. The removal of the spare room subsidy is a success.

Today is of course the first of the month as well as the first anniversary of the introduction of the bedroom tax and a wave of other welfare reforms. But I am paraphrasing Iain Duncan Smith and Esther McVey rather than making a token effort at an April Fool.

Yesterday’s work and pensions questions brought inevitable attacks on the policy that has caused so much controversy since its introduction a year ago.

Labour’s Kate Green quoted last week’s reports from the BBC that just 6 per cent of households affected by the bedroom tax have managed to move and from Real Life Reform that eight out of ten are in debt and their borrowing is increasing by £52 a week. ‘Rather than preaching about careful budgeting, why do Ministers not just scrap this hated and unworkable tax, which is sending people spiralling into debt?

IDS’s reply is worth quoting in full:

‘It is interesting that the Opposition and the hon. Lady take the view that people moving is a bad thing. Let me just tell her—[Interruption.] It is interesting that they say that, but 30,000-plus people—I will repeat that: 30,000 people—who were in overcrowded accommodation have now had the opportunity for the first time to move into houses where they are not overcrowded. The hon. Lady and the Opposition left us with a quarter of a million people in that position— 250,000—so in 10 months over 10% have had the opportunity to move and we are saving over £1 million a day. I call that a success.’

That £1 million a day savings is one of those DWP statistics that it gives to the press without ever publishing on its own website so there is no way of checking it. Presumably it simply reflects the saving to the DWP housing benefit budget for social tenants without including any of the other costs that will eventually fall on taxpayers.

The 30,000 figure is 6 per cent of the 498,000 households currently affected by the bedroom tax. Note first that there is no attempt to repeat McVey’s claim on the Today programme last week that the real figure is 8 per cent or acknowledge that the more people that move the less money the DWP will save. But more importantly note the careful phrasing of the answer. The matching 30,000 people in overcrowded accommodation ‘have had the opportunity to move’. He can hardly say more than that given the regional mismatch between overcrowding and under-occupation and all those newly empty three-bed homes in the North. ‘I call that a success.’

But IDS seemed so pleased with his success that the careful phrasing went out of the window when he was asked a friendlier question later on. Conservative MP Philip Davies asked if he had noticed that the ‘Labour BBC’ had at first complained that too many people would be removed from their homes yet was now complaining that too few had moved. ‘In the interests of fairness, surely taxpayers not on housing benefit who cannot afford a spare bedroom should not be expected to pay for a spare bedroom for people on housing benefit,’ he said.

IDS’s reply is again worth quoting in full:

‘The first and principal point is that this programme is saving over £1 million a day for hard-pressed taxpayers, many of whom, as my hon. Friend said, cannot afford a spare room themselves but were paying taxes to subsidise those who had spare rooms. The second point is that over 30,000 people who were once in overcrowded accommodation, left behind by Labour in terrible conditions, are now moving into better houses. This programme is a success. The Opposition did nothing about those people the whole time they were in government. ‘

More importantly, note how in the time between the two questions those 30,000 overcrowded families have gone from having ‘the opportunity to move’ to ‘moving into better houses’. As far as I am aware there is absolutely no evidence for this – and lots of evidence of bedroom tax victims who want to move but can’t because no smaller homes are available - but ‘this programme is a success.’

The bedroom tax is of course only one of a wave of welfare reforms introduced under the coalition. It probably won’t surprise you to learn that most of these have also been successes.

Take the Work programme and its record on helping disabled people find a job. According to IDS, ‘it has been successful for those who are furthest from the labour market’. According to shadow work and pensions secretary Rachel Reeves: ‘The truth is that just 5 per cent of disabled people on the Work programme end up in work. If that is a success, I would like to know what failure is.’

Take Universal Jobsmatch, the programme on which it emerged recently that 60 per cent of jobs are bogus (MI6 was not really seeking a ‘target elimination specialist’). That ‘revolutionises the way jobseekers look for work’, said Esther McVey. ‘Shame on you!’ she told the Labour MP who questioned it.

Or take Universal Credit. Labour’s Chi Onwurah asked whether the government would ‘continue the development of the existing, discredited universal credit IT system while building a new system in parallel’. How much would the double development costs and how it was going to recruit the skills it needs ‘given the current shambles’? IDS’s answer will not surprise you. Recruitment has been ‘a big success’ and the system is ‘not ‘discredited’.

Labour’s Chris Bryant pointed out that the government originally promised that a million people would be on universal credit from today. The actual figure is less than 4,000.

Instead of moaning, said IDS, he should get out and ‘see how successful its rolling out has been’. 

After all that success, it was some relief to hear Mike Penning, the minister for disabled people, admit to problems with the work capability assessment and personal independence payment and failures by Atos and Capita as a succession of MPs complained about delays.

As we uncelebrate the bedroom tax’s first birthday, it’s vital to remember that it is just one of a whole range of welfare reforms and that, as the FT reported yesterday, 60 per cent of coalition spending cuts are yet to come. 

Housing nations

Thu, 27 Mar 2014

What would a Yes vote to Scottish independence mean for housing in the rest of the UK?

With less than six months to go until the referendum, it’s not just in Scotland that the issues are being debated. While England may feel it can mostly ignore what’s happening north of the Tweed the question is perhaps felt more deeply in the other UK nations.

In Northern Ireland, a research institute has just warned of ‘substantial’ political, economic and social effects. And in Wales the issues were addressed directly this week in a debate at the TAI 2014 conference in Cardiff on the motion ‘This house believes an independent Scotland would be good for Wales.’

Each side had a Scottish and a Welsh speaker. Professor Douglas Robertson of the University of Stirling and Bethan Jenkins of Plaid Cymru argued in favour, while Jim Strang of Parkhead Housing Association and Keith Edwards of CIH Cymru were opposing.

A quick show of hands among the CIH Cymru conference audience indicated that the Yes camp would be facing an uphill battle to win them over but the debate itself raised some fascinating issues about the future and housing’s place within it.

Douglas Robertson said that the crux of the argument was not about ethnicity and identity but about social welfare standards: ‘What sort of Scotland do we want?’ and in turn ‘What sort of society do we want?’

For him the choice for Scotland boiled down to becoming a Scandinavian country rather than a neo-liberal American one. And a Yes vote in Scotland would show there were different ways of doing things in Wales.

That was a point picked up by Bethan Jenkins, who argued that a Yes vote would create space for a debate about more powers for Wales and would also mean more UK focus on Wales.

But Jim Strang said the consequences of a Yes would be dire for the UK as a whole. ’Wales and the rest of the UK cannot afford Scottish independence,’ he said. Issues of poverty and unemployment were the same in Birmingham, Cardiff and Glasgow and a No vote would mean a chance to build a fairer UK. ‘I’m a proud Glaswegian and a proud Scotsman but I’m also proud to be called British.’

And Keith Edwards said extra Welsh bargaining power from a Yes vote would end up being far outweighed by the long-term consequences for social justice.

What was interesting was the concern about social justice that ran through the case made by both sides. The Yes camp in Scotland looks at its one Conservative MP (‘we have more pandas than Tories,’ said Douglas Robertson) yet sees austerity imposed from Westminster. Most on the No side are just as opposed to austerity but argue the way to resist it is through opposition across the UK.

Another show of hands at the end of the debate showed perhaps only 10 per cent of the audience saying a Yes vote would be good for Wales. However, social justice, and housing’s role within it, has been a key theme in much of the rest of the conference.

Wales is part way through a major programme of housing and planning legislation that is the result of new devolved powers and also featured heavily on the agenda this week.  However, it is grappling not just with austerity but also with the question of how to increase housing supply at a time when money is tight.

The conference heard a warning from England about the consequences of the affordable rent programme. Tom Murtha of HACT chaired a session on alternatives to austerity and made a passionate speech about the importance of social housing and the dangers of accepting ‘affordable’ housing that is not affordable at all.

In another session veteran activist Peter Tatchell had praise for the efforts the housing sector has made on equalities and made a wide-ranging speech and Q&A covering everything from the Heygate estate to media demonising of the poor.

His alternatives to austerity were to cancel Trident, close down Boots if it avoids tax in Switzerland, levy a financial transactions tax and impose a one-off wealth tax on the richest 10 per cent.

As the countdown continues to the Scottish independence vote, the debate on social justice in the UK as a whole continues.

Does the cap fit?

Wed, 26 Mar 2014

The debate about the welfare cap seems to be all about the politics. It should be about the contradictions at the heart of the policy too.

The coalition parties and the opposition are all supporting the measure that will place a legal restriction on most welfare spending from 2015/16 so, despite an expected Labour rebellion, it seems more or less certain to go through.

The cap started off as a political trap set by the Conservatives and Labour support reflects a determination not to fall into it.

Judging from his appearance on the Today programme this morning, Iain Duncan Smith seems determined to act as though Labour doesn’t really mean its support. But the example he chose says much about his priorities and the way the cap will operate.

IDS cited Labour’s pledge to repeal what he calls the removal of the spare room subsidy. Only JSA-passported housing benefit will be outside the cap, so his point was that ending the bedroom tax will automatically increase spending within the cap and Labour should have to say what it will cut instead.

The contradictions of such an arbitrary measure begin with the way that pressures on spending caused by an ageing population or unemployment are not capped, while those triggered by housing tenure and disability are not.

Despite government rhetoric about worklessness and ‘out of control’ welfare spending, the cap targets benefits and tax credits for people who are in work or who cannot work.

The basic state pension is not capped but pension credits are. As Chris Goulden of the Joseph Rowntree Foundation points out, that means that the cap will protect the wealthiest claimants not those in the greatest need.

And Evan Davis identified another contradiction on the Today programme this morning: what happens if the cap stops the government from fulfilling its equally legally binding commitment to end child poverty by 2020. IDS fell back on his faith-based formula of ‘I believe we will’ (while trying to move the goalposts on the definition of child poverty in the meantime).

But there are plenty of other contradictions if you focus more closely on housing:

  • Apart from the misery and debt it’s causing (see today’s latest Real Life Reform report on that), one of the main arguments against the bedroom tax is that it will simply transfer costs from housing benefit elsewhere. The cap actually gives future governments an even greater incentive to do the same thing and ‘save money’ by transferring costs to local authorities, social landlords and the voluntary sector.
  • When it comes to repealing the bedroom tax, most housing benefit is capped but (as I read it) discretionary housing payments are not. The temptation for Labour could therefore be to rely on the DHP route to fulfilling its pledge despite all the problems inherent in a system that relies on local discretion.
  • We know that the long-term shift in housing tenure will mean a rising housing benefit bill for private tenant pensioners. While the basic state pension is uncapped, their housing benefit is within the cap.
  • The cap covers the UK, yet housing policy decisions taken by individual nations will have an impact on it. For example, as the English government forces landlords to build for more expensive affordable rents, and sell off and convert their social rent homes, that will put up rents and the housing benefit bill. That means English decisions on housing could potentially trigger cuts in welfare for Scotland and Wales.
  • The overall cap level is made up of forecasts of the costs of individual benefits. However, as I blogged last week, when you look at how the Office for Budget Responsibility’s estimates of the cost of housing benefit keep changing with every Budget and Autumn Statement, this does not fill you with confidence.

Exactly how the cap will operate remains to be seen. We know the basics: governments will have to set cap targets five years ahead and come back to parliament for approval if capped spending exceeds them by more than 2 per cent.

However, it could be that a future government will introduce measures such as the living wage or (we hope) greater investment in social housing that will reduce the pressure on benefits spending and make the cap less onerous than it appears.
Equally, as Kate Webb noted last week, coming elections could see parties pledging to reduce the cap without having to spell out any detail of how.

Today’s vote may seem to be all about a cap that offers a clear and easy to understand way to control public spending. But it could turn out to be anything but and the implications could be felt for years to come.

Budget 2014: the next five years

Wed, 19 Mar 2014

Never mind today and tomorrow: what does the Budget mean for housing over the longer term?

As usual, some of the most revealing information comes not in the speech or the Treasury’s background documents but in the Economic and Fiscal Outlook published by the Office for Budget Responsibility. This time around the detail and the forecasts for the next five years have a lot to say about housing benefit, the welfare cap and the housing market. 

On the welfare cap, the OBR has a detailed breakdown of the benefits and tax credits that will and won’t be included:

Cap

We already knew that ‘the vast majority’ of housing benefit would be covered. This shows that 86 per cent of the current housing benefit bill will be within the cap – but that that the proportion will rise to 90 per cent by the end of the decade as the uncapped bit linked to unemployment falls.

The figures could also answer my question in my Budget live blog about the impact of above-inflation social rent rises: policy decisions like these seem to be already factored in to the cap level.

Which might be ok were it not for the fact that the OBR has constantly changed its forecasts of the housing benefit bill. It now says the total cost will be £1 billion more over the next five years than it forecast at the time of the Autumn Statement in December. However, that figure was itself £6 billion higher over five years than it estimated at the time of the Budget a year ago, which in turn was £3.7 billion higher than it said at the 2012 Autumn Statement.

Unforeseen increases in any capped benefits could automatically trigger cuts under the new system. The OBR’s forecasting difficulties on housing benefit highlight the fact that increases are quite likely not to be foreseen. As the Centre for Economic and Social Exclusion points out, these sort of problems go well beyond the 2 per cent per year tolerance for breach built into the cap.

And a separate part of the report on trends in welfare spending makes clear that these problems are directly related to our housing system.

While the government has consistently claimed that the housing benefit bill is ‘out of control’, the OBR points out that:

‘The largest driver of the rise in spending on housing benefit has been caseload growth in the private rented sector. This reflects both a rising share of households living in private rented accommodation and a rising proportion of those households claiming housing benefit. As a result, the share of spending accounted for by the private rented sector is forecast to rise from 30 per cent in 2007-08 to 40 per cent by 2018-19.’

The main reason for that is of course the long-term shift from owner-occupation to private renting that began long before the recession but accelerated in the last five years. The OBR says that:

‘The rising proportion of the renting population claiming housing benefit may be related to the weakness of average wage growth relative to rent inflation. This explanation is supported by DWP data, which suggest that almost all the recent rise in the private-rented sector housing benefit caseload has been accounted for by people in employment. We expect the share of claimants in the private rented sector to continue rising over the forecast period, but for average awards to rise more slowly than nominal GDP per capita due to policy, including on uprating.’

So much for being ‘out of control’ or the product of the so-called ‘dependency culture’. The OBR sees the growth in the housing benefit bill as a direct consequence of shifting tenure and rents rising faster than wages as more people in work have to claim. The total bill will keep on rising but that last bit on policy and uprating could suggest that if the bill does fall as a proportion of GDP it will be because more people will face greater shortfalls between their housing benefit and their rent.

And will it fall even in those terms? Elsewhere in the report, the OBR forecasts big increases in house prices as a result of the economic recovery and policies like Help to Buy:

Price

Annual house price inflation will rise from the current 5.5 per cent (using the ONS index) to a peak of 9.2 per cent in the third quarter of 2014. Over the next year or so prices will rise significantly more than it expected three months ago. Over the next five years, prices will rise by 30 per cent to reach a level of just 0.5 per cent below their pre-crisis peak in real terms.

When ministers argue that their policies are not generating a boom they tend to rely on the real terms comparison with 2007 to reassure us all. However, if this forecast is correct, we will be all but back at the house price levels that triggered the sub-prime mortgage crisis, the credit crunch and the financial crisis within five years.

Bear in mind too that earnings have been falling in real terms ever since the crash, so house prices will actually be more unaffordable than they were at the peak of the boom. I find that alarming rather than reassuring. 

However, long-term trends in the housing system may not matter so much to the chancellor if the OBR is correct in its forecasts about rising tax receipts from stamp duty. As house prices and transactions both rise, the OBR says the £6.9 billion receipts from stamp duty in 2012/13 will rise to £9.5 billion in 2013/14 and £12.7 billion in 2014/15. By 2018.19 total receipts will stand at £18.1 billion.

That’s £9 billion more over the next five years than it was forecasting three months ago. The OBR notes: ‘The housing market, particularly in London, has continued to outperform our forecast and receipts have been higher than expected.’ Little wonder that Osborne resisted calls for reductions in this Budget – and housing is also generating more modest but still significant gains for him in inheritance tax. Could it be time to reinvest some of it?

As house prices rise, so more and more homes cost more than the thresholds for higher rates of stamp duty. The average house price is expected to pass £250,000 this year, meaning that buyers will have to pay 3 per cent duty on the whole amount. The average effective rate of stamp duty is expected to rise from 1.7 per cent in 2008/09 to over 3 per cent in 2018/19. 

The bigger question is what this will mean for levels of home ownership and ultimately for the housing benefit bill. The government may hope that extending Help to Buy 1 will create 120,000 new owners but those unaffordable house prices would be creating many more new renters who need help with their rent.

It’s not housing benefit that is out of control but our whole housing system. 

Budget 2014 - live blog

Wed, 19 Mar 2014

15:40: Kate Webb of Shelter has just posted a blog about a Budget that provided welcome support for homeowners but laid the groundwork for a future squeeze in support for renters.

The good news for owners and those wanting to get on the ladder comes on SMI, self build and Help to Buy plus a range of other measures I summarised earlier.

The bad news for renters is the welfare cap. Current spending projections are built in but if welfare spending rises faster than expected a future government will have to find savings elsewhere: 

‘Crucially the pressure to bring spending back under the limit of the cap falls entirely on the DWP, rather than, for example, rising housing benefit expenditure triggering action in CLG to increase supply of genuinely affordable housing to reduce the HB bill.’

Even worse, Kate warns that one or more parties may promise in their next election manifesto to reduce the cap, locking cuts into the system without having to set out any detail at the time:

‘Reducing the welfare cap by £12 billion probably sounds abstractedly palatable to the average person on the street. Spelling out that this would entail the complete withdrawal of housing benefit for young families or cuts to benefits that enable disabled people to work may be a harder sell.’ 

Meanwhile Leslie Morphy of Crisis makes a similar point about the dangers implicit in the cap:

‘Though the maths might look solid today, we fear that predicting something as complex as national demand for benefits five years in advance is incredibly risky. If the sums do turn out to be wrong, in four of five years’ time it will cause poverty, misery and homelessness.’

14:40: Some reactions so far. David Orr of the NHF says it’s a missed opportunity:

‘We welcome the Chancellor’s focus on housing and the announcement of a new garden city, but we think the Budget is a missed opportunity. Measures like Help to Buy are likely to stimulate demand for housing but the Budget does not go far enough to boost the supply of homes needed to meet that demand.’

Grainia Long of the CIH welcomes the extra help for small and medium sized housebuilders and some of the other specific measures on garden cities and support for mortgage interest. She concludes:

‘In his Budget speech the Chancellor claimed that the measures he announced would deliver 200,000 new homes, including the 120,000 homes supported by the extension of Help to Buy equity loans. This would be an important step along the road to addressing out housing crisis, but it still leaves us with much to do.’

14:32: Here’s some more detail from the ‘Housing and local growth’ section of the main Budget document:

  • Help to Buy: equity loan scheme – extended to March 2020 to help a further 120,000 households to buy a new-build home.
  • Ebbsfleet Garden City – Government will form an Urban Development Corporation, in consultation with local MPs, councils and residents, to deliver it and support the scheme with up to £200 million of infrastructure funding to kickstart development.
  • Barking Riverside – The government will work with the Greater London Authority (GLA) to develop proposals for extending the Gospel Oak to Barking line to Barking Riverside to unlock up to 11,000 new homes.
  • Brent Cross regeneration scheme – The government will work with the London Borough of Barnet and the GLA to look at proposals for the Brent Cross regeneration scheme, subject to value for money and affordability.
  • Estate regeneration – A £150 million fund to kick start regeneration of social housing estates. This will be repayable loans  and bids will shortly be invited from private sector developers, working with local authorities on estates that might be able to benefit. Following the Autumn Statement, expressions of interest have already been made through the Greater London Authority relating to the Aylesbury Estate, Blackwall Reach and Grahame Park regeneration projects in London.
  • Builders’ Finance Fund – To support SME access to finance, the government will create a £500 million Builders’ Finance Fund. This ‘will provide loans to developers to unlock 15,000 housing units stalled due to difficulty in accessing finance’.
  • Custom build – Consultation on a new Right to Build giving custom builders a right to a plot from councils and test the operation of this approach with vanguard local authorities. The government will also create a £150 million repayable loan scheme to provide up to 10,000 serviced plots, and will look to extend the Help to Buy: equity loan scheme to cover custom build.
  • Strategic Land and Property Review – The Government Property Unit has concluded its Strategic Land and Property Review which has identified scope to release £5 billion from government land and property, creating opportunities for housing and economic development. Departments have already committed to £3.5 billion of that and a further £1.5 billion will be identified. ‘By Autumn Statement 2014 the government will look to quantify its housing and growth ambitions for this new surplus land programme.’
  • Zero carbon homes – ‘At Budget 2013 the government committed to implement ‘zero carbon homes’ from 2016. The government will shortly publish its response to last year’s consultation.’
  • Right to Move – The government will shortly consult on the design of a priority ‘Right to Move’ for social tenants to increase their mobility for work-related reasons. Options will include giving such tenants priority when a new social home becomes available, and setting aside a pool of vacant lets to enable them to move across local authority boundaries.
  • Development benefits – Government-funded staged pilot for passing a share of the benefits of development directly to individual households, including further research and evaluation of the approach.
  • Garden City prospectus – The government will publish a prospectus by Easter 2014 setting out how interested local authorities could develop their own, locally-led proposals for bringing forward new garden cities.
  • More planning reform - including consultation on change of use measures to make it easier to change to residential use, for example from warehpuses and light industry structures.
  • Support for mortgage interest (SMI) scheme to remain at higher £200,000 capital limit until March 2016 at a cost of £90 million - not clear if shorter waiting period of 13 weeks is also being extended.
  • Higher rate 15% stamp duty on homes owned by companies extended to homes worth over £500,000 and  the Annual Tax on Enveloped Dwellings to be extended to homes worth £1-2 million from April 2015 and £500,000-£1 million from April 2016. The original tax on homes worth over £2 million raised five times more than expected in the 2012 Budget because there were ‘significantly more properties above £2 million than expected’.

14:12: Looking at the Budget documents now. Here’s the full list of the benefits and tax credits covered by the welfare cap:

Cap

We know from the Autumn Statement that ‘the vast majority’ of housing benefit will be in the cap. Apart from the obvious trap for Labour (repeal the bedroom tax and you have to cut something else) this raises a big question about social rent policy: if rents rise by CPI plus one per cent but the cap rises by CPI, does that means other benefits will have to be cut to make up for it?

13:40: Here’s they key passage on housing from Osborne’s speech:

Mr Deputy Speaker, our country needs to export more – and it also needs to build more.

‘House building is up 23%. But that’s not enough. That’s why we’re making further reforms to our planning system and offering half a billion pounds of finance to small house building firms. It’s why we’re signing city deals across the country to get more built – with a new funding deal this week for Cambridge. And it’s why we’re giving people a new Right to Build their own homes and providing £150 million of finance today to support that.

‘It’s why we’re funding regeneration of some of the urban housing estates that are in the worst condition, and we’re extending the current Support for Mortgage Interest Scheme to 2016.

‘And it’s why we’ve got Help to Buy. We’re extending the Help to Buy equity loan scheme for the rest of the decade, so we get 120,000 new homes built.

‘In the South East where the pressure is greatest we’re going to build new homes in Barking Riverside, regenerate Brent Cross, and build the first new Garden City in almost a hundred years at Ebbsfleet. We’re going to build 15,000 homes there, put in the infrastructure, set up the development corporation and make it happen. I thank my Honourable Friends for Dartford and Gravesham for their tremendous support. And we will be publishing a prospectus on the future of Garden Cities.

Taken all together, the housing policies I announce today will support over 200,000 new homes for families. We’re getting Britain building.’

So that seems to mean that the non-Help to Buy announcements will generate 80,000 homes. It was interesting there was no mention of changes to Help to Buy 2. The Budget documents should help show how much of this is new. 

Elsewhere in the speech, Osborne confirmed that the welfare cap will include housing benefit (it was the first benefit he mentioned) and extended the 15 per cent rate of stamp duty on homes bought through companies. 

10:05: George Osborne is due to start his Budget speech at 12.30. Here are some more pre-Budget articles and blogs that are worth a read in the meantime.

On the housing market, Ken Gibb of Glasgow University asks whether Osborne will cool of fuel the housing market and warns that without a political consensus on housing policy the danger is more political short-termism, chronic under-supply and market volatility. Meanwhile Neal Hudson of Savills looks at what the Bank of England can do to control the market and at the prospects for the Mortgage Market Review in April. If that does not succeed in curbing riskier lending he warns that it may ‘go head-to-head with the government by intervening in the mortgage market later this year’. (Mark Carney warned of the housing-related risks ahead yesterday).

On social housing, David Orr wants ‘more homes please’ and pleads with Osborne to address three barriers that are holding back housing associations: land and improvements in the release of public land; access to finance by reforming restrictions on the way homes are valued; and the extension of guarantees to the refinancing of existing debt. 

And ahead of a Budget that looks like it is set to make you feel sick of hearing the word ‘resilient’, Julia Unwin has a message for Osborne that cost-effective spending in areas like childcare and social housing can not only reduce poverty but also boost the economy.

For a look at the CIH’s Budget submission go here

08:50: Here’s my summary of the housing-related news and speculation ahead of the Budget. More to follow later.

Housing has of course already been at the centre of the pre-Budget spin. George Osborne made two big announcements on morning television on Sunday: Help to Buy 1 – the equity loan scheme – will be extended from 2016 to 2020 in England; and we will also see what’s claimed to be ‘the first new garden city for 100 years’ at Ebbsfleet in Kent.

On the first, it’s worth noting that housebuilders were only asking for the scheme to be tapered off after 2016 rather than extended. The government’s argument is that investing another £6 billion to help 120,000 more households buy a new-build home will provide greater certainty to developers so they can invest in building more homes. Critics warn that it’s a subsidy that will go to many homes that would have been built anyway and that in the long term it will simply inflate land prices. The instant verdict from the City was a £900 million increase in the share prices of the major builders. On the second, the plan for 15,000 new homes in Kent seems to be smaller than plans approved in 2012 and it is hard to see how many of the original garden city principles are being applied.

With those announcements already out of the way, Noble Francis asks whether we have heard it already when it comes to the Budget. It’s possible we’ll hear more on both of them later. However, other speculation centres on:

  • Help to Buy 2. The extension of its less contentious partner be accompanied by changes to the heavily criticised mortgage guarantee scheme? And if they are will they curb it – or extend it?
  • The welfare cap. Osborne is due to reveal more detail of how the cap on non-cyclical spending on benefits and tax credits will operate. The idea is that a future Chancellor will either have to balance cost increases with savings elsewhere or seek parliamentary approval to lift the cap. The big question for housing is of course what that will mean for housing benefit and the housing element of universal credit. We know from the Autumn Statement that ‘the vast majority’ of housing benefit will be covered – only JSA-passported housing benefit will be outside the cap – but how will that interact with other housing policies such as the social housing rent formula? The FT has a bit more on the cap this morning.
  • Stamp duty. There have been unheeded calls for reform ahead of every Budget that I can remember but with the average asking price for a home now having passed the £250,000 threshold at which stamp duty hits 3 per cent, will Osborne finally listen? The FT speculates on a new 2 per cent rate for homes between £250,000 and £300,000 Could we see other changes to property tax?
  • Land auctions. A feasibility study on the scheme to reform incentives for communities to accept development is due to be published.
  • Right to buy: Will Osborne announce Conservative-pleasing increases to discounts? Will the Lib Dems let him or ask for something in return?
  • Borrowing cap: Osborne announced a slight lifting in the cap in the Autumn Statement and the Lib Dems and everyone in housing want him to go further.
  • Tax relief on investment in social enterprises: Osborne is due to reveal more detail and it will be interesting to see what scope the scheme offers for housing. The Guardian has a report explaining a bit more.
  • The Policy Exchange agenda: the Autumn Statement adopted several policies promoted by the think thank including selling high-value social housing. Alex Morton has since joined the No 10 Policy Unit so will we see more? Perhaps the announcement on garden cities already offers evidence of that.
  • Troubled families: many of this morning’s papers report that the scheme will be brought forward for another 40,000 families. 

We’ll have to wait for the Budget speech – or more likely the small print of the Budget documents – to hear more on those points.

Making the move

Thu, 13 Mar 2014

Forced out of area moves are on the increase and they are not just happening in London.

The Oxford Times reports this week on cases of people being offered homes as far away in Cardiff, Cheltenham and Birmingham. The council blames the cuts in housing benefit and the benefit cap that make it impossible to find affordable private rented accommodation but a local solicitor has accused it of dumping people outside the area.

Elysha Britnell, a 22 year old mother of two children, was told she would have to move out of her temporary accommodation in Oxford and accept a home in Birmingham. She says she has no family and friends outside Oxford and has never lived anywhere else and is appealing against the decision:

‘I’m Oxford born and bred. If this appeal fails I’ll be completely homeless. I have got nowhere else to go. Even if I go to Birmingham, I may as well be homeless, because I have nobody there.’

Her solicitor John McNulty blames the changes to the discharge of the homelessness duty introduced under the Localism Act:

‘There was a change in the law which now lets councils dump people. Now they can find people out-of-area placements and just discharge their duty to these people.’  

He explains more of the background in an earlier piece for the Oxford Mail.

Scott Seamons, Oxford City Council’s board member for housing, blamed the cap on housing benefit, told the Oxford Times:

‘Due to cuts in the local housing allowance, it’s become increasingly difficult to place people with private landlords in Oxford. There’s too much choice for landlords, so they’re refusing people on benefits. Our first choice is absolutely to keep people in Oxford. I don’t want to see people being pushed out of the city. We’re doing what we can to build new houses. It’s the only way we’re really going to be able to make a difference.’

Whatever the rights and wrongs of this particular case, stories like this have become depressingly familiar in the wake of the Localism Act and the Welfare Reform Act but this is the first I’ve seen outside London. However, it is perhaps not so surprising that it should be happening in Oxford when you consider that a survey last week found that is the least affordable city in the country.

Within London, it was the furore over Newham’s plans to export its homeless families to Stoke-on-Trent that made all the headlines two years ago. However, even at the time it was only one of many boroughs looking outside the capital.

The benefit cap introduced last year has made things even worse.  Amelia Gentleman reported for The Guardian last week on families priced first out of inner London and now facing having to move out of the capital altogether as a result of the benefit cap. Birmingham, Manchester and Grimsby were mentioned as possible destinations.

There are two separate but connected housing issues involved here. The Newham story involved the location of temporary accommodation to people accepted as homeless. The later stories involve the location of private rented accommodation offered as a permanent discharge of the homelessness duty.

On the first issue, as Inside Housing reported recently, the latest government stats show that almost 12,000 families were placed ‘out of borough’ in another local authority area last year. Boroughs have even been gazumping each other to secure the temporary accommodation that is available.

As the graph below shows, that number of households in temporary accommodation outside their local authority district has doubled since the election. The total of 11,860 families outside their area at the end of 2013 represented one in five of all those in temporary accommodation.

The graph also shows a dip in the number following the introduction of the discharge power in November 2012. However, the number has increased by 32 per cent increase in the year since.

Whatever the reasons for this, at least we know the numbers involved. On the second issue, it’s also possible to get the stats on permanent discharges of the homelessness duty.

In theory, they have to take account of the suitability of the location of the new home and avoid disruption to schooling, employment, medical care and support.

The impact on people who have moved area was illustrated in a report on formerly homeless families in the private rented sector published last month by Shelter and Crisis: there were major impacts on schooling and on support that people received from family and friends. In some cases people were so unhappy they tried to move back to their original area, in others they struggled to find a new school place and in one a mother had still not been able to place her child in school 19 months after she moved.

In practice, while ministers publicly disapproved of out of area placements, one of its own advisors was telling councils how to sidestep the safeguards. The DCLG then denied he was an advisor.

Whatever the truth of that, while austerity and the Welfare Reform Act pile the pressure on councils and claimants, the Localism Act has introduced new flexibilities for those that want to use them. Hammersmith & Fulham has, for example, excluded homeless people from its housing list and its policy has so far survived legal challenge.

It’s also hard to assess how many people have been forced to move from their home area by housing benefit cuts – although in 2012 local housing allowance stats were suggesting significant movement from inner to outer London. 

What does seem clear though is that the problem is growing – and that now it is spreading outside London. 

Buy, buy, bye?

Tue, 11 Mar 2014

As George Osborne prepares for next week’s budget, even the people who’ve benefited are calling for changes to help to buy. But is he listening?

A survey out today finds that most mortgage lenders and brokers now believe that help to buy 2 – the more controversial mortgage guarantee element of the scheme - will be scaled back or scrapped before the official end date of 2016.

Last week, the National Audit Office raised concerns about the affordability and value for money of equity loans offered by new homes under help to buy 1. And the RICS called for help to buy to be regionalised on areas with most economic and housing need and focussed on first-time buyers.

Today’s survey by the Intermediary Mortgage Lenders Association found widespread scepticism that the mortgage guarantee scheme announced by Osborne in his budget a year ago and launched at the Conservative conference in October will survive in its current form.

Some 75 per cent of lenders and 54 per cent of brokers think it will be withdrawn early for remortgages, with a further 8 per cent of lenders and 18 per cent of brokers believing it will be scaled back.

Clear majorities of both lenders and brokers also believe it will be withdrawn early or scaled back for 95 per cent mortgages. And, even though more think it will be retained for new build homes, six out of ten think it will be curtailed there too.

Unsurprisingly, since so many of them require the government to guarantee riskier mortgages, 69 per cent of lenders see artificially inflated house prices as the biggest risk to help to buy. That’s up from 60 per cent when they were asked last July.

That’s the biggest worry too for brokers (57 per cent), closely followed by unattractive pricing (51 per cent).

The stats on house prices bear this out. The graph below shows what has happened over the last two years and in particular since George Osborne announced Help to Buy in his March 2013 budget and brought forward the launch of help to buy 2 at the Conservative conference in October 2013. The impact is shown most dramatically in the Nationwide index: in the space of a year house price inflation has gone from zero to almost 10 per cent. However, a similar pattern is evident if you click along the tabs at the top to see the numbers from the Halifax index and from those of the Land Registry and ONS (which have not yet published figures for February).

More usefully perhaps, help to buy has boosted mortgage lending. The Bank of England said last week that mortgage approvals rose to their highest level for six years in January. One of the stated aims of help to buy 2 was to unblock the market in the high loan to value mortgages that had stalled in the wake of the credit crunch.

With 95 per cent mortgages available outside the scheme from lenders like the Nationwide, it’s hard to gauge the exact impact. However, the next graph shows the recovery in lending to first-time buyers in the last year. The numbers may still be well down on pre-credit crunch levels, let alone pre-boom levels, but they have at least recovered from the slump of the last five years that helped to accelerate the decline of home ownership.

The longer-term worry is of course that people are buying into the market at inflated prices at a time when mortgage rates must eventually rise from their current record lows.

More immediately, as Peter Williams of IMLA points out, the challenge is to restore a sustainable mortgage market without government support at the same time as many other regulatory changes are about to be introduced.

However, it’s hard to disagree with Jeremy Warner when he argues in the Telegraph this morning that we have a housing boom but we shouldn’t expect the government to do much about it:

‘In preparing for next week’s budget, Chancellor George Osborne is unlikely to be much concerned with the long-term consequences of another runaway housing market. Instead, he will be focused like a laser on what might revive his dwindling election prospects.’

But then perhaps it is a mistake to see help to buy 2 as a housing policy at all – or to expect it to continue much beyond May 2015. 

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