Saturday, 25 October 2014

Inside edge

Working it out

Tue, 5 Aug 2014

As Labour and the Conservatives renew hostilities about the housing benefit bill, which of them will do something about it?

In the latest round of Labour’s The Choice summer offensive, shadow work and pensions secretary Rachel Reeves released figures from the House of Commons Library showing that the total bill is set to rise to £27 billion by 2018/19.

Within that, she highlighted the soaring number of claims by people in work from 617,000 at the last election to 962,000 now and 1.2 million by 2018/19. That doubling in working claims will cost a total of £12.9 billion or £488 for every household in Britain between 2010/11 and 2018/19.

As for the politics behind this, Patrick Wintour argues in The Guardian that the speech is part of a Labour effort to convince voters that the benefits bill relates to people in work as well as the unemployed. Reeves will say that:

‘The number of working people claiming housing benefit is set to double because the Tory government has failed to tackle low pay, insecure work and the cost-of-living crisis. That’s meant thousands more people have been forced to rely on housing benefit to make ends meet.’

The Conservative response, reported by Matthew Holehouse in the Telegraph, is that Labour is ‘being hypocritical’ because it has opposed all of the coalition’s attempts to cut the bill. According to welfare minister Mark Harper:

‘We inherited an out-of-control housing benefit system from Labour that created a culture of dependency. But Labour haven’t learnt their lesson. They voted against our housing benefit cap, they voted against our overall cap on benefits and they still plan to borrow and spend more by restoring the spare room subsidy – landing future generations with more debt than they can ever hope to repay.’

A coalition aide says that the rise in working claims is actually the result of the success of its policies in getting people into work. ‘Far better that people are in work, paying taxes and contributing in part to their rents, than languishing on out-of-work benefits,’ she says.

However, none of this should come as much surprise to anyone familiar with the long-term trends under both parties. DWP figures show that the housing benefit bill almost doubled in real terms in the six years after the Conservatives decided to let it ‘take the strain’ of higher rents in 1991. The bill stabilised in the first ten years of Labour government after 1997 but then rose by 25 per cent in real terms in the wake of the global financial crisis.

Since 2010, the coalition has reduced the rate of growth (11 per cent up to 2014/15) rather than cut the total bill. For example, the DWP continues to claim in today’s papers that the bedroom tax will save the original £480 million when its own latest figures say more like £350 million (itself a questionable figure which takes no account of discretionary housing payments or the costs transferred to local authorities and social landlords).

The Office for Budget Responsibility published forecasts up alongside the Budget in March showing that the total bill will reach £26.9 billion by 2018.19. As I blogged at the time, it said that ‘the largest driver of the rise in spending has been caseload growth in the private rented sector’ and that the proportion going to private tenants/landlords would rise from 30 per cent in 2007/08 to 40 per cent in 2008/09. It went on:

‘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.’

In other words, the DWP’s own data directly contradicts DWP ministers’ statements about the housing benefit bill being ‘out of control’ and the result of a ‘culture of dependency’. Instead it will continue to rise despite all the cuts so far and those yet to come including 1 per cent uprating of private sector claims.

That is the more or less inevitable result of low pay, casualised work, reliance on a deregulated private rented sector, the shift to affordable rent and the inflation-busting formula for increases in social rents.

Advance reports of Reeves’s speech suggest that she will promise to ‘raise the minimum wage, introduce living wage contracts and get 200,000 homes built a year by 2020 to tackle the housing benefit bill and ensure working people can make ends meet’.

Rising wages will help cut the housing benefit bill for people in work as may longer-term private tenancies with predictable rent rises but beyond that much will depend on how many of those 200,000 homes are at genuinely affordable rents. The rhetoric on this from shadow housing minister Emma Reynolds in a speech last week sounded promising even if there are no commitments yet:

‘It’s economic madness that 95 pence in every pound of Government spending on housing goes on benefits and only 5 pence goes on building homes. The Government thinks the opposite. That’s why it cut the Affordable Homes Programme by an eye-watering 60 per cent. They said they could deliver affordable homes on the cheap. But in fact, it was just a cheap trick. The Government’s notion of affordability, at 80 per cent of market rent, is costing tenants and taxpayers more. It is crucial that councils and housing associations build more genuinely affordable homes.’

Back with the Conservatives, chancellor George Osborne appeared on the Today programme this morning to pledge his enthusiastic support for a plan to invest in new train lines in the north of England. Leaving aside the fact that he has not actually committed any money, he argued that it was good to invest in infrastructure but bad to spend money on benefits. The trouble is that he doesn’t seem to get the same case for investing in new homes to spend less on housing benefit. 

Osborne has already committed to another £12 billion of cuts in benefits after the next election and it’s hard to think that housing benefit will escape – or that Labour will not face some uncomfortable choices. 

Going the extra mile

Tue, 5 Aug 2014

How far should the government go to buy off local opposition to new garden cities?

Deputy prime minister Nick Clegg said over the weekend that ministers would consider options including council tax reductions and house price guarantees to ensure that local communities do not lose out. He told the BBC’s Countryfile programme (watch from about eight minutes in): ‘What I’m saying is we’re actively looking at things like that to show that we will go the extra mile to allay those concerns of people who feel that their property, or the price of their home, might be affected. We don’t want people to lose out.’

He went on: ‘We could maybe give deductions on their council tax for the period of time during which the garden city is being built. We could possibly also say to those homes where they think the price of their home will be affected, we will guarantee the price of their home by buying it, if you like, up front.’

From a political perspective, these ideas look like an obvious way to minimise opposition to new development. But what about the wider considerations for a country that is only building half the number of homes needed to meet demand? Here a few that spring to mind:

Why the implicit assumption that it’s only local home owners that should have a say? How close would you have to be to be eligible for compensation/bribes? What about the tenants who will be affected? What about the people elsewhere condemned to poor and expensive housing if we fail to build enough homes? What about future generations?

Will bribes to local residents work anyway? The new homes bonus has not turned out to be much of a ‘powerful new incentive’ (though this was offered to councils not individuals). The government’s offer of millions of pounds in incentives to communities that accept fracking led to calls to apply the same principles for new homes.

However, this assumes that opposition to development is motivated by financial considerations alone. Emotional attachment to the countryside and a desire to preserve things as they are may be just as powerful but people may also respond to a well-argued case based on the national interest. A famous study in Switzerland looked at public attitudes to the siting of a potential nuclear waste depository. When people were asked if they would support it if parliament said their area was the best place, 51 per cent said yes. When they were asked if they would approve if parliament offered substantial compensation, support fell to just 25 per cent.

What about the land? The garden cities model works by capturing the uplift in the value of the land between existing use and residential development use. If home owners are to be compensated at the full residential market value, why not land owners too? That would undermine the whole model. 

What about other projects? Clegg went on to say that we already have procedures that apply to big infrastructure schemes. For example, the government will pay market value plus 10 per cent to owners of homes closer than 60m to the proposed HS2 train line. However, there are well-established principles for the compulsory purchase of land and property. Offering enhanced terms to residents near garden cities could have costly implications for all other infrastructure projects - and other housing developments.

All of these considerations came up in the submissions for the Wolfson Economics Prize on garden cities that were shortlisted earlier this year. The contestants were asked ‘how would you deliver a new garden city which is visionary, economically viable and popular?’

As I blogged at the time, the answers to the popularity question were as much about creating a vision for the future community as how to compensate landowners and existing residents. The entries had some very different ideas about compensation too: the proposed premium on existing use value to landowners ranged from ‘slightly enhanced values’ to plus 20 per cent to 20 times the agricultural value.

However, many of the entries also talked about ‘patient investors’, landowners willing to forgo cash now in return for a long-term equity stake in the project. One talked about the way the great estates of London were developed in the 18th and 19th century by retaining the freehold and taking a return over time rather than taking a capital sum at the outset. Others proposed offering existing residents preferential terms to buy shares or bonds in the new community – or even a choice between compensation now or a share in the future proceeds.

Nick Clegg has raised a vital question for the future: how to balance the interests of local home residents against a clear national need for more homes. However, the answers have to be about more than just buying off local opposition.

Back in the present, the chances of any genuine garden cities (beyond reheated versions of existing developments) going ahead under a coalition government that includes Eric Pickles look somewhere between slim and zero.

And housing and planning minister Brandon Lewis did not exactly sound like he was fully behind Clegg’s ideas when he told the BBC that they were ‘an interesting contribution’ to the debate. His description of the bidding process as ‘still open for communities with proposals for ambitious, locally led developments that have the backing of existing residents’ does not exactly sound visionary either.

To read more about garden cities click here.

Welcome shift

Tue, 29 Jul 2014

People seem to be getting the ‘Yes to Homes’ message at last but have the nimbys really had their day?

A survey of public attitudes to new housebuilding published by the DCLG on Saturday reveals a welcome shift when people are asked whether they support or oppose more homes being built in their local area.

New housing and planning minister Brandon Lewis welcomed the results as evidence that nimbyism is on the wane.

Here are the headline findings from the British Social Attitudes survey showing the shift in opinion on this question between 2010 and 2013:


We seem to have gone from opposing new homes by 46% to 28% to supporting them by 47% to 31%. Within those figures, strong support has doubled from 5% to 11%, while strong opposition has fallen from 15 to 8 per cent.

This is a dramatic – and perhaps surprising – shift in just three years. There are of course big differences in attitudes between different sorts of people. The breakdown for different groups needs to be treated with some caution because of the sample size but there do seem to be changes in some unexpected places:

  • Age: Opposition is strongest among the 35-54s (36%) but the biggest reduction in opposition happened among the over-65s (52 per cent in 2010 to 20 per cent in 2013).
  • Tenure: Opposition is still much stronger among home owners than renters but it has fallen by a similar amount among all tenure groups.
  • Income: People in the highest income quartile are still the most likely to oppose new homes (33%) but that groups has also seen the biggest reduction since 2010 (when it was 49%)
  • Type of area: There is a clear divide between people living in large cities (only 17 per cent oppose new homes in their area) and those living in smaller towns and rural areas. However, opposition fell most in country villages (5% to 21%).

So why the change? In a piece for Saturday’s Telegraph Lewis hails the government’s planning reforms. He claims that the Labour government ‘killed off the local actors in the planning system’ but that local communities are now back in control.

That’s why the government decided to reunite the housing and planning portfolios and that’s why ‘housebuilding is moving in the right direction’. He says: ‘The new planning system puts local people in control, so if they want to build more homes, they will.’

But is this quite the ‘mission accomplished’ that Lewis makes out? Findings that people are more likely to support new homes if the community is involved in planning and local people have more control over what gets built certainly seem to go with the grain of localist thinking (even though it’s never been clear what that really means).

However, this has not yet translated into many more homes on the ground. It’s true that housing starts are moving in the right direction but earlier this month it emerged in leaked documents that officials warned ministers that they are about to fall again. Completions are up too but are running at half the level needed to meet demand.

As Alex Marsh argues on his blog, increased awareness of the housing problems facing the country seems a more likely explanation for the change in attitudes. Some 81 per cent of people agree that there is a shortage of affordable homes to buy and 82% say it’s more difficult to buy than 20 years ago. However, they are cautious about the prospects for change: 55 per cent think that ‘homes will continue to be unaffordable in my local area even if new homes are built’.

These results from the survey also seem more upbeat about new homes than more nuanced results from opinion polling. As Ben Marshall of Ipsos Mori blogged last year for Yes to Homes, 80% of the British public agree that there is a national housing crisis but more disagree than agree that there is a crisis in their local area (49% to 45%). Meanwhile local councillors still think local opposition is the biggest barrier to increasing supply.

Ben argues that the case for new homes still needs to be made locally:

‘Localism is unlikely to deliver the new housing required if the issue isn’t given greater ongoing attention by local politicians, communities and businesses. This is the challenge: housing supply is a strategic, national imperative in the hands, hearts and minds of local people.’

From this perspective it’s worrying that local newspapers don’t seem to have got the message yet that public attitudes are changing. Yes to Homes and other campaigns have generated positive local coverage but stories about plans for new homes are still routinely reported in terms of the reaction of local home owners. The more dramatic this is, the better.

A quick search of local paper stories over the last month bears this out. In Warwickshire there’s ‘fury’, in Hampshire ‘anger’, in Nottinghamshire new homes are ‘controversial’, in Sussex they’ll ‘ruin’ the beauty of the countryside and in Aberdeen they’re ‘diabolical’.

And how far does Brandon Lewis really speak for members of his own party? How about the Tory councillor who says plans for new homes near Coventry will create a ‘social dumping ground’ or the Tory councillor and MP condemning ‘fresh assaults on green spaces’ around Bradford?

Many of the stories quote people saying that they support new homes in their area in principle but oppose these particular plans because of their impact on schools or traffic or because there are brownfield sites nearby that should be built on first. Some of these concerns are genuine but some just seem like a way of saying no without saying ‘not in my backyard’.

The change in public attitudes to new homes revealed in this survey really is welcome news but there is still no room for complacency. 

Closed doors

Mon, 28 Jul 2014

What is it about a ‘poor door’ that causes so much outrage?

The term has captured something on both sides of the Atlantic: first on an exclusive development in New York City last year and then applied to a growing trend in London reported in Saturday’s Guardian.

The London building at the centre of that story – One Commerical Street on the eastern fringes of the City – was the same one that I blogged about last year when it was chosen by chancellor George Osborne as the venue for his speech arguing that the economy was ‘turning the corner’.

The development was midway through construction at the time and 40 per cent of the market homes had already been sold off-plan in the Far East. However, the plans revealed that it would have separate entrances for rich and poor: one at the front for the market housing and the second around the back for the housing association homes. That seemed to me to make it the perfect metaphor for the UK’s unequal recovery.

Only a few weeks before that – unknown to me at the time – very similar news had broken in New York about 40 Riverside Boulevard, a high-rise development that would have separate entrances. These were quickly dubbed a ‘poor door’ and a ‘rich door’.

The two stories became one this week when New York planners approved the scheme. That prompted outrage in the city and a pledge by Democrat mayor Bill de Blasio block similar schemes in future and this was the hook for Hilary Osborne’s Guardian investigation highlighting the fact that the same thing is even more common in London.

It’s interesting that the outrage seems to have been more more intense in New York. Perhaps that’s for historical reasons: America defined itself against a class-ridden Britain symbolised by Upstairs Downstairs and Dickens; one of the ‘self-evident’ truths in the US constitution is that ‘all men are created equal’ (even though it only meant white men); and separate entrances recall the shame of ‘separate but equal’ racial segregation.

It’s also political. Part of de Blasio’s support came from New Yorkers angry about economic inequality and the income levels of ‘the 1 per cent’ who caused the financial crisis. His $41 billion plan to create and preserve 200,000 affordable homes in the next ten years was a key campaign pledge. One mechanism for delivering it is mandatory inclusionary zoning, under which developers are required to provide low and moderate income housing in return for the lifting of restrictions on the height of developments and tax breaks.

Housing policy may work differently in London but the underlying issues are the same and inclusionary zoning does a similar job to the section 106 agreement that created the affordable homes at One Commercial Street.

One argument developers use to justify the separate entrances is that they are a way of ensuring that affordable housing tenants do not have to pay the high service charges for the concierges and other services that go with the ‘rich door’. There may be something in that, although the service charges have to be set against the considerable extra upfront costs of building a development with separate lift shafts. The point left more unspoken is that buyers pay such high prices for luxury apartments precisely because they want them to be exclusive.

The outrage on the left is met by mockery on the right, with the Wall Street Journal portraying the ‘poor door’ controversy as ‘the Dickensian misery of expecting people to pay their bills’. Somewhere between the two is the argument that if a ‘poor door’ is the only way to secure affordable housing then it’s a price worth paying for keeping homes in the centre of the city rather than despatching them to the outskirts.

Segregated development is also nothing new: think back to the 1930s and Oxford had ‘snob walls’ with iron spikes on the top separating private from council housing. A counter-argument could even be made communities are more mixed now than they were in the 1980s. However, that rather ignores the powerful forces that are generating inequality and division.

While inclusionary zoning has a long history in the US, it’s only relatively recently that Section 106 developer contributions have become a key mechanism for delivering affordable housing in the UK. What’s seen here as a tax on new development (which has been considerably relaxed by the coalition) is often seen there as a tax break or subsidy for developers (build affordable homes, gain the right to build new floors full of luxury condos).

What’s changed completely is the wider housing and economic context. Escalating house prices in London and New York have created a housing market in which only the very rich can afford to buy, gentrification has spread to former working class areas and people on low incomes are left with rapidly shrinking pockets of affordable housing. Inadequate subsidies for affordable housing leave new provision ever more dependent on developer contributions and the right to buy and regeneration eat into the existing stock. Meanwhile an increasingly unequal society becomes ever more polarised between the very rich and the very poor.

At One Commercial Street, for example, apartments starting at £500,000 for a studio are only affordable to the top 1 per cent of households (calculate where you stand here). The affordable homes will have gone to around 70 households from perhaps the bottom 10 per cent.

Of those who might have used the non-existent middle door, some will choose to move to the suburbs or out of the city altogether as enclaves of affordable housing disappear. For those who want to remain in the city and do not already own, the meaning of affordability is stretched to breaking point to include $3,000 a month rents in New York and £720,000 shared ownership in London. For those at the bottom who are homeless or too low on the waiting list, some will be forced out of the centre of the city by cuts in housing benefit and some by out of area homelessness discharges.

The ‘poor door’ controversy will make us more sensitive to buildings with separate entrances for rich and poor and hopefully more aware of the need for more new homes. It may generate a wider debate about whether affordable housing requirements should be delivered on or off site. It may even lead some to question whether what amounts to a tax on new development (which may mean more overseas investor buyers) is the best way to subsidise affordable homes.

However, ‘poor doors’ are the result of state intervention to mitigate rather than confront the far greater inadequacies of our housing system and the inequalities built into it. That’s the real outrage.  

Survey story - part two

Thu, 24 Jul 2014

Here’s the second part of my blog on some key themes emerging from the latest English Housing Survey.

Part one looked at changing trends in tenure, the impact of the financial crisis and the true nature of under-occupation. This final part looks at three more trends that caught my eye:

Private renters are not as satisfied at they seem: Whenever groups representing private tenants complain about poor conditions in the sector, landlords and ministers point to evidence from the survey about satisfaction levels. The latest data shows that 84 per cent of private renters were satisfied or very satisfied with their accommodation and 87 per cent were satisfied with their area. These figures are higher than for social renters and not much lower than for owner-occupiers. In addition, when private tenants were asked why their previous tenancy ended, only 7 per cent said it was because they were asked to leave by their landlord or agent. Against that, a private let does not look much like a settled home for many people: 907,000 out of England’s four million private renters had moved within the last year. 

However, as the graph below shows, the results are very different when people are asked if their current tenure is ‘a good way of occupying a home’. Similar proportions of owner-occupiers (93 per cent) and social renters (82 per cent) say yes to this as say they are satisfied with their accommodation or area but the proportion of private renters saying yes slumps to just 52 per cent.


Some 23 per cent of private renters were dissatisfied with their current tenure, a rate four times higher than social renters (6 per cent) and ten times higher than owner-occupiers (2 per cent). Being satisfied with your accommodation or area is not the same thing at all as being satisfied with being a private tenant.

Affordability may not be what you think: It’s tempting to take it as read that social housing is more affordable than private renting and owner-occupation – but if you look at housing costs in relation to incomes a very different picture emerges. On average, owner-occupiers spend 20 per cent of their income on their mortgage in 2012/13, with the proportion increasing to 25 per cent for those who have bought within the last three years and falling to 19 per cent for those who bought three or more years ago. In contrast, social renters spend 30 per cent of their income on rent and private renters 40 per cent.

These figures are for the incomes of the household reference person and their partner (and so are closer to reality than affordability measures than only include a single earner). They are also after housing benefit has been applied: without it, rents would have accounted for 42 per cent of social tenants’ income. However, they are for 2012/13, before most cuts in housing benefit and before most development of new social housing for affordable rent.

Private renters also paid more (£163 a week) in money terms than people with a mortgage (£149 a week) and they will of course be paying that for as long as they rent with no chance of paying off their mortgage after 25 or 30 years. 

Social renters do not conform to TV stereotypes: One reason why the rash of TV programmes like Benefits Street caused so much offence is their insinuations about what social tenants do (or don’t do) all day. It’s true that 65 per cent of social tenants are not working (this figure is for households and refers to the status of the household reference person). It’s also true that this is higher than for private renters (28 per cent) and owner occupiers (38 per cent).

However, a more complex picture emerges from the more detailed breakdown in the survey. Only 10 per cent of social tenants are unemployed, compared with 31 per cent who are retired, 23 per cent who are ‘other inactive’ (permanently sick or disabled or caring for the home or family) and 1 per cent who are students. Where TV programmes imply that social tenants won’t work, the survey shows the much higher proportions who are unable to work.

Meanwhile the 35 per cent of social tenant households who are in work (23 per cent full-time, 12 per cent part-time) are finding it harder to make ends meet and pay the rent. The proportion of council tenants who were working and in receipt of housing benefit almost doubled from 18 per cent in 2008/09 to 34 per cent in 2012/13. The survey says this may reflect lower paid work and more people undertaking part-time work.  

This has important implications at a time when the government sees getting a job as the route out of poverty. Even if most of the unemployed and some of the long-term sick and disabled are successful, cutting tenants’ benefits to incentivise them to find work does not seem like such a simple solution to their financial problems.

You can find more detail on all of this plus much more in the detailed commentary and tables from the English Housing Survey available here. Part one of this blog is here

English Housing Survey part 1

Wed, 23 Jul 2014

It’s time again for a welter of new information about housing in England. Here’s the first of a two-part blog on what caught my eye.

The English Housing Survey also covers stock conditions, energy efficiency and fire safety but this blog concentrates on the story on households. Information from it was first released in February but more followed today. Here are the first three of six themes that seemed significant to me.

The slow death of the property-owning democracy continues

I blogged about the key trends in tenure in February. It wasn’t just about the rise and rise of private renting (it had been clear that it would overtake social renting for some time) but a huge shift within owner-occupation. In 2012/13 the number of outright owners almost overtook the number of mortgaged owners. This is part of a generational shift (baby boomers are slowly paying off their mortgage and few of their kids can get one) that would have horrified Mrs Thatcher when she revived the old Tory idea of the property-owning democracy. Between 2008/09 and 2012/13, the proportion of households aged 25-34 who were private tenants rose from 31%t to 45%.

The financial crisis had a dramatic impact on tenure

Mortgaged ownership has been shrinking for years but the trend seems to have accelerated dramatically as a result of the recession and credit crunch. The survey includes information on recent movers – households who moved into their current home in the last 12 months. In 2012/13 there were 2.3 million of them: 59% moved into the private rented sector, 24 per cent into owner-occupation and 16% into social housing. As the graph shows, a big shift happened in the two years between 2007/08 and 2009/10: the proportion of recent movers who went into owner-occupation dropped from 42% to 20%, while the proportion becoming private renters rose from 43% to 62%.


Under-occupation is in the eye of the beholder

The bedroom tax has focussed attention on under-occupation in social housing, with ministers arguing that it desperately needs to be tackled to free up space for overcrowded families. As I’ve blogged before, the English Housing Survey tells a very different story and uses a different measure of under-occupation. The ‘bedroom standard’ is a slightly harsher measure of bedrooms needed than the rules on housing benefit (older children have to share) but has a more generous definition of under-occupation (two bedrooms more than needed rather than one as under the housing benefit rules).

With that caveat, the survey highlights four issues:

  • Owner-occupiers are most likely to under-occupy. Half of all home owners have two bedrooms more than need and another 36 per cent had one bedroom above the standard.
  • Social tenants – the targets for the bedroom tax – are least likely to under-occupy. Only 9.9 per cent had two bedrooms more than the standard and 28.7 per cent had one more. That total of 39 per cent compares to 85 per cent for owners and 51 per cent for private renters.
  • Under-occupation and overcrowding in social housing were both falling before the bedroom tax was introduced in April 2013. Overcrowding fell from 7 per cent in 2010/11 to 6 per cent in 2012/13. The 9.9 per cent under-occupation rate in 2012/13 was down from 10.3 per cent in 2010/11 and 12.1 per cent in 2003/04.
  • More than half of all under-occupiers (3 million out of 5.8 million with two bedrooms more than the standard) are aged over 65. Isn’t this where downsizing initiatives and incentives should be targeted?

I’ll be posting part 2 of this blog later. How satisfied are private renters? Who had the most affordable housing? And do TV shows get it right about social renters? Watch this space fort three more new perspectives from the English Housing Survey. 

A room of their own

Mon, 21 Jul 2014

What does the Lib Dem change of heart mean for the future of the bedroom tax?

It is not quite the u-turn that’s being claimed in some quarters but it is a significant change of direction. It’s not quite the mature change of mind in the light of the evidence that’s being claimed by the Lib Dems either: the evidence has been there from the beginning and the independent evaluation that supposedly triggered the change in policy must have been available at the DWP for weeks before it was sneaked out on Tuesday.

Read Rob Gershon’s great blog for a forensic analysis of Wednesday night’s statement by Treasury chief secretary Danny Alexander and all the previous evidence that he seems somehow to have missed. I’d add only one thing to that: Danny could have asked his dad.

This is of course not the first time that the Lib Dems have withdrawn support from the bedroom tax. In April it turned out that Tim Farron meant the party but not the bit of it that’s in government. This time around the leadership is falling into line with the grassroots to call for specific reforms to the policy.

It’s easy to accuse them of hypocrisy: without Lib Dem support, the bedroom tax could never have been introduced in the first place. And naivety: the bedroom tax is a symbol of the way the Conservatives forced through changes on welfare reform and housing that the Lib Dems were too quick to accept in the early days of the coalition. And it’s probably too late politically, as former Nick Clegg advisor Sean Kemp argues in The Spectator.

However, politicians are allowed to change their mind and it’s not a bad thing when they listen to the evidence. The Lib Dem change of heart is much better late than never and it could yet make a real difference to bedroom tax victims before the next election.

Danny Alexander spelt out more detail in an interview on Channel Four News last night. If you haven’t seen it, do watch again here as it’s interesting on four different levels:

First, it’s cringe-inducing TV of the highest order as Alexander struggles to justify his previous position and evades repeated attempts to get him to say ‘sorry’ until near the end. Alexander’s continued use of ‘the spare room subsidy’ (the name invented by the Conservatives to justify the policy) does not do much to convey contrition.

Second, the new Lib Dem policy seems to be more complex than the original statements made out. It amounts to an admission that discretionary housing payments (DHPs) have not worked and more exemptions are needed.  The interview hints that the party does not mean to exempt all disabled adults (something that might cover two-thirds of all bedroom tax victims) but a much smaller group of ‘people who have a medical need for an additional bedroom’. There would also be a new duty on social landlords to prevent under-occupation, though it’s not clear how that will work.

Alexander did not mention how the suitability of alternative accommodation for downsizers would be decided. This issue was thrown into stark relief in the package before the interview, which featured Wayne Blackburn, a disabled man who has already been forced to downsize into unsuitable accommodation. It’s also worth noting Inside Housing’s story today about rising numbers of out-of-area homelessness discharges: these are happening despite government guidance that ‘suitable’ should mean in the same area.

Third, Alexander still does not seem to understand his own policy. He repeats the discredited government line that Labour brought in ‘this self-same change for people in the private rented sector’. In reality even the Lib Dems’ reformed bedroom tax will be much harsher since the local housing allowance only ever applied to new tenants and operates in a completely different way.

Fourth, he drops some hints about what’s likely to happen next. If the Lib Dems want to reform the bedroom tax before the next election, they could vote for it in the House of Commons or negotiate it behind the scenes with their Conservative coalition partners.

On Commons votes, here’s what he has to say:

Q: If there was a choice in the House of Commons to vote for the policy you now support, will you vote for it?

A: Well, of course… if Liberal Democrats put forward our policy in the House of Commons of course I’ll support that.

Q: What about if Labour do?

A: I think we’d have to look at whatever Labour put forward.

Q: What about if Labour put forward your idea?

A: I think we’d have to look at what Labour put forward on a case by case basis.

Q: This is maddening political games. This is what drives people at home nuts. You can’t answer a straight question about if somebody does what you want you won’t vote for it.

A: You know that isn’t true because Labour would only be putting down a motion like that in order to play political games themselves.

I take this to mean that if Labour calls a vote to scrap the bedroom tax, the Lib Dems will vote against and Labour will use it to paint them as hypocrites. If Labour proposed reforms they might vote in favour, but would Labour want to? However, Lib Dem MP Andrew George, who came top in the ballot for private member’s bills, is drafting legislation that includes wide-ranging bedroom tax reforms. That will come to the Commons on September 5. What will the Lib Dems and Labour do then? Together they have the votes to push through reforms that will help many bedroom tax victims before the next election but only if they put policy before party politics.

On coalition negotiations, Alexander says that ‘it’s right that in the next few months in the run-up to the Autumn Statement that we should argue the case within government, which we will do’.

Q: You could force it through couldn’t you? you could force the Conservatives to deliver this if you want. How far will you take it? You could say you’re not going to get anything else in the Autumn Statement unless you give us this. Are you going to do that?

A: Well, we will make it part of what we’re arguing for as part of that process so you’ll see the results in the Autumn Statement.

Q: So that’s a guarantee that it will be in the Autumn Statement isn’t it?

A: It’s not a guarantee, it’s part of what we’re pushing for in the Autumn Statement and we’ll see how we get on.

So how will the Lib Dems play their hand? Alexander’s answers do not inspire that much confidence but they will get at least two chances to force through their new policy this year. Will they take them?

Shuffling the deck

Wed, 16 Jul 2014

So housing seems to have kept the politicians who should have gone and lost the one who was making a difference.

Speculation ahead of the reshuffle suggested that Eric Pickles and Iain Duncan Smith would leave their posts as part of the cull of middle aged men in the Cabinet. True, some of the stories seemed a bit thin (a woman with a posh accent overheard talking on the phone didn’t seem like much to go on) but I lived in hope. I also looked forward to the DWP press release arguing that it proved that universal credit is ‘on track and on schedule’.

Instead it’s business as usual at the top of their two departments with a shake-up lower down the ministerial scale. After just over nine months in the job, Kris Hopkins is now the former housing minister and is shunted sideways into local government. Brandon Lewis moves from that job and gets a promotion to minister of state for housing and planning. Penny Mordaunt comes in as junior minister responsible for coastal communities.

The good news is that housing is restored to the minister of state status it lost when Hopkins was appointed and that the housing and planning briefs have been reunited. Lewis seems on message about housing issues, recently helped open new council houses in his constituency and is a private landlord. He’s also a protégée of Pickles and co-hosted a local radio programme with his boss when he was leader of Brentwood council.

The bad news is that the revolving door of housing ministers is speeding up again. Hopkins replaced Mark Prisk, who was supposedly sacked for his lack of media profile. He did attract more publicity but mostly by putting his foot in his mouth with ill-advised comments about house prices and landlords evicting tenants. It’s tempting to say that his departure is linked to worry about a leaked report predicting a fall in housing starts ahead of the election but more likely it’s just an indication that who does the job does not matter very much politically.

The very bad news is that Nick Boles has also moved from the DCLG. He told a fringe meeting at the last Conservative conference that ‘if I’m still planning minister after the next election, I want you to shoot me’ and that his ideal job was working in the education department with old Policy Exchange chum Michael Gove. He’s got his wish but only half of it.

However, Boles was like a breath of fresh air at the DCLG and within the Conservative Party. He was prepared to put the case for new homes to sceptical voters and seemed to have license from the leadership to wind up the Daily Telegraph and even more sceptical members of his own party. Somehow I can’t see Brandon Lewis doing anything as brilliant as Boles’s confrontation with Simon Jenkins on Newsnight last year.

His departure could therefore signal a pre-election shift in the balance of power away from modernising Conservatives who see new homes as vital to economic growth in favour of traditional ones who want to resist them at all costs. A quick look around at recent local paper coverage bears out the potential: from Warwickshire Tories calling a site for new homes a ‘social dumping ground’ to Bradford Tories facing ‘assaults on their green spaces’.

The worrying news is that the DCLG is also about to lose Sir Bob Kerslake, who will stop being head of the civil service in the Autumn and retire as permanent secretary in February when he’s 60. Sir Bob was of course previously head of the HCA and many people credit him with protecting the housing programme in 2010 so it’s hard to see his departure as good news for the sector.

Allegra Stretton reported on Newsnight on Monday that he was being sacked for ‘poor performance’ (which seems to be code for resisting civil service reform). If the leak and the timing of an announcement about the civil service at the same time as a political reshuffle seemed remarkable, so does the fact that he was appointed and promoted under the coalition.

The man himself blogged yesterday about his pride in working with ‘brilliant’ people in the job and the ‘big and difficult transformation’ at the DCLG. But he added: ‘Less brilliant have been the ‘noises off’ criticising civil servants and accusing them of being reluctant to change.’

With a departing permanent secretary, yet another new housing minister and the loss of the Boles stardust, things do not look good for the DCLG ahead of the election. Perhaps it’s just as well that Pickles has outsourced policy development to the big housebuilders?

By comparison the DWP seems a model of stability. Out goes Mike Penning and in comes Mark Harper as minister for disabled people (after a period of confusion similar to the one about who was housing minister yesterday afternoon).

Iain Duncan Smith supposedly survived an attempt to remove him in the last reshuffle and now somehow he’s survived yet again. If you haven’t seen it, do read Chris Dillow’s brilliant blog on ‘why idiots succeed’. My money is on reason number one – the wet bed – plus Cameron’s fear of having one of John Major’s ‘bastards’ on the backbenches.

Here’s how Major summed things up last year: ‘IDS is trying to reform benefits. But unless he is lucky or a genius, which last time I looked was not true, he may get things wrong.’

The former prime minister was prescient. As I blogged yesterday, the DWP chose the reshuffle as the perfect day to bury the bad news in an independent evaluation of the bedroom tax that provides powerful new backing for critics of the policy. Only last week, it was embarrassed when Sir Bob Kerslake confirmed that the Treasury has still not signed off the business case for universal credit.

And yet somehow, with his flagship sinking underneath him, the captain sails serenely on.  

In case you missed it

Tue, 15 Jul 2014

Today looks like a very good day for the DWP to sneak out independent research on the impact of the bedroom tax and cuts to the local housing allowance.

While Iain Duncan Smith seems to have survived the Cabinet cull of middle aged men, the two reports offer in-depth scrutiny of two of his most controversial policies. There is as yet no DWP press release or comment but you can find the reports here and here on its website.

This blog will concentrate on the independent evaluation of what the DWP calls the removal of the spare room subsidy. The report by the Cambridge Centre for Housing and Planning Research and Ipsos Mori analyses the effects on and the responses of tenants, landlords, local authorities, voluntary and statutory organisations and advice agencies and lenders.

While this is the interim report and covers only the first eight months of implementation from April to November 2013, it’s also the most comprehensive analysis of the policy yet attempted is published by the department responsible for it. Here are some of the findings that I’m guessing it hopes that the reshuffle will distract you from reading about:

The impact on tenants. Around 80 per cent of those affected are paying some or all of the shortfalls on their rent but only half have paid it in full and 20 per cent had paid nothing in the first six months.

Of those who have paid, 57 per cent say they found the money by cutting back on household essentials and 35 per cent by cutting back on non-essentials.

A third have borrowed money to pay the shortfall. Most of this has come from family and friends (21 per cent) but tenants questioned whether this was sustainable given the low incomes of those they are borrowing from. Another 6 per cent have borrowed from another lender, 3 per cent from a credit card and 3 per cent had taken payday loans.

In total, that means more tenants making up the shortfall have done it through borrowing than by applying for a discretionary housing payment (22 per cent) or looking for a job or better pay or hours (21 per cent)or looking to move (16 per cent).


Downsizing. The DWP might have seized on higher than expected figures for successful moves to smaller accommodation: 4.5 per cent of affected tenants had managed to downsize to another social tenancy in the first six months. The report notes that if this trend continued at the same rate for the next two years, over 20 per cent of those affected would have downsized within the social rented sector. A further 1.4 per cent moved into private rented homes in the first six months.

However, this trend may not be all it seems. It is only higher than expected because the DWP’s impact assessment assumed that there would be no significant moves. There were also big differences between areas:

  • landlords with the lowest proportion of tenants affected had seen downsizing rates almost four times higher than those with the highest proportion
  • demand for downsizing has been difficult to meet so far especially in large rural areas and in urban and suburban areas where the standard social rented property is a three-bedroom house
  • financial incentives to downsize offered by landlords are less available in areas most affected by the bedroom tax.

Meanwhile most tenants were reluctant to move away from services, work and support networks and landlords and agencies said most affected tenants would prefer to say put and pay the shortfall.

Discretionary housing payments. The research confirms other indications of gaps in the system and huge variations between different areas:

  • more than half of affected tenants were not aware of DHPs
  • there was widespread concern about disabled people in adapted properties being denied help because their disability benefits were counted as income
  • agencies were worried that some of the most vulnerable, including those with mental health difficulties, are missing out
  • there was widespread concern that the time-limited nature of DHP awards means it is only delaying the real impact of the policy and about the future size of DHP allocations.

The DWP has also just published a good practice guide for local authorities on DHPs.

Employment. Some 18 per cent of affected tenants said they had looked to earn more money as a result of the policy but ‘only modest numbers would appear to have been successful in the first six months’. The vast majority (87 per cent) of those looking for work or better pay have not found them.

Allocations and development. Some 41 per cent of landlords reported difficulties letting larger properties, with the problem greatest in areas most affected by the bedroom tax like Wales and the north of England (60 per cent) and lowest in areas least affected like London. However, the report found no statistically significant increase in national voids figures.

Of the 80 per cent of landlords involved in new development, a third said they had changed the profile of their programme due to the bedroom tax and benefit cap. The main impact has been a reduction in the number of larger homes and increase in one-bedroom flats being built. Many landlords were worried that losses in rental income could reduce their ability to develop in future but their relationship with lenders does not seem to have suffered yet. 

Overcrowding. The DWP has argued that the bedroom tax will help overcrowded families by freeing up larger homes. However, the report found that most local authorities and landlords believe it will have little impact and revisions to the definition of overcrowding as a result of the policy mean it will be difficult to assess the impact anyway.

Knock-on effects. Changing allocations procedures (for example 72 per cent of landlords have increased priority for downsizers) have increased waiting times for smaller homes but made larger homes available to other people on the waiting list. Two-thirds of landlords would consider letting larger homes to people not affected by the bedroom tax (pensioners and working people not on housing benefit).

Agencies working with the single homeless reported difficulties in hostel move-on to social housing because of the shortage of one-bed homes and landlord reluctance to let two-beds to single people.

Arrears and evictions. It was too early to expect much hard evidence on either but the report found widespread concern about ‘the impact of potential future evictions on local services, and on landlord finances as well as on the lives of vulnerable people’. The survey of claimants found 80 per cent were finding it very or fairly difficult to pay the rent and 79 per cent were running out of money very or fairly often (rising to 90 per cent for those in arrears).

Policies again vary hugely between areas. The chief executive of one local authority told the researchers ‘it is not the council’s business to evict people’ but a social landlord in the same area said it would follow usual procedures and ‘take supportive but robust action’.

And the research also reveals that small numbers of evictions have already happened and more could be on the way. The survey shows 45 evictions due solely to bedroom tax in the first seven months including 24 by one landlord. That is a tiny number but the report says that:

‘In terms of the level of arrears required to trigger court action, most landlords interviewed said that they were developing their policy over time. They were anxious not to be in the media for being the first in court for “bedroom tax evictions” and wantedf to give tenants every opportunity to pay. Nevertheless by the autumn a third had already begun the process of issuing formal warning letters and in some cases continuing further in the route to evicting non-payers.’

Ominously too, the report found that while most local authorities would not consider someone with bedroom tax arrears to be intentionally homeless, some said they would look to discharge their homelessness duty into a private tenancy and possibly into shared housing. 

Overall then, the report will increase rather than allay fears about the impact of the bedroom tax. If it had really wanted to, the DWP could have spun a positive story about some of the findings, for example on downsizing or the falling numbers of tenants affected. The response by IDS to the BBC’s story on the study is a nod in this direction but he familiar line about ‘scaremongering’ by critics is looking pretty tired.

Far better then to publish the report on a day when everyone’s attention is focussed elsewhere. 

Chance of a lifetime

Fri, 27 Jun 2014

MPs will get the chance to back major housing reforms including new significant exemptions to the bedroom tax later this year. Will they take it?

Andrew George, the Liberal Democrat MP for St Ives, has what he describes as ‘the chance of a lifetime’ to change things through legislation after coming first in the ballot for private member’s bills. Talking to him yesterday gave me a fascinating but slightly depressing insight into how the system – and party politics – work.

He consulted his constituents on a shortlist of options including housing, a Cornish Assembly and health care standards and after more than 2,000 comments has decided to plump for an Affordable Homes Bill with four key elements:

  • Extension of Help to Buy or a new Affordable Homes Investment Bank to underpin the ‘intermediate’ market (shared equity/shared ownership/mutual housing) to construct a new lower rung on the housing ladder for those who cannot afford full ownership.
  • New exemptions to the bedroom tax for anyone who has lived at an address for more than three years or who lives in a home with disabled adaptations
  • A new Use Class for ‘non-permanent residential use’ to empower local planning authorities to control the number of second homes in their area.
  • Enhanced powers of compulsory purchase for local authorities where developers land bank development sites or fail to use sites for which planning permission has been granted but development has not advanced or where need for affordable homes cannot be met on ‘exception’ sites through community land auctions/trusts.

To give a bit of context, Andrew George is my MP so I know he has a longstanding interest in affordable homes and a particular local one in the pernicious impact of second homes. More recently he’s been named the most rebellious Liberal Democrat MP of this parliament and has voted against the government on issues such as the bedroom tax, NHS reform and tuition fees.

All four of his proposals have the potential to attract cross-party support but there could be issues with all of them too. This is the starting point but not necessarily what the final Bill will look like since he may have to narrow it down to get majority support.

On intermediate housing, he argues that the market has not taken off because lenders are ‘iffy’ about it and people who buy a share struggle to sell. ‘I can’t see why anyone would object to it,’ he told me. ‘The Treasury might be worried about the budgetary implications but the principles can’t be objected to.’ Shared ownership sceptics may disagree but it could be a big improvement to Help to Buy.

Private member’s bills can only amend, rather than repeal, legislation, which is why he’s gone for exemptions to the bedroom tax. ‘The thing I’ve found offensive about it is the implication that because you’re poor you’re less entitled to a stable family home,’ he says. ‘This would significantly neutralise [the bedroom tax] and carve out a large number of cases.’ By my reckoning, his proposals would exempt the majority of those affected. Some 83 per cent of social tenants have lived in their home for more than three years (though that includes pensioners and the proportion of working age will be lower) and some newer tenants will be in specially adapted homes.

On second homes, his proposal could get support from other rural MPs but it does go against the grain of Tory deregulation (as I blogged earlier this week, the Deregulation Bill will liberalise short-term rentals in London). George says he has campaigned on the issue for years but been turned down by housing ministers under both the Conservatives and Labour.

Finally, his proposals on land banking chime with Labour policy but something similar has been proposed by Boris Johnson in London.

So what next? The reason that topping the private member’s bill ballot is the equivalent of winning the lottery for a backbench MP is that parliamentary time is very limited and the winner has the best chance of seeing their Bill become law. It’s not a guarantee though. The last MP who won the ballot and was successful was Labour’s Brian Iddon before the last election with a Bill to protect the rights of tenants of repossessed landlords and he was a member of the largest party and had government backing. MPs promoting Bills have to be prepared to negotiate to win support. 

George had to strike a balance between proposing something small to maximise support and something bigger with a higher risk of not getting it through. ‘I wasn’t going to run with something tame and anodyne,’ he says. ‘This is once in a lifetime chance to advance a cause rather than tinker at the edges.’ 

However, while all of us might hope that law-making at Westminster is a rational process in which proposals are debated and enacted on their merits, the reality is not quite like that. Party politics inevitably intrudes.

Take the bedroom tax, for example. My guess is that it would not survive a genuinely free vote in the Commons in its current form if the right compromise could be found. The all-party Work and Pensions Committee recommended significant exemptions and changes in a report in April. Some Lib Dems and even a few Conservatives have voted against it or abstained at various points.

However, with ministers and their aides expected to vote for government policy or resign, there have never been enough of them to succeed. Labour, meanwhile, has used opposition day debates to call for repeal of the bedroom tax but seemed more intent on pinning the blame on the Tories and Lib Dems at the next election than securing concessions in the meantime.

Too often then the parliamentary system and tribal party politics have seemed to trump changes to what most MPs know is a bad policy. Will it be any different this time? The early signs are not promising. ‘I’ve spoken to the Labour leads and they have indicated that they may not go for my bedroom tax change,’ says George.

From the Conservative side of the House, meanwhile, he’s had dark threats from Eurosceptics with their own agenda. ‘The Tories have threatened to talk my Bill out unless I allow the European Referendum Bill to get in first,’ he says. ‘The only way to prevent that is to get 100 people there on the day and I may struggle to do that.’

Andrew George is currently drafting his Bill and is prepared to narrow it down to the elements that will attract enough votes to pass. Can the Lib Dem rebel succeed? The first debate in the Commons is set for September 5. Watch this space.

Passing the buck

Fri, 27 Jun 2014

George Osborne has spent so long outsourcing responsibility for the housing market to Mark Carney that it’s easy to forget the Bank of England’s actual brief.

Far from controlling house prices, or tackling affordability or making the market less dysfunctional, the Bank’s Financial Policy Committee (FPC) ‘is charged with a primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system’ and a secondary objective ‘to support the economic policy of the government’.

So the measures the FPC announced today on high loan to income (LTI) mortgages and a slightly strengthened stress test on lending are about preventing future house prices from increasing household debt to a level that poses risks to the financial system rather than tackling current price levels and affordability.

Loans of more than 4.5 times income will be limited to no more than 15 per cent of banks’ total mortgage lending from October. However, given that only about 9 per cent of mortgages (19 per cent in London) are above that level at the moment, that indicates the Bank is reasonably relaxed about increases in high LTI lending and in house prices.

Its central forecast is that house prices will rise by 20 per cent over the next three years but that affordability will be boosted by nominal income growth getting back to an average level of 4 per cent a year. As Capital Economics points out, the new measures seem designed only to kick in if prices rise more than the Bank expects.

As the Carney and the Bank acted, the Treasury announced that no new loans at more than 4.5 times borrowers’ income will be allowed under the Help to Buy mortgage guarantee scheme (HTB2).

Less than 5 per cent of HTB2 mortgages are at more than 4.5 time income so Osborne seems to have gone further than he need have done to satisfy his pledge to apply any proposals made by the Bank to Help to Buy. Was this more of a nod to Help to Buy critics than we might have expected? Or does it beg the question of why this was not the case from the beginning? Until the late 1980s the norm was mortgages at three times a single income or 2.5 times a joint income.  

The immediate reaction on the stock market was a sharp rise in the share price of leading housebuilders so clearly there was relief that the Bank had not taken more robust action.

Shortly after the announcements, Eric Pickles was downplaying concern about house prices at the CIH housing conference in Manchester. ‘I think we’re as far away from a bubble as you could possibly imagine. I think the bubble is in people’s imagination,’ he said. ‘I think that’s one of the reasons why the chancellor gave those powers to the Bank of England.’

Which brings me back to my original point about passing the buck. The Bank’s brief is to remove or reduce systemic risks to the financial system. Mortgages are the biggest asset class for lenders and the biggest element in household debt for borrowers so the risks are clear.

However, house prices are only part of that and arguably only a bubble that popped and led to a recession would be a systemic risk. The Bank seems relaxed about a 20 per cent rise in prices on current levels.

In any case, macro-prudential action on mortgage lending alone would not necessarily control house prices at a time when an increasing proportion of home sales are to cash buyers, overseas buyers and buy to let landlords, none of whom the Bank can influence directly.

According to the Intermediary Mortgage Lenders Association (IMLA) 36 per cent of homes sold in the first quarter of this year were bought entirely with cash, up from 24 per cent in 2007. Total housing demand financed by cash reached an all-time high of 61 per cent.

Meanwhile, 14 per cent of Britain’s outstanding mortgages are buy to let, which is not covered by the FPC’s measures – and in and case 44 per cent of landlord purchases are made without a mortgage.

In summary then, more draconian action by the Bank of England would have little or no effect on perhaps half of house sales but tilt the balance still further in favour of landlords and cash buyers and against first-time buyers.

As for the unaffordability of current house prices – something demonstrated graphically in analysis by Shelter yesterday – that is not the concern of the Bank of England unless it threatens financial stability. This despite the fact that Carney himself could only afford to work in this country because he was given a £250,000 a year housing allowance on top of his basic salary.

Sir John Gieve, the former deputy governor for financial stability at the Bank of England, gave his reaction to today’s announcements on the World at One at lunchtime. His key point was about the need to address the supply and taxation of housing. ‘We’ve under-taxed property and in particular we’ve under-taxed very high value property owned abroad,’ he said.

All of which means that there is only one man who can do something about the housing and affordability crisis: George Osborne. Passing the buck to the Bank of England won’t wash. The buck stops at 11 Downing Street.

Just as I was about to post this blog, I spotted this by Paul Smee, director-general of the Council of Mortgage Lenders, that sums things up perfectly:

This is about financial stability, not housing policy. These are Bank actions to safeguard financial stability and promote economic stability. They are not - and should not be seen as - a proxy for Government housing policy. These are not the tools for other policymakers, tasked with crafting a comprehensive, well-honed housing market strategy.’

Paying the bill

Wed, 25 Jun 2014

Blink and you may have missed it but significant housing legislation you may never have heard of passed its final stages in the Commons on Monday night.

Scant discussion in the housing press (including by me) of the Deregulation Bill is perhaps understandable when you consider that it is huge and it covers everything from the right to buy to outer space*. Several of the clauses involving housing were also not in the original Bill and have been added later.

However, here’s what will become law in England this summer as a result of Monday’s votes (there are other minor changes I don’t have room for):

  • The qualifying period for the right to buy will be reduced from five years to three
  • Local authorities will no longer be able to impose standards for new homes that go beyond the building regulations (mainly on energy efficiency)
  • Legislation banning short-term lets of homes in London will be repealed
  • The secretary of state will no longer have the power to require local authorities to produce housing strategies

The last of these may sound more important than it actually is because as I understand it the power has never actually been used but the other three could have major implications and there were last-minute attempts to amend all of them on Monday night.

The right to buy is obviously the big one for social landlords and tenants and the only one that has attracted the most attention. Effectively it restores the qualifying period to what it was before Labour extended it in 2004. Independent analysis for the Bill committee by the University of York found that it could mean extra 700,000 tenants are eligible for the right to buy. However, it found that a maximum of 56,000 of these are in work and earning enough to be able to buy.

Apart from the straightforward implications of those extra numbers – at a time when the right to buy is being abolished in Scotland, remember – the National Housing Federation raised concerns about the impact of the ‘preserved’ right to buy following stock transfer. Receipts are shared with the local authority but it has no obligation to spend them on new homes. It also wanted a reduction in the discount if the sales receipt does not cover debt secured against the property.

The government does seem to have moved on future transfers. The DCLG has published a stock transfer manual and solicitor-general Oliver Heald said on Monday that ‘the intention is that for transfers completing after 30 September 2014, net proceeds from preserved right-to-buy sales are, within three years, to be used to fund new affordable housing at no greater subsidy cost than under the main affordable homes programme’.

However, Green MP Caroline Lucas failed in an attempt to tighten up the rules on replacement homes. Her amendment would have forced ministers to publish a plan to replace homes sold under the right to buy and review the effectiveness of it within a year of the Bill getting Royal Assent. She argued that:

‘Currently, only one in every seven homes sold through right to buy has been replaced, and I find it astonishing that the Government are so complacent that they are not even monitoring the number of homes replaced following the preserved right to buy. Housing associations say that, in fact, the number is likely to be even less than one in seven. It is inexcusable that Ministers have not even consulted housing associations.’

The second produced an unexpected last-minute concession from the government. The Deregulation Bill prevents local authorities from going beyond the building regulations when they set local energy efficiency requirements as part of its more general review of housing standards. As I’ve blogged before, a good case can be made that the government is simply replacing what it sees as ‘red tape’ with blue and yellow tape but this is what it sees as ‘deregulation’.

However, the Bill risked leaving energy efficiency policy in limbo in the run-up to zero carbon homes and in the wake of the abolition of the Code for Sustainable Homes. It would also prevent local authorities that have not already adopted higher energy standards (as in London, for example) from implementing them.

Labour’s Jonathan Reynolds attempted to fix that on Monday with an amendment stipulating that the deregulation ‘shall not come into force until the secretary of state has laid a Zero Carbon Housing Strategy before both Houses of Parliament’. He argued:

‘If the Government are sincere in backing zero-carbon homes, they have nothing to fear from my amendment—it would make no difference to a Government committed to delivering an ambitious zero-carbon homes policy in 2016.’

The amendment was voted down but after the third reading there was an unexpected intervention by Oliver Letwin, the minister for government policy:

‘We are aware that within that framework, the decision on the commencement date for amendments to the Planning and Energy Act 2008, which restrict the ability of local authorities to impose their own special requirements, must be made in such a way that the ending of those abilities to set special requirements knits properly with the start of the operation of standards for zero-carbon homes and allowable solutions. I hope that will make the hon. Gentleman—and, indeed, my hon. Friends who are concerned about the same question of timing—rest easy. ‘

That appears to allow local authorities to continue with their energy efficiency work in the meantime. However, as I’ve blogged before, it remains to be seen how ‘zero carbon’ new homes will really be after 2016 given the influence of developers on the dilution of the standard and an exemption for ‘small’ sites that could amount to a loophole covering a third or more of new homes.

The section of the Bill on short-term lets in London was presented as a classic piece of deregulation by communities secretary Eric Pickles when he announced the change two weeks ago. It would end ‘outdated rules’ from the 1970s preventing London residents from renting out their own homes on a short-term basis without getting planning permission for a change of use. These ‘archaic’ rules caused controversy during the Olympics and are ‘irregularly’ enforced, he said.

However, the measure faced criticism on Monday night from both Labour and Conservative MPs representing Central London constituencies. The worry is that it could lead to a rash of homes being converted into holiday lets.  Conservative Mark Field complained that it was being rushed through before consultation was finished. Labour’s Karen Buck said that Kensington and Chelsea, Camden and Islington had all expressed strong reservations ‘precisely because of the fear that they will lead to a loss of residential stock in what are already highly stressed neighbourhoods’.

Oliver Heald said the government was working with London boroughs to try to achieve the right balance between freedom for Londoners and protecting housing supply: ‘We would not want that to be undermined. We are trying to ensure that speculators are not able to buy homes meant for Londoners and rent them permanently as short-term lets.’

However, Mark Field came back later to point out that the rules were introduced in 1973 at a time of acute housing shortage to protect the housing stock from being converted into visitor accommodation. He said the change would have significant implications for London’s stock of permanent accommodation and ‘may make it impossible for our local authorities to meet their targets for new homes’:

‘Above all, it threatens to make central London homes, already traded by many people as some sort of global currency, into little more than assets to be exploited for maximum profit.’

And Karen Buck argued that it would make it much more difficult for local authorities to enforce if they had to prove a property was in ‘habitual short-term use’. She said:

‘No one wants enforcement action to be taken against someone who lets their home for a few days or a couple of weeks, or who does a home swap, but there will be unintended consequences in a high-value, high-turnover and high- pressured area such as central London.’

I wonder if this little-noticed change in a little-noticed bill may turn out to be the most significant in the longer term because of the impact of new technology. Websites like offering short-term lets in major cities are booming around the world and allowing residents to turn their spare rooms into cash by renting them out to tourists by the night. It looks like a brilliant and irresistable use of the internet to bring people together. However, it’s not just rooms that are being let but complete homes.

A quick search of the best known site, Airbnb, reveals thousands of short-term lets available in London for a week from next Saturday. Most of these will of course contravene the existing law, though the lets seem to be happening anyway.

However, as I type this there are currently also 732 complete flats or houses in London available to rent next week. Some could be owners or tenants going on holiday themselves but how many are empty, available to rent to tourists but not to Londoners? And how many more will there be when the law is changed? How many other websites will there be? How many homes will be sub-divided into the smallest rooms possible for short-term lets? Who will pay the bill for deregulation?

* At first I thought the second bit was a joke made by a minister because the Bill has so many different elements but it turns out that it really does cover outer space too in a bit about satellites and liability insurance.


'We are not a charity'

Tue, 24 Jun 2014

An eloquent argument for social housing came from an unexpected source on Panorama last night.

The programme covered what it called a new housing crisis: homelessness and the private rented sector. The hook for Britain’s Homeless Families was the fact that the number of people being made homeless by private landlords has trebled in the last five years but it also looked at families stuck in temporary accommodation and facing eviction because of the benefit cap.

It began with the case of Vicky, who was forced to leave her home in Kent because she was on housing benefit despite the fact that she had never been in rent arrears and never had a complaint about her. ‘I’m a bit shocked actually,’ she said. ‘If you treated the property well and you paid your rent I couldn’t see what the problem would be.’

When I tell you that she was one of 200 tenants on housing benefit evicted by the same landlord in Kent you will probably guess that the landlord in question is Fergus Wilson. The man dubbed the king of buy to let justified the decision in the blunt language we’ve come to expect. ‘We are in business to make money, we are not a charity.’

His point was that rents are rising faster than housing benefit and that makes claimants too risky (though he’s been quite happy to allow housing benefit to finance his empire up to now). ‘If we went to the other extreme of having 100 per cent people on benefits we would go pop because of the default rates.’

Presenter Richard Bilton asked him: ‘Do you think you have a moral responsibility to these people or is it only profit that matters?’ Wilson replied: ‘Well we’ve had a moral responsibility for a number of years but it’s just reached such a point that we cannot continue.’

A brief interview followed with housing minister Kris Hopkins:

Bilton: ‘Is it acceptable do you think to evict people because they are on benefits?’  

Hopkins: ‘Um, well, in principle, if they’ve done something wrong…’

Bilton: ‘No, their tenancy ends, they’re on benefits, you’re a landlord and you don’t want benefits in your property.’

Hopkins: ‘Well, first of all an individual private business will make commercial decisions and if they actually decide they don’t want somebody on housing benefit in future that’s a perfectly legitimate thing for them to do.’

We then cut back to the case of Vicky and her daughter in Kent. ‘You move into a place and if you’re not expecting to have to move on every few months you start to put down roots and you start to think about the school that your child will go to,’ she said. ‘It just feels so unfair that in this day and age the rug can be pulled out from your feet like this in terms of where you live.’

If you missed Panorama last night, you can watch again here. The programme covered several other cases involving people in different circumstances. I’ve concentrated on the first one because I think it illustrates the problem most clearly: a tenant is evicted because she is on housing benefit; the landlord justifies the decision on the grounds that rents rising faster than benefit rates will inevitably mean arrears that threaten his business; the minister washes his hands of any responsibility by saying it’s a commercial decision.

The thing that stuck me is that all three of them are strictly speaking correct. Vicky is losing her home through no fault of her own. Wilson knows that local housing allowance rates have been cut and are set for years of below-inflation increases. Hopkins is right that there’s nothing to stop landlords doing what they want at the end of a tenancy.

But if you put the three statements together you wonder who is responsible if it’s not the tenant, the landlord or the government. The short-term answer, shown later in the programme, is the local authority and the taxpayer as we pick up the bill for homelessness and temporary accommodation.

Last week’s homelessness statistics showed that 58,250 households are in temporary accommodation (up 16 per cent since the election) including 81,000 children. Of those, 4,480 are in bed and breakfast (up 86 per cent) including 480 families with children who have been there more than the statutory six weeks (up 200 per cent). And 12,430 of the households in temporary accommodation have been sent to another local authority district (up 36 per cent in the last year and 120 per cent since the election).

Getting back to Panorama, the number of households accepted as homeless as the result of the end of an assured shorthold tenancy has trebled from 4,580 in 2009/10 to 13,650 in 2013/14 and has risen by another 14 per cent in the last year. Although the total number is lower than between 1998 and 2004, that takes no account of the way that homelessness prevention work has halved the number of acceptances. Loss of an assured shorthold now accounts for 27 per cent of homeless acceptances compared to 13 per cent ten years ago.

So the longer-term answer is that successive governments are responsible. First, we stop investing in social housing and sell existing stock under the right to buy. Second, we outsource housing provision to private landlords and create the conditions for the sector to expand. Third, we assure landlords and tenants that housing benefit will ‘take the strain’ of higher rents. Fourth, we fail to build enough homes so that house prices and rents rise. Fifth, we decide that housing benefit is too expensive and it will no longer cover the full rent. Sixth, we discover that the solution to homelessness is actually the main cause of homelessness: an assured shorthold tenancy. And on the seventh day we sit back and admire the revolving door we have created.

The world is of course not as simple as Fergus Wilson suggests (or I do in my neat summary). Many landlords regard his media appearances as an embarrassment and many people are working hard to make the system we have work as best it can (Havering’s long-term leasing featured in the programme, for example).

However, when Wilson says that ‘we are in business to make money, we are not a charity’ he not only speaks the truth about private landlords, harsh though it may be, he also spells out why an alternative is so desperately needed. One that’s not in it to make profits and might even be a charity. 

To read more about the private rented sector click here.

Something to shout about

Wed, 18 Jun 2014

Here’s hoping today’s launch of the SHOUT manifesto can be the start of a new era for social housing.

Anyone who’s read this blog will know that I support the campaign but the launch got me thinking in a deeper way about exactly what we mean by ‘social housing’ and why it is ‘under threat’.

The starting point is of course the way that the coalition has deliberately blurred the distinction between social and affordable rent. Only last week George Osborne’s Mansion House speech and Kris Hopkins’s press release on the latest affordable housing figures provided two classic examples. The latter even managed to mix up the stats on social, affordable and all homes.

On twitter I called it a ‘triple blur’ but Tom Murtha, one of the people behind SHOUT, came up with the much better metaphor of the ‘three-card trick’. I love the way that conjures up images of Osborne and Hopkins as shady operators inviting credulous punters to ‘find the lady’ while keeping a wary eye out for the police. For a more serious analysis of why the distinctions matter, not just in the construction of new homes but in the conversion of existing social rent homes to affordable, see this blog on Red Brick.

However, the blurring did not start with Osborne and Hopkins. In terms of the letter of the law, it could even be argued that they are correct when they mix up ‘social’ and ‘affordable’. The Localism Act follows Part 2 of the Housing and Regeneration Act 2008 in defining social housing as both ‘low cost rental accommodation’ and ‘low cost home ownership accommodation’ that are ‘made available to people whose needs are not adequately served by the commercial housing market’. Low cost rental means at a rent below the market rate. Low cost home ownership means shared ownership or equity percentage arrangements. Strictly speaking then, ‘social housing’ includes not just affordable rent and shared ownership but even the shared equity element of Help to Buy.

Except of course that virtually everyone in housing believes there is a clear distinction between social rent and affordable rent let alone shared ownership and shared equity. Social rents are affordable in relation to incomes whereas affordable rents are merely rents at below market levels and may therefore be completely unaffordable. Social housing tenancies offer the security that turns a house into a home rather than a short-term let. 

However, there are and always have been more grey areas. On rents, for example, the earliest council housing was generally only affordable to more affluent workers. The target rent regime is far from perfect: the current formula means that rents are rising faster than earnings and have been for years. There is also huge variation around the country: ‘affordable’ rents are not always ‘unaffordable’ and in some areas private rents are actually lower than social rents.

The crucial point for me is that social rents are set by a formula that includes earnings where affordable rents are merely a reflection of ever more unaffordable house prices and rents in the private sector. In whole swathes of the country, and especially in the South East, they will only be ‘affordable’ to working tenants if they can claim housing benefit.

Does that matter if housing benefit is ‘taking the strain’? For all kinds of reasons, yes it does: work incentives will be blunted; the housing benefit bill will rise at a time when it is already under pressure; inevitable cuts will leave tenants with increasing shortfalls; and the evidence seems pretty clear that it offers worse value for money over the long term.

On tenure, social landlords were using introductory and probationary tenancies for years before the Localism Act allowed them to use flexible tenancies. And security of tenure has only existed since 1981 and was enacted not by a Labour government but by Margaret Thatcher (though it was a bi-partisan policy to implement what was already seen as de facto security because council landlords were publicly accountable bodies).

However, starved of investment and denuded by the right to buy, social housing is very different now than it was then. Alongside a major programme of investment and the removal of restrictions on council borrowing, plus an end to affordable rent, SHOUT also argues that:

  • Social rented housing should be viewed as a tenure of equal status to others. It meets needs that other tenures cannot and is a tenure of choice for millions of people. This choice should be acknowledged and supported.
  • National and local politicians should be encouraged to take the lead in affirming the positive value and purpose of social rented housing, and challenging the demonisation and stigmatisation of social housing and social housing residents.

Kate Davies addressed some of these points in a recent Guardian Housing piece that condemned the stereotypes but was also dubious about ‘social housing professionals queuing up to express their love of social housing’.

‘I find the demonisation of social tenants obnoxious,’ she said, ‘but I also shudder at this crude promotion of council housing as an idealised workers’ paradise. Let’s be absolutely honest about the facts.’ Her point I think was that we should present social housing as it is rather than reach back nostalgically to the past: celebrate the achievements of aspirational tenants who want to move on while accepting that ‘it provides a safe haven for vulnerable people, and this is the real value of social housing today’.

I found myself agreeing with some of what she said, challenged by some of it but still troubled by the implications of accepting that social housing should be limited to what circumstances have made it. Go right back to the Localis report that influenced the coalition’s housing reforms and you’ll find it advocating social housing only for the most vulnerable and near-market rents for everyone else; go to where the reforms went furthest, in Hammersmith & Fulham, and you’ll find new criteria for the waiting list that are so restricted that it fell to just 700 and Conservative councillors saying that this proves there is no demand for social housing.

Take a look, for example, at the prospectus for the Estate Regeneration Programme published by the DCLG last week. The aim is to redevelop existing estates at a greater density to provide more homes. It sounds a good idea in principle as does replacing tower blocks with terraced streets. The prospectus does also distinguish between ‘social’ and ‘affordable’ housing. However, there are no stipulations as to the split between them and between homes for rent and for sale. As one of the specific objectives is to maximse the output of homes for the minimum amount of public loans available, it’s not hard to see the danger of Hammersmith & Fulham-style regeneration of existing estates with little or no social housing.  

It seems naïve to imagine that the clock can be turned back to before the Localism Act and still less to 1979 or 1945. With investment in short supply, it may well be that higher rents and flexible tenancies will be an important part of the housing and regeneration mix. However, they will continue to be regarded with suspicion unless government and landlords make a clear commitment to the future of social renting rather than collude in its slow death. With that commitment to genuine affordability in place, intermediate (definitely not ‘affordable’) rents could come to be seen as an important option for tenants who can afford them just like low-cost ownership is for those who can buy. The new ideas put forward by Generation Rent yesterday could come into play too.

With that, plus the all-party support seen at today’s SHOUT launch, could the way then be clear to reclaim the broader meaning of ‘social housing’? As a range of options to rent and buy a home for the millions of people who the market has failed rather than an A&E department for the poorest and most vulnerable? That really would be something to shout about. 

Fresh perspective on renting

Tue, 17 Jun 2014

A new manifesto for private renters published today highlights the new thinking on housing emerging ahead of the general election.

This is the first of two manifestos being launched this week by new organisations with different priorities and constituencies to the existing ones. We’ll hear from SHOUT, the campaign for social housing, tomorrow but today it’s the turn of Generation Rent.

And it’s about time. Since the creation of the assured shorthold tenancy and the invention of buy to let, the private rented sector has more than doubled in size. That’s great news for landlords and letting agents but not so great for tenants with minimal security of tenure and consumer rights.

To illustrate my point, here are three recent bits of news. First, take a look at the limp DCLG guide to ‘How to Rent’. Second see the incredible story on Nearly Legal of the ‘the unacceptable face of London landlords’ who turns out to be the Conservative mayor of Barnet. 

Third, have a read of last night’s debate in the Commons on the Consumer Rights Bill, which saw the defeat of a Labour attempt to ban letting agent fees to tenants. Business minister Jenny Willott ignored evidence that just such a ban has worked in Scotland without increasing rents and pressed ahead with the coalition’s plans to ensure that fees are transparent.

That gave Labour’s Stella Creasey the chance to repeat one of the most memorable Commons lines about housing during this parliament. Transparency on fees is, she said, ‘a bit like telling someone who is tied to the train tracks what the timetable is for the trains. However, as Willott pointed out, Labour had 13 years in government but failed to act.

The major political parties have at last woken up to the need for action and to the fact that private renters have votes at the next election. Even the coalition has made cautious moves on transparency and redress, while Labour has proposed not just the fees ban but minimum three-year tenancies with limits on rent increases.

Generation Rent goes further in today’s manifesto that it says will make the private rented sector fit for the 21st century. Proposals include:

  • The right to a five-year tenancy, with flexibility for the tenant
  • A national register of landlords and licensing of letting agents
  • Requiring landlords to prove their properties meet decency standards
  • Rent increases linked to average earnings 
  • A right to buy for private tenants (based on the right of first refusal still available to long leaseholders and regulated tenants when their landlord decides to sell).

The manifesto also includes reforms that could be introduced while the legislation is being implemented or if the government insists on maintaining a voluntary approach. These include tax reform to incentivise landlords to offer longer tenancies and a change for longstanding tenancies to get extra notice at the end of a tenancy on top of the existing two months.

Without going into the proposals in detail, reaction from landlords will no doubt be hostile, although the intention is to promote a professionalised sector based on longer tenancies. However, as with the Labour plan for three-year tenancies, there could be obvious loopholes for landlords to exploit, such as a discretionary ground for possession where the landlord or a member of their family wished to occupy their property.

However, Generation Rent’s manifesto is not just about the current plight of renters, it also looks to the future of the housing system and what it calls ‘a permanently affordable private rented sector’.

This amounts to a scaled-up version of the community land trust model with government backing. ‘A secondary market of new private rented homes, built by government and sold to buyers at close to cost price, is one way to produce affordable homes for renters,’ argues the manifesto. The initial affordability would come from requisitioning public land. Buyers would be able to live in the homes themselves or rent them out, but only at a greatly reduced rent to reflect the cheap purchase price.

More detail is set out in a separate paper on Buying out of the bubble: A bubble-free housing market. This proposes £1 billion of state funding (plus private funding) for a first wave of 10,000 homes, with sales receipts funding future waves and prices capped at 110 per cent of the build cost. All homes would be sold leasehold with price inflation capped.  Subsequent sales could only be at the regulated value and rental incomes would be capped at a fair proportion of the regulated value. Housing associations and councils could buy the homes for social tenancies, with the right to buy limited to the secondary market.

The manifesto offers three mechanisms for achieving reform:

  • A new Landlord and Tenant Act introducing wholesale rather than piecemeal reform
  • A new Department of Housing, with a dedicated secretary of state for housing, bringing together oversight of the private rented sector and social housing, but also taking over housing benefit from the DWP and combining the skills, planning and housebuilding functions spread between different departments.]
  • A review of how the legal system treats housing cases including consideration of a new housing court of tribunal. 

How much of this actually makes it into the policy of the next government does of course remain to be seen. However, the contrast between the debate that Generation Rent is opening up and the one in the House of Commons last night could hardly be starker.

And this is just the start of what will be a big week for housing policy, with SHOUT tomorrow and the IPPR’S Condition of Britain report with new proposals on the welfare state on Thursday. 

Dead air

Thu, 12 Jun 2014

There was a telling moment at the end of last night’s Radio 4 debate on housing: the sound of complete silence from the audience.

The dead air came in response to a question from presenter Mark Easton asking people at the debate at the London School of Economics (LSE) how many of them think our political leaders are doing their best to solve the housing crisis.

But I am not sure if what sounded like mostly a young audience was tremendously impressed by the answers from the panel either and that may have been down to the way the question was framed in Housing: Where Will We All Live?

The premise was: It’s been identified as the single biggest threat to the British economy: we are simply not building enough homes.’ The debate about ‘why the problem has developed and how best to fix it’ featured deputy London mayor Richard Blakeway, John Stewart of the Home Builders Federation, Rachel Fisher of the National Housing Federation, Paul Cheshire of the LSE and designer Wayne Hemingway.

But the programme began with two members of the audience describing their housing problems. Holly Baxter had moved from a place condemned as uninhabitable to a friend’s airing cupboard to renting a shared house with four other people, all while working full-time. ‘I can’t imagine that ever ending,’ she said. ‘I can’t even imagine renting a two-bed flat.’

Laura McGuiness is a management consultant with a partner also working in the City who have been saving for a deposit for five years. She described being continually outbid by buy to let investors and overseas cash buyers. ‘The homes we bid on all went for £70,000 over the asking price,’ she said. ‘Prices are going up at £10,000 a month.’

The panel were then asked to name their solutions:

  • Employer support for rental deposits and more shared ownership (Richard Blakeway)
  • Reform planning so housebuilders can deliver 75 per cent of the homes we need (John Stewart)
  • Link economic development, job creation and housebuilding with a national plan and think about shared ownership and other models rather than treat ownership as the only model (Rachel Fisher)
  • Tackle the ‘manufactured problem’ that the planning system forces us to live on 10 per cent of the land area of England and inflates the prices of homes and land (Paul Cheshire)
  • Tackle the way we provide houses and the politics that means ‘all we’re doing is making the 65 per cent [who own] richer and the 35 per cent poorer’ (Wayne Hemingway).

Some of these answers have more going for them than others. All of them addressed the question posed in the debate. However, none of them came close to tackling the issues raised by the two people from the audience.

Even before the programme (recorded on Monday) was broadcast last night, Holly Baxter had expressed her bitter disappointment with the answers on The Guardian’s website:

‘The fact that such a distinguished panel were hopelessly out of touch with the reality of housing left me deflated. I was expecting to hear practical solutions to the housing crisis, and a drive to burst the bubble. Instead, excessive pandering to landlords and an insistence that my experience was anomalous seemed to dominate. But the fact remains that my experience is the norm for people my age.

‘The only person who did speak passionately and sensibly about the issue was the designer Wayne Hemingway. He mentioned the psychological benefits of being able to decorate your home, of being able to choose your own furnishings, of choosing the other people you live with. It was the only acknowledgement I heard all night that the statistics about my generation had human faces behind them.’

The problem lay, I think, less with the panel than the premise of the programme: the assumption that increasing housing supply is the only solution to the crisis. The crisis certainly won’t be solved without increasing supply - and that requires urgent action now - but it will only have an effect over the long term. It will take at least until the end of the decade to get to 250,000 additional homes per year and it could take at least another decade of building at that rate to have an impact on prices.

Even if we can achieve that – a big if given the politics involved - remember that this was only the level that the Barker report said would bring house price increases down to the European average, not actually reduce them and that after 10 years of under-provision we need even more homes now.

The panel had some good ideas, especially from Rachel Fisher and Wayne Hemingway, and a real challenge to the current consensus from Paul Cheshire, but they had little to offer people already experiencing the worst of the housing crisis right now.

And given the narrow framing of the question there was little sense that there might just be other causes of the crisis – the affordability question, the distribution of the homes we already have, housing as an investment market, for example – that require other solutions. The failure of our political class on housing is much more profound than the question made out. No wonder it was met with silence. 

Gardeners’ question time

Tue, 10 Jun 2014

Just about everyone agrees that we need to build new garden cities – but that’s the easy bit. What comes next?

I’ve just been looking at the five entries shortlisted last week for the Wolfson Economics Prize. There were 274 other entries, which may be a product of the £250,000 on offer to the winner but also reflects an idea whose time has come (again). There now seems to be a remarkable acceptance right across the political spectrum that garden cities are an important part of the solution to the housing crisis (even though the prize itself is put up by a Conservative peer and administered by Policy Exchange).


But what is a garden city? Should we build new Letchworths or Welwyns in a 21st century fulfilment of Ebenezer Howard’s vision pictured above? Is it a vaguer commitment to sustainable development? Or it is more of a marketing term and a signal of what it is not for Conservatives (a new town or, even worse, an eco-town)?

For the moment at least the third meaning seems prominent. An opinion poll commissioned by the Wolfson Economics Prize found that a remarkable 74 per cent of people think garden cities are a good idea. Even more remarkably 79 per cent of over-65s and 80 per cent of Conservative voters agreed. Lord Wolfson himself has urged his party to ignore opposition to new homes from ‘a very vocal majority’. Chris Walker of Policy Exchange argues that garden cities could be a ‘game changer’ in winning local support. On the Today programme this morning though Nick Clegg lamented the time it had taken him to get Tory support.

Looking through the entries, I was struck by the quality and breadth of ideas on offer (an entry from authors including planning gurus Peter Hall and David Lock and the former chief planner of innovative Freiburg did not even make the shortlist). However, while there was agreement on some issues there was complete disagreement on others. Here are some themes I spotted:

Garden cities can mean very different things. As Barton Willmore points out in its entry, Ebenezer Howard’s original utopian vision was attacked by Jane Jacobs as ‘towns planned by the few for the imagined lifestyles of the many’. It argues that:

‘Looking to the existing Garden Cities, the likes of the TCPA continue to promote large-scale, comprehensive masterplanning. But the places we love and cherish as part of our heritage almost all developed organically, built by a host of players over generations with a masterplan rarely in sight.’

And do they need to be standalone communities at all? Urbed’s entry calls for the creation of a ‘garden city’ of almost 400,000 people by doubling the size of an existing city. It argues:

‘Through this debate we have come to the fundamental conclusion that it is probably impossible to create a Garden City of any scale from scratch in the current economic climate.’

It’s all about the land. Almost all of the entries rely on land value capture and long-term investment and some form of development corporation model. As the entry from Wei Yang & Partners puts it:

‘What distinguishes a garden city from other forms of development is its approach to land value capture for the benefit of the community, community ownership of land and long term stewardship of assets.’

The uplift in the land value from development can therefore be used to fund the infrastructure rather than to line the pockets of landowners. But how much should existing landowners get? Many of the entries talk of ‘patient investors’, landowners willing to forgo a short-term cash receipt for a long-term equity share in the new community. Where the land is bought, all seem to agree on existing use vale plus a premium, but this ranges from ‘slightly enhanced values’ to 20 per cent to 20 times the agricultural value in the different entries.

Urbed’s entry argues that existing use value plus compensation is ‘not seen as politically acceptable’ to the coalition and proposes instead a model based on the great estates that developed London in the 18th and 19th century. ‘The key to their success was the retention of the freehold and the incremental development of the estate to benefit from the increase in value over time rather than taking a capital sum at the outset.’

And the planning. New communities also have to make it through planning and that is much easier said than done. Derwenthorpe took ten years and permission for Owenstown, the co-operative new town proposed in Scotland, was refused in April. The eco towns programme stalled in a series of local rows and David Lock fears garden cities could go the same way unless we use the New Towns Act.

Learning from history. The lessons offered by the new towns seemed to be forgotten under the Thatcher, Major and Blair governments. In times of austerity, realisation has dawned again that Letchworth received no public subsidy and that the new towns repaid their initial public loans many times over.

However, is some of our politics still lagging behind? In its entry, Wei Yang & Partners surveys the history of garden cities, new towns, new settlements and eco towns and concludes:

‘The logical response would be to propose a national plan, the reinstatement of regional bodies charged with plan-making and the return of the new town development corporations to ensure delivery. We believe that this is politically unacceptable: the localism agenda, now embraced by all political parties, has raised expectations on the part of local communities for engagement and a return to central control would be politically unacceptable. Any new initiative must engender the support, or tacit acceptance, of local communities.’

Garden cities are a very long-term solution to the housing crisis. New home completions in Milton Keynes averaged 5,000 a year from 1967 and 1991, then fell to about half that number. Urbed envisages a build rate of 2,800 homes a year for its imaginary city of Uxcester but it also points out that we need to build the equivalent of a Milton Keynes every year in England.

Don’t reply on big housebuilders. Support from small builders and self-builders is a key element of many of the entries. Urbed calls for balanced incremental development with opportunities for them, pointing out that 60 per cent of new homes in France and Italy are built like this and highlighting the way that custom build was pioneered at Almere in Holland. Shelter argues for ‘a town that built itself’ with self-builders making up a significant proportion of the early movers.

Who will live in the new communities? Kathleen Kelly of the Joseph Rowntree Foundation makes the crucial points that the homes need to be both affordable and available to people of all ages.

One entry that did not make the shortlist (by Martin Hewes) argues that older/retired people should form the core pioneer population for the new garden city. Could it therefore also be a mechanism for encouraging under-occupying empty nesters to downsize and free up larger homes in existing communities.

In a report last week, the Town and Country Planning Association argued that 30 per cent of homes should be for social rent and another 30 per cent for shared equity and discounted ownership.

Most of the entries talk about tenure diversity but from what I can see Shelter’s is the only shortlisted entry that breaks it down. Its garden city would have 30 per cent social rent and 7.5 per cent shared ownership as well as market homes sold at a discount.

Follow the train lines. Investment in HS2, Crossrail and East-West Rail (between Oxford and Cambridge) all create opportunities for new communities with good transport links that don’t rely on cars. Wei Yang & Partners identifies an arc from Southampton to Felixstowe and argues that the single location with the greatest potential is at the intersection of HS2 and East-West Rail around Bicester. The idea of a building a new town around an HS2 station midway between London and Birmingham seems so obvious that I once tweeted it myself. I was told that the big problem is that trains need around 100 miles between stations to be high speed rather than spend all their time accelerating and breaking.

Will public support evaporate when a specific location is suggested? Shelter’s entry is the only one to name a specific location: the Hoo Peninsula in north Kent. The location has much going for it, not least the lack of neighbours on three sides and the fact that 90 per cent of the land has a single owner (the Church of England). However, it also means that Shelter has to grapple with issues like flooding and transport in a much more detailed way than the other entries. And that’s before you get to the nightingales issue.

The 74 per cent public approval in the Wolfson poll seems remarkable, even though nimbyism is slowly losing its grip over public opinion. But how much of that 74 per is made up of people who think garden cities mean new homes will be built somewhere other than in their back yard?

To read more about garden cities click here.

Rough justice

Mon, 9 Jun 2014

Why did that picture of anti-homeless spikes get such prominence on Twitter and in the media over the weekend?

Here is the tweet from Anglican priest Sally Hitchiner that sparked an angry wave of Twitter reaction and follow-up stories in the national press.



What she called studs, but look to many other people like spikes, do indeed send a very negative message. Many people have noted the resemblance to anti-pigeon measures on London buildings. And Katharine Sacks-Jones of Crisis points out that there are just one part of a rough tale for rough sleepers. ‘We will never end homelessness with studs in the pavement - only by tackling the root causes,’ she says.

Yet for all those powerful arguments, anti-homeless urban design is sadly not new or unusual. There have been previous furores in Britain, notably involving Tesco, and there are much worse examples in other cities around the world.

Take a quick look at these anti-homeless barriers beneath an overpass in Chicago or these benches and sculptures in parks and shopping malls in Tokyo (the penguins and dolphins are not as innocent as they seem) and you’ll see what I mean.

Above all, take a few minutes to watch this amazing short video about anti-homeless design in Paris to see the lengths to which companies and the authorities will go to stop anyone sleeping on their benches or window sills or doorways:

The title of the film, The Fakir’s Rest, is a reference to exactly the same sort of spikes that feature at 118 Southwark Bridge Road.

So there must be more going on here than just the appearance of the spikes, the ubiquity of social media and Twitter’s tendency to magnify outrage.

Perhaps it’s because the very word reaches back to a deeper history of homelessness, when spikes were not sharp metal objects concreted into a doorway but the nickname for the vast dormitories for homeless men provided by local authorities. ‘The Spike’ was the title of George Orwell’s first published work in the 1930s and later became a key part of Down and Out in Paris and London. Spikes became the huge DHSS resettlement units that did not close down until more than 50 years later.

However, those spikes in a residential doorway have slightly different connotations in the contemporary world of homelessness in London and of No Second Night Out. The issues are highlighted in the nuanced reaction from Howard Sinclair of St Mungos Broadway to the furore:

‘Each year our teams, in Southwark and elsewhere, help thousands of people off the streets. Part of their role is to prevent people adopting a street lifestyle which, on occasions, means adapting the physical environment to prevent people sleeping rough in a particular location on a regular basis. These “studs” appear a rather brutal way of doing just that. However to undertake such measures without providing the necessary assistance to people who sleep rough is wrong - the aim is to help people move in, not just move on.’

The complex issues are also eloquently explained in this blog by a former outreach worker.

Yet for all that, the anti-homeless spikes still seem to be a symbol of something more, which I think is why they took off on Twitter and in the media.

Could it be that their presence in a residential doorway plays into wider narratives about the housing crisis in London and the proliferation of luxury flats? Or that they tap into our long history of vagrancy and the law and the Vagrancy Act?

Or could it be what the spikes say about our values as a society: the suspicion that what we care about is not so much homelessness itself as the public appearance of homelessness? 

Zero sums

Wed, 4 Jun 2014

Ministers once promised that Britain would lead the world on zero carbon homes. Do we now just lead the world in hot air?

The 2016 target for all new homes to be zero carbon seemed genuinely revolutionary when Gordon Brown and housing minister Yvette Cooper first announced it in 2006. Questions about practicalities and costs were brushed aside as they argued that the target would spark the mass adoption of new technologies, drive down costs and even open up vast new export markets for British firms. As Cooper put it at the time:

‘In 10 years, all new homes should be built at a zero carbon rating. No other country has set that sort of timetable or ambition but I believe that we need to do it to drive the environmental technologies of the future and ensure that we are building the homes of the future.’

Eight years, and six housing ministers, later and today’s Queen’s Speech promises that ‘legislation will allow for the creation of an allowable solutions scheme to enable all new homes to be built to a zero carbon standard’.  So far, so good. The Liberal Democrats even reached back to the days of Brown and Cooper with their claim on Monday of ‘Britain to lead world on zero carbon homes’.

In truth of course, the homes will about as ‘zero carbon’ as the speech is the Queen’s own work. Back in 2006, zero meant zero: 100 per cent of all carbon emissions right down to the electricity used to boil the kettle would be reduced on site.

Over time though the definition has been watered down. The nature of the emissions included has been steadily relaxed and more and more of the emissions reduction has been left to ‘allowable solutions’ rather than improvements in the energy performance of the building and on-site renewable energy generation. See Keith Cooper’s feature in Inside Housing last year for some of the detail.

The government will complete this process. The Queen’s Speech itself says that: ‘Legislation will allow for the creation of an allowable solutions scheme to enable all new homes to be built to a zero carbon standard.’

A more detailed briefing says that with the Infrastructure Bill the government remains committed to the zero carbon standard for new homes from 2016 ‘but it is not always technically feasible or cost-effective for house builders to mitigate all emissions on-site’.

The government will set a ‘minimum energy performance standard’ and the document goes on:

‘The remainder of the zero carbon target can be met through cost effective off-site carbon abatement measures – known as “allowable solutions”. These provide an optional, cost-effective and flexible means for house builders to meet the zero carbon homes standard, as an alternative to increased on-site energy efficiency measures or renewable energy (such as solar panels).’

The zero carbon home standard will be set at level 5 of the Code for Sustainable Homes but legislation will allow for developers to build to level 4 as long as they offset through allowable solutions to achieve level 5.

I’ll leave the technical details of this off-site offset to others with more expertise while noting that the Code itself is being scrapped as ‘red tape’. It’s possible to see the changes as yet another concession to the big housebuilders, again without any quid pro quo from them, or as the pragmatic implementation of the original bold aim – or perhaps as both. Even the boldest original version of zero carbon did nothing about the far greater quantity of emissions from existing homes but it’s clear that ‘zero carbon’ new homes means something very different now.

For a measured reaction, see this from Paul King of the UK Green Building Council, a prominent supporter of zero carbon homes:

‘The policy of allowing developers to pay into a fund to offset emissions they cannot reduce is a sound idea in principle, despite its lukewarm reception this week. If implemented properly, this could lead to investment in local, community energy schemes and drive innovation in clean technology. On the other hand, a weak scheme, that generates little investment that has no connection to the housebuilding which is taking place, would be a deeply disappointing outcome.’

However, that is not all the briefing document has to say on zero carbon. It goes on:

‘Small sites, which are most commonly developed by small scale house builders, will be exempt. The definition of a small site will be consulted on shortlfy, and set out in regulation.’

This is a crucial issue, with some reports suggesting that the definition of a ‘small site’ will be fewer than 50 homes. Paul King warns that the Lib Dem side of the coalition is ‘at risk of snatching defeat from the jaws of victory by letting small developments – a large chunk of the housebuilding market - off the hook’.

A much more hostile reaction came from the Sustainable Energy Association, which says today’s announcement ‘leaves zero carbon homes policy in tatters’ and will lock in higher energy bills for decades. It claims the new rules mean that ‘zero carbon’ will only apply to 30 per cent of new homes (70 per cent are in small developments, it says) and will require only a 44 per cent reduction in carbon emissions on 2006 standards.

And before anyone comes away with the idea that the Infrastructure Bill is a green bill, other elements will ‘guarantee long-term investment in the road network’ and ‘support the development of gas and oil from shale and geothermal energy by clarifying and streamlining the underground access regime’. We may be building ‘zero’ carbon new homes but we seem equally intent on fracking maximum carbon underneath them.

There are clearly a range of different environmental, economic and practical considerations that have to be balanced against each other here alongside the politics of eye-catching pledges and maneuvering to meet them and the question of whether the original aim was ever achievable.

However, I wonder what the late and much-missed Mel Starrs would have made of the latest changes.  Here’s a blog she wrote in 2011 on ‘the Zero Carbon Homes debacle’ pleading for the phrase to be ditched:

‘If we need to, we can still call 2016 targets “net zero” or more accurately “carbon neutral”, but please can we have the phrase “zero carbon” back so we can use it again for exemplar buildings?’

As it stands, ‘zero carbon’ homes remind me of nothing so much as that other triumph of political sleight of hand: ‘affordable’ homes. 

In our blood

Thu, 29 May 2014

On a first glance at today’s new figures, the help to buy mortgage guarantee scheme is failing to live up to the fears of its critics or the hopes of ministers.

The figures released by the Treasury show 7,313 sales in the first six months of the scheme. Of these, 72 per cent were for homes valued below £250,000 and 80 per cent were to first-time buyers.

Those completions account for around 1.3 per cent of mortgages over the six months so it’s hard to see how the help to buy 2 mortgage guarantee (HTB2) on its own can have contributed much to rising property prices.

And the regional breakdown shows that HTB2 guarantees account for the lowest proportion of mortgage lending in the regions where prices have risen most – London and the South East. Here are the figures:

Scotland accounts for six of the top 10 local authority areas seeing the most HTB2 completions: Glasgow, Edinburgh, Fife, South Lanarkshire, North Lanarkshire and Aberdeen. Leeds, Birmingham and Wigan also make the list, with Bristol the only entry from the south of England.

In contrast, most of the north London boroughs at the epicentre of the house price boom in the capital saw fewer than 10 HTB2 completions each. Brent and Camden saw one each and the tri-boroughs of Hammersmith & Fulham, Kensington & Chelsea and Westminster two apiece.

Worries that the cap of £600,000 would lead to a rash of high-value completions with high-value liabilities for the government do not seem to have been borne out either. There were just 31 completions worth over £500,000 and another 491 between £250,000 and £500,000.

The mean income of households with a guarantee was £49,056, and 60 per cent of households had an income of between £20,000 and £60,000. Judged against the mean property value of £151,597, that means house price: income multiples for HTB2 borrowers are actually lower than in the rest of the market.

So much for the fears – at least so far. In statistical terms, the impact of Help to Buy has been miniscule compared to low interest rates, Funding for Lending, buy to let and all the other factors underpinning and inflating prices. However, as I’ve blogged before, the deeper impact may have been psychological: the prospect of a state guarantee for the market has inflated the expectations of sellers. While HTB2 has helped 5,843 first-time buyers, Priced Out estimates that rising prices have excluded 250,000 would-be buyers from the market over the last year.

Take-up of HTB2 is accelerating – the 2,657 completions in March represents 36 per cent of the total so far – but it is still nowhere near the initial forecasts of 190,000 completions a year. The scheme was meant to guarantee £12.5 billion of mortgages but completions so far total just £153 million.

That may reflect the fact that help to buy mortgages are relatively expensive compared to the rest of the lending market and that prices in much of the South East are already too far out of reach for many first-time buyers.

It may also explain the curiously muted government spin this morning. The last time HTB2 statistics were released they came complete with case studies and personal appearances by David Cameron. The flipside of fears not being realised so far is that HTB2 has not actually helped many people to buy so far either.

Little wonder that Cameron’s press release this morning concentrates on the aggregate figure for both versions of Help to Buy. So far at least, the supposedly smaller HTB equity loan scheme (HTB1) has seen more sales per month than HTB2.

As he brought forward the launch of HTB2 in October 2013 George Osborne supposedly told the Cabinet: ‘Hopefully we will get a little housing boom and everyone will be happy as property values go up.’ So far his plans for May 2015 seem on course without much obvious help from Help to Buy.

David Cameron said this morning that: ‘As Britons, home ownership is in our blood - it’s about aspiration, planning for the future and laying down roots.’

The bigger picture is that home ownership is shrinking faster than he is helping people on to the ladder (see David Boyle’s apocalyptic warning at Hay yesterday). High and rising house prices mean that the patient expecting a blood transfusion is actually being bled dry.

View results 10 per page | 20 per page | 50 per page |

Newsletter Sign-up

More Newsletters

IH Subscription



You will soon need to sign into using your email address rather than your username.

If you are unsure which email address is linked to your account, please Click Here. Your password will remain the same.

If you have a print subscription we need to ensure that we have the correct details in order to link your subscription to your online account, for more information Click Here.

Click Here to close window or press the Esc key.