All posts from: December 2011
Should we now write off any prospect of a solution to the new homes crisis for the rest of this parliament?
Despite a ‘warm welcome’ from planning minister Greg Clark, today’s report on the National Planning Policy Framework (NPPF) by an all-party committee of MPs calls for a rethink of several fundamental principles.
In particular, the Communities and Local Government committee wants the government to remove the default ‘yes’ to development from the document and to launch a second consultation on a rewritten version.
The default ‘yes’ would only have applied in cases where there was no local plan and it was therefore the key to tackling anti-development or feet-dragging local authorities. The second consultation is something that ministers have repeatedly denied was a possibility.
The committee does also say that ‘it is it is reasonable and practical for the NPPF to have as an overarching principle a presumption in favour of sustainable development’ but only if it is clear that sustainability is to be judged on environmental and social grounds as well as economic ones.
Put that alongside calls for the reinstatement of ‘brownfield first’ and ‘town centres first’ policies, and little wonder that the National Trust and Daily Telegraph are hailing the report as a vindication of their campaign against the NPPF while Labour’s Hilary Benn seems unable to resist climbing on the bandwagon.
Little wonder too that developers and housebuilders are calling on ministers to ‘stand firm’. They can probably live with ‘brownfield first’ but argue that the default ‘yes’ is essential when more than half of local authorities still have no local plan seven years after being legally obliged to produce one. And they will worry that a second consultation will open the door to a more fundamental rewrite and further delay.
Clark’s rose-tinted response to such a critical report makes no sense until you consider the possibility that this is him preparing the ground for u-turn or three. For example, he will ‘carefully consider’ the committee’s new definition of ‘sustainable development’.
The prospect of watering down the NPPF and delaying its implementation will do little to tackle the continuing shortage of new homes. The Home Builders Federation published figures today showing another 10 per cent fall in approvals, meaning that the planning permissions coming through the system are half what is required to meet demand.
So all in all we are left with a mess. The planning system will only ever deliver enough homes through a combination of carrots and sticks. The main carrot (the new homes bonus) seems too small to be effective and the main stick (the default ‘yes’) is now being call into question.
But could the committee be rescuing us from an even bigger mess? The MPs consider that going ahead with the document as drafted would be fraught with problems.
They argue: ‘The Government has set great store by the brevity and simplicity of the NPPF, but in its current form the draft NPPF does not necessarily achieve clarity by virtue of its brevity. There are many examples of inconsistent drafting which need addressing. The significant gaps in planning policy and guidance could lead to a huge expansion in the size of local plans as local authorities attempt to plug the gap.
‘There is a danger that, far from speeding up the planning process, in the short term the NPPF will slow it down by introducing ambiguity where previously there was detailed guidance—”planning by appeal” could be the outcome.’
They also argue the NPPF should keep the current definition of affordable housing (a cost low enough for households to afford in the context of local incomes and local house prices) rather than define it as housing where eligibility is determined with regard to local incomes and house prices.
These are crucial points and would be welcome improvements to the final document. Getting the NPPF right does not amount to the vindication claimed by the Telegraph.
However, the problem is that the government’s approach to planning in general and its speedy scrapping of the old Labour system in particular only ever made sense it it could get a new system in place quickly. That now looks less likely - and so does the prospect of more new homes any time soon.
So has the FSA done enough to guard against a future mortgage crisis without being so heavy-handed that it makes it impossible for many people to get one now?
The reaction from lenders to yesterday’s much-delayed Mortgage Market Review certainly suggests so. The Council of Mortgage Lenders (CML), which said previous drafts would have a ‘damaging and disproportional effect’ on consumers and lenders, said the FSA had come up with something ‘far more workable and proportionate’.
The Building Societies Association (BSA) said the original plans had risked locking credit-worthy borrowers out of the market and imprisoned many existing borrowers in their current homes and loans. It welcomed transitional arrangements that would allow people on self-certified loans (which made up more than half of the market in 2007) to re-mortgage to a more standard loan.
The package seems designed to stop the lending (and borrowing) abuses of the past. The three main proposals are:
- Lenders will have to carry out affordability assessments and only make loans where there is a reasonable expectations that borrowers can pay them back without relying on future house price rises.
- The assessments should allow for the possibility that interest rates might rise in future and borrowers should not enter contracts on the assumptions that initial low rates will last forever.
- Interest-only mortgages should be assessed on a repayment basis unless there is a believable strategy for repaying out of capital resources that does not rely on future house price rises.
It’s not exactly rocket science to make lenders check borrowers can actually afford their mortgage before giving them one, but the system should protect consumers by banning self-certified loans and stopping them being caught out by interest rate rises. According to the FSA, it would mean 2.5 per cent of current borrowers would not get a mortgage and that 11.3 per cent of borrowers in the boom of 2005-2007 would not have got one.
That certainly sounds powerful - though not as draconian as the earlier draft that housing organisations claimed would stop 2.2m of the 11m current mortgage holders from getting a loan at all.
However, I can’t help but think something is missing here. Partly, that comes from a feeling that regulators tend to fight the last crisis rather than the next one.
I’m old enough to remember lenders resisting restrictions on loan to value ratios in the wake of the repossessions crisis of the early 1990s by arguing that their new, sophisticated credit scoring techniques made them unnecessary - and look where that got us. In the same way, measures to protect consumers against what happened in the boom and bust of the noughties will not necessarily help in the one to come in the 2020s.
Mostly, though, it comes from what’s missing from the review itself. Earlier drafts were not just about protecting consumers but about extending the reach of regulation to cover buy to let and second charge lending for the first time. Second charge lending is where borrowers take out a second loan on top of their original mortgage.
Yesterday’s final version says that in the first draft in 2009 ‘we explained that a key risk to achieving the overall aims of the MMR is the ability of firms and consumers to “game” our changes; seeking to avoid the stricter standards applying to first-charge lending by accessing other forms of credit, such as second charge and buy-to-let’.
However, while the government has said it intends to transfer regulation of second charge lending to the FSA, the MMR goes on: ‘This transfer has been delayed until a decision is taken on the wider transfer of consumer credit. This means that any transfer will not take place until at least April 2014 or beyond.’ Translation: it may not happen.
As for buy to let: ‘Whether we regulate buy-to-let lending remains a decision for government.’ Translation: it is not going to happen.
If that does not exactly fill me with confidence, buried on p200 of the final version is an admission that the FSA is worried too: ‘We are currently seeing anecdotal evidence of buy-to-let mortgages being used by borrowers who would otherwise be denied an owner-occupied mortgage. We remain concerned that this problem may be exacerbated with the implementation of our responsible lending proposals.’
Fascinating and contrasting moves on housing this week from two of the most important politicians in London.
Then Ken Livingstone reveals another two planks in his platform as Labour candidate for Mayor of London: a campaign for a London living rent; and a London-wide lettings agency. He explains more in a piece for Inside Housing here.
Both are interesting in their own right. Greenhalgh is not just an influential council leader but one of the theorists behind much Conservative market-based housing policy thanks to his co-authorship of the Localis pamphlet Principles for Social Housing Reform in 2009. He became the pantomine villain of that year’s Labour party conference.
And Livingstone clearly believes housing can be a powerful weapon in his campaign to regain the mayoralty from Boris Johnson and his questionable claims about affordable housing.Put them together though and you have starkly contrasting visions of the future of housing both in the capital and in the nation as a whole.
The White City Opportunity Area is a huge regeneration project that includes industrial land north of the Westfield shopping centre, the old BBC television centre and a potential new university campus as well as council estates. It’s the second most deprived neighbourhood in the borough and a far cry from the well-heeled Town ward that Greenhalgh represents.
More than half of the housing is social rented compared to just under a third in the borough as a whole.The housing strategy promises ‘no net loss of social rented housing in the area’ though the intention seems to be to break up the estates into more mixed residential areas. Hammersmith & Fulham’s statement on Greenhalgh’s departure refers to £70m - or £17,000 per household - being spent in the area per year.
Greenhalgh says: ‘I do not think the people of White City are getting value for money out of that £70 million, nor do I think are wider taxpayers. I want to focus that money on getting much better outcomes for people living there and ensuring that the neighbourhood is fully involved in how that money is spent.’
What better testing ground could he find for the belief stated in the Localis pamphlet that ‘council estates have become the very things that they were designed to replace – social ghettos – trapping their residents in a vicious circle of dependency’?
Today’s statement by Ken Livingstone is an attempt to open up a new front in the battle with Johnson, this time focussing on the squeezed middle of hundreds of thousands of Londoners who do not qualify for social housing and cannot afford to buy. So he will establish a campaign for a London Living Rent - a benchmark that people should pay no more than a third of their income on rent.
In more than half of London boroughs Londoners are paying on average over 50 per cent of their incomes. We should be doing everything we can to get that number down. Many people in reasonably well-paid jobs are seeing their incomes absorbed into their housing costs.
Learning from the success of the London Living Wage in arguing, cajoling, intervening and collaborating, the Living Rent Campaign will be a new way of making City Hall work for ordinary Londoners.
That would be backed up with a new London-wide lettings agency that ‘will put good tenants in touch with good landlords across the spectrum of private renting so that both can benefit from security of tenure and reduce the costs of letting’.
It would work with councils, landlords and tenants to develop a strategy to tackle rogue landlords, drive up standards and cut unscrupulous letting agents out of the market.It’s good to see a major politician from any party look to tackle what’s happening in the private rented sector but it’s not at all clear how the Living Rent plan would work. Johnson’s camp told the BBC that the mayor has no powers to introduce it and that in any case it would lead to fewer homes being built and disinvestment by landlords but he’s clearly felt moved to respond with his own plan to accredit 100,000 London landlords by 2016.
However, Livingstone is promising to ‘campaign for’ a Living Rent - not actually introduce one. Just as Greenhalgh will be putting his theory that council housing breeds deprivation to the test with market-based solutions, so Livingstone’s pledge is a first, tentative challenge to the view that the market can be left to its own devices.
I see Grant Shapps is having another go at housing associations about transparency. He might be better off shining a light on the murky world of letting agents.
There’s another timely reminder of the state of a sector that risks giving estate agents a good reputation out this morning. A report from the Resolution Foundation finds that tenants are being ripped off with significant upfront costs, variable fees and a lack of transparency around charges.
In a mystery shopping exercise conducted in three cities, researchers found that all agents were charging tenants administrative fees ranging from £95 to £375. On top of that half were charging for putting an extra person on the tenancy agreement, a third were charging tenancy renewal fees, half charged a check-out fee and some charged holding fees, check-in fees and credit and reference check fees.
Total upfront costs including a deposit, fees and rent in advance for a one-bed flat ranged from £1,028 in Manchester to £2,166 in London.
Yet only two of the letting agents displayed the costs of renting on their websites and many renters only discovered charges after they had decided to rent a property.
The research covers a relatively small sample of agents but this is far from the first time that abuses have been highlighted. In 2009, Citizens Advice found that 94 per cent of agents were charging fees on top of what they already charge landlords. Some were charging a modest £25 while others were charging almost £700.
At the time, the Labour government had just published a green paper calling for statutory regulation of the industry and the reputable firms in the industry, represented by the Association of Residential Letting Agents (ARLA), had just launched their own bid to clean up the sector.
However, the regulation plans proposed as part of the Rugg review were one of the first things scrapped by Grant Shapps as ‘red tape’ when he became housing minister last year. ‘With the vast majority of England’s three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords,’ he said.
The decision was criticised not just by Citizens Advice but also by ARLA. ‘A great fear is that a lot of agents who were looking at tidying up their practices will now feel they can run amok and add to the poor reputation we have at the moment,’ said its operations manager at the time. ARLA has has pressed ahead with a licensing scheme for its own members
The Resolution Federation argues that letting agents should be regulated to the same level as estate agents so that unscrupulous firms can be banned. It says all agents should be signed up to an ombudsman service to give effective redress to tenants and they should have to display all charges on their website and in adverts.
On the last official statistics the private rented sector had grown to 3.3m or 16 per cent of households in 2009/10. By now it is almost certainly bigger than the social rented sector and many people estimate it could grow to almost a quarter of households by the end of the decade.
Yet concern has continued to grow too about the way that unscrupulous letting agents are ripping off not just tenants but landlords too.
How much longer before the government shines a light where it is really needed?
So is The Great British Property Scandal a fantastic exposé or a dangerous over-simplification? Or both?
I’m talking here about the documentary at the centre of Channel 4’s season of programmes this week rather than the season itself which is doing a great job of highlighting some key housing issues.
The season began with an excellent second instalment of John Snow’s Landlords from Hell on Monday. And it continues tonight with Phil’s Empty Homes Homes Giveaway (Mr Spencer has a piece for Inside Housing here) and on the next two Thursdays with Kevin’s Grand Design (what happened when Mr McCloud put his own project where his mouth is).
But the centrepiece of the whole thing is George Clarke’s two-part documentary on empty homes that went out on Monday night and last night.
Fantastic exposé? Clarke, the architect and presenter of Restoration Man, is passionate about the waste of leaving homes empty in the middle of a housing crisis.
The passion came out loud and clear as he filmed streets of boarded-up houses and interviewed people desperate for homes.
He’s channelling it into a campaign to do something about it: a change in the law to give communities and individuals the power to turn abandoned properties back into homes; and access to low-cost loan funds for the conversion work. It has 58,000 signatures so far.
And he’s on to something with his support for grassroots action on the housing shortage. It’s more than past time we had a new generation of housing activists and housing organisations and it’s vital that the funding that is available gets used in the most effective way.
Dangerous over-simplification? As well as praise and signatures, the programme has attracted some criticism too for arguing that empty homes will be enough on their own to solve the housing crisis.
Little wonder that George Clarke’s arguments seemed to go down so well at the Conservative conference, when empty homes (like brownfield land) can be used as convenient cover for nimbyism. Watch last night’s episode for a transparently staged meeting with David Cameron.
As my fellow IH blogger Colin Wiles argues, the housing shortage cannot be ‘solved’ without building new homes on greenfield land.
Any argument that obscures that fundamental point risks making things worse. And my guess is that most people who watched last night’s programme will come away thinking that empty homes are the solution – rather than part of the solution.
George Clarke has been careful to make that point in print but in the broadbrush world of TV it did not come across. In the programme he attacked cuts in capital investment and right to buy in one breath and said the government did not seem to get that it was all about supply, then added: ‘But before we start building more new homes we’ve got to tackle the number of empties.’
Similarly, although he mentioned the fact that 88 per cent of empty homes are privately owned, the implications of that were not explored.
While the government is keen on anything that lets communities take over council-owned property, it’s been steadily reasserting private property rights (for example by more legislation against squatting and restricting the use of empty dwelling management orders).
It’s hard to see how those 88 per cent of empties can be brought back into use without much greater incentives – or much greater penalties – for those private owners. The Lib Dem-inspired council tax changes that are out to consultation might be a start.
Nor did the programme look at the complex arguments about the housing market renewal areas where most of it was filmed: was it the renewal programme that caused the empties or the cancellation of the programme halfway through?
The renewal areas themselves were born out of the widespread idea when the Labour government was elected in 1997 that the key housing issue was low demand. That in turn was heavily influenced by the fact that the key ministers had constituencies in the North West, Yorkshire and North East.
In renewal areas, the theory was that you could create sustainable communities by demolishing some homes to save the rest. In social housing, the problem was seen as the condition of the existing stock, not the construction of new homes.
‘Low demand’ helped blind Labour ministers until it was far too late to the rapid emergence of the exact opposite as the housing boom took off in the 2000s.
It would be a tragedy if a campaign to bring empty homes back into use distracted attention from the even greater need for new homes now. Just as it would be if the overwhelming case for new homes drowned out the one for grassroots action on empties.
We desperately need both.
Housing was under scrutiny in the House of Commons and on prime time TV yesterday and the comparison did not flatter the mother of parliaments.
In the Commons, it was CLG questions and the first chance for MPs to question housing minister Grant Shapps about the housing strategy and his handling of the fall-out from the 97% fall in the number of affordable homes.
All last week the main contenders had been talking up the fight: the Labour contender Jack Dromey with a series of barbs about the 454 homes and warming up with a Guardian Q&A ; the coalition champion Shapps releasing a robust open letter over the weekend.
Come Monday 2.30 and they were stripped for action. Parliamentary questions are actually more like tag team wrestling than boxing since MPs take it in turn to have a go at the ministers and it was Labour’s Rushanara Ali who made the first move.
The first question is always something general and Shapps flipped it back easily enough. ‘Housing starts over the six quarters since the Government were formed are up 24% when compared with the previous six quarters under the previous Government.’
Nonsense, said Ali. ‘The actual figures were a 7% decrease in housing starts, a 6% fall in net supply in the past year and a 99% fall in affordable housing in the past six months.’
Shapps replied: ‘We can all play with figures, but I would have thought that the only accurate indication -.’ At this point Hansard says [Interruption], which I imagine was rather like the bit in wrestling where the crowd boo the pantomone villain. The minister went on: ‘Well, I would have thought that the actual indication on which everyone in the House could agree would mean taking the period since we have been in power and comparing it with the same period beforehand. If we do so, we discover that housing starts are up by almost one quarter, which of course is in stark contrast with the record under the previous administration, when the number of affordable homes reduced by 200,000.’
The intensity rose when the former Labour champion Nick Raynsford stepped into the ring. ‘The minister says that he wants to compare the period in which the current government have been in power with an equivalent period under the previous government, but he seems to be under an illusion that the current government came to power on 1 April 2010. They did not. Will he now stop trying to take credit for housing that was built during the period of the previous, Labour government and show respect for statistical honesty and truth, which we in this House regard as important? ‘
That was more like it. But Shapps flipped himself off the ropes with: ‘If the right hon. Gentleman, as a distinguished former housing minister, is asking me to stop including four weeks, he has his wish.’ [Hmmm. The coalition actually started on 12 May and he was not appointed until the next day].
And then it was the Labour champion’s turn. The government’s own figures showed new homes down 6%, homelessness up 10% and a catastrophic 99% fall in affordable house building, said Dromey. ‘So few new homes have been built that the Housing Minister could visit them all in the next six weeks. Does he accept that this is a direct consequence of the Chancellor of the Exchequer’s £4 billion cut in housing investment, and that this sorry record of failure demonstrates that the Government’s housing policy, like their economic policies, are hurting, not working?’
It will not surprise you to learn that Shapps did not accept that - or that he used his tried and tested put-down that Dromey is the sixth Labour housing minister or shadow he has faced across the despatch box. He replied that: ‘Actually the figures for those in temporary accommodation are down by 4%, and that homelessness is at its lowest level for 28 of the past 30 years.’
Even in a stats fest, that last one sounded a bit weak, but Shapps had more: ‘On the specifics of the numbers, I know that he is keen to twist official statistics to try to represent whatever he wants to show, but the truth is that I could not possibly visit 92 different providers, which I can now reveal to the House have agreed to build 70,000 units at a cost of £1.4 billion. That is far in excess of anything delivered by the previous administration. I know that he has not been in the job for long, but many of his predecessors are on the opposition back benches, so he could consult them and ask how we ended up with 200,000 fewer homes.’
That was better - especially the patronising put-down. There was still time for a quick replay of that ‘28 out of the past 30 years’ stat in a question on homelessness (I imagine it will get another airing when the latest homelessness stats are published on Thursday) and a rematch between Shapps and Dromey’s predecessor Alison Seabeck about like-for-like replacements under the right to buy.
And there was also a chance for Eric Pickles (who would willingly wrestle him?) to praise a recent book by Labour’s David Lammy.
‘In recommending the book, I would draw members’ attentions to the insightful point that “Labour’s greatest dereliction of duty in government was social housing.” I am sure we can all agree on that.’
But if this is really the best that parliament can offer thank goodness for Channel 4. If you missed them last night, the second part of Jon Snow’s Landlords from Hell and the first part of George Clarke’s Great British Property Scandal are well worth making the time to watch.
I imagine some local authorities and housing associations will be crying foul this morning about some TV over-simplification and there was some interesting division of opinion on twitter.
However, both programmes shone a light on issues that would otherwise go largely unnoticed outside the housing world. And there is more to come from the Property Scandal season tonight, tomorrow and Thursday - and National Empty Homes Week continues too.