All posts from: May 2012
This week, your intrepid business correspondent braved a hazardous sea crossing and explored hitherto unchartered parts of the globe to visit the self-build pioneers of Holland.
My guide on this journey into the unknown was one Grant Shapps (if you’re reading this in the future, he was housing minister until the early summer of 2012), who claimed that the trade delegation he was leading constituted his first foray outside Albion since he took office – oh to be foreign sec… well, maybe one day.
The mission was to see how the people of Almere – a commuter town built on reclaimed land about half an hour outside of Amsterdam – were developing the largest self-build site in the known universe (Europe, anyway).
And it was suitably impressive, even if it did bring to mind a frontier town in the Midwest, as depicted in a million and one Hollywood movies. Sadly, none of our enthusiastic Dutch hosts could point me towards either the saloon swing doors nor the adjacent ‘house of ill repute’. Presumably these will be part of the second phase.
Whatever anyone thinks of the design of these homes, the Almere experiment has certainly delivered home ownership – much of it on a similar basis to the UK’s shared-ownership model - on the cheap and to people who would otherwise be priced out.
Most people on the trip agreed that Almere would be difficult to replicate on our own overcrowded shores even if we wanted to try it. Councils’ renowned intransigence over planning was cited as a major potential stumbling block for high-volume self-build; the word ‘nimbyism’ was bandied about fairly regularly in the Dutch sunshine.
However, the minister is more than a little keen on self-build as a panacea for our ailing house building industry. Mr Shapps wants to see 100,000 extra homes built by self-builders over the next decade.
All well and good, yes. But we are soon going to need an extra quarter of a million homes a year, according to a select committee report. An extra 10,000 a year barely makes a dent. And yesterday’s latest figures on housing starts won’t ease fears that we are heading into an ever-deepening crisis.
What is worrying is that this push for more self-build might overshadow some of the other things that could be done to get more spades in the ground. The same select committee report that identified the shortfall did include references to self-build as part of the solution, but it also mentioned many other issues that seem not to have bent the government’s ear in the same way.
Of course, things such as easing local authority borrowing or wiping out housing associations’ historic debt would put extra pressure on the public purse. And George Osborne’s current MO is to do exactly the opposite.
Given his Treasury-imposed handcuffs, you can see why Mr Shapps is all cock-a-hoop over the prospect of letting people get on with building their homes for themselves. An interesting idea, it may be; the answer to our prayers, it almost certainly is not.
The second law of thermodynamics and the financing of new housing are not, at first glance, subjects that lend themselves to easy analogy. But bear with me for a moment…
Because it is this law from which the concept of entropy is derived; in other words, the idea that, over time, everything tends towards a state of disorder from one of order (yes, it’s a simplification, but Inside Housing is not the place for a discussion of theoretical physics of a Friday afternoon). So, without time moving in a uniform direction, there would be no decay, but if it only travels forward then chaos is ultimately the only possible outcome.
Similarly, if time’s inexorable march onward were not a factor, then the issue of how local authorities can free up cash to spend on building and repairing the properties that this country needs to address the escalating housing crisis would be less problematic.
But, as Henry Winkler and David Beckham know only too well, time is the enemy of man. And as demonstrated in the far-reaching report that emerged from the communities and local government select committee this week, the need to build more houses is getting more and more acute with every passing minute.
The committee – made up of MPs from across the political spectrum – concluded that we need to build nigh on a quarter of a million homes every year. It’s fair to say that current output is a little shy of that.
One possible solution, so the report argues, would be to get councils to take up some of the slack. Councils, as everyone knows, haven’t engaged in large-scale house building programmes for more than a generation but the recent self-financing revolution means they have new powers to spend the income they generate from rents without having to send the money back to Whitehall.
The problem is that the self-financing dream ticket comes with an important caveat, namely local authority borrowing caps. Scared that councils might not exercise caution if they are given control of their housing revenue, the government has limited how much they can borrow and, therefore, how much capacity they have to develop.
Once they pay off some of the debt they have acquired as part of the self-financing deal, that cap will be less onerous. But it’s these first few years that are crucial.
What the committee has called for – and it’s a call that has now received the backing of a number of voices in the sector – is for the government to remove the cap. Even if councils still borrow within what is known as the prudential code, this move could generate as much as £15 billion of extra capacity. That’s a lot of houses.
There are mixed feelings from the sector as to whether this is a genuine prospect or not, but if it happens it needs to happen soon. If not, lifting the cap would be rendered pointless seeing as debt repayments would create this capacity for councils in any case.
As with the second law of thermodynamics, time is very much the issue. And as anyone who has studied physics or the machinations of a government department knows, some things can take a long time to change…