Catching up on a busy few weeks in housing policy

On rent convergence, for example, last year’s consultation asked whether below-formula social rents should increase by an extra £1 or £2 a week, but social landlords were pressing for £3.

In deciding on this, ministers had to weigh the costs to tenants and the Department for Work and Pensions against the positive impact on landlord investment in improvements and new homes, and balance the interests of existing tenants against people waiting for a social home.

The decision to allow an extra £1 a week from April 2027 and £2 from April 2028 splits the difference, but the delay means the extra income will be slow to arrive. In any case, it will probably not be enough to make up for the rent cuts imposed in the 2010s.

In another important announcement, private registered providers (including for-profits) will get access to £2.5bn of low-interest loans over the next four years. The rate will be 0.1% and will have a 25-year term.

A footnote explains that “more specifically, this encompasses registered providers that are classified to the private sector”.

Local authorities will be able to borrow for new council homes at a preferential rate from the Public Works Loans Board, which will be extended to March 2027. That preferential rate is gilts +40bps, which equates to over 5%.

It is not clear whether councils will also get access to the low-interest loans, but that footnote implies that public sector bodies are excluded. This feels like a glaring inconsistency.

There’s a similarly mixed picture with the announcement that developers will be able to sell homes delivered under Section 106 agreements on the open market for a limited period.

On the one hand, this feels like a pragmatic follow-up to what’s already happened in London, with housing associations unable or unwilling to buy the homes.

In the longer term, the government hopes that increased financial capacity for associations, improvements in standards and moves to reduce the complexity of the agreements will fix the problem.

Key to this will be ensuring that homes delivered under the Future Homes Standard by private developers are good enough to attract associations focused on improved standards for social housing.

More immediately, where developers genuinely cannot sell Section 106 homes that are due for completion before December 2027, local planning authorities will be encouraged to “seek alternative affordable housing or discounted market tenures in the first instance where possible”.

If that’s not possible, developers will be able to switch the homes to open market rent or sale, with equivalent form affordable housing provided on an alternative site in the area or, if that’s not possible, “a financial payment made in lieu of on-site affordable housing”.

That sounds like a pragmatic solution but might it also create perverse incentives for developers who would prefer the full market price, associations who may be dubious about the quality and local authorities who may prefer a cash payment?

Elsewhere in the announcements, landlords will be given plenty of time to meet the new Decent Homes Standard (DHS), with implementation in 2035. The government says this is comparable to the timetable for the original DHS, which was introduced for social landlords in 2001 but gave landlords until 2010 to comply.

The new standard will apply to private landlords as well, with the government arguing that they need time to adjust to the Renters’ Rights Act and Awaab’s Law, though Generation Rent says it is “absurd” to make private renters wait a decade.

Social and private landlords will get until 2030 to meet new Minimum Energy Efficiency Standards (MEES) of the equivalent of Energy Performance Certificate (EPC) band C, but will also have to negotiate changes to EPCs themselves.

The Warm Homes Plan shifts the emphasis away from fabric-first to technology such as heat pumps, solar panels and batteries.

That means homes will be greener, but will they necessarily be warmer or cheaper to heat? Exemptions to MEES mean that there could still be 700,000 private rented homes rated EPC D to G in 2030.

That’s just a flavour of a set of announcements that will keep the sector, and housing as a whole, busy digesting their implications.

What’s still missing is the overall housing strategy that is now promised “in the coming weeks”.

Housing minister Matthew Pennycook gave some intriguing hints about that in a Financial Times interview on Friday.

In it, he says that delivering the manifesto target of 1.5 million new homes will lead to a “levelling out” of house prices but that sustaining that level of delivery over the medium to long term will lead to a “gradual reduction”.

He argues that the current housebuilding model “locks in an upward ratchet of land and house prices” and that the state must lean in “to diversify the way housing is delivered” by supporting alternatives to an “overly speculative model of development”.

He adds that “there will probably need to be a market adjustment in London”, where there are people who have paid too much for land “and are now sitting on it”.

More help is on the way for developers in London via a second phase of the New Homes Accelerator.

The government is still making solid progress on housing but the strategy cannot come soon enough. This week’s announcements must be matched by a long-term vision.

Jules Birch, columnist, Inside Housing