A possible ‘seismic’ shift in the government’s approach to house building

An announcement from government as part of the Autumn Statement was a proposal for the direct commissioning of housing by government through the Homes and Communities Agency (HCA). This has been described as a “seismic” shift in government policy, and one that I support.

It means that in the long term the Treasury will gain powers to step in to take responsibility for the number of homes being built. I believe this is necessary to overcome understandable resistance locally to building new homes. While I support the principle of localism, when it comes to housing, it doesn’t work. This announcement recognises that.

It also marks a welcome shift away from revenue subsidy to capital investment. One of the biggest errors in housing policy over the last thirty years has been the ever-increasing reliance on private capital to fund new homes, resulting in a huge burden being placed on the housing benefit bill as rents have soared, partly due to a shortfall in supply, and partly due to the need to service the capital borrowing. It has also resulted in larger housing associations shifting their emphasis from providing homes to rent at truly affordable levels to building homes for sale or to rent at market levels. The ‘social’ has well and truly been lost from ‘social housing’.

Sadly, one part of the announcement I have doubts about is new powers to the HCA to sell homes once completed. If this means that the HCA sells them to housing associations or local authorities for rent, then I am happy. This will ensure that the government quango will be required to drive efficiency, quality and innovation because no housing association or council will purchase expensive and/or poor quality homes.

If, as I suspect, the HCA has the power to sell the homes on the open market, or dispose of them through a sales vehicle at subsidised prices, the other great mistake of the last thirty years will be repeated, with homes that could have remained in the social rented sector being lost, often to the buy to let market, where local need is not reflected in letting practices, and with inflated rents which consequently places a further burden on the housing benefit bill.

That would be the worst of all worlds, housing imposed on a locality that does not meet local need, with capital subsidy and ongoing revenue subsidy from the public purse.

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