The Housing and Planning Bill is to have its Second Reading in the House of Commons this week. The Bill has three policy objectives:
- To get the nation building homes faster
- To help more people buy their own home
- To ensure the way housing is managed is fair and fit for the future
These objectives can be divided into a primary objective, building homes faster, and two secondary objectives, home ownership and future management arrangements. Neither of the ‘secondary’ objectives will make any contribution whatsoever to alleviating the crisis in supply nor that of affordability. They could even exacerbate the current crisis.
I wish that the two secondary objectives could be replaced by a new one, that of providing homes that are truly affordable.
There are measures in the Bill that I welcome such as tackling rogue landlords and letting agents, as well as the introduction of a brownfield register.
The extension of Right to Buy to housing associations will see the loss of homes for rent – at least until they return in the private rented sector charging rents at three or four times current social rents. Four out of ten council houses sold through Right to Buy are now in the private rented sector. Under the proposals in the Bill, any replacement homes will unlikely be for rent, thereby further depleting the availability of homes for those who cannot compete in the housing market.
Pay to Stay (where households with incomes of £40,000 in London and £30,000 elsewhere will be expected to pay market rents) will make some rents unaffordable. Pay to Stay will also provide a perverse incentive that could see individual tenants deciding not to work additional hours because their household income would take them over the threshold where they will be required to pay market or near market rents.
Reform of Section 106 will see the loss of the requirement that up to 40% of homes in new developments must be for social housing (to rent or shared ownership). This requirement will be replaced by a requirement to have 30% being starter homes and no requirement for any homes to rent.
Starter homes will be sold with a discount, at huge cost to the public purse but without the benefit of building additional homes and certainly not ones that can be rented at levels that can be afforded.
I have no issue whatsoever about people aspiring to own their own home. I own mine. But I fear what will happen to the tens of thousands of households in the south east who will never be able to afford to buy, even with the subsidy being offered by government. I wouldn’t have any problem with this policy if, and it is a big if, there was an adequate number of homes for rent at rates that people can afford.
The consequence of this ill-conceived Bill will be further house price inflation (fueled by the subsidies available for starter homes), making home ownership even more unaffordable for those not eligible for starter homes subsidies.
The homes that are most needed, homes for rent by those who already cannot compete in the housing market, will not be provided.
The Housing and Planning Bill is a huge opportunity missed. It will stand in its shortsightedness alongside the economically illiterate decision of the 1980s that saw the introduction of private finance for the development of social housing and the transfer of government subsidy from capital investment to endless revenue support.