What the government’s housing white paper needs to say

This could be a big week for housing, with the government publishing its long-awaited housing strategy. Today (Sunday 5th February) the government has hinted at a new emphasis on people who rent their homes.

imageI welcome what Housing Minister Gavin Barwell has said, that there will be minimum term tenancies and more homes built for rent, signaling a “change of tone” from previous Conservative Party policy. But the key issue is what sort of rental homes they will be? Will tenants have greater security of tenure and, critically, will they be truly affordable?

I have lost count of the number of announcement, housing strategies, policy documents and white papers there have been over the last 25 years. Most have delivered little. Some have been disastrous. And the housing crisis has just got worse.

Will this latest iteration be any different. Yes, if as promised there is a shift from the obsession with home ownership. As I have already said do one of the key issues is whether the promised homes for rent will be truly affordable.

If, as I suspect, the government will be looking for institutional investors (pension funds, for example) to make it happen, then we will be disappointed. Yes, pension funds are keen to invest in property. Unlike governments, pension funds take a long term view, beyond the immediate political cycle. But they are, by their very nature, looking for the best possible return. If there are rent controls, as I believe there should be, the pension funds won’t be interested.

Private landlords already make a valuable contribution to meeting housing need, but with land prices being what they are, they will not be producing any homes in the affordability bracket needed.

The average privately rented one bed flat in Brighton is now £971 per month. The most housing benefit will pay is £612 per month (the Local Housing Allowance – LHA). To make the private rented sector affordable to those on medium, low and no income, the government could either abolish the LHA, but that would cost billions of Pounds, year on year and forever. It could put a cap on the amount a landlord can charge, but then investors in the private rented market would disappear. Anyway, I cannot see any government intervening in the market in this way.

There is another way, which makes financial sense in the long term: invest and build council houses along with housing association homes. This will require upfront capital investment, in the acquisition of land, and the building of homes. A one-off subsidy in capital investment can ensure that there isn’t a need for ongoing rent subsidies through housing benefit.

I have no illusion about local councils, many of whom lack imagination and courage when it comes to modern design and construction methods. They will have to up their game considerably.

What of the right to buy? It must surely be ended. More than a third of the homes sold through the right to buy have ended up in the private rented sector with rents three of four higher than when they were in council ownership. It makes no sense in economic or housing terms, although it has proven to be political popular in spite of the negative impact it has had on the provision of homes for people in the greatest need.

So what of aspiration? Gavin Barwell has said that the government had not given up making home ownership available to all. Most people, when asked, say they would like to own their own home. But for around half the population, that aspiration is unachievable, even with the huge public subsidies on offer. A more achievable aspiration could be the provision a homes for people who need them, at rents that people can afford.

I hope that secure tenancies will be reintroduced. People need that security, as well as the flexibility that renting should offer. I disagree with Jeremy Corbyn who has been quoted as saying that the rental market was “incapable of giving people the security they need”. I disagree. People used to have much greater security of tenure, and there is no reason why that can’t happen again for those who pay their rent and don’t cause anti-social behaviour. It requires a change in the law and investment in services offering advice and representation so that tenants’ rights can be enforced. That is something the government can deliver on, and quickly.

New_Prime_Minister_Theresa_May_makes_a_speech_outside_10_Downing_Street_London_after_meeti-xlarge_trans++uWljxTX2ToqwW26CTqWzx8B_jeBzq4FpvJVTUwJgaqgTheresa May said on the steps of Downing Street that her government will help those who are “just about managing”. This housing strategy needs to go beyond that. It needs to help those who already aren’t managing. Her housing strategy will be judged on whether it addresses the issue of affordability and supply.

I am not holding my breath, but hope to be pleasantly surprised.

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