The housing merry-go-round

Earlier this month I had the pleasure of meeting James Brokenshire, the current housing minister. He was speaking at the 20th anniversary of the Residential Landlords Association and, perhaps unsurprisingly, focused his words on the rental sector almost exclusively.

Two things he said caught my attention particularly. "There is not one situation in which the private rented sector does not play a vital role. It is not a fall-back option, but a positive choice for millions.” And. “I’m incredibly optimistic about the future of the private rented sector.”

Interesting then that the Government is rather less supportive of landlords and intently focused on owner-occupiers and those who would be but cannot yet afford it.

Housing policy ideas have abounded in recent years. Whether they’ve really achieved their stated aims is up for debate though. The list below is by no means exhaustive - I’ve skipped the Help to Buy Isa, Lifetime Isa, shared ownership and Right to Buy in its original form for example. But hopefully this gives a flavour.

1. Help to Buy

Help to Buy has been accused of inflating property prices, giving builders an excuse to reintroduce incentives and helping those who would have had no problem getting on the housing ladder simply buy a much bigger house.

Various pundits have criticised the scheme, which they did from before launch, seeing easily that this would be the outcome. Builders are not among these. Instead, they are clamouring for more – “extend the scheme beyond 2020,” they cry.

Would it help? Wannabe first-time buyers, not sure. The builders’ balance sheets, certainly.

2. Starter Homes

Starter Homes – remember that idea? What happened to those?

It was an idea first touted by George Osborne back in 2014 with the gist being that if you’re a first-time buyer the Starter Homes scheme could help you buy a new-build home with a 20 per cent discount.

The maximum cost of a home offered via the Starter Homes scheme was set at £250,000 outside London and £450,000 inside London. If you look it up on the Government website, it says cheerily ‘The scheme hasn’t started yet but planning is well underway.’

Apparently, some homes have been ‘started’. None have been sold yet.

3. Right to Buy – on housing associations

This was an extension of the hugely successful Thatcher policy that established the Tories as the party of home ownership in the 1980s.

It was designed, I suspect, to appeal to lower income families. But it ignored the enormously damaging impact of Right to Buy on the housing market over the past 30 years.

The policy has decimated social housing stock. David Cameron’s promise that every council house purchased would be replaced with two more social homes after he came to power this decade was not just broken, it was barely considered.

Extending the scheme to housing associations poses two further, much harder problems for the market too.

First, housing associations, while publicly funded and non-profit, are nevertheless privately owned. Forcing companies to sell at a discount to tenants sets a very questionable and dangerous precedent in the law.

Second, running down the stock of social rented accommodation via this scheme is going to compound the shortage of homes for people in the UK who cannot afford any other form of shelter. If the Government failed on its two for one policy on council housing, why will this be different?

4. Buy-to-let

And here we come full-circle. It’s funny, given that Labour is supposed to be about the national provision of public services, that it was under Gordon Brown that landlords were given the biggest tax boon ever, enabling them to buy up housing stock and make a very tidy personal profit – as well as help fuel a house price boom that delivered a nice lift to the Treasury’s coffers.

It’s resulted in a growing private rented sector in the UK and a lot of ever-richer private landlords.

In a bid to appeal to younger voters – the disenfranchised would-be first-time buyers – Osborne made an executive decision. Landlords will probably vote Tory whatever we do to them, so let’s tell young people we’re hurting landlords to help them. Never let the facts get in the way of a vote-grabbing headline.

But the successive tax changes landlords are navigating - whether fair or not is not the point - have had a tangible negative effect on the housing market.

In areas of the country that are the poorest and where social housing provision is insufficient, private landlords have for many years picked up the slack.

With the removal of tax relief, raised stamp duty and the introduction of universal credit thrown in for good measure, rapidly growing numbers of landlords do not feel financially able to let to social tenants anymore.

So, Mr Brokenshire, what are we to think?

Young people who want to buy are usually renters. Renting is getting more and more expensive because of Government policies – tenant fee bans or not.

It is a direct result of Conservative policy. You may be feeling ‘incredibly optimistic’ about the future of the private rented sector but I’m not sure I am. More importantly, what are you to do?

Reversing the tax changes probably isn’t going to do much other than cause consternation and utter confusion.

As it stands, Government can build as many new homes as it pleases – and please, I’m not arguing that it shouldn’t – but it won’t solve any of this.

There are so many things that need to be addressed – whether, in spite of the help it offers builders’ profit margins, Help to Buy should be extended; whether Right to Buy replacement should be properly addressed and the two for one policy delivered; whether builders should be forced to meet stricter deadlines on completion following planning permission consents; whether Section 106 rules on affordable homes should be made more stringent again having become lax recently; whether a policy of selling housing association stock on top of social housing stock was perhaps misguided.

There is clearly a lot to do. I don’t have the answers, but might I suggest just one step in the right direction? Stay put in your position for longer than your predecessors.

It takes about three years to deliver a new home in the UK on average from start to sale. It might help if we had a minister in the post for longer than just a third of this time in future.