housing policy under the conservatives: the eclipse of social housing? professor ian cole centre for...

Housing Policy under the Conservatives:

the eclipse of social housing?

Professor Ian ColeCentre for Regional Economic and Social Research

Sheffield Hallam University

CWAG Conference London 18 September

2015

Outline

The 'Housing Question'

Reasons to be cheerful

Reasons to be miserable

Reasons to be thoughtful

Implications for the ALMO sector?


2015

The 'Housing Question' ..in 1912 what to do when housing costs are running faster than

household incomes and housing standards are falling? 1. control PRS rents 2. build social/subsidised housing 3. introduce a specific housing allowance 4. redistribute income and wealth to provide a more equal

society 5. rely on the private market to provide

Response in 1920s to 1990s? Combinations of 1, 2 and 3.

Response in 2015: 5, some of 2 and a diminishing reliance on 3


2015

Reasons to be cheerful .....


2015

Reasons to be miserable .....

Actions

Rent cut of 1 per cent per annum for four years

'Pay to stay'

RTB for housing associations

Sale of vacant. high value council stock

Welfare reform - real value of HB, shift to UC

Limits on borrowing capacity

Diversion of energy and resources into home ownership


2015

Reasons to be miserable...

Inactions

housing supply

affordability crisis

reliance on demand subsidies

territorial and tenure-based division and segregation

standards in the PRS


2015

Reasons to be thoughtful...

unintended consequences of policy often prove to be more telling than intended consequences

'flagship' policies often fail to sail

improvised policies often prove to be more enduring

..and it always helps to have a historical perspective


2015

The problems in predicting the future impact of housing policies..

Group 1 Loud proclamation, limited impact (from a scream to a whisper)

Tenants' Choice Housing Action Trusts Right to Repair Commonhold Regional Housing Strategies National Affordable HomeSwap Scheme


2015

The problems in predicting the future impact of housing policies..

Group 2 Quiet introduction, major impact (from a whisper to a scream)

Right to Buy (for LAs) Decent Homes 1989 Housing Act for housing associations Buy to let mortgages and... ALMOs


2015

Counting the cost....... Four year programme of 1 per cent rent reductions in social housing £2.5 billion cost to LAs over next four years £42.7 billion over thirty years (business planning period) Southwark (eg) £120 million over 30 years

Starter Homes (removing s106 and CIL responsibilities from developers) £3.6 billion over four years (LGA estimate)

Number of RTB sales due to extra discounts under Coalition (at June 2015) 19,445 Number of replacement homes (on 1 to 1 basis?) started by then: 3,337

Number of RTB sales in LA sector in 2013/14: 11,514 Number of new social rented homes in LA sector: 10,924 Net loss of LA homes: 590


2015

Contradictions of current policies making home ownership more affordable... ...by relying on the private sector to deliver homes

cutting back on rent revenues, making rental payments more uncertain and attacking surpluses...

while forcing HAs to operate closer to the market

encouraging take-up of RTB... ..in an era of lender caution and future interest rate increases

centralising control of social housing... ....while seeking to free up the regulatory regime

relaxing planning controls... ..without a plan to deal with land banking


2015

Trends in Housing Starts (England)

2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/150

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

AllDwellings

Private Enterprise Housing Associations Local Authorities

Num

ber o

f Per

man

ent D

wel

lings

Sta

rted


2015

Response to recession: big builders survive


2015

Response to recession: big builders thrive!


2015

The law of unintended consequences introducing the RTB... and feeding the expansion of PRS down the line?

taking direct control of HA sector ...and adding £60 billion to the public debt?

taking money from sales of vacant stock in Westminster ..to help RTB replacements in Stoke?

building the Northern Powerhouse ..may stimulate public housing investment

the introduction of UC.. ..may lead to contraction of direct rent payments to tenants

nationally driven housing policies.. will have unpredictable and uneven local consequences


2015

The local impacts of national policies The Differential Impact of Pay to Stay (source: Savills Residential Research)

Region Householdsaffected

Can afford RTB and market rent

Can afford market rent

Can afford neither

North East 11,227 86.3% 13.7% 0%

Yorkshire and Humber 21,319 59.7% 40.3% 0%

North West 30,688 64.2% 35.8% 0%

E. Midlands 7,739 86.3% 6.6% 7.1%

W Midlands 16,121 68.5% 23.7% 7.8%

South West 22,338 45.5% 27.9% 26.6%

East of England 27,188 28.7% 22.1% 49.1%

South East 50,871 41.5% 15.1% 43.4%

London 27,108 37.1% 2.7% 60.1%


2015

Local impact of selling off more expensive vacant LA stock ...

most expensive third according to regional thresholds will affect:

59% of LA stock in Harrogate

38% of LA stock in Woking

0% of LA stock in Portsmouth, Northumberland and Croydon


2015

Some awkward perennials.... can parts of the North of England just be written off? what can prevent the social cleansing of London? will intermediate tenures and institutional renting ever take

off on a sufficient scale? is the PRS fit for purpose for a mobile, entrepreneurial

economy? what about increasing levels of homelessness and rough

sleeping? will receipts from sales be geographically ringfenced or not..? can the dysfunctional nature of age-based housing inequality

be faced, politically? and, above all....


2015

The challenge................

how to deliver the 'age of aspiration' by reversing the structural decline in home ownership will 'politics' prevail over 'economics'? and at what expense? previous means of achieving this :

The ‘newly affluent society’ (60/70s)....but now we have the 'stretched middle' The right to buy (80s/90s)...but limited impact of recent incentives The deregulation of financial markets and acceptance of high

level of consumer debt (90s/00s)....but caution over lending to marginal income groups will prevail


2015

The Future.... The Conservatives will never embrace the state..

..but may reluctantly accept it as a temporary necessity, if the market fails to deliver

Will starter homes and the Help to Buy be enough?

..or will the Conservatives yet learn to love renting?

and will these solutions give more freedom to ALMOs to help them out?


2015

Key elements of the case for ALMOs....? have proved their worth

some now have long-term commitment behind them

are increasingly commercially oriented (otherwise..)

prototypes for housing companies?

can manage risk

one step removed from the local political process

can operate more flexibly in uncertain markets

poor experience of those taken back in-house?


2015

The limits of national housing strategies

Housing strategies have an indirect relationship with housing outcomes at best

And housing problems are experienced locally and need to be addressed at that level

Macro-economic forces, demographic changes and socio-cultural attitudes interact to exert a stronger influence.

In other words.... 'Life is what happens to you when you're busy making other

plans'


2015

....and the final eclipse of social housing may still be some way off...

Housing Policy under the Conservatives:

the eclipse of social housing?

Professor Ian ColeCentre for Regional Economic and Social Research

Sheffield Hallam University

housing policy under the conservatives: the eclipse of social housing? professor ian cole centre for...

Documents

cwag conference london

housing standards

housing policy

housing costs

socialsubsidised housing

housing question reasons

eclipse of social housing

prs slide