Unlocking Housing Growth

I have just had a quick read of today’s statement released by DCLG from Eric Pickles on what the Government says it intends to do to get more homes built in short order.

I am not going to offer a point-by-point response but rather offer a brief overview.

My over-riding view is that the Government is offering a complicated approach to trying to solve a simple problem. The reasons why we are not building enough new homes over time is different to why we are not building enough homes today – at this very moment. I am going to look at the immediate problem and not the longer term issues because the Government has billed today’s announcements as being designed to get us building now.

It is widely accepted that the main reason why so few homes are being built today is that there are not enough mortgages available which enough potential buyers can access. This is mainly because lenders want deposits at a level which too many people can’t provide. If this is the case, why is the Government coming up with a ‘solution’ which is so complicated and restricted to only those builders who are actively participating in the scheme? Why not cut to to the heart of the problem and use the money which the tax-payers are putting in, or guaranteeing, to directly offer Government Mortgages? By directly offering mortgages Government can decide what level of deposit they require and cut out all of the complications which they are now getting involved with, and actually gets to the core of the current problem. This isn’t new – we used to have Local Authority Mortgages, which were mainly for people who couldn’t get one from the market.

Most of the solutions and interventions which have been announced today seem to me to be things which will take a while to kick in, and seem to be panic measures which will not get things moving now anyway, and to which the long term implications haven’t been thought through or considered, so why the panic?

We are told that developers will be able to negotiate down the requirement to supply the level of Affordable Homes which Local Authorities are currently saying they need to make a development sustainable. Firstly, this will take time – the developer has to muster the evidence to prove the development is not viable with the Affordable element included, and the Local Authority will have to assess the evidence. Also, where does this leave the Housing Needs Assessment which Local Authorities have carried out and their resulting Housing Strategies? If they are to have no status what is the point of doing them?

Also, saying that developers can over-turn S106 requirements because they are not affordable misses the point of S106s. They are to make possible schemes which otherwise would not be allowed due to Planning considerations – this seems to suggest that schemes which do not meet Planning requirements are to be given Planning Consent anyway- we might as well just remove all Planning Policy and Control for a few years and let rip. I know I exaggerate, but surely not much.

The Government is going to provide a substantial guarantee to increase developments for private rental in line with Sir Adrian Montague’s recent report. I will eventually do a separate blog on this report but will raise the following issues here: Is increasing the private rented sector really meeting the needs of people who really want to be owner occupiers but can’t get into this market because of what has been discussed above; and has anyone considered how a much a larger private rented sector will effect the need for further public expenditure in the future when these people retire and can’t afford the private rents? – How much bigger in future will the Housing Benefit bill have to be (and what are the implications if the budget for this doesn’t increase)? It looks possible that we will end up giving two subsidies: one to build the homes and another to pay the rents. In any event, it will take time to sort out the details in order to get the institutional investors interested – so again why the panic when this will not get any new homes built very soon, and when getting the details right for the long term is so important?

Today’s announcement says that large scale Planning Applications can be decided by The Planning Inspectorate, if the developer so chooses. What has happened to the Government’s policy of Localism?

I could go on, but haven’t the time. All-in-all this looks like a set of panic measures which are unlikely to work and will cost us all a lot of money in the long term.

 

 

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