The Conservative manifesto is explicit on housing numbers:
“We will build 200,000 quality Starter Homes over the course of the next Parliament…We have delivered over 217,000 new affordable homes since 2010.We will now go further, delivering 275,000 additional affordable homes by 2020.”
That presumably means at least 60,0000 affordable homes being “built” (i.e. completions) each year between now and 2020. Completions by housing providers over the past three years have averaged 25,000 each year, so this leap in output is highly ambitious, and highly unlikely. What’s more, all of the levers of present policy are being switched away from the production of affordable homes towards home ownership products. Look at what is known about the numbers so far:
The rent cut will take £4 billion out of housing association coffers up to 2020. This will lead to a significant reduction in the output of affordable homes by housing providers – 14,000 according to an OBR estimate. There is no certainty that the rent formula will revert to CPI plus 1 percent after 2020 and some are even mentioning a future 2 percent cut, which would have an even bigger impact on output.
The Right to Buy will require the forced sale of at least 15,000 social rented homes each year but will also stop council housebuilding in its tracks. What is the point of building anything if it will be immediately sold? I have yet to see a national analysis of the impact, but if you add up local authority plans across the country the reduction will be in the tens of thousands.
Welfare reform and the uncertainties of future income streams will also reduce the appetite of housing providers to build new homes.
Starter homes replacing affordable homes on section 106 sites will cut housing association affordable output by at least 12,500 affordable homes each year (40 percent of affordable output came through section 106 last year). There is no clarity as yet on how this will be implemented. In his recent appearance before the Housing and Planning Bill Committee Brandon Lewis made a rather waffly comment to the effect that local authorities would be free to decide the tenure mix on sites but that national policy would prioritise starter homes. Given that a developer will receive about twice as much for a starter home as for a housing association affordable home will developers be required to provide higher quotas of starter homes on a given site? No one seems to know.
Taken in the round it is quite clear that the manifesto pledge to build 275,000 affordable homes by 2020 is simply unachievable and they will be lucky to achieve half of that figure. There is of course, a simple and elegant solution – to re-define starter homes so that they come under the umbrella definition of “affordable” homes. That would allow the targets for starter homes and affordable homes, as set out in the manifesto, to be conflated and muddled. The government could confuse the public by claiming that they are meeting both targets simultaneously. As Jules Birch and I have written in recent blogs, terms like “affordable” are becoming so lacking in meaning that this change of definition could well be on the cards. (This is despite the fact that Brandon Lewis appears determined to give buyers of starter homes a 20 percent windfall in the value of their home after five years, even though this would rule out starter homes being considered as affordable homes under present planning definitions – see Annex 2.)
Hanging over all of this of course, is uncertainty. Uncertainty about the detail in the Housing and Planning Bill, uncertainty about future rental streams, uncertainty about the impact of welfare reform, and uncertainty about ONS re-classification. If you get the chance I recommend that you read a new analysis from NLP planning which tries to unwind the “tangled web” of government policies on housing. “Uncertainty always slows housing output” is one of their key conclusions. And there is probably more uncertainty now hanging over English housing policy than at any time over the past seventy years.
By Colin Wiles