Housing affordability: government announcements and other reports and policy papers: October 2018
TCPA ,‘Planning for Affordable Housing’
The TCPA's Planning for Affordable Housing report looks at the reasons why councils aren't meeting demands for affordable housing. The research found that councils rely substantially on the planning system to create new affordable housing, but many areas see almost none delivered through it. Councils where residents were among the lowest earners in the country said that they are being 'left behind' by the current system because high-value areas are the only ones which are able to meet developers' profit margins and therefore attract investment. Councils said they were unhappy with the new viability test (in the NPPF). The TCPA recommends further reform of the viability test, changes to the compensation code to remove ‘hope value’, rescind permitted development rights, reinstate a definition of affordable housing which links affordability to income, and set an overall target for the number of affordable homes required in England.
Centre for Social Justice, ‘A social justice housing strategy: increasing the supply of truly affordable homes’
The CSJ report calls on the Government to increase the supply of truly affordable homes. It warns the failure will send the cost of housing benefit soaring to over £70bn a year by 2050 unless action is taken urgently. Key recommendations include: allowing Councils to retain 100% of the receipts generated by Right to Buy sales on the condition that these are reinvested within three years, allowing developments beyond London to be fast tracked if they offer 35% or above affordable housing, better capturing the dramatic uplift in land value when planning permissions are granted, providing greater financial leverage to housing associations, and revitalising councils’ ability to build homes at scale.
House of Lords debate on affordable housing
The debate was led by Lord Shipley, vice president of the LGA, with contributions from Lord Best, Lord Kerslake and others. Lord Bourne, the MHCLG minister said the government agreed that affordability is a massive problem, one that had built up over time under successive Governments. He said that did not make it any less serious, but it means that we to some extent all share the blame. He concluded that the problem is not insurmountable and that some of the policy options touched on in the debate should be investigated.
CIH, ‘Rethinking social housing’
The report calls for a common definition and understanding of the role and purpose of social housing, stronger tenant voice, increased supply of genuinely affordable homes, a policy framework which links rents to local incomes and takes account of local and regional differences, better quality housing, and confronting the stigma and stereotyping attached to social housing. The CIH is now consulting its members on the report.
MHCLG, ‘Innovation in affordable home ownership: a call for proposals for private shared ownership’
Further to the Government housing green paper, ‘A new deal for social housing’, MHCLG are consulting on private shared homeownership products which would be primarily privately funded (without S106 monies) and other innovative routes into homeownership which do not require government investment but may require the removal of regulatory or other barriers. The department is particularly interested in private shared ownership proposals where we believe government loan funding will play an important part in removing the risk and financial uncertainty created by staircasing.
MHCLG, ‘Evaluation of the Help to Buy Equity Loan scheme, 2017’
The 2017 study provides an updated evaluation of the Help to Buy Equity Loan scheme, which has seen an increase in funding since its inception on 2013 from £3.5bn to £22.1bn. The evaluation concludes that the scheme continues to deliver within the policy terms set for it – to support FTBs and boost supply. “The scheme has meant that the house building sector is stronger and has also had some impact on the property types being developed; their location and the amount of land being brought into the market. To the extent that new build has not fully adjusted to increased demand there will have been some impact on new build prices. Inevitably, there are divergent views not just around the impact of the scheme but also on the ways it might be modified. However, given the importance attached to new supply and the clear role the scheme has played in delivering more homes, any alternative would need to deliver both more and better outcomes”. The 2018 Budget announced new Help to Buy regional price caps (set at 1.5 times the current forecast regional average first-time buyer price, up to a maximum of £600,000 in London). The government does not intend to introduce a further Help to Buy Equity Loan scheme after March 2023.
Homes England, ‘Strategic plan 2018/19-2022/23’
Homes England’s 5-year plan details what the agency will do to improve housing affordability, including unlocking public and private land where the market will not, supporting new investment products for affordable housing and stronger partnership working.
Budget 2018: affordable housing
Budget 2018 confirmed the lifting of the Housing Revenue Account borrowing cap for council house building. According to MHCLG this “gives councils the tools they need to deliver a new generation of council housing – up to an estimated 10,000 additional homes a year”. Councils in areas of high affordability pressure have been invited to bid for a share of £1bn borrowing to build fund. It also increased the funding for the Housing Infrastructure Fund by £500m to £5.5bn (to “unlock up to 650,000 new homes). The government wants to see parishes and communities provide many more homes for local people to buy, at prices they can afford. The Localism Act allows the people who know their area best to come together to prepare neighbourhood plans and development orders, to ensure they get the right homes, in the right places. The government will provide £8.5m to help up to 500 parishes allocate land for homes sold at a discount. Neighbourhood plans and orders are approved by local referendums, and the government will update planning guidance to ensure that these cannot be unfairly overruled by local planning authorities. The government will also explore how it can empower neighbourhood groups to offer these homes first to people with a direct connection to the local area.
Letwin Review, ‘Independent review of build out’
The final Letwin report calls on the Government to adopt a new set of planning rules specifically designed to apply to all future large sites (over 1.5K units) in areas of high housing demand; provide incentives to diversify existing large sites by making any future government funding for house builders or potential purchasers on such sites conditional upon the builder accepting a S106 agreement; give local authorities clear statutory powers to purchase the large site compulsorily at prices which reflect the value of those sites once they have planning permission; support for special purpose funding and delivery vehicles, such as Local Development Companies. The review found no evidence that speculative land banking is part of the business model for major house builders, nor that this is a driver of slow build out rates.
‘Government response to supporting housing delivery through developer contributions. A summary of consultation responses and the Government’s view on the way forward’
The Government acknowledges the complexity and uncertainty of the current system of developer contributions is acting as a barrier to the delivery of housing. “The system does not react quickly to changes in market conditions or allow local authorities to effectively secure the contributions needed to support new development. It is also not as transparent as it should be; and the current system could also be more effective in securing funding towards strategic infrastructure and supporting cross boundary planning”. However, the Government claims its new NPPF ensures that local plans clearly set out the contributions that developers are expected to make towards infrastructure and affordable housing. The Budget did announce a streamlining of the process for setting a higher zonal Community Infrastructure Levy in areas of high land value uplift, and removing all restrictions on Section 106 pooling towards a single piece of infrastructure. The government will also introduce a Strategic Infrastructure Tariff for Combined Authorities and joint planning committees with strategic planning powers.
Savills, ‘Investing in private rent’
The report says that compared to the student housing sector, institutional investment in privately rented homes for the wider population remains relatively immature. But it is developing fast, with a switch in focus to stock built specifically for the rental market. “The mind-set of investors has begun to change. They have increasingly committed to the idea of delivering truly long-dated income streams, letting go of the comfort blanket offered by potentially flipping stock back into the ‘for sale’ market…..However, affordable housing remains a sticking point”.
Following promises to tackle unfair practices in the leasehold market, the Government is consulting on leasehold reform to limit ground rents (to £10 for all new leases) and that no new leasehold houses could be created save in limited situations. The consultation also includes proposals to ensure that the charges that freeholders may pay towards the maintenance of communal areas are fairer and more transparent.