Housing affordability: government announcements and other reports and policy papers: March to June 2019
Capital grant subsidy
Natfed’s report on the capital grant required to meet social housing need in England 2021 – 2031 claims it will be necessary to build 145,000 social homes each year, including 90,000 for social rent. This translate into an average of £14.6bn in capital grant from Government each year for ten years (£12.8bn per year in today’s prices), to unlock a total housebuilding programme worth £46.2bn per year on average. For the grant-funded homes, this grant would cover 44% of total scheme costs. Investment on this scale would represent a return to previous high points in social housing spend. In today’s prices, the investment called for here is only slightly above the £11.35bn spent in 1953, which delivered a record output of more than 200,000 council homes. Until 2008 the public grant available for social housing as a proportion of total scheme costs had remained around or above 50% for several decades.
According to the Resolution Foundation 5.2m people now have a second homes, a 30% increase between 2000-02 and 2012-14. The Foundation claims there has been an increasing concentration of property wealth within a declining proportion of families. In contrast to the one in ten adults with multiple sources of property wealth, four in ten (40%) adults have no property wealth at all, up from 35% in 2000-02 and the same level as in 1993-95.The analysis finds that alongside an increase in the number of people with additional property, the average value of assets held in these properties has increased by 20 per cent in real terms between 2000-02 and 2012-14 – from £125,000 to £150,000. The wealth held in additional properties had a gross value of £760 billion in 2012-14 – 15 per cent of the £5.2 trillion held in gross property wealth overall. The Foundation says that there is a clear generational split in terms of who owns second homes, with those in prime age and the early stages of retirement having accumulated the most. Those with a second home are overwhelmingly rich and wealthy – 88% of additional property owners are in the top half of the wealth distribution, and 79% of adults who earn income from additional properties as landlords are in the top half of the income distribution. There are also stark regional differences in those who earn income from a second home as a landlord. Some 59% of landlords are found in the South West, South East, East of England and London, which are also the areas where incomes and average wealth are highest.
Help to Buy
A NAO report ‘Help to Buy: equity loan scheme – progress review’, concluded that the scheme had increased home ownership and housing supply and that the government has put reasonable arrangements in place to benefit from increasing property prices. However, more than half of people using the scheme could have purchased a home without support from the state. The NAO warns that a market downturn could prove expensive for HMT.
A ONS study, ‘Living alone’, forecasts nearly one in seven people in the UK could be living alone by 2039 (10.7m), the majority in rented homes. The number of people living on their own went up by 16% to 7.7 million between 1997 and 2017, while the population rose by 13%. Those aged 25 to 64 who are living alone are less likely to own their home than couples without children (50% of households compared with 75% respectively in 2017), giving them less opportunity to accumulate wealth through buying their home or paying off a mortgage. The gap in home ownership between one-person households and couples widens with age. Whether they rent or own their home, the burden of housing costs is also greater for one-person households.
Housing costs and labour mobility
A report by the Resolution Foundation, ‘Moving matters: housing costs and labour market mobility’, finds the propensity of young private renters to move home and job has fallen by two-thirds between 1997 and 2018, and suggest that this partly reflects the fact that private rents have risen consistently faster in higher-paying areas of England. Rents have risen by almost 90 per cent in the highest-paying 30 per cent of local authorities over the past 20 years, compared to just over 70 per cent among the 30 per cent lowest paying places. As a result, not only has the earnings boost of moving to a more productive area diminished as a result of closing wage differentials; so, too, has the broader living standards uplift once housing costs are taken into account. The picture is similar for homeowners, with house prices growing four times as fast as wages in the 10 per cent of local authorities with the highest earnings.
Action on Empty Homes report ‘Community Action on Empty Homes’, claims 216K homes are empty. It calls for the creation of more community-based partnerships, to bring empty homes into use for local people.
Section 21 evictions
The government plans to consult on new legislation to abolish Section 21 evictions – so called ‘no-fault’ evictions. This will bring an end to private landlords uprooting tenants from their homes with as little as 8 weeks’ notice after the fixed-term contract has come to an end. It effectively creates open-ended tenancies. Landlords will have to provide a concrete, evidenced reason already specified in law for bringing tenancies to an end. According to a RLA survey almost half of landlords and letting agents are considering selling some of or all their rental homes if S21 is scraped. However, the survey also indicates caution as 40% of respondents said they will wait for the government to confirm its plans before they decide on whether to provide homes for rent.
Half babies born to renters
Almost half of the babies born in the UK are starting their lives in rented accommodation, according to a report by insurance firm The Royal London. It says it is the first time in almost six decades a child is as likely to be born into a rented home, rather than owner-occupied. Families with children privately renting have risen by 94% in a decade. "Generation rent" is becoming "generation parent", with 49.2% of children born to families who are renting, according to figures for 2016-17.
A report by Habinteg, ‘A forecast for accessible housing’, claims only 7% of all homes in England provide the four basic accessibility criteria to be deemed ‘visitable’ according to the English Housing Survey. Yet there are 13.9m disabled people in the UK, with numbers continuing to rise. The NHS estimates there are 1.2m wheelchair users in the UK. The report says failing to address the deficit in the number of accessible and adaptable homes would mean storing up a housing crisis of a different kind if the new homes we build are not able to meet the needs of the population both now and in the future.
The Government’s Spring Statement included the following on housing: a £717m housing infrastructure funding; £3bn of loans to housing associations (from the £8bn of housing guarantees announced in the 2017 Autumn Budget); a further £1bn of the overall £8bn for SME builders; a ‘Accelerated Planning Green Paper’ and new planning guidance to speed up development on large sites (see Letwin Review); new permitted development rights so the owners of high street premises can change the way the buildings are used more easily; a new right to allow buildings to extend upwards to create new homes, which respect the existing design of communities and the impact on neighbours; commitment to adopt the Future Homes Standard by 2025.