Labour has just announced a new housing green paper, setting out its housing policy for discussion.
Labour’s ambitious plan to deliver one million genuinely affordable homes over ten years would do much to alleviate the nation’s housing problem. But, only if a future Labour government had the right policies and money to back them up.
However, putting the onus on councils to deliver most of the units is perhaps a step too far for now, although, most certainly a step in the right direction.
Councils have not only lost the skilled professionals they need to deliver the numbers they once did, they are also ill suited to delivering homes due to their constrained financial status. Furthermore, the competing demands on their services, and shortcomings in their institutional framework (e.g. agile procurement processes, lack of commercial relationships with supply chain, conflicts of interests etc.) makes it harder for them to deliver homes in the current climate.
This of course can all be resolved in the long term, but will require significant political will and consensus. Government would also have to deal with the Right-to-Buy which played a big part in cutting off council house building and increasing the complexity of regeneration and redevelopment.
Local authorities, however, have been proactive and innovative as of late, with the boom in Local Housing Companies (LHC). Research from the Smith Institute suggests that this will deliver15,000 homes a year by 2022, and up to half of councils in England will have LHC if current trends continue. This could be a means through which councils can deliver on the council house building promises made by Labour.
Labour also suggests redefining affordable housing to relate it to average incomes rather than housing being a percentage of market rents. This makes sense as a measure of affordability, however, this will likely lead to a trade-off between affordability and the numbers of affordable homes delivered, unless capital grants are available at the outset, geared to the income segment to be accommodated.
The green paper also suggested that affordability can be determined by whether rent or mortgage costs are than a third of a household’s, after tax income. Though, this is a widely used definition of housing affordability, a factor that needs to be considered is that, with a mortgage, one builds up equity, and with renting, one does not.
Labour also plan to lift council housing borrowing caps and provide a further £4 billion for social housing and housing associations. This is certainly something RICS has been calling for, however appropriate measures must be taken to ensure that local authorities do not expose themselves to too much risk.
Overall, the Labour housing green paper overwhelmingly focuses on social housing over all other tenures. Although the tenure needs significant support and attention, we mustn’t forget the other parts of the market which accommodates large swathes of the population where demand is similarly high.
To reiterate RICS’ long held views on housing, there is no one silver bullet to the housing crisis. The problem is as diverse as the people it affects and the solutions need to make use of all available tools and address demand on all tenures.
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