16 April 2015

We have a serious housing crisis in Britain. Houses are being built at half the rate that is needed, public housing is desperately short, and private rented housing is in need of reform. In 2013/14 in England we built only a pitiful 30 590 affordable homes for social and affordable rent and 12 130 intermediate affordable homes for rent and ownership (see tables 1b and 1c in Affordable housing supply in England: 2013 to 2014, published October 2014, here).

I’m wary of the political parties’ new found interest in housing. The Labour/Tory/Libdem record in office is appalling and the approaching election seems to over-influence their views; they and the others are profligate with heady numbers and conjured funds. Nevertheless, what Labour and the Conservatives say matters: one of them will be the major party in government in May.

I have already looked at Labour’s views and, oh dear, practicalities and will apart, they are now on the right track and comprehensively embrace both public housing and private rented housing. The Conservatives have had an ideological seizure; their housing policy is a long-term project to diminish public housing and, they hope, catch votes. It will make the shortage of public housing worse. The likely result of the Tory project is that we shall see the stock of public houses in Cornwall shrink and the added shortage will lead to open market house prices and private rent increasing.

The details of the Tory project are not clear but the Tory first part is to compel councils to sell their most expensive council houses as they become vacant. There are about 10 000 council houses in Cornwall and I’m unclear of the exact effect of the Tory policy on that stock. As I understand it – the Tory manifesto has only ninety or so words on the council and housing association aspect of housing – with the money got from the sales, councils will build in cheaper areas replacement public housing, probably at dearer affordable not cheaper social rents, and hopefully in larger numbers than those sold; some of the money will be used in the second part of the Tory plans.

I should say at this point that the Tory record in building replacement houses for those sold is an utter failure. The Thatcher government of the 1980s did not wish to see them replaced and the housing stock available for public rent shrank and that initiated our current shortage. Since 1980 1.88 million public houses and flats have been sold and only 345 000 replacements built. Labour did nothing with effect between 1997-2010 to deal with the Tory stupidity. The Thatcher desire to increase private ownership has been frustrated and a failure: there are proportionately fewer owner occupied houses in England now than when Thatcher was prime minister. The replacement record of the Tory Libdem government since 2010 is, well, unencouraging: see the post I wrote recently about the dire figures. The likely effect of these forced sales is a net loss of council housing stock available to locals wishing to, only able to, rent.

The Tory figures for the amount to be raised by the enforced sales are speculative of course. That’s a courteous way of saying they don’t know how much they would raise.

On top of the loss of council housing the second part of the Tory project will add the compelled sale of housing association social housing at large discounts (up to about £77 000 in Cornwall) to tenants who have been in the house/flat for three years, a random redistribution of public money to the comfortably housed.

There are several problems.

First, these houses belong to housing associations which are not part of the State but independent organisations and often charities. If a Tory government tries to compel them to sell their possessions, they will probably contest that in the courts. Result: uncertainty, which will also affect investors as in the next paragraph. It would be bizarre to see the Tories, the party of private property, seizing others’ properties.

Second, the associations raise money for building more affordable houses based on their assets, the houses they presently own. If those are being seized, investors are likely to be shy of investing. Result: loss of funds, fewer affordable houses built.

Third, if the houses and flats are sold to present tenants, they will not be available to rent as public housing to people on housing waiting lists. Result: a loss of public housing, longer waiting lists. Actually, history suggests that many of them will be sold on and become buy-to-let properties in the private rented sector: there will be a double cost to taxpayers, an initial purchase subsidy and then housing benefits.

Fourth, People will increasingly be pushed towards the private rented sector where rents are higher than in public housing. Tenants will need financial support in paying the rent. Result: a higher bill for housing benefits.

Fifth, The Tory hope is that the funds from the sale of dear council houses will not only build replacement houses but also compensate the housing associations for the loss of their house/flat assets. Some hope.

Sixth, if tenants of housing association properties are to be enabled to buy their house, why should not tenants in private rented housing be similarly enabled? Is it just to exclude them?

Note that many former council houses sold to tenants have been sold on to landlords and are now in the private rented sector and attracting housing benefits for the new private tenants: the double cost to taxpayers I mentioned above.

On benefits, note that the Tories plan to cut them by £12 billion if they win the election. Presumably housing benefit will be in that cut.

Selling the dearest council houses and moving the tenants to replacement houses in poorer areas is in effect cleansing well-heeled areas of the poor and creating and entrenching class apartheid in housing. Public housing will increasingly be seen and stigmatised as housing of last resort for the poor. The Tory housing policy is probably the worst of all the election policies of any party.

There are about 29 000 on Cornwall Council’s housing waiting list.

Related posts
Right to buy 28 February 2015