The Government must do more for affordable housing

Join LabourList and John Slaughter for a free breakfast on Monday 23rd September at Labour Conference to debate housing issues: Will Labour’s plan meet our housing needs? See you at Brighton Mercure, Coast View Room 1 at 8.30am! RSVP to [email protected]

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No type of housing is left untouched by the enormity of the housing crisis. We need to boost housing supply across the board, from properties for first time buyers to specialist retirement housing stock, and from social rented flats to open market sale through to private rented builds.  The key to making housing affordable for everyone is to address housing shortages in every part of the sector.

If we don’t take action, housing will become even more unaffordable.  We need to build at least 240,000 homes a year to keep up with demand and this does not take account of the historic under-supply of homes over many years.  The Coalition Government has given the housing industry unprecedented attention in the last 2 years.  However, there remains a need for a fully comprehensive strategy on housing.  Government must develop a strategic policy framework for the housing sector, examining how to bring in more investment into the housing sector; and how to create a business climate which will encourage such investment.

The major long term constraint on delivery has been the planning system.  Over the last 20 years , the planning system has constrained supply.  In 2004, the Barker Review concluded that the planning system was not fit for purpose, and this led to a programme of reforms under the Labour Government.  The current Government has undertaken further reforms, including the NPPF.

The planning system together with regulation acts as a barrier to entry in the private sector.  Dealing effectively with both the uncertainty created by the planning system and with current levels and complexities of regulation is a challenge for all house builders but it is particularly difficult for smaller businesses.  As a result, over the last 20 or so years, there has been a major reduction in the number of smaller companies in housebuilding and there have been few significant new entrants into the market.  As result of the financial crisis the number of small and medium sized firms has declined yet further.

We need to tackle the conditions that are hampering smaller firms and new entry as responding effectively to the housing crisis requires a multitude of businesses, from the small family builder to the multinational company.  The planning reforms introduced should be sustained and continued efforts made to deregulate the housing sector.  Small builders simply do not have the capacity to tackle the burden of regulation over time as things stand.

As mentioned earlier, tackling the housing crisis will mean boosting the provision of all forms of tenure, including the private rented sector.  More must be done to attract institutional investment to the sector and make it a more attractive prospect for potential tenants.  In terms of social rented or affordable homes, prudent measures to raise the borrowing headroom for local authorities to build homes should be supported.  Councils have estimated they could build up to 60,000 additional new homes over the next 5 years if they were allowed to invest in housing against normal borrowing guidelines.  We should also look to encourage the emerging interest of councils and other bodies to invest pension fund assets in housing.  The roots of today’s problems in the housing market are multi faceted and demand a multi faceted policy response from Government.  In order to make housing more affordable for all the Government must support and encourage expansion of all forms of tenure and free up the private sector to build those homes.

The solution should never be a zero sum game.  Solutions to the housing crisis must work for all parties and be complementary to each other.  The housing ladder must also be taken as a whole.  There has been a lot of focus on first time buyers for example.  But dysfunction at any point in the housing market has a knock effect all the way up and down the housing ladder.  The Government must have detailed policies for all parts of the housing sector including encouraging the supply of housing for elderly people – providing certainty and assurance to businesses and investors that support schemes are in place and there is a clear direction of travel.  Government must lay out the policy roadmap for the housing industry and then do all it can to create a business friendly environment for the industry to build the homes Britain needs.