Housing crisis solved at #CPC16?
Perhaps not quite yet, I fear. Sajid Javid, Secretary of State for Communities and Local Government announced a new scheme to support house-building at the Conservative Party Conference yesterday, saying that:
“We want to ensure everyone has a safe and secure place to live and that means we’ve got to build more homes”.
I quite agree, so I’m glad that the government takes this view. However, yesterday’s announcement has some obvious shortcomings and leaves many questions, at least until we see the detailed plans.
One question concerns the real scale of the resources committed to the new house-building funds, as it appears that more than £2 billion of the total £5 billion has been re-allocated from existing housing spend.
A related question is simply whether the new funds will be able to achieve more than the existing “Help to Buy” mortgage support scheme, which I have criticised for not doing enough, and is shortly to be wound up.
The latest statistics show that the first 39 months of the scheme led to 91,759 homes being “bought with the support of Help to Buy”.
The new target has been reported as “40,000 by 2020”. This would be deeply unimpressive if it really is intended to be a three-year target, being less than half of the out-turn from Right to Buy. However, it might well be intended to be an annual target, in which case it would mean an extra 12,000 homes per year, if it succeeds. No doubt the real numbers will become clear very shortly.
If the total target for this parliament was really only 40,000 by 2020 then the subsidy per house would be a very generous £125,000. However, if the targets was more like 120,000 by the need of the parliament, which perhaps seems more likely, then the value of the subsidy would still be just over £40,000 per house built. This might be attractive to developers.
However, a third question concerns the strength of the measures that government will put in place in order to stop the subsidy being given for new homes that would have been built anyway – the criteria will need to be very carefully drawn.
I can see why the government wants to concentrate its efforts on boosting on private ownership, given that home ownership fell during the last parliament, whilst developing it was rather central to the Conservative psyche – and indeed many union members want to own their own homes.
However, the new initiative really does need to be supplemented by a strong increase in social housing, as those in greatest need are being left further behind. In addition, the growth of private renting has brought some significant problems in terms of affordability and weak tenants rights. The government needs to widen its focus to deal with these issues if it is to truly achieve the goal of ensure that “everyone has a safe and secure place to live”.