10 Downing Street has a new tenant.
Boris Johnson became Britain’s latest Prime Minister this week and the latest to tackle the country’s often discussed, but rarely addressed, “housing crisis”. In the most recent of the SMF’s “Ask the Expert” series, held in partnership with the Economic and Social Research Council (a part of UK Research and Innovation), an expert panel unfurled their three housing policy recommendations for Britain’s new leader.
Offering their thoughts were Christine Whitehead (Emeritus Professor of Housing Economics at LSE), Jeff Matsu (Co-Investigator at the UK Collaborative Centre for Housing Evidence and Senior Economist at RICS), and Lord Bob Kerslake (Chair of the Peabody Housing Trust). Tasked with proposing three recommendations for the new Prime Minister to consider, here is our summary.
1. Quality over quantity
Unrealistic and arbitrary build targets have proved to be a perennial problem for UK housing policy. Now ousted Theresa May set the ambitious target of 300,000 homes a year by the middle of the next decade. Liz Truss, the government’s new International Trade Secretary, was just a few weeks ago calling for one million homes to be built on the green belt during her short-lived leadership bid.
“Any house, anywhere, is not the sensible policy”, Christine Whitehead told the SMF. And although councils and developers have the capacity to build homes to high standards, too frequently these standards are not being met by developers. Much of this stems from the recent cutting of red tape in areas requiring affordable housing (so-called permitted-development rules) which has led to 32,000 homes being built in two years. All three of our panelists agreed that permitted-development was drastically weakening local authority power to regulate the quality of housing and should be scrapped.
On the subject of counteracting poor-quality new build homes, Lord Bob Kerslake, a former Head of the Civil Service, said that whilst policies revolving around “fancy design” may sound impressive, what really matters is – “how good are the windows?” – or in other words, how do we ensure the highest build quality? The Prime Minister has already endorsed a plan to develop “beautiful” homes which are driven by “good design”. If this goes ahead, giving greater power to local government to force developers to meet standards could prove to be key. Lord Kerslake also pressed the important issue of addressing the quality and energy efficiency of the existing housing stock, especially if the government is to deliver on its promise of a carbon neutrality by 2050.
2. Address affordability
Jeff Matsu presented findings from the ESRC-funded CaCHE and called for the new government to not simply tinker around the edges with policies designed to address affordability, but rather commit to the link between income inequality and housing affordability. Evidence from CaCHE indicates that the poorest 60% of current renters are unable to first-time-buy in the South East of England. All the while, the private rental sector has doubled throughout the UK since 2000. Christine Whitehead indicated that successive governments have been caught napping on this; between 1997-2010 no government paper on housing made mention of changes occurring in the private rental sector. If issues around affordability for first-time-buyers are to be addressed, just building more to lower house prices may not be the answer, especially without factoring in growth in income levels.
Problems have been compounded by the freeze on Local Housing Allowance which began in 2016. This benefit is claimed by hundreds of thousands of private rental tenants and Christine Whitehead called for it to be immediately unfrozen by the new Prime Minister. The freeze on LHA is squeezing the living standards of low-income renters who are struggling to make it on to the housing ladder. So, with the Conservative Party muting politically popular changes to stamp duty and help-to-buy, our panel all agreed that addressing income inequality and income growth levels could prove to be a more important challenge for the new Prime Minister.
3. Avoid the trap of short-term policies
On the subject of short-term approaches, the panel made a number of calls for an end to quick fix, vote winning policies on housing.
Jeff Matsu argued that we need a sustained and steady increase in the housing stock, one which does not fluctuate when the market stagnates. And this stock increase must be distributed across the country, something the Johnson government may wish to consider as they mull over the idea of building a host of new towns on the edge of London. Christine Whitehead also raised the important issue of investing in communities as well as bricks and mortar, alongside diversifying development sites to contain both affordable housing and higher-priced homes. Planning for sustainable communities and energy efficient homes should not be overlooked just so a government can hit ambitious new build targets.
Finally, Lord Kerslake questioned why housing has not been invested in politically by previous governments. The revolving door at MHCLG has seen eight housing ministers come and go in eight years (make that nine in nine now, following the appointment of Esther McVey to the role). He recommended that the Housing Minister be made a Secretary of State level post and that the Minister be given the time and confidence to effect genuine change in the system.
Whilst much of Boris Johnson’s immediate time inside No.10 will be taken up with scheming his way out of the Brexit gridlock, the government requires a careful and considered appraisal of existing and future housing policy. By abandoning unrealistic build targets, focussing on quality over quantity, and committing to addressing income inequality, the new Prime Minister could spark some of his much-mentioned “optimism” into the housing market.