by Joe Shalam, Head of Financial Inclusion
Housing was described this week as ‘the election issue yet to bark’ – but with several housing policy announcements starting to come out the dog is waking up.
About time too, given that housing was one of the critical factors that swung voters during the last general election. Turnout increased significantly among private renters in 2017. Ipsos data shows the Labour Party’s lead among private renters more than doubling from 11 points to 23 points from 2015 to 2017. Indeed, the concentration of private renters in an area correlated even more strongly than age to falls in the Conservative vote.
A key reason for this swing – and one particularly dispiriting for the ‘party of home-ownership’ – is that owner-occupancy rates remain at historic lows. Just 38% of 25 to 34-year-olds own their home, compared to 67% in 1991. Private renters today pay a much higher proportion of their income on housing costs, yet remain deprived of the financial, social and emotional benefits of building an asset in the process.
Any contender for government will need an effective strategy to appeal to “generation rent.”
The first part of this is helping those who could probably afford to pay a mortgage but, as Mr Johnson described this week, do not have the ‘wherewithal for a really big deposit.’ Demand-side policies, such as the new market for fixed rate, 95% mortgages, will certainly help those who are already at the cusp of home-ownership.
But the private renters most in need of support are those at the very lowest rungs of the housing ladder: low-earning tenants seeing ever more vast proportions of their income swallowed up by rent, families living in cramped “temporary” accommodation, and those sleeping rough.
Official figures show that there are currently 84,000 families living in temporary accommodation, including some 125,000 children. This is a 76 per cent increase since 2011. On any given night, the Ministry of Housing estimates that 4,700 people can be expected to be sleeping on the street, up 165 per cent in the same period.
One driver of this has been growth of the private rented sector and its relative insecurity compared to other tenures. The termination of private rental contracts is now the number one trigger for homelessness in England. Measures planned to improve security in the sector are therefore extremely welcome, and have been key recommendations of the CSJ’s Housing Commission, chaired by Lord Best.
But little will be done to ameliorate the situation of low-income renters and the homeless population without radically increasing the supply of new truly affordable housing – that is, homes set at ‘social rents’ which are tied to local incomes. Figures released this week showed that we built under 6,500 last year, compared to 40,000 a decade ago.
As we know from our work with 400 grassroots charities, a secure social home provides a critical part of the safety net for someone facing homelessness because of a relationship breakdown, for example, or an unexpected job loss. But at its best it should also be a spring board that helps people bounce back.
It makes fiscal sense to invest in low-cost rented housing over the long-term. As the number of people relying on support in the expensive PRS has grown, the housing benefit bill has ballooned to an eyewatering £22 billion, more than the entire police budget. Where local authorities lack social housing, they end up relying on costly emergency accommodation to the tune of £1 billion per year.
A generational programme of new truly affordable housing will bring down these costs over the longer term, while helping to transform the lives of people living in poverty. This could be paid for, at least in part, by capturing more of the astronomic rises in land value which occur when planning permissions are granted (as has been suggested by both Tony Pidgley, Chairman of Berkeley Homes, and Chancellor Sajid Javid this week).
Moreover, as the Letwin review suggested last year, more social housing would also increase the ‘buildout’ rate of homes in the private market, benefitting prospective homeowners too.
The presence of new social homes will also allow the Government to roll out a National Housing First Programme, a homelessness reduction scheme put to great success in Finland and elsewhere internationally. This would bring us much closer to ending the plight of rough sleeping once and for all, providing the stable homes people need to address the wider issues holding them back.
But we also need a vision for social housing. One that uses the ingenuity behind other reforms to spur innovation and good practice.
Why can’t a New Schools Network style body, for example, champion the greenest, most beautiful, and best social housing developments across the country, as it has done Free Schools? Local authorities should be allowed to keep more of their Right to Buy receipts to build if they sign up. Call the very best affordable homes ‘Boris Builds’ and you’re surely onto a winner.
And why shouldn’t we learn from the reforms to welfare to see social housing that is more dynamic, and empowering, offering support for skills, adult learning, job progression, saving and investment.
If all parties don’t start talking more about those at the sharpest edge of the housing crisis, like 2017 this could be one area that comes back to bite them.