Selling expensive council houses can't accommodate the future

"What might be an appropriate tactical response in some cases could not be considered to be a comprehensive strategic solution."

According to the latest government figures, the number of households in England is expected to grow by 232,000 per year over the next twenty years. Last year, we completed just 109,000 homes, with rates falling again in the first quarter of 2012. How can we bridge this gap and what combination of tenures would best meet the needs of the population? With the economy in double-dip recession and access to mortgages constrained, most of these homes need to be for rent, although an element of housing for sale, possibly using a rent now, buy later model, would help to ensure more balanced communities.

A recent Policy Exchange report proposes that the volume of affordable housing could be increased by at least 80,000 homes per year by selling off social housing properties in high-value areas and replacing them with new homes in low-value areas. This might be an appropriate tactical response in some cases but could not be considered to be a comprehensive strategic solution to providing sufficient affordable homes.

There are a few difficulties with the Policy Exchange approach.

Firstly, it is a reactive approach that can only come into play once a home becomes vacant, so it is difficult to plan a new development when the timing of the cashflow to fund it is so uncertain. Inevitably, there would be a delay with fewer affordable homes available, before the new homes could be constructed.

Secondly, over the long term, we risk denuding high-value areas of all affordable housing, pushing families on lower incomes away from their places of work, reducing their disposable income and putting additional pressure on the transport system. It would also create greater pressure on public services in low-value areas. Having said that, many social landlords are making judgements about the appropriateness of their existing stock as they become empty, so this approach is already in place in some areas. Alternatively the homes may be retained by the landlord but let at 80 per cent of the market rent, which would generate a better income stream for the landlord while retaining the housing mix in the area.

The efforts of the coalition government to encourage house building, by streamlining the planning system and giving some support to stalled schemes, have failed because they are largely relying on the private developers to deliver the increase and they will only build where they can make a profit, difficult when first-time buyers find it so difficult to access mortgage finance. There are few private companies undertaking development for rent so this is a gap in the market that social landlords could exploit, at the same time as making a significant contribution towards bridging the gap between the number of new homes and new households.

Housing associations have access to relatively cheap finance, they have established development teams who know their areas and have good relationships with local councils, and they have the scale and housing management expertise to manage a large portfolio of rented stock efficiently. Under the current Affordable Homes Programme, most new affordable housing is being let at 80 per cent of market rent, well above social housing rent levels in most areas. This model requires relatively little capital subsidy (in many cases, none) but the higher rent levels are increasing the housing benefit bill for households on low incomes. Indeed the properties in high-value areas could be relet at market or sub-market rates and the cashflows from these used to support borrowing to build more homes.

Using their scale, financial strength and community knowledge, housing associations should be able to increase the volume of new rented housing without subsidy, while still being able to let at rents a little below the market rent level. These should be secure homes in which families could remain long-term without the fear of being pushed out at the end of a fixed-term tenancy introduced under the current regime. There would also be no requirement to means test the tenant population to identify the high earners who would be paying higher rents under the proposed “pay to stay” policy.

The government has begun to recognise that increasing the rate of house-building would also have a significantly positive effect on the economy, reducing unemployment and largely sourcing materials from within the country. An announcement is expected soon that the government will guarantee housing association loans, enabling them to further reduce the cost of capital and thus their costs of development. This is an opportunity to scale up the delivery of new homes for rent well above the level envisaged in the Policy Exchange report.

A man walks in late afternoon sunshine on the Heygate housing estate near Elephant and Castle on February 11, 2010 in London, England. Photograph: Getty Images

Chris Mansfield is a managing consultant at Hargreaves Risk and Strategy, a consultancy working in the housing association sector.

Grant Shapps on the campaign trail. Photo: Getty
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Grant Shapps resigns over Tory youth wing bullying scandal

The minister, formerly party chairman, has resigned over allegations of bullying and blackmail made against a Tory activist. 

Grant Shapps, who was a key figure in the Tory general election campaign, has resigned following allegations about a bullying scandal among Conservative activists.

Shapps was formerly party chairman, but was demoted to international development minister after May. His formal statement is expected shortly.

The resignation follows lurid claims about bullying and blackmail among Tory activists. One, Mark Clarke, has been accused of putting pressure on a fellow activist who complained about his behaviour to withdraw the allegation. The complainant, Elliot Johnson, later killed himself.

The junior Treasury minister Robert Halfon also revealed that he had an affair with a young activist after being warned that Clarke planned to blackmail him over the relationship. Former Tory chair Sayeedi Warsi says that she was targeted by Clarke on Twitter, where he tried to portray her as an anti-semite. 

Shapps appointed Mark Clarke to run RoadTrip 2015, where young Tory activists toured key marginals on a bus before the general election. 

Today, the Guardian published an emotional interview with the parents of 21-year-old Elliot Johnson, the activist who killed himself, in which they called for Shapps to consider his position. Ray Johnson also spoke to BBC's Newsnight:


The Johnson family claimed that Shapps and co-chair Andrew Feldman had failed to act on complaints made against Clarke. Feldman says he did not hear of the bullying claims until August. 

Asked about the case at a conference in Malta, David Cameron pointedly refused to offer Shapps his full backing, saying a statement would be released. “I think it is important that on the tragic case that took place that the coroner’s inquiry is allowed to proceed properly," he added. “I feel deeply for his parents, It is an appalling loss to suffer and that is why it is so important there is a proper coroner’s inquiry. In terms of what the Conservative party should do, there should be and there is a proper inquiry that asks all the questions as people come forward. That will take place. It is a tragic loss of a talented young life and it is not something any parent should go through and I feel for them deeply.” 

Mark Clarke denies any wrongdoing.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.