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.

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For a mayor who will help make Londoners healthier, vote for Tessa Jowell

The surgeon, former Labour health minister and chairman of the London Health Commission, Ara Darzi, backs Tessa Jowell to be Labour's candidate for London mayor.

London’s mayor matters. As the world’s preeminent city, London possesses an enormous wealth of assets: energetic and enterprising people, successful businesses, a strong public sector, good infrastructure and more parks and green spaces than any other capital city.

Yet these aren’t put to work to promote the health of Londoners. Indeed, quite the opposite: right now, London faces a public health emergency.

More than a million Londoners still smoke tobacco, with 67 children lighting up for the first time every day. London’s air quality is silently killing us. We have the dirtiest air in Europe, causing more than 4,000 premature deaths every year.

Nearly four million Londoners are obese or overweight – and just 13% of us walk or cycle to school or work, despite half of us living close enough to do so. All Londoners should be ashamed that we have the highest rate of childhood obesity of any major global city.

It’s often been said that we don’t value our health until we lose it. As a cancer surgeon, I am certain that is true. And I know that London can do better. 

For that reason, twice in the past decade, I’ve led movements of Londoners working together to improve health and to improve the NHS. Healthcare for London gave our prescription for a better NHS in the capital. And Better Health for London showed how Londoners could be helped to better health, as well as better healthcare.

In my time championing health in London, I’ve never met a politician more committed to doing the right thing for Londoners’ health than Tessa Jowell. That’s why I’m backing her as Labour’s choice for mayor. We need a mayor who will deliver real change, and Tessa will be that mayor.  

When she invited me to discuss Better Health for London, she had the courage to commit to doing what is right, no matter how hard the politics. Above all, she wanted to know how many lives would be saved or improved, and what she could do to help.

In Tessa, I see extraordinary passion, boundless energy and unwavering determination to help others.

For all Londoners, the healthiest choice isn’t always easy and isn’t always obvious. Every day, we make hundreds of choices that affect our health – how we get to and from school or work, what we choose to eat, how we spend our free time.

As mayor, Tessa Jowell will help Londoners by making each of those individual decisions that bit easier. And in that difference is everything: making small changes individually will make a huge difference collectively.  

Tessa is committed to helping London’s children in their early years – just as she did in government by delivering Sure Start. Tessa will tackle London’s childhood obesity epidemic by getting children moving just as she did with the Olympics. Tessa will make London a walking city – helping all of us to healthier lifestyles.

And yes, she’s got the guts to make our parks and public places smoke free, helping adults to choose to stop smoking and preventing children from starting.   

The real test of leadership is not to dream up great ideas or make grand speeches. It is to build coalitions to make change happen. It is to deliver real improvements to daily life. Only Tessa has the track record of delivery – from the Olympics to Sure Start.   

Like many in our capital, I am a Londoner by choice. I am here because I believe that London is the greatest city in the world – and is bursting with potential to be even greater.

The Labour party now has a crucial choice to make. London needs Labour to choose Tessa, to give Londoners the chance to choose better health.