What has Cameron actually announced about housing today?
In David Cameron’s closing speech to the Conservative Party conference in Manchester today, he announced plans to change the requirements to build affordable rented homes in new developments so developers can build “starter homes” instead of homes to be leased at affordable or social rents.
The policy is geared toward ensuring that his party meets its campaign pledge of building 200,000 new homes by the close of this parliament, by taking the emphasis off renting (affordable housing requirements usually refer to rented, not owned houses) and onto owning. It should, claims Cameron, take us from “Generation Rent” to “Generation Buy”.
What sort of houses will they build instead?
“Starter homes” are homes sold at 80 per cent of market rates to those under 40. These an be sold for a maximum of £450,000 in London, and £250,000 everywhere else.
That sounds quite good!
There is a chance that Cameron is right – that removing these obstacles will make developers move through the planning process more quickly, and will help boost the number or houses built.
But (and this is a big but): most predictions so far are that this won’t happen, and if it does, it’ll only help a very specific demographic. As my colleague Stephen Bush has already pointed out, the announcement is good politics, but bad policy. It makes it look like Cameron is doing something about the housing crisis, while scoring points with big property developers along the way.
My colleague Jonn Elledge, meanwhile, notes that this system could actually slow down housebuilding, as the houses will take longer to sell than they would to let. Moreover, if housebuilding is more profitable in the long run, this will push up land – and therefore house – prices.
Tory voters and their children, in a nutshell. The starter homes will mostly be one or two bedrooms, and will be aimed at working couples.
Shelter calculated earlier this year that a couple would need a combined income of £76,957 in London and £50,266 in the rest of the UK to afford one of these homes, which makes it clear that they’re aimed at well-off professionals. If you’re in a stable relationship, earn £40,000 or £26,000 a year each and are looking to get on the housing ladder, you’re in luck.
Who won’t it help?
Everyone else. Under this policy, the Conservatives are effectively redefining “affordable”, just as they co-opted the phrase “living wage” earlier this year. By most peoples’ definitions, a housing option only available to those with access to £80,000 in earnings a year is not affordable. The situation outside London is a little better.
That’s not to say the affordable housing requirements were perfect before – these, too, were defined by some councils as 80 per cent of market rents, which in many places equates to anything but affordable. Yet removing the requirement for affordable rentals leaves nothing for those unable to afford to buy, leaving the squeezed lower-middle (and most young people) increasingly in the lurch.