When it comes to housing there is one measure of stress and strain where we’ve never had it so good, at least not for a long time. In the recessions of living memory for most readers – the 80s, 90s and noughties – a symbol of the most painful economic periods was families forced to “give back their keys”, i.e. surrender their home, repossessed by the mortgage lender. Today, most recent figures show repossessions at near decade lows and mortgage arrears at 20-year lows. You might ask: housing crisis, what housing crisis?
In fact, what this emphasises is how unique our housing policy conundrum really is. Mortgage repossessions may be at historic lows, suggesting very few existing homeowners are struggling to keep the roof over their head, but those not yet able to get a foot on the property ladder find entering the market in large swathes of our country next to impossible. Meanwhile, for those in private rented accommodation, there is growing evidence that the cost of housing is reaching breaking point.
In my view, it is the starting point of any housing policy assessment to understand where the pressure bites greatest. Yes, we have a huge challenge with first-time buyers but this is a crisis of aspiration, not usually of basic need. Morally, it is surely right to recognise that households threatened with homelessness face the greatest immediate threat to their wellbeing, and that therefore, the term ‘crisis’ most aptly refers to those at this insecure sharp end.
As my Ministerial colleagues rightly point out, overall homelessness is still 57 per cent less than its 2003/04 peak, yet it is worrying that the proportion of households made homeless due to the end of an Assured Shorthold Tenancy rose from 15 per cent in 2010/11 to 31 per cent in 2015/16. The figure for London is now over 40 per cent. This suggests that the sheer cost of housing is overwhelming many tenants, with the ‘safety net’ of housing benefit no longer catching up with rising rents (and unlikely ever to do so because of how much it costs the taxpayer).
Before I am accused of criticising my own side, the relentless rise in the cost of housing has beset Britain for decades. House prices rose 200 per cent from 1997 to the 2008 credit crunch. In those ‘living memory’ recessions I referred to we used to have a good old house price crash to restore genuine affordability for a period, albeit accompanied by broader economic pain. But the severity of the crash in 2008 forced a policy response of cheap money and monetary stimulus – ‘funding for lending’; quantitative easing; help to buy etc. – that probably avoided a Greek-style cataclysm but has perpetuated ever more elevated asset prices, including housing, in much of the UK.
What matters is the policy response and a fairly fundamental change has occurred since Theresa May became Prime Minister and Gavin Barwell took over as Housing Minister. In his first Ministerial speech last September, Gavin Barwell committed the government to supporting the rental market and saying that there should not be a focus on “one single tenure”. This was unquestionably a departure from David Cameron’s government’s headline focus on home ownership.
To be clear, I have no problem with supporting aspiration, for we are facing an inter-generational crisis and the real prospect of widespread home ownership ebbing away. And I have been a practitioner: prior to becoming an MP I ran my own business for 11 years initially as a mortgage broker and then engaged in running a shared ownership property portal and home show. Having spent over a decade helping first-time buyers on a daily basis it was not difficult for me to support the Cameron government’s home ownership thrust.
But my business also had a link up with Broadway, the homeless charity now part of St Mungos. I was part of a panel awarding grants to homeless clients who were seeking to get back on their feet and start a business, such as a market stall. For me, the housing market has always been one joined-up whole, not segregated parts. A housing policy that works for everyone must be tenure-blind and give the greatest attention to those in greatest need. Quite simply that means delivering more supply across all tenures.
To put this into practice, the next major policy step is the forthcoming (at the time of writing) Housing White Paper. The big question is to what extent the government can deliver true ‘additionality’, that is, genuinely additional supply of housing that would not have taken place without a specific intervention, and which enables delivery numbers to accelerate past year-on-year averages. We might expect further support for small builders and housing associations to take up the slack from the major developers; policies to help more councils deliver quality Local Plans with more affordable housing; and measures to tackle the skills gap that already exists before we even consider the potential impact of Brexit.
I hope that in the years ahead a significant part of genuine additionality will come from a major ‘build-to-rent’ programme consisting of institutional investment and increasingly off-site, modular construction of homes to rent at a range of price points, including sub-market. One of the biggest challenges in housing is that hundreds of thousands of planning permissions remain unbuilt. In contrast with the natural tendency of sites for sale to roll out in phases, a site for rent must be occupied – and therefore delivered – as quickly as possible. Rental development is also counter-cyclical, i.e. less susceptible to ‘boom and bust’. Whatever the detail, there is no housing magic wand. We need a broad thrust of increased supply across all tenures to deliver a truly sustainable market.