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Germany’s housing struggles – familiar challenges, interesting solutions

By Ed Turner
Last week Red Brick reported on the housing elements of the grand coalition deal in Germany and in particular the agreement to make further efforts to bring rent increases under control.
In this post, Ed Turner reports from Munich. Many of the issues being discussed are familiar to the UK; the issues of supply and affordability seem to be increasingly common across much of the EU.
Ed is Deputy Leader of Oxford City Council and leads on Planning for the LGA Labour Group.  He is also a Lecturer in Politics at Aston University (specialising in German politics). The views expressed are his own.
Earlier this week there was a round-table discussion hosted by the Friedrich Ebert Foundation’s “Bavaria Forum” on housing challenges in Munich.  Speakers were Dieter Reiter, the SPD’s candidate for mayor next year, Jutta Blankau, Hamburg’s minister for city development, and Maximilian Heisler, who founded an initiative against tenants being priced out of their areas of the city.  These thoughts are based on my scrawled notes – so should not be taken as an accurate minute.  But there were some rather interesting points which threw up interesting parallels with the UK in the challenges faced, but also contrasts in solutions being sought.

  1. Major urban areas face a huge housing need – but probably have more fiscal tools to respond themselves.  In Munich, for example, where the city is growing by some 15,000 people a year, Reiter set a target of 7,000 new flats a year to be built, including a decent proportion with public support.  The city also has first refusal on some social flats sold off by the Bavarian state government (due to concerns about European law which in the end proved unfounded), and is seriously considering buying some of these.  In Hamburg, meanwhile, the city owns 130,000 flats, and hopes to build 6,000 a year more, of which 2,000 would be publicly-supported in one way or another.

  2. Rent restrictions are to be slightly tightened by the grand coalition government, but this is not going to solve the problem of high rents.  Currently, in areas declared by the relevant state (Land) government to have a problem with spiralling rents, increases for sitting tenants can be restricted to 20% over three years.  This is to be amended to 15% over three years.  Moreover, rents for sitting tenants cannot exceed those of average new lettings for similar properties.  However, as Jutta Blankau pointed out, these measures still see rents spiralling – as they have done in Munich, in particular, with the “pricing out” of long-standing residents likely to be a top local election issue.  This won’t be solved until supply matches demand. There is a particular issue with modernisation of flats, which allows rises to proceed more quickly.  Here, there is also to be a new restriction – only 10% of the modernisation costs can be passed on per year (currently 11%), with a new restriction that only the total cost of modernisation can be charged this way.  Still, forced “luxury modernisation” of flats remains an important method of “gentrification”.  So too does the forced conversion of rented flats to owner occupation (which is banned by Hamburg’s state government but not by the state of Bavaria, where Munich is located).  An interesting idea is that, where finance for energy efficiency improvements comes from the state investment bank KfW, there could be further restrictions on the impact on rents.

  3. Disposals of public land pose a dilemma for policy-makers in Germany.  In Hamburg, the Social Democratic state government has introduced new criteria to judge bids for public land, whereby the price offered comprises only one third of the evaluation.  There is an obvious tension between state governments needing to raise capital receipts, and seeing social housing maximised.

  4. Lettings agents’ fees pose a problem – and a familiar solution is being offered.  The coalition agreement states that in future fees will have to be paid by the person who engages the agent (normally – but not necessarily – the landlord).  This is similar to the Scottish model of letting agent fees.

  5. Intensification of existing residential areas is hugely contentious.  Here, the discussion took a turn which will be entirely familiar to anyone involved in local politics (probably the world over).  At a general level, there was a desire to see far more flats built.  But when it came to intensified use of land in existing urban areas, all of a sudden the mood changed.  Dieter Reiter expressed some frustration that, in all of his campaign trips around the city with local SPD candidates, not one had identified an area ripe for intensification.  Such schemes were usually highly contentious and resisted by existing locals.

  6. Cross-boundary issues pose a real problem.  Reiter sees the expansion of Munich (which has a tightly drawn urban boundary – a familiar situation to those who know about Oxford, Stevenage, or York!) as an alternative to intensification, and rightly points out that, given spiralling land values for residential use in Munich, there is a real risk that new housing within the urban boundary will take away much of what is really valued by local people.   But some neighbouring local authorities are resistant to development, there appear to be few legal tools to force them to co-operate, and where they do agree development it is sometimes at an inappropriately low density.  Hamburg is in a different position as it offers much more in the way of brownfield land for development.

  7. Existing, well-housed communities sometimes avail themselves of legal and involvement processes to oppose more housing.  In Hamburg, citizens have the ability to promote local referendums on issues of concern, these are used to block developments, and the housing minister has had quite some flak for using her powers to over-rule these decisions.  She’s also set up fiscal incentives for the city’s districts to agree to development.  Citizens additionally deploy legal processes to prevent new housing development.  Dieter Reiter pointed to the need for politicians to “lead from the front” on these issues, and take into account all possible interests in the community, not just the loudest voices.

So all in all, these challenges are familiar (and perhaps a riposte to those who suggest that the German model of housing provision would offer a panacea to problems in Britain – at least in high-demand areas).  At the same time, the position of housing on the political agenda, the appetite for state action, and the willingness of some politicians to stand up and suffer some short-term political pain for long-term gain was encouraging, and well worth replicating.

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Homeless International responds to the Philippines Disasters

Donations to the Disasters Emergency Committee Philippines Emergency Appeal can be made here: http://www.dec.org.uk/

In the aftermath of two major disasters in the Philippines, Homeless International’s local partner organisation in the country is supporting relief efforts and working on longer-term recovery for those affected.

In early November, Typhoon Haiyan – known as Yolanda in the Philippines – killed thousands of people and caused widespread devastation across the country. Only a few weeks earlier, a 7.2 magnitude earthquake hit Bohol and Cebu islands in the Central Visayas region. People living on these islands had hardly recovered from the destruction, displacement and loss of lives caused by the earthquake when Haiyan hit, affecting the same Central Visayas provinces as well as the Eastern and Western Visayas.

Following the two disasters, HI are working closely with the Philippine Alliance to connect them with the appropriate resources and support networks to help their relief efforts and longer-term work.

The Homeless People’s Federation Philippines, Inc. (HPFPI) – part of the Philippine Alliance – has direct experience of helping to organise post-disaster relief and long-term recovery work and will be helping to bring affected communities together after Typhoon Haiyan and the Bohol earthquake, and supporting them to rebuild their lives, homes and communities.

HPFPI teams will initially begin work on the islands of Bohol, Cebu and Panay where HPFPI has regional bases and where earthquake-affected areas are still vulnerable and in need of urgent rehabilitation and recovery work. Teams will begin by assessing the situation in these regions and establishing contact with local communities, before providing relief support where it is needed and helping communities to mobilise and build their capacities for long-term recovery work. Through their assessment they will be able to devise with the communities a mid-long term rehabilitation and development strategy that will ensure that the devastated communities are able to come back stronger and more disaster-resilient than before. Some teams will be joined by technical professionals, including on Bohol Island where communities affected by the earthquake need immediate support as they return to their structurally damaged and unsafe homes.

Homeless International is in regular communication with staff at the Philippine Alliance and will be providing support where required. At this time they are not soliciting public donations to support this work; instead donations to wider relief efforts in the Philippines can be made through the Disasters Emergency Committee.  Donations to the DEC Philippines Emergency Appeal can be made here: http://www.dec.org.uk/

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Lessons from the German Coalition

Recently, Red Brick has reported on New York, London and Scotland. Now it’s time to look at what has been happening in Germany.
After the Federal Elections two months ago, no one Party commanded a majority in the Bundestag. Angela Merkel’s Conservative Party, the Christian Democrats (CDU/CSU), took 41% of the vote, the centre left SPD took 26%, the Greens 8% and the Left Party 9%. Merkel’s former Coalition partners, the FDP, failed to achieve the 5% necessary to take Parliamentary seats – making a new Coalition necessary. Following long negotiations, the CDU and the SDP have agreed a ‘grand coalition’ of the two biggest parties, which will have a huge majority.  The future policy of the country has therefore been decided in the agreement between the two.
The agreement is built around the main priorities of the two parties. The CDU won a commitment to no tax increases and no increase in national (Federal) debt. The SDP won key demands for a national minimum wage, Germany’s first, set 8.50 Euros, and a reduction in the retirement age to 63 years for those who have contributed to pensions for 45 years.

Housing doesn’t appear in the media headlines about the deal but there has been a significant agreement on controlling rents. Germany has the highest proportion of renters in the EU, and there is a tradition of long-term investment in property ownership for renting as well as a history of controls over the rate of rent increases (including strong laws against ‘usury’). Major strains have appeared in the housing market in recent years, with growing shortages especially in the main cities leading to strong pressure on rents. In Berlin, where there have been rapid rent increases, the Senate has recently agreed a law – The Law on the Prohibition of Misuse of Housing (now there’s an idea!) – banning the renting out of apartments to short-term visitors to protect local people from growing tourist demand.
The new Coalition’s package for affordable housing includes tax incentives for residential development and new legislation to allow local senates to cap rents in areas facing large increases. Rents on new homes will not be allowed to be more than 10% higher than the local average and local government will be able to cap increases on existing homes to 15% over 4 years. Designed to protect low and middle income tenants from exploitation, critics have argued that it will do little to stop the escalating gentrification of more desirable neighbourhoods – which is now similar to that which we have experienced in London and some other UK cities.
It is intriguing to think how the CDU/SPD policy could be applied in the UK, where there is a presumption that rent control of any kind will choke off investment. There is a strong collective memory that rent control led to the withering away of the private rented sector. Of course it was more complex than that, and high levels of subsidy to the other main tenures – home ownership and social renting – also had a lot to do with it. But the truth is that no-one really knows what would happen in the current UK housing market if rents were controlled. There is certainly some usury involved at present, but most landlords with heavy mortgages are not making an excessive rate of return on their investment even though rents are incredibly high – because the high value of property is the underpinning problem. Arguing for an entirely new system of rent setting across the whole sector could well scare the horses, so new policies to restrict the rate of rent increases seems to have more potential.
The debate has therefore settled on different forms of ‘rent stabilisation’, as in the recent reports from the London Assembly and Shelter, and as advocated by Jack Dromey when he was Housing shadow minister. Allied to longer tenancies plus licensing and greater enforcement, plus tough regulation of agents, it means there is a workable package.
Any form of rent regulation is likely to be opposed by the Tories, as happened on the London Assembly, unless David Cameron makes another major U turn. If Labour goes into the Election with rent regulation as a central feature of a comprehensive package to control the cost of living it would help to put the Tories on the back foot.
And Labour could claim it is just following the policy of Europe’s most successful Conservative, Mrs Angela Merkel.

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No direction home*

Boris Johnson today published his second ‘Draft London Housing Strategy’, almost exactly two years after he published his first Draft London Housing Strategy. After five and a half years in power, you would think that he might have got a bit further with it by now.
To be frank, it wasn’t worth the wait. This document tells us about a long list of things that will be published in the new year – the evidence base, the prospectus for the next round of ‘affordable housing’ grants, further revisions to the London Plan. It wastes space justifying various Government policies like changes to housing allocations and the use of flexible tenancies, and the supposed value of ‘Help to Buy’. It is unconvincing in its analysis of the huge changes going on in the London housing market and fails utterly to address the challenges that have to be faced (for example the effect on the city of the projected growth in the number of households or the implications of the prediction that private renting will overtake home ownership as the biggest tenure by the mid-2020s). It also adheres to the Boris tradition for obfuscation, right down to lumping together affordable and social rented homes in the table at the end – to hide the fact that there will be none of the latter – and glossing over the further decline in funding that is available for new homes.
‘The Strategy’ is bewilderingly short of strategic assessments and nowhere does it address the key risk – what will happen to London if the population grows as predicted but insufficient homes continue to be built? 3.3m households now will become 4.4m within 25 years. There is a long term requirement for up to 60,000 extra homes a year but even the strategy’s highly optimistic assumptions only lead to 45,000 – against a historic average achievement of 20,000 a year in the last 20 years. Nothing is proposed to deal with big current issues like new housing developments being advertised abroad and sold off plan before any Londoner has even considered whether they can buy one. Despite becoming the dominant tenure, the strategy makes it clear that the private rented sector is to be regulated by platitudes.
Looking for the beef amongst the waffle, there are some suggestion as to how the ever diminishing pot of money available to London will be spent. The strategy sets an ‘interim’ target (interim, after 5 years consideration?), to guide funding for the period 2015-2018, that there should be at least 15,000 ‘affordable homes’ each year. Of these, Johnson says 40% will be flexible low cost home ownership and 60% will be ‘affordable rent’.
Of the affordable rent, half (4,500) will be capped at ‘low affordable rents’, prioritised to those in greatest need and in low income employment, and let without security of tenure (ie on fixed term tenancies). Many of these will be smaller homes targeted at under-occupying households. ‘Low affordable rents’ is simply not defined but is very unlikely to be as low as social or target rents. The other half will be at ‘discounted’ rents set at either 80% of market rates or at the local housing allowance level. These will be targeted at people in work, but it is unclear as to whether these will be people who qualify for in-work housing benefit or people on much higher incomes. If it is the latter, then the money is being misapplied; if it is the former, it will add pointlessly to the housing benefit bill – it would have been better to spend the money on subsidy to keep the rents down in the first place.
So, there will be no new homes set at existing social rents. And worse, housing associations will be encouraged (on pain of not getting a contract for 2015-18) to ‘dispose’ of existing stock to generate funds for the new programme, and to ‘convert’ existing social rented homes into ‘affordable rent’ at up to 80% of market levels when they become available to let. No assessment is made of balance between the number of new homes gained and the number of existing homes lost as a result of this policy.
The strategy adopts the usual Tory stance of suggesting new priorities for social housing allocations, in this case people in work, without ever addressing the issue of who will be less of a priority as a result. It is a fiction that the strategy is ‘balanced with the need to ensure the most vulnerable are looked after.’ As is evidenced by the almost dismissive discussion of homelessness, the most vulnerable are being abandoned.
I doubt if it will make him feel better, but there are a small number of proposals with which I agree, largely to do with funding. A London housing bank would probably be a good thing. I welcome the mayor’s support for lifting the cap on council borrowing for new homes using HRA resources. Major reform of property and land taxation is worth pursuing, although I note this document admits that the reform would have to be fiscally neutral. His general support for shifting funding from ‘benefits to bricks’ is also welcome although the policies in this strategy will push rents up and make the problem worse. I would also have my eye on housing association surpluses but I think Johnson misjudges the state of their finances and how they have been impacted by the first round of ‘affordable rent’. It is also good to see that there is a further move towards pan-London lettings, a process started by Ken Livingstone when he was Mayor which seemed to have stalled.
In amongst the pretty pictures of nice new houses, this strategy is largely about ending social rented housing in London, abandoning the poorest Londoners to the private rented sector – potentially at great cost in housing benefit, and deluding a generation of Londoners that there will be a home ownership option for them when the tenure is in  steep decline. There is no vision, there is no appreciation of the scale of what is needed, and there is no honesty about the constraints imposed by austerity. Can we have another draft draft draft please?
About my last blog, which had a blank page under the heading ‘What the London mayor knows about housing’, I have to own up to the idea not being entirely original. Decades ago, a wonderful footballer called Len Shackleton, who scored 6 goals on his debut for Newcastle United but then disgraced himself by also playing for Sunderland, wrote an autobiography. Known as the Clown Prince of Soccer, Shackleton had a chapter called ‘What the average football director knows about football’ above a blank page.
*No Direction Home was the name of the Martin Scorsese film of the life of Bob Dylan.
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What the London Mayor knows about housing

(page left blank deliberately )

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Half a policy is better than the Coalition’s none

Ed Balls’ speech to the House Building Council yesterday was pushed down the news agenda by his own robust rebuttal of Cameron’s slurs on him and Ed Miliband over the Co-op Paul Flowers affair. But that shouldn’t detract from the importance of the speech.
First, let us look at what he said. He reminded us of Labour’s commitment to build up to 200,000 homes a year by 2020 and the various previous promises about the funding of affordable homes. As everyone acknowledges, this is not enough but it would be a significant step forward from where we are now – getting on for a doubling of performance so far under the Tories. He noted that successful previous recoveries from recession have involved substantial investment in new homes, and that housing would be central to his economic policy. He put the case for a higher share of affordable homes.  He set out a pathway to a new generation of New Towns, using the post-War Development Corporation model, backed by Government guarantees and forward funding of infrastructure.
Balls was nuanced in two important areas. First he defended the ‘brownfield first’ policy, arguing that weakening it would run the risk of undermining sustainable development in areas ‘where viable brownfield sites are widely available’. Many commentators take the view that greater use of greenfield land, and indeed green belt land, is essential. In my view, this is all about the terms on which greenfield land is released – and in particular avoiding endless new estates of executive houses like we have had in the past. One way forward would be look at how the rural exemptions policy has worked in the past and seek to apply it to new circumstances.
Second, despite the lazy reporting that Labour now supports ‘Help to Buy’, Balls distinguished heavily between the scheme’s first phase which supported first time buyers and the second phase which gives Government-backed loans to any buyer of property up to £600,000, including those re-mortgaging, which could have a serious impact on prices whilst supply is so heavily constrained.
Balls made much of the two independent reviews Labour has launched: Sir Michael Lyons looking at land supply and land banking, the planning system and the local authority role; and Sir John Armitt looking at infrastructure including drafting new legislation. We need these studies to proceed rapidly.
Overall, the speech represented further steady progress from the position staked out by Jack Dromey during his excellent stint as shadow housing minister. But more needs to be added if the policy is to be sufficiently comprehensive to be capable of meeting the challenge. To get housebuilding moving all the levers have to be pulled not just some of them. That’s why I call it half a policy.
Balls may return to other issues in future, but some of the questions still to be addressed include the following:

  • What should be done about property and land taxation?
  • How will greater affordability be achieved other than waiting hopefully for extra supply to temper prices?
  • Is shared ownership an answer lower down the income scale?
  • How can we ensure all sites, or perhaps virtually all sites, have a genuine mix of market and affordable homes to own and rent?
  • What should we do with the disastrous ‘affordable rent’ programme which is stretching housing association finances while delivering hopelessly unaffordable homes in many cases?
  • How can a genuine ‘benefits to bricks’ policy be developed to prioritise investment and reduce reliance on housing benefit?
  • How can we develop policies that fit all of the different regions with their hugely different circumstances?
  • The promise of Government guarantees indicates some willingness to lift ‘the dead hand’ of the Treasury, but will Labour commit to ending the cap on councils borrowing for new homes? And will the Party finally grasp the nettle of changing public borrowing definitions so councils can operate more like housing associations – to everyone’s benefit?
  • And finally on my little list, how much grant will be available to support new social housing, and at what levels? – without grant to oil the wheels, none of the other policies will deliver fast enough.
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People respond to opportunity not coercion

Here we go again. This time it’s someone called Mick Kent, £187,000 a year Chief Executive of the Bromford Group (a housing association, built on public funds, who proclaim ‘Our culture: Proud to be different’), getting publicity after writing a letter to Iain Duncan Smith supporting the principles of welfare reform and condemning the social security system as unsustainable and socially and economically damaging.
I mention the salary only because it is amazing how many people earning huge sums feel able to lecture those earning 5% of that about how they should live. His mini biography on their website says ‘he regularly takes the red pill’ with an actual link to the Matrix. Pretentious, that.
Mr Kent’s main point seems to be that he supports the ‘dependency culture’ theories proffered by the now demonstrably incompetent Duncan Smith. Mr Kent takes the view that the allocation of social housing ‘according to greatest need and vulnerability has led to a race to the bottom and a focus on what customers can‘t do rather than what they can do. This in turn has led to the dependency culture and caused deep and untold damage to society’. This piffle could have been copied out of the Daily Mail, circa 2010.
The constant demonization of social tenants as workshy layabouts who should to be forced to work or train as a condition of their tenancy is so far from the truth that it is laughable. It certainly should not be reinforced by those who make a very good living out of their rents. I hate to say it, but the higher up the ladder you go in housing the more often you hear these things said. Perhaps Mr Kent would care to take a sample of his tenants who are economically inactive: take out those who are retired, take out those who are disabled or have a long term limiting illness, take out those with mental ill-health or learning disability, take out those already in training or actively seeking work, take out those looking after young children, take out those who are carers for others, take out those who can only get casual or zero hours contract work, and so on. See what you’re left with and then pass judgement on the tiny remaining number. But never pretend that this tiny group is somehow representative of the whole class of social tenants.
I am not arguing that landlords should stop offering people employment and training opportunities – as Mr Kent has said himself, ‘they have jumped at the opportunities we have offered them’. Quite, that’s my point. People respond to opportunity: otherwise there would be no explanation why there are always so many more ‘workshy’ people in a recession than in a boom.
Some of Bromford’s employment training and volunteering schemes look very good, and I welcome them. It is the conditionality they insist on that is offensive. In my view, there is no justification for general coercion (and no excuse for insulting and superior attitudes).  Like some other housing associations, Bromford make heavy use of short and ‘flexible’ (ie time limited) tenancies, which means the landlord always holds a sword to the throat of the tenant. If the tenant does not comply with the Bromford ‘deal’, it may lead to them ending the tenancy or not offering a new one.
All of this is justified by the ‘dependency culture’ thesis. This is a meaningless phrase that caught on because it was repeated so often in the media, and by people like Duncan Smith and Mr Kent. It is carefully designed to make us think that ‘welfare’ is somehow like dependence on drugs or alcohol, people are hooked and need to be encouraged or bullied out of it. Of course people who live on very low incomes are dependent on the normally meagre benefits they receive. Of course they worry that going into insecure work might make them even worse off. Living on benefits as a ‘lifestyle’ is already extremely hard and the existing regime has any number of punishments like benefit withdrawal. Why on earth should loss of tenancy be added to the list, and why should this only apply to social tenants?
Mr Kent is critical of the implementation of the bedroom tax, but not its principles. He fails to mention the punitive retrospective aspect of the policy. And to show how out of touch he is, he comments: ‘Most of the people who need a spare room due to disability will probably eventually be covered by the extra discretionary money made available to local councils’. This is inexcusably ill-informed and I wonder if he would care to meet the people who are in the first wave of bedroom tax evictions to tell them that.
Rather than commenting on the perceived failings of poor people, perhaps Mr Kent should take a look at the vast fortunes being piled up in this country, people who make even housing association chief executives look as if they are on their uppers. My favourite magazine (not), ‘Absolutely Notting Hill’, this month contains an article by Rachel Johnson, sister of the London Mayor. She talks about the decline of the NH neighbourhood. ‘More often than not’, she says, families that move in come ‘complete with a fleet of cars, trained nannies, housekeepers, nutritionists, private tutors and personal trainers (and that’s just for the dog)’. Life is so hard: she says ‘According to one friend, who has grimly ‘done the math’ … annual household expenditure, just on food, restaurants, education, services, holidays and staff, approaches £300,000 round here’. There are, she laments, now 2 socio-economic groups: the haves and the have-yachts. The article is based on her new book, ‘Notting Hill, Actually’ about the lives of such people. Don’t rush to buy.
The point about people like Mr Kent is that they see the poor as ‘the problem’ that good-meaning people like him have to solve. They seem incapable of seeing the structure of our society, growing inequality, the extraordinary enrichment of the people at the top while the poor are told ‘we are all in this together’, decried as scroungers and punished for being ‘welfare dependent’.
Mr Kent could stand up for his tenants. He could do something useful like condemning the damage being done by massive rent increases and the additional requirement for benefits this brings. Then he really would be different. Keep taking the pills.
 

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The Long and Winding Road

As the debate over how to build more new homes intensifies, a new report on the politics of housing commissioned by the National Housing Federation takes a long look back over nearly 100 years of housing policy. It seeks to answer the questions: which governments successfully addressed housing supply issues and what factors explain their relative success/lack of success in doing so?
Starting from the premise that recent governments, over the last 35 years, have been remarkable less successful at building new homes than previous ones, the analysis offers a variety of possible explanations.
The authors argue that political debate is driven by voter concerns, and the typical voter is now more likely to be well-housed and to own their own home, to have less interest in the supply of housing for others, and to be more interested in house price growth. They fear that new housing will reduce the value and amenity of existing houses: home owners are more likely to be hostile to new development than existing renters.
In consequence, they argue, the debate has shifted away from housing supply as such to focus more narrowly on the level of home ownership and the concerns of existing and aspirant home owners. As the public has become more apathetic about housing, seen increasingly as a minority or individual problem, so the political parties have reduced their emphasis on anything other than promoting home ownership.
Over the same period the hardening of attitudes towards ‘welfare’ has impacted on social housing, so that ‘housing need’ as a concept has also come to be viewed more negatively. The trend away from subsidising bricks and mortar to subsidising housing costs through benefits has reinforced this change in attitudes, making the income stream on which investment depends vulnerable to general ‘welfare’ policy as well as housing policy.
The housing shortage is less visible than it was in some past times, for example after WW1, with the ‘Homes Fit for Heroes’, and after WW2 when there was an urgent need to respond to the destruction of nearly half  a million homes – and the people had very high expectations of what the state should deliver for them. The post-WW2 ‘numbers game’, during which the parties competed vigorously over housebuilding promises during elections, was ended partly by a feeling that housing quantity issues were being resolved but mainly, in my view, by the financial pressures after 1976 followed by the ideological policies of the Thatcher government.
Non housing factors have had a major influence, especially as the expansion of housebuilding has normally been used as an effective way to help the economy out of recession – until 2010 that is.
There has also been a general ideological shift, affecting all parties, towards market solutions and away from state solutions. Compare, for example, current attitudes to private landlordism following deregulation with those of the 1960s and 1970s, when, following the Rachman and other scandals, the predominant view was that the sector should wither away.
Inevitably the report looks at planning regulation, which it argues has become more complex with a wider range of objectives competing with the housing supply objective and the growing influence of objectors. The authors see the planning system as including perverse incentives to hoard land and discuss the role that land taxation might play.
The authors make the point that uneven regional growth has become more pronounced, making it harder to introduce effective national housing policies that are appropriate everywhere. Although it is covered, I think they underplay the importance of the removal of local authorities as housing developers in the Thatcher era and the failure of the policy that housing associations should fill the gap. There has never been a period of strong housebuilding provision without councils taking a leading role.
Any report with such an ambitious aim is likely to have holes and gaps and to come to conclusions about events that could be interpreted very differently. That is the case here. I think they underestimate the importance of the ideological battles that take place within and around the parties, seeking to lead rather than respond to public opinion. In progressive times, I would point to the influence of John Wheatley after WW1 and Aneurin Bevan after WW2 who not only helpe create the public mood of the times but also showed great personal leadership in driving policies through. They also have little to say about the influence of the media, which I think has been very strong – for example in promoting the ‘ideal’ of home ownership and diminishing social housing. But it is a fascinating and provoking read and an interesting piece of work for the NHF to have commissioned.
I found the section on the implications for current policy a little weak, although I accept that this was not the report’s primary purpose. I would have liked to see more analysis of the era we have entered – are we on the cusp of another major change in public attitudes towards housebuilding as home ownership declines and a tenure that has much less public approval becomes the dominant force in the housing market? They do make an interesting point that, in previous times, shortage was highly visible whereas much of the current debate is about shortages that might arise in the future if we fail to build now – a more nebulous concept.
The report is written by the Social Market Foundation and can also be found on their website, where they also have an interesting animation of housing policy from 1918-2012.

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One New York, Rising Together

Bill de Blasio, who scored a spectacular landslide victory this week to become the next Mayor of New York, could be an inspiration for Labour, for Ed Miliband and for whoever becomes the London mayoral candidate for 2016. His campaign slogan was “One New York, Rising Together” and he focused on tackling the cost of living crisis, tackling inequality, and increasing taxes on the very wealthy to fund new programmes.

Bill de Blasio

“Make no mistake: The people of this city have chosen a progressive path, and tonight we set forth on it, together.” Bill de Blasio
Standing on a radical affordable housing platform, de Blasio emphasised the dangers of growing inequality and the stark contrast between the wealthy and ordinary New Yorkers who can barely pay the rent. He also focused on homelessness and the growing numbers living in shelters. He tapped effectively into the growing frustration of the city’s residents that NY was becoming a rich person’s city.

  • One-third of New Yorkers spend at least half of their income on housing.
  • 50,000 New Yorkers, including 21,000 children, live in homeless shelters and many more are turned away.

De Blasio has a track record on housing. He was a regional director of the Department of Housing and Urban Development during the Clinton administration. In various elected and administrative roles, he has taken on negligent landlords (including through the ‘Worst Landlords Watch List’) and campaigned on housing standards, including the right to energy supplies.
De Blasio’s policy commitments centre on providing or preserving affordable housing, arguing that the process of development is reinforcing class segregation rather than weakening it. He argues that the process of ‘rezoning’ should require homes to be built for middle and low income families and not just the wealthy. He plans to direct $1 billion of city pension funds to affordable housing construction. He will raise taxes on developers who keep land vacant waiting for prices to rise, set up a non-profit land bank, and conduct an annual census of vacant buildings. He will campaign to restore rent stabilization and rent increase exemptions and set up new services to help tenants fight evictions. He has promised to tackle the backlog of health and safety repairs to New York’s public housing. He will help small landlords repair their properties and strengthen the homeless safety net with stronger guarantees of access to shelters.
De Blasio intends to lead the US cities in a campaign for a new national urban agenda, including more public housing, low income tax credits and other affordability policies.
The parallels with Ed Miliband’s ‘One Nation’ policies is striking. Like New Yorkers, people in Britain are beginning to realise that letting rich people do what they like and make as much money as they like will never lead to prosperity trickling down to middle and low income people.
The Bill de Blasio campaign website housing section is here.
And his Mayoral transition website is here.
And the New York Times report of his election can be found here.

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The sharp end of a very thick wedge

There has been quite a furore about two council houses that have been sold by the London borough of Southwark. They were, according to Amelia Gentleman in the Guardian, ‘an attractive pair of Grade II listed semi-detached buildings’ near London Bridge and the Shard. Despite Savills claiming that they are the most expensive council houses ever sold, they are in in serious disrepair, nearly uninhabitable. They raised £3 million for the council at auction and are now occupied as a protest.
You can take your pick on the rights and wrongs of this one: the council are either denuding the borough of social housing, according to the campaigners, or wisely cashing in by selling properties they can’t afford to do up to enable them to build 20 more social homes, according to the council.
The fuss draws attention to the madness of the London property market but it is also the extreme end of a growing threat to social housing. While the new development programme is mainly producing unaffordable homes at ‘affordable rent’, the stock of social rented housing being let at target rents is being reduced rapidly without being replenished. Social rented housing is under threat from many directions:

  • the Government’s ‘reinvigorated’ (ie give away) right to buy council houses which has increased sales markedly.
  • the Government’s ‘conversion’ policy, whereby social rented (mainly housing association) homes becoming available for letting are, in growing numbers, switched to so-called ‘affordable rents’ at up to 80% of market rents.
  • many ‘regeneration’ schemes, mainly flatted council estates, where the price of regeneration is the loss of a very large proportion of the social rented homes – because the works are paid for by building for private sale.
  • almost all social landlords now have an ‘asset management strategy’ which sounds like a good idea until it becomes a pretext for selling properties, normally the most valuable or the ones needing most repair, in order to fund new development.

Some councils and housing associations use the ‘Made in Chelsea’ argument to justify reductions in social housing – that is, poor people shouldn’t be allowed to live in expensive places. The problem with this rationalisation is that ‘expensive’ now includes much of London and many other parts of the country as well.
Labour is grappling with a ‘benefits to bricks’ policy which will tackle the ludicrous position where 95% of the money spent on housing is in the form of housing benefit and only 5% is in the form of investment subsidies. This is the end result of 30+ years of policy designed to raise rents and to let housing benefit take the strain.
The first clause in such a policy will need to be to stop things getting worse. The only way to make a ‘benefits to bricks’ policy effective will be to bear down on rents in the long term. The prime determinant of rents in social housing should be to cover costs net of subsidy not to bring social homes into line with market rents, which are determined by shortage. A new Labour Government will need to end the ‘affordable rent’ policy because it is making the problem worse.  Homes converted from social rent to ‘affordable rent’ should be de-converted as they become available for letting again. Beefed up regulation should put asset management under the microscope to make sure it is a useful tool designed to grow the stock of social housing not diminish it. Councils and housing associations should be under stronger duties to report on and justify sales. And there should be much stronger scrutiny of regeneration proposals if the outcome is the loss of social housing.
Most people will think the Southwark decision is entirely defensible and a good deal – as long as the 20 new homes actually get built and are let to people in housing need – but it is the sharp end of a very thick wedge. Social rented homes are the biggest asset we have in the fight to meet housing need and it is vital that the stock is protected.