Today’s Autumn statement was an opportunity for the Chancellor to signal a real change of approach to housing supply, in particular to invest in genuinely affordable housing.
His extra £1.4 billion for affordable housing is a step in the right direction but it is not nearly enough.
To begin with, it is not clear if this is extra money on top of the £4.7 bn Shared Ownership and Affordable Housing Funding Programme announced earlier this year. And although the Chancellor has announced greater flexibility on how these funds can be spent it is not clear how much will be directed at genuinely affordable housing. Our assumption is that the bulk of it will be directed at the “affordable rent” programme, shared ownership, starter homes and other forms of intermediate tenure. Although these schemes can be viable in parts of the country the fact is that, in most of southern England where housing needs are greatest, products such as “affordable rent” with rents set at up to 80 percent of market rent, are simply unaffordable to “just managing” families and are likely to trap them within the benefit system for the long term.
SHOUT has consistently argued for investment in 100,000 social rented homes each year as a way of producing significant savings on the Housing Benefit bill (almost a trillion pounds in little more than a generation), as well as helping to bring down rents and house prices and providing a major stimulus to the economy. All of the evidence indicates that the house-building industry will never build the number of homes that are required if the focus if solely on owner occupation. Most experts believe that, without addressing structural issues such as planning, land release and the structure of the housebuilding industry itself, subsidising various forms of home ownership will merely inflate the price of houses and is therefore self-defeating. The government's current focus on starter homes is also regressive because the significant subsidies offered to first time buyers evaporate after eight years when properties can be sold at their full value. In contrast, investment in social housing can be recycled for the benefit of future generations.
Regrettably, the Government’s approach over the past few years has tended to put all its eggs in the home-ownership basket, with only £1 spent on affordable housing for every £20 spent on a raft of home ownership initiatives. In 2012 there were almost 40,000 social rent completions in England. In 2016 only 950 social rented homes went on site in England. This is not good news for those households seeking genuinely affordable homes to rent.
We are pleased that the Government has signalled a clear change of tone on housing policy in recent months. Today’s announcement is to be welcomed, but it needs to go much, much further if the country’s serious housing problems are to be addressed.