In the week that the Labour Party issued its call for evidence for the Housing Policy Review, guest blogger Paul Lusk works through some practical issues that policy-makers need to address.
Housing is at a crossroads. There is an opportunity such has not existed for many years to put housing policy in the UK onto a practical footing – one where choices can be made based on value for money, not returns on financial manipulation.
First, take owner occupation. Tax privileges have fuelled a fifty-year bubble in prices whereby owners have bought homes for personal use and then stumbled on a gold plated pension plan which successive generations have bought into. Society will be wary of ever again repeating the conditions that led to the 2007 crash. Owner occupation remains a preferred form of tenure with the benefits of control and security. Its origins lie in Chartism and the co-operative building societies that were early fruit of British socialism. We on the left can be proud of this legacy, and cherish its continuation. But no longer can home-buying be a one-way street to apparently assured riches. An over-sudden readjustment of house values to their real worth would be catastrophic. The only realistic option is a standstill in housing values for a generation. It may be two decades before the adjustment is complete, but it’s the only way forward. The owner occupation boom is over, and a soft landing is now underway.
Now on social housing: by completing finance reforms that the Brown government started (but failed to complete), the coalition is stabilising the council housing sector at a shade under ten percent of the national stock. There will no longer be artificial incentives to shift council stock to housing associations, so any transfers will be about the strategic benefits of transferring control, not about financial manipulation. The seventeen percent of housing in the ‘social’ sector will settle down split roughly half and half between councils and housing associations.
That leaves the sector that provides homes for market rental. The so-called ‘private’ rented sector (housing associations, of course, also like to think of themselves as ‘private’) now provides nearly as many homes as the entire social sector. It is mainly geared around short-term lets by very small landlords, many of whom have bought homes as a speculative investment. Its capacity to provide good homes meeting housing need can be overlooked. It is now time to address the potential for a private sector that attracts more professional managers to deliver longer term homes with a recognised role in meeting housing need.
We need to think clearly about the whole issue of ‘housing need’ and subsidised rents. Generally we on the left know that social housing does not equal welfare housing but we have been reluctant to draw the obvious conclusion – that creating more lettings in the social sector does not equal meeting housing need. The private and the social sectors both have a role to play in meeting housing need, if this means enabling people to access essential accommodation which they could not otherwise afford. We need to think about both short term and long term housing needs, and the risks of defaulting into restricting the future choices of people whose short term housing need has been settled by the allocation of a social home. We need to think about whether the buying power of the state is properly rewarded by the current system of housing benefit with its array of poverty traps.
We also need to revive a central idea in the Cave review of social housing – making it easier to decouple housing services from stock ownership. Actually this applies also to the private sector if is to be made stronger and more efficient. The tax system heavily penalises landlords who devolve housing management to external providers, including tenant co-ops. The Tenant Services Authority abandoned its plans to empower tenants to ‘trigger’ a change in managing agent for reasons that it always refused to discuss, but the logic of removing the barriers to this separation of powers is irrefutable. All groups of long-term tenants should have the right to choose their own manager.