The new UK Housing Review 2016 puts together figures you won’t find anywhere else: the government’s investment plans for housing and how they split between supporting the private market and building affordable homes. They show that the different market-support packages like Help to Buy and starter homes now total £43 billion, whereas affordable investment totals only £18 billion. The CIH concludes that, as a result, investment in affordable renting ‘will fall to its lowest levels since the Second World War’.
Red Brick has already picked holes in the Chancellor’s ‘long-term economic plan’. Insofar as he has one, it seems to be unravelling before our eyes. But if at last he’s being criticised for robbing the poor to pay the rich, the criticism hasn’t yet affected his housing plans, where the shift away from affordable renting towards helping builders and would-be home owners becomes more marked each time one of his ‘long-term plans’ is scrapped and another put in its place. As the UK Housing Review reveals, whereas the current Affordable Homes Programme, that began last April and extends to 2018, was originally to have invested £2.9 billion, this has now been cut back to just £1.8 billion. The promises made in the 2013 Spending Review (another one of Osborne’s ‘long-term plans’) have been ditched, and what’s left of the programme is confined to schemes already committed by the HCA and GLA. The rest of the money has been scooped into the Chancellor’s pot for supporting home ownership (unless Boris Johnson succeeds in his apparent bid to keep some of it for ‘affordable’ renting).
One effect of past policies has, of course, been a remarkable shift towards homes let at so-called Affordable Rents. By April last year there were 123,264 of them, almost five per cent of housing association stock, of which less than a third were newly built and the rest were conversions or acquisitions. This has inevitably produced a big shift away from building homes to let at social rents. The result is that while in England there were 4,063,000 social rented homes in 2012, by 2015 this had dropped to 3,967,000, a fall of two per cent. CIH projects that by 2020 the loss will have reached 350,000, a nine per cent fall since 2012. This will be a result of further conversions, right to buy sales, demolitions (due to be ramped up if estate regeneration plans come to fruition) and sales of ‘high-value’ stock. Of course, the scale of some of these changes can, as yet, only be guessed at, and the figures will be refined as more details are revealed.
The odd thing is that, if Affordable Rent was a key part of an earlier ‘long-term plan’, it’s now been ditched. With the curtailing of the current Affordable Homes Programme, there is likely to be a drastic fall in output of sub-market rented homes over the next couple of years: Affordable Rent is due to follow social rent into the housing policy dustbin. The main replacement policy is, of course, the promotion of starter homes. The image of the ‘subsidy sandwich’ provided by Inside Housing earlier this month nicely captures how various layers of government money are being put together to construct this huge stimulus to developers and to house prices, all justified by labelling £450,000 starter homes as ‘affordable’. As Nicky Gavron commented recently, the Tories have made ‘affordable housing’ a meaningless term.
Unfortunately, the effects are not just rhetorical: starter homes and shared ownership properties can be substituted by developers for social and Affordable Rent dwellings when negotiating ‘section 106’ agreements as part of planning permissions. It so happens that section 106 is one of the last remaining sources of funding for new homes at social rents: even that source is now to be cut off. Although 2,410 social rented homes were started on site in 2014/15, it’s likely that starts in the year now ending will be lower and in the next year lower still. Soon, any production of homes let at social rent will depend on social landlords’ own funding – which is just being reduced as a result of the one per cent cut in rents that starts next month. If Osborne stays in charge, it seems his latest ‘long-term plan’ is not only to stop providing sub-market rented homes, but to get rid of those we still have as quickly as possible. As the UK Housing Review’s analysis and projections show, a dramatic shift in housing policy is about to begin.