Residential investment specialist Richard Berridge, Director of Blackbird Real Estate Advisory, writes exclusively for Political Insight
An effective housing strategy is not easy, and generally further complicated by ideologies that lean towards one type of tenure over another.
Imagine a typical church organ: multi-layered keyboards, pedal board, stops, couplers, pistons, swell and crescendo pedals. Now try playing it wearing oven gloves & swim fins without any musical training and you’ll get a reasonable idea of how difficult forming effective housing policy is. There is no such thing as a silver bullet.
On top of that, keeping a housing minister in the job long enough to see through policies seems to be inordinately difficult.
Added to this gordian knot of housing policy is the current imperative to stimulate the economy during an existentialthreat to our way of life. A thankless task.
Any government must take into account the aspirations of the people it represents. In the UK, broadly 80% aspire to own their own homes. So, it’s understandable that Govt’s focus is on delivering ownership to those who aspire to it. But there’s a gap between aspiration and reality. Currently, 64% of people own their own home. Down from a peak of 71% in 2003 since when it has steadily declined. Due, in no small part, to house price inflation of more than 100% which seriously compromised affordability. So, it’s clear that meeting the aspirations of the 80% is going to take patience and delicate manipulation of the housing organ and its many levers.
Whilst It is unlikely that Rishi Sunak’s temporary 0% rate of SDLT up to £500,000 will have much effect on ownership rates, it may marginally stimulate transactions until it ends in March 2021.
The Private Rented Sector (PRS) has roughly doubled, from around 10% in 2000 to the current 19.4% of all homes. Govt has recognised the importance of the PRS and has introduced the Tenant Fees Act, banning fees to tenants. Govt is also consulting on removing Section 21 no fault evictions and has set up the Regulation of Property Agents (RoPA) working party chaired by Lord Best.
Govt is supporting the professionally operated rental sector, Build-to-Rent (BtR) with whom it has worked to raise both standards of management and quality of accommodation. As a result, BtR managed buildings have received some startlingly high scores from housing review website Homeviews. The higher level of satisfaction in these homes is challenging the general PRS to do better.
Govt is also looking to support the affordable rented sector. Although not as actively perhaps as it should. 36% of homes in the UK are rented; either social or PRS, many in the early stage of their working and voting life. As people transition from renting to owning, as statistics show many inevitably do, they must be confident that Govt had their backs as renters as much as they do in ownership. Affiliations are formed early.
Build, Build, Build is the Prime Minister’s latest clarion callto stimulate the economy, this has been supported by an extension to permitted development rights (PDR) and a likely extension to Help to Buy (HtB). Neither of which have been universally well received. Principally because PDR is seen asthe very worst of modern housing, and HtB has the unenviable reputation of enriching housebuilders at the expense of both Gov’t and homebuyers.
In addition, new planning regulations have supported a revised and extended push for PDR but risk creating incoherent town centres due to piecemeal development. Small/medium towns may be particularly at risk where, ironically, thanks in part to Covid-19, local high streets have been a godsend as people choose to shop locally and only when and where necessary. It also seems at odds with Govt’s flagship ‘Build Better Build Beautiful’ initiative which appears to have taken something of a back seat.
Government sees planning as an obstacle to delivery of its targets. But in reality, it is simply under resourced and, despite having some hugely talented individuals, is lacking the sophistication and sheer scale of resource housebuilders can afford. Perhaps Dominic Cummings should consider taking a scalpel to planning rather than an axe.
This is a particularly difficult time for housing policy during Covid-19. As it is for all areas of policy. To paraphrase Donald Rumsfeld there are known knowns, known unknows and unknown unknowns. There can be only one strategy: to have a long-term plan, respectful of a multi-tenure landscape, supporting each tenure with equal vigour but with a clear pathway to support the aspirations of ownership for those who desire it.