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Steve Akehurst
 
I’m a Public Affairs Officer at Shelter, and work on getting affordable housing up the political agenda. I’m particularly interested in how housing relates to living standards in the UK. Outside of work, I enjoy reading, writing and putting in painfully mediocre 5-a-side performances.

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By Steve Akehurst

The kids are not alright: parents more anxious about their children’s housing prospects than any other issue

With May 7th fast approaching, the latest YouGov of election season shows housing is now a top 5 issue for voters – ahead of traditional election territory like education, Europe and tax.

And new research we have out today gives you an idea of why.

It shows that the shortage of homes in England now means young couples with children, on typical incomes, face 12 years of saving before they can afford to buy their first home. This affects a whole range of areas in every region of the country (18.6 years in Brighton and Hove, 17.8 years in Cornwall, Walsall 13.8 years, North Tyneside 12.6 years).

Working families being priced out is not the only important symptom of the housing shortage, of course – others include homelessness, rising rents, poor conditions, lengthening social housing waiting lists – but it is the one which is making housing a mainstream issue for the first time in a generation. The prospect of an entire generation being locked out of home ownership worries not only those directly affected, but their parents too, who are realising that this means less stability and prosperity for their kids.

Separate research we’re publishing today bears this out. It looks at the attitudes of parents with children aged 18 and under, and finds:

1.    Home ownership plays an important part in parent’s views of their children’s future.

2.    But they are gloomier about it than any other issue: overwhelmingly, they think ‘prospects for young people owning their own home’ is the key issue which has got worse. 

3.    While their negativity about every other key issue has fallen significantly since 2013, it remains high for housing.

 4.    Finally, housing is a particular priority and anxiety among those parents who say they are not feeling the economic recovery.

We have made this argument time and time again on this blog, but this is why housing is now such a potentially potent issue electorally: it’s an issue which speaks to a broad range of voters and to themes they care strongly about (their children’s future, aspiration).

That’s why the opportunity for any party to take ownership of this issue in the election remains huge.

That said, this is certainly no free lunch in policy terms. It’s noticeable that the above figures show none of the piecemeal, short cut solutions of recent years – Help to Buy, starter homes, Right to Buy tweaks – have eased anxiety about housing. And that’s fundamentally because they haven’t worked, or won’t. That’s not to say this government is the only one prone to half-measures; the last one was too. The housing crisis is the failure of successive governments. But it does show any party wanting to get credit for solving symptoms of the housing shortage will need to show leadership to end the housing shortage: by building the homes, especially affordable homes, we desperately need. Voters increasingly recognise there is no alternative if their kids are to have somewhere to live, and as research we’re releasing next week will show, are increasingly receptive to it even in their own ‘back yard’.

But we’ll see if this opportunity to speak to the problem and solution is taken up in the coming months of the campaign. Certainly, despite vastly increased voter anxiety, housing has been conspicuous by its absence since the New Year.

It was alluded to as one of David Cameron’s top six themes, but we will have to wait to see if the policy attached to it has a chance of making inroads in to the problem. Meanwhile, it didn’t feature at all in Ed Miliband’s recent stump speech to The Fabians, despite the Lyons review and Miliband going big on it in his conference speech last year.

So far the debate has understandably seen the two main parties slug it out on traditional election territory: the NHS, the economy. But things have changed since 2010. Any political party which ignores the huge anxiety that’s bubbled up about housing between now and May is missing a trick.

Pete Jefferys
 
I’m a Policy Officer at Shelter and interested in how we can get housing up the political agenda, secure a better deal for private renters and get affordable homes built. Outside of policy, I love exploring new parts of London, sport and going back home to Devon.

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By Pete Jefferys

Giving with one hand, taking with the other

I’m genuinely torn on the government’s new house building policy: 100,000 Starter Homes for first time buyers, each sold with a 20% discount.

On the one hand, I think it’s great that the policy uses a zoning power to make land available more cheaply to build much needed homes. We’ve been advocating something similar as part of a much broader house building programme. It’s also great that the policy helps priced-out first time buyers with a very substantial 20% discount (and recognises that the discount should stay locked in for at least the next buyer too).

However there are some pretty major kickers.

Most obviously, the government says that the discount to first time buyers can only be afforded if there is no affordable rented housing or shared ownership homes included. I think this is highly dubious. We’ve calculated that the 100,000 homes will create something in the order of £3.5 billion of additional value on the brownfield sites. This is because by zoning land previously not given planning permission you increase its value enormously and by using zoning this extra value that can be “captured” for the local community’s benefit.

When you consider that the policy also wipes out the risk of not getting planning permission for developers by granting automatic permission, there should definitely be scope to squeeze down their margins below their usual 20%, saving more cash for affordable housing.

We argue that there should not be any restriction on developers submitting plans which include affordable housing and that these should be given priority. Any developer who says that it is not “viable” (i.e. enormously profitable) to build any affordable housing should be required to open up their books to the local council and show why it’s not viable: given they face no planning risk and can get the land cheaply.

There’s also an issue with restricting these new homes to unused brownfield land only. Clearly we should always build on brownfield first, but as NLP and others have shown there’s simply not enough brownfield land to meet our housing shortage. If the policy could be extended to some agricultural sites then the model would work even better (as agricultural land values are far below industrial). On scrubby fields with low amenity value near train stations, this sort of zoning could generate enormous amounts of cash to build genuinely affordable housing and local infrastructure.

While I’m sure that the government calculates that there’s a political benefit to restricting the policy to brownfield sites, this may backfire when proposals come forward if they are built on sites which are completely unsuitable for homes, far from employment or services. Equally, having “brownfield” status is no guarantee of avoiding a local planning dispute, indeed many “brownfield” sites are more environmentally valuable than single-crop fields. The evidence we’ve gathered suggests that the most important thing for local communities is knowing that their kids will be able to afford homes, that the homes will be good quality and that there will be new local services (especially schools and health services) which benefit the whole community.

Finally, the way that the 20% discount is calculated is hugely important to prevent developers from gaming the system. I would argue that independent surveyors should give a full market value before a 20% discount is taken off. If the discount is set according to average prices by bedroom numbers in the local area, then there’s a real risk that developers which just build smaller or worse quality homes – wiping out the discount.

On balance though, I do think that this policy usefully moves the debate forward, even if only by small steps. It’s much better than demand side interventions like Help to Buy or cutting Stamp Duty – both of which translate into higher house prices. However if we’re going to provide the long-term solution to the housing shortage that we need it will take a much bigger, bolder and comprehensive programme than this.

John Bibby
 
John is a Policy Officer at Shelter.

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By John Bibby

Should I support ‘rent control’? The devil is in the detail.

At the beginning of the month the Independent reported that ‘almost nobody in the UK is opposed to rent controls’; polling showed that 59% of people supported their reintroduction. 7% were in opposition and a sizeable 34% didn’t know.

And to be honest, if you were to ask me only whether I supported the introduction of ‘rent controls’ without any detail I’d be with the 34%.

Like any kind of regulation, not all rent control is good or bad. It depends on exactly what the proposal is and where it will apply. As the rather more nuanced editorial that accompanied the article said “…the choice is not between sledgehammer controls and nothing at all.” The devil is in the detail.

And the opportunity for widely different detail is significant. Rent controls are typically divided up into belonging to two or three ‘generations’ depending on whether they limit absolute rent levels, increases in rents between tenancies or just rent increases within tenancies. But even this distinction can over-simplify the extent of the difference between different regimes and how they act in practice.

In practice, an absolute freeze on all rents at existing levels is very different from an enforced cut to below existing market levels or instituting a ‘fair rent’ regime. A 10% limit on rent increases between tenancies is very different from a 100% limit. And so is the difference between always limiting in-tenancy rent increases to inflation and establishing a municipal board to annually decide the maximum increases landlords are able to charge.

Nor does the complexity end with the detail of regulation that concerns rents directly. How the policy interacts with other national regulation matters hugely. Because in a situation where, for example, rent increases are limited during tenancies, the minimum legal length of a tenancy is critically important. If your landlord can just kick you out and get a new tenant at a market rent then restrictions on rent increases are relatively meaningless.

The Cambridge Centre for Housing and Planning Research in their 2012 comparison of international rental markets produced six regulatory indicators that are a good starting point for considering the extent of the regulations effecting rents:

  • Initial rent setting
  • Rent increases during a tenancy
  • Length of a lease
  • Capacity to get a property back during lease
  • Capacity to sell/transfer to other tenure
  • Enforcement or eviction if contract broken

All of which leads to the possibility of a large number of different regimes of rent regulation, with different advantage, disadvantages and trade-offs.

It also acts as a reminder that even in the current English sector, private rents are lightly regulated, albeit extremely minimally. Because landlords can’t just hike up the rent whenever they want, even within an Assured Shorthold Tenancy. Rents are fixed within fixed-term contracts and can only be increased once every 12 months under a rolling (statutory periodic) contract. This may mean for example, that landlords can and do absorb cost pressures like an interest rise hike for up to a year before they are able to increase rents.

But despite the plurality of options and England’s existing regulation, the choice on rent control can often be characterised as a binary choice between nothing and everything. And the public debate about rent control can sometimes descend into a stale ideological row between people who are vehemently in favour or against rent controls on point of principle.

For some in favour, the dizzying unaffordability of private rents justifies almost any intervention. For some against, any increase in regulation threatens to send the English housing market into an End of Days scenario.

The problem is that both the concerns of those in favour of and against rent control in principle are founded on reasonable worries.

Concerns about the contraction of the sector and a crash in house prices are perfectly legitimate. As Steve Hilditch over on the Red Brick blog rightly points out, house price crashes are carnage, never something to be relished.

The burden of such a crash never falls principally on those most able to pay, but – as Amir Sufi and Atif Mian identified in their cracking appraisal of the 2008 US house price crash – on those with the largest debts who are least able to pay. The net effect in the US was a dramatic regressive redistribution of wealth from the indebted poor to rich savers. There’s no reason to assume the same wouldn’t happen here, with equity rich homeowners able to withstand a fall in prices and mortgage holders left dangerously over-exposed.

But it is equally legitimate to be concerned about the high cost of private renting in England and the fact that nationally it on average hoovers up 40% of renters’ take home pay – well over the 33% that is typically thought to be affordable. In high demand areas like London, it can take even more, pushing people further out or away from the city entirely. With more and more families living in private renting long-term, high and rising rents can make housing insecure and unstable.

We shouldn’t pretend that there is an ideal form of rent regulation that will make private renting affordable for everyone. But that shouldn’t stop us from trying to work for the best possible one that we can hope for in England – one that improves affordability without leading to catastrophe. And such a policy lies somewhere in the detailed middle between the poles of absolute rent caps and no regulation at all. Remember that we already have a form of very light regulation.

Is discussing such a detailed middle possible?

Yes, I think so.

When it comes to something like income tax, we’re able to have a public debate to democratically determine this detailed middle. We’ve moved on from discussing the principle of whether there ought to be an income tax at all; that the answer is yes is almost unquestioned. The public debate is about bands and rates, how much and who should pay.

If we are going to get any closer to doing something about rent affordability we need to move in that detailed direction.

 
Liz Vourdas is a senior researcher at Shelter

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By Liz Vourdas

Down the line: the role of digital in housing advice

Each year, more and more people come to Shelter for help.

An affordable homes shortage, sky high housing costs, cuts to welfare and an unstable private rented sector mean that last year Shelter saw record numbers of people calling our helpline and visiting our website with housing problems. 

We want to help everyone, but we simply don’t have the resources to answer every call.

That’s one of the reasons we work hard to provide high quality digital advice. We need to look at how we can best get information, advice and support to people facing housing problems in the right way, at the right time.

To do this, we asked the leading research agency TNS BMRB to talk to people who’ve been homeless or in bad housing, to help us understand the different roles face-to-face, telephone and online advice services play in getting people the help they need.

We found that:-

Individual needs are complex

The context of people’s lives is critical for understanding the role that digital can play in housing advice and support and, just as importantly, where it can’t.

Three factors are key in determining what help people need:

  • What their housing problem is and how severe or urgent it is;
  • Their personal, emotional and practical circumstances, such as mental or physical health problems, or relationship difficulties; and
  • Whether they have the skills, knowledge and confidence to tackle the problem they are facing

Face-to-face, telephone and online services all have their own advantages.  Someone that is facing losing their home imminently is likely to need emotional and practical support and advice, and therefore will be more likely to need to speak to someone.

To address everyone’s needs, we need a multi-channel strategy

The research clearly showed us that person-to-person services are vital for people with more severe and urgent housing problems.

It showed us that developing digital services can play a role in helping people with housing issues:

Digital can be a preventative service

Some people with housing issues don’t get help until crisis point – online services could help us to get to people before they get into a crisis.   

People liked the anonymity and convenience of digital services. Allowing people to get advice and information online in their own space and time, without the pressure of speaking to someone, can help resolve problems at an earlier stage.

We found that the complexity of the problem faced, particularly around legal rights, meant people felt out of their depth. If digital can help to build people’s confidence around housing rights and responsibilities, we can also help people to become capable of resolving issues themselves.  

Digital can help us be more efficient in how we deliver our face-to-face and telephone services.

They could enable clients to “self-triage” online before their contact with a Shelter adviser, saving valuable adviser time and meaning that we can answer more calls. 

Digital can give us new ways of providing that person-to-person contact

Those who sought face-to-face or telephone help really valued Shelter’s support, and the reassurances person-to-person contact was able to give them.

Digital gives us a different way to offer this.  For example, video calls could provide face-to-face advice to those with housing problems who don’t live near our support services. 

We’ll be using these insights to trial online and offline services, aiming to improve the efficiency, impact and reach of our services, and ultimately: to help even more people.

Toby Lloyd
 
I'm Head of Policy at Shelter, and have worked on housing issues in the public, private and third sectors for nine years. I'm a Londoner, a cyclist, father of two young daughters and member of the Hackney Co-housing Project.

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By Toby Lloyd

Green belts, green nooses, green fields

Scarcely a day goes by at the moment without someone having a go at the sacred cow of British planning, the Green Belt. This morning it was Tom Papworth at the Adam Smith Institute, calling for the complete abolition of the Green Belt in order to let market ‘price discovery’ determine where best to build homes – although he does also suggest less extreme measures, like releasing all Green Belt land within ten minutes’ walk of a station.

From http://www.bbc.co.uk/news/magazine-14916238

For the record, we have also drawn attention to the problem of Green Belts preventing much needed housing growth, and called for sensible reviews: releasing 1% of Green Belt land over 15 years would provide enough land for 33,000 homes a year – and that’s at low, village densities.

But the Green Belt is also a broadly sound principle that has served England’s towns and cities rather well over the decades. It’s always easiest for builders to site new development in green fields at the edge of towns – that way you can free-ride on existing infrastructure and build cheaply without having to deal with complex brownfield sites. This means that, in a world with cheap access to cars, cities that are left entirely to the market tend to sprawl outwards in vast, low density suburbs that cannot be efficiently served by public transport or social infrastructure.

Fans of total planning deregulation tend to eulogise the 1930s – when we did build a lot of homes around cities. But would anyone really argue that our cities should double their footprint every ten years, as they did then? That only around 10% of England is urbanised is indeed a sign that a bit of greenfield loss would not be the end of the world. But it’s also a sign of the success of Green Belt policy in preventing infinite sprawl.

So despite our call for sensible release of greenfield land for more homes, I do part company with those that blame Green Belt policies for all the world’s ills. Papworth sets out very clearly the problems of undersupply, and does a good job knocking down some of the simplistic arguments for treating Green Belts as sacrosanct. But he commits the classic mistake of theoretical economists – setting up the problem in detail, and assuming that the solution is just to do the opposite. This sounds simple in theory, but the sadly reality is rather more complicated than that.

Just consider what would happen if national government abolished all Green Belts tomorrow: there would be an immediate land speculation boom, as developers, investors, dealers and brokers piled in to buy up potentially developable sites, hoping to cash in on easy profits. Land values, long supressed by Green Belt restrictions, would sky-rocket – and almost certainly crash again as the bubble burst. As I’ve argued repeatedly, high and volatile land prices are the real root cause of our failure to build more homes. Economists like to say that ‘in the long run’ the land market would stabilise at a new equilibrium, and argue that this would be at lower prices than in today’s constrained market. Yet the lesson of history is that land markets are rarely, if ever, stable: the speculative pressures caused by long lead times and very high potential gains naturally drive boom and bust cycles. Property bubbles were common in the nineteenth century – when there were no Green Belts and millions of us lived in overcrowded slums. I’d go as far as to say that we don’t have scarce land and a volatile land market because of planning, we have planning because land is inherently scarce and land markets are inherently volatile.

To continue the thought experiment, once the initial speculative frenzy was over, there would then be a protracted period of bickering over where infrastructure should go and who should pay for it. All the new speculative landowners would jockey for their sites to benefit from public investment, using whatever means available to them – a recipe for divisive, even corrupt, decision making. In the end, some of this land would get built on, but the chances of it being the best bits to deliver public benefit as opposed to the bits owned by the most influential people are slim. And the costs incurred in getting to this point would mean that, just as now, low quality, high cost development was the most likely outcome. The successful developers would still have the same incentive as now to eke out supply and keep prices up.

We can’t rely on the abolition of Green Belts to solve our housing shortage – we need a smarter approach that recognises the role of agency, understands the land market, and has the courage to tackle vested interests and ideological shibboleths.

Simply put, planning is not the only constraint on house building: where the train line and waste dump go are just as important, as is the financial model driving development. In this context, planning is actually a way of crystalising all of the constraints into a clear framework so they can be rationally addressed together. Belief in the perfection of markets is not an argument – it is just an article of faith. And we need more than that to crack this complex problem.

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