Fixing the housing shortage: what do the manifestos say?

One of the great things about this election is, for the first time in a generation, politicians are competing for votes on housing. Unfortunately there is a downside: lots of big claims and big numbers flying around as parties trade claims and counter-claims. It can become bamboozling, even to those who work in the field.

So we thought we’d put together a one stop shop for you, to help you make sense of what the parties are promising on building more homes.

Firstly, it’s worth stating where we have come from. All parties in this election give a level of space to housebuilding which is unprecedented in recent years. In 2010 housebuilding was not only nowhere near the top of the election agenda, the housing sections of the manifestos were largely confined to empty homes and scrapping home information packs.

What is needed?

Before we look at what they are pledging, it’s worth taking a look at what is needed. Only from there do the numbers and claims make sense.

The shortage of homes is at the root of almost every housing problem there is: from high house prices and rents, to overcrowding and long waiting lists for social housing.

In short, to fix all of these problems we think we need 250,000 new homes a year – 50% of which are market, 30% social rent and 20% intermediate like shared ownership. At the moment we only build about half that number.

Fixing this broadly breaks down in to two distinct areas, both of which we have campaigned for in this Parliament:

• Reforming the private market. The number of homes delivered by private housebuilders has declined – more than ever it is dominated by a handful of big developers. The problem sits in the land market:  the high price of land encourages speculation and delay by developers rather than building.  We think the most the most pragmatic solution here is not (contrary to received wisdom) tearing up the planning system, but rather it is smarter planning interventions that get land at cheaper prices in to the hands of people who want to build, and encourages more builders into the market to increase competition.
• Increasing investment in Affordable Housing, such as social housing and intermediate products like shared ownership, which has collapsed since the 1970s. These are the kind of homes the private market will never build en masse, but are desperately needed. Some of this can be done without adding to national spending or borrowing totals, but not all: at the very least it needs around £1.2bn a year extra subsidy in to the affordable housing budget. Given the high priority of housing, and spending choices elsewhere, we don’t think that’s an unreasonable sum.

As the mega-graph makes blindly clear, neither of these problems are the fault of any one government. They are the result of a generation of neglect for housing under successive governments.

Do have a look at www.thehomesweneed.org for the specific ideas we have campaigned on to these problems, including New Homes Zones, strengthening compulsory purchase powers, a Housing Investment Bank, a Help to Build fund for SMEs and five new Garden Cities.

What the 2015 manifestos say (three main UK-wide parties*)

Conservative

Housing is a top 6 theme for the Conservative election campaign. The manifesto therefore devotes a lot of time to housing, especially home ownership.

It does not set an overall target for housebuilding – the Conservatives have rejected such a target as unnecessary and counter-productive.

Boosting the private market

• In general, most of the really big measures are focused on demand-side solutions: this includes an extension of Help to Buy, new Help to Buy ISAs for savers and a pledge to keep mortgage rates low. Many would argue these measures miss the underlying cause of the crisis, which is the shortage of homes.

• However, there are some measures targeted at boosting building in the private market. ‘Housing Zones’ will be a positive step towards encouraging lower-cost development on brownfield land, though they may need more teeth to work. Obligations to promote self-build will be placed on local authorities, which are also welcome, are in there too – as is a new body to encourage the release of public land for private development in London.
• A pledge to deliver locally-led Garden Cities makes the manifesto, though there is no detail beyond that.
• They have also struck a deal with the private sector to deliver 40,000 new Starter Homes a year, for sale at 80% of market price. In ordinary circumstance this would be very welcome – unfortunately the devil is in the detail here slightly. We believe it is worrying that this is funded by reducing obligations on developers to deliver traditional affordable housing.
• In general, there is a big focus on ‘brownfield only’, with the whole of the Green Belt put beyond all reach. A £1bn fund is pledged to fund new homes on brownfield land.

Affordable housing

• On affordable housing, Right to Buy is extended to Housing Associations.
• Councils will be forced to sell off social homes in the most expensive/unaffordable areas of the country. The Conservatives argue this will help deliver more affordable homes, though we have big worries that even if they are it will end up being at higher rents and away from areas where they are most needed. This sell off is also what is funding Right to Buy discounts, and the £1bn fund for market homes on brownfield land.
• 10,000 new homes (not clear if this is per year or not) at 80% of market rent, which is a positive step.

Labour

Overall, Labour have pledged to deliver 200,000 new homes a year by 2020. However, there is no target for what kind of homes will make up this total.

Reforming the private market

• Reform of the private market does most of the lifting in Labour’s  plans to reach 200,000 new homes a year (it’s classic ‘pre-distribution’ in that sense). The manifesto pledges to implement the Lyons review, which outlined an extremely comprehensive plan for boosting private building – including New Homes Corporations, Housing Growth Areas and beefing up compulsory purchase powers, all of which Shelter have campaigned for.
• In the manifesto, the party states their intention for a “housing market that rewards the building of high quality homes rather than land banking and speculation”. To support this, it points to ‘use it or lose it’ powers for councils (tax powers, compulsory purchase powers) to tackle land banking. It also pledges greater transparency in the land market.

• A Help to Build fund for SMEs; money from the Help to Buy ISA to be redirected to encourage building of market homes. A new generation of Garden Cities is pledged, though there are no specifics on how many or where.
• New powers for councils to set aside a proportion of new homes for first time buyers.

Affordable housing

• Here is where Labour’s plans are weaker. They have pledged to make affordable housing a “priority for extra capital investment” (something Miliband re-iterated in the leaders debate last week). However, it isn’t clear how much – or whether this will include re-funding much needed social housing. History suggests it’s unlikely Labour will get to 200,000 homes a year consistently without extra money into affordable housing.
• The Lyons review was rather cautious on reforming council’s borrowing powers to stimulate council house building. They have kicked that to review.

Liberal Democrats

The Liberal Democrats argue there needs to be 300,000 new homes a year built (no tenure mix specified). This has been a pledge of theirs for some time – but this time there is more detail.  They plan to publish a long-term plan for reaching this target within the first year of the Parliament.

Reforming the private market

• Importantly, the Lib Dems join Labour in backing the strengthening of compulsory purchase powers. This is a key step in getting land in to the hands of private builders at a cheaper rate than is currently the case.
• They are the most specific of all three parties on Garden Cities, pledging ten – with new settlements located between Oxford and Cambridge.
• A government commissioning programme whereby the state steps in directly to build market homes in areas where private developers are deemed to have failed.
• Release of public land for private development.

Affordable housing

• Unfortunately, there is no extra money committed to affordable housing.
• However, the manifesto argues for councils to be allowed to borrow to build social rented homes.
• In addition, there is a range of very welcome measures to roll back some of the changes that have weakened obligations on developers to deliver a certain number of affordable homes.
• The party does promise to improve the intermediate market – there is a fund to boost shared ownership, 80% market rent homes and their key ‘retail pledge’ of ‘Rent to Own’ homes, where every rent payment goes towards owning the home. This last policy polled very well when we looked at it last year.

Looking forward

So what does all this mean for the next Parliament?

Firstly, there are some positive steps in the offing whoever wins – Housing Zones and self-build for the Conservatives, Labour’s New Homes Corporations/Housing Growth Areas, Garden Cities with the Lib Dems.

But it’s also worth saying that while 2015 is a dramatic improvement on 2010, the job is far from done. And not only because none of the plans have been delivered (all parties have a history of big talk but little delivery, remember). There is also some genuinely worrying stuff in mix too. All parties, to varying degrees, are particularly weak on affordable housing – with no one committing explicit funds to boost desperately needed social housing.

Which means a big priority for us going in to the next Parliament will be holding the parties to account to deliver what they have promised voters, and pushing them to go further – especially on affordable housing.

*Note: We’ve chosen here to focus only on the Conservatives, Labour and Liberal Democrats  as these will likely be the three biggest UK-wide parties in the next Parliament.