Last week’s Spring Statement didn’t deliver much for housing.
The Chancellor’s announcement that £3 billion worth of government guarantees for loans to build 30,000 ‘affordable’ homes received plenty of positive coverage. But truly affordable social homes can’t be built on borrowing alone.
Government guarantees won’t go very far towards a solution for our housing crisis unless cheaper borrowing is accompanied by serious investment in capital grants for social housing at the next spending review (which we called for at the launch of our social housing commission at the start of this year).
And as the day unfolded, this modest good news was followed by two massive, bitter pills, in a statement released quietly that afternoon by Secretary of State for housing James Brokenshire.
We urgently need land market reform
First, Brokenshire responded to Sir Oliver Letwin’s review of build-out rates, which concluded the only way to get England building faster is to diversify output — i.e. more social rent, fewer unaffordable identikit estates of market houses.
The government welcomed this finding, but is shying away from doing the one thing needed to make this vision a reality: serious reform of the broken land market at the root of our housing crisis.
We were frustrated to see Brokenshire agree with ‘the principle that the costs of increased housing diversification should be funded through reductions in land values’, but not with the need for government to act to achieve this.
Instead, the government only plans to tinker with existing mechanisms, and that’s all. And that’s despite the growing chorus calling for reform across a diverse range of organisations– including Shelter, the National Housing Federation, Campaign to Protect Rural England, the housing select committee and a raft of genuinely cross-party thinkers and politicians.
The government’s approach is a mistake
Without legislative reform, specifically to the 1961 Land Compensation Act, any plans to drive down land values are at serious risk of failure. In our current system, councils can ask for all the social housing and infrastructure they like, but unless landowners agree, it won’t happen.
Councils can compulsorily purchase land, but if the government thinks this will allow them to buy at values that permit housing diversification, they’re misguided. The rules set by the 1961 Act force councils to pay for land in line with what might have been put there if there had been no compulsory purchase – i.e., those same identikit estates of market sale homes that are out of reach for millions.
The government’s reluctance to address this issue may be understandable given the vociferous lobbying in favour of the status quo from representatives of landowners, promoters, big developers and lawyers, who stand to lose out from reform.
But until the government takes on this challenge, land will continue to trade on the assumption that it will be used to build the same kinds of homes we are building now. And we know that isn’t good enough.
One more piece of bad news
But there was still one more piece of bad news to come. In the next breath, Brokenshire announced an extension to the government’s ‘bottom of the barrel’ method for creating new homes — new Permitted Development Rights will allow hot food takeaways to be converted to residential use without going through the planning system.
That means no quality control, no space standards and no contributions to social housing. Our research last year revealed over 10,000 affordable homes were lost through this system between 2015-16 and 2017-18. Plans to bring all redevelopment of commercial buildings into the same system are also now firmly on the table.
Rather than dealing with the root causes of our housing crisis, the government is intent on continuing to trade off quality and affordability for more supply.
This isn’t good enough. Sign Shelter’s petition to demand the government commits the land and money needed to build social homes now.