Making affordable housing affordable

Politics.co.uk
Politics.co.uk

Andrew Stunell, the Liberal Democrat communities and local government spokesman, suggests innovative ways in which the government could increase the housing supply, including bringing empty homes back into use, converting commercial property and selling-off community land.

The housing sector is in crisis, with the basic product in short supply and costly, its viability threatened by an extravagant price bubble, and now by rising interest rates and a softening job market.

Gordon Brown's pledge to put housing at the top of the agenda is long overdue, though sadly with few signs that he knows what he means. The recent Treasury plan to offer more long-term fixed mortgages as a means of improving access to affordable housing missed the basic point - we simply don't have enough houses.

At present about 160,000 new houses are built each year, offset by around 40,000 demolitions, a net increase of about 120,000 homes a year. But the rate of new household formation is maybe 220,000, a 100,000 a year gap. No wonder house prices doubled, whilst social housing waiting lists rose by 500,000 families in ten years.


The priority must be for more social rented housing, first to make good the loss in social housing stock that has occurred over the last 20 years, and then to urgently tackle the backlog. With a tight CSR expected this autumn, real innovation is needed here.

With 71 per cent of families in owner occupation - the highest in the Western world - the private sector is not far from market saturation, with penal income/price ratios putting first time buyers at increasing risk should there be an economic slow down.

Schemes of so-called 'affordable homes' haven't cured the problem - not least because once resold most simply enter the main stream market at full price. What is needed is a much wider use of models already tried and tested, which 'lock in' affordability, and even deliver new social housing without subsidy.

If new social and affordable homes are built to match the rate of household growth where can they go? A start would be to bring half of the 300,000 homes empty for longer than 6 months back into use - equivalent to a year's supply at current rates. Then, according to the former ODPM, up to a million homes could be created above shops and in other former commercial/industrial buildings. Equalising VAT on new and refurbishment works is just one incentive needed to spur this on.

The Liberal Democrats are examining new ways of freeing up land for housing through Community Land Auctions. This would potentially increase supply, whilst allowing the community to pay for supporting infrastructure from the realisation of the increase in the land values created by the permission. Certainly surplus publicly owned land should be assessed with a view to donating it in appropriate areas to registered social landlords or mutual associations for affordable housing.

But a 60 per cent increase in house building in the next decade will need both a change in the industry's mind-set and a long term commitment by government to achieving continuous higher output. At present developers have little incentive to build faster when they can make more money the longer they delay coming to market with a new home.

Do Gordon Brown or Yvette Cooper understand any of this? We must hope so, or the list of those homeless, repossessed, or ill-housed will grow longer every day.

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