How to solve the housing crisis, in one easy lesson

This week, we’ve been able to talk one-to-one with all of the major MHCLG team.  Here’s an impartial take on the Conservative housing policies.

In looking at the Conservative Party’s housing policy, one is sometimes reminded of the Hitchhiker’s Guide to the Galaxy, where a supercomputer found the answer to the ultimate question only to discover it was meaningless because they hadn’t worked out what the question was in the first place.

The Conservatives have lots of ideas to solve the housing crisis, but are somewhat unclear on what the crisis is. Is it the fact that prices are too high so young people cannot buy? Is it shortage of affordable rented homes? Is it too much building on sacred green belt sites? Is it a simple failure to build enough homes of all types?

David Cameron and Theresa May both addressed housing but did very different things, with Cameron trying to incentivise housebuilding with the New Homes Bonus, improved delivery with permitted development rights, and helped home ownership with Help to Buy grants and then requiring Starter Homes as a developer obligation. His approach on affordable housing was to allow higher than social rent levels. For Cameron the question was inaccessible home ownership.

Theresa May looked at first to share his approach – her Downing Street speech of July 2016 talked of young people who “find it harder than ever before to own your own home”. But soon it became clear she saw a different problem: the Housing White Paper in February 2017 moved the emphasis away from home ownership and towards rented solutions. Starter Homes requirements remain unimplemented; after a series of lengthy consultations, it may be worth taking bets on the date the policy is formally dropped.

Due to the disastrous circumstances of its delivery, no-one remembers the content of May’s 2017 conference speech but its message was supposed to “The British Dream” in which fixing the housing market was central. She praised and recommitted to Help to Buy, and committed £2bn more to affordable housing. Three months later housing was added to the title of the Ministry, giving us the Ministry of Housing, Communities and Local Government.  Housing was described as the “number one domestic priority”.

Home ownership still drives Tory hearts; Philip Hammond’s budget cut in Stamp Duty cheered them, and members see the resentment from young people who find buying a home unattainable. But 2018 has seen far more on social housing: a green paper, and a well-received Prime Ministerial speech at the National Housing Federation. In her conference speech May agreed a longstanding cross-party local government demand, and lifted the cap on councils borrowing against their council house rent income; she has been widely praised by the sector for it. May’s enthusiasm for council homes helpfully contrasted with Boris Johnson who used his speech at a fringe event to attack social rented housing.

Earlier in the week Housing secretary James Brokenshire committed the government to build 300,000 homes a year by the mid 2020s (a cynic may note this timeframe is longer than the present Parliament), and signalled proposals to make upward extensions permitted development. Brokenshire also announced a New Homes Ombudsman to “champion home buyers, protect their interests and hold developers to account”. Grassroots Conservatives at conference were very keen to see good, well-designed developments that provided all the necessary infrastructure and created a sense of community, thinking them likely to be popular.

One senior Minister told us that he had noticed a change of heart amongst his Conservative parliamentary colleagues since the 2017 general election.  Before, MPs were happy to be NIMBYs.  Now, they know that, to do so, they are depriving houses to the sons and daughters of their voters.

With May having again re-emphasised her commitment to housing being her “number one domestic priority”, developers might wonder what they had done to deserve the remark directed at them by housing minister Kit Malthouse at one conference fringe event: “They say dogs can smell fear, well, so can developers” – it seems to have been a reference to the threat to take over unimplemented development permissions. Malthouse emphasised to delegates he had been tasked to build “more, better, faster” and one policy unchanged from the Cameron era is to try to open up housing development to more smaller and innovative developers – a James Dyson for the sector.

Looking forward, money remains tight and for all the talk of austerity being over, the spending tap is not open (May’s commitment to social housing amounted to £2bn over several years and not starting until 2022). The beginning of September saw rumours that Help to Buy is seen as simply boosting prices and therefore having no impact on affordability (although Malthouse has defended it). Might Hammond’s budget at the end of the month see funds directed away, say to more Stamp Duty cuts and to the affordable housing programme? If so, major housebuilders will regret the loss of what has been a handy subsidy.