While a blueprint for housing is welcome, associations and local authorities are finding their own ways to deliver. David Blackman reports
Much has happened since the Housing White Paper was published in February 2017, but its admission of a ‘broken housing market’ makes it one of the most significant policy statements for many years.
To debate the risks and opportunities across the economic and political landscape since the white paper, JLL and Social Housing organised a breakfast briefing debate at this year’s Chartered Institute of Housing conference in Manchester.
In his presentation opening the event, Jon Neale, head of UK research at JLL, said he had been ‘disappointed’ that the white paper did not live up to its pre-publication hype as a ‘revolution’ in housing policy.
And the number of questions in the document left it looking ‘more like a green paper than a white paper’, said Danny Mather, corporate finance manager at Warrington Borough Council, who was also on the panel at the event.
Mr Neale did, however, welcome the paper’s shift in direction on tenure.
‘It is potentially reorienting housing policy away from the very pro-home-ownership policies of George Osborne, towards the ‘Red Tory’ idea of bringing in disenfranchised young people by offering them something from the system,’ he said.
But he suggested the document was short on concrete proposals for tackling the housing problems.
‘The white paper seems a fantastic statement of what the problems are but [there are] not many solutions. There are some extremely valuable ideas but it’s tinkering around the edges rather than addressing the big issues.’
Notable among the list of problems to address was what Mr Neale described as the ‘overprotection of parts of the green belt’.
Advocating a much more flexible approach, especially in the South East, he noted, ‘A lot of the green belt is not that beautiful or green.’
However, Mr Neale said he believed the sacrosanct nature of the green belt could be challenged as a result of what he described as ‘the sudden emergence of young people as a political force during this election’.
‘Before, it was assumed that you had to orientate your policies towards the older vote, because it was older people who voted.
‘What happened on 8 June really questioned that assumption.’
And this shift has implications for housing policy, he pointed out.
“As the housing sector it is incumbent upon us to work together – we are starting to see more cooperation”
Bronwen Rapley, Onward Homes
‘You will see the realisation that politicians can’t focus their thoughts just on protecting the housing wealth of the older generation – whether it’s about not building enough houses or protecting the green belt.
‘The reason lots of younger people, in their 20s and 30s, feel disenfranchised is that the housing crisis has hit them the hardest – a lot of what happened at the last election can be traced back to that.’
But lurking in the background of any housing policy response is that the ‘huge challenge’ of Brexit, which, says Mr Neale, will ‘suck up civil servants’ and ministers’ time’.
This is despite, he argued, the ‘entirely home grown’ nature of the housing crisis, which has ‘absolutely nothing to do with Europe and everything to do with Westminster’.
However, the post-election confusion provides opportunities for England’s elected metro mayors to seize the initiative, said Bronwen Rapley, chief executive of Liverpool-based Onward Homes.
‘Political turmoil at Westminster might enhance the powers of metro mayors because there may be less interference from central government and more opportunities to get on with regeneration,’ said Ms Rapley. Recent conversations with bodies such as Transport for the North about potential partnerships had, she said, been ‘encouraging’.
She added: ‘As the housing sector it is incumbent on us to work together. We are starting to see much stronger co-operation between organisations.’
But Ms Rapley also said that cuts to supported housing provision, as a result of the local housing allowance cap, had helped to fuel the homelessness that was so evident to conference delegates on the streets of Manchester.
‘I’m not convinced we are making the connections. In many places, homelessness isn’t a problem of lack of homes; it’s a lack of support.’
One of the consequences of the closure of preventive schemes was the sectioning of mentally ill people, which in turn led to bed-blocking in the health service.
The context for the cuts to these preventive services is, of course, the wider budget cuts across local government.
‘Local authorities have a lot of problems and have to make massive savings,’ said Warrington BC’s Mr Mather.
‘We used to get £120m of grant in 2010; by 2020 it will be £9m. Local authorities are having to think and act differently to cope with growing demand,’ he said, citing the 1,200 people that Warrington is currently housing in temporary accommodation.
The dire situation faced by local government was one of the factors driving the increasing involvement in housing by councils, Mr Mather explained.
Warrington Council, he said, was stepping up its lending to housing associations, which had grown over the past six years to a £275m portfolio of loans, ranging in size from £90m right down to £3m.
‘We see massive growth in that area, which we are gearing up for. Traditionally we gave loans in the North West, but we are now talking to organisations in London.’
The council’s own bank, to be called Redwood, would be fully operational and offering mortgages later this month, he added.
Warrington, like many other local authorities, has also started to purchase properties on the open market, exploiting its ability to borrow ‘very cheaply’ from the Public Works Loan Board. And the north-west council was in the ‘advanced stages’ of setting up a housing company, which, said Mr Mather, will probably be ready to launch in the autumn.
He also noted, however, that setting up a housing company is a far from risk-free option for councils. ‘Some councils will get it wrong: some will jump in without investing in the business case and will go belly up over the next few years, which won’t look good for the local government sector.’
The right to buy is another business-plan risk councils need to consider when setting up housing companies, he added.
However, by using its landholdings, Warrington can over time ‘develop a company of considerable worth’, said Mr Mather. ‘The logic is to make money for the council.’
In addition, he said, the authority’s elected members had been put off housing associations by the sector’s growing commercialisation.
‘To our members, housing associations seemed to be moving away from their social remit and providing affordable housing, to building housing for rent.’
Michelle Allott, group director of finance at Together Housing, questioned why Warrington wanted to build rather than go into joint ventures with housing associations, which have greater development expertise.
“There are some valuable ideas, but it’s tinkering around the edges, not addressing the big issues”
Jon Neale, JLL
Hyde Housing Group chief executive Elaine Bailey cited, as a good example of how local government can tap the registered providers’ expertise, a joint venture on which her association is working with Brighton council.
Both Brighton and Hyde have contributed land and finance to the scheme, which has the objective of building 1,000 homes to let out at ‘working rents’ that will be set in line with local average wages.
Richard Petty, lead director for affordable housing at JLL, said the white paper had ‘changed nothing’ to date, particularly in the context of the election and the Grenfell Tower fire. However, he said that deregulatory measures introduced in April mark the ‘greatest shake up in terms of freedoms in the last 20 years or more’, with a lot the sector can do to work assets, dispose, enter into transactions or restructure.
He said the way providers choose to behave with assets can have a knock on effect on value.
‘That’s in your hands actually. It’s about us looking at how the RP market behaves. We’re starting to see some of that behaviour play out in the stock rationalisation market – the way RPs are thinking about how they price bids and use stock after they acquire it.
‘And as long as that’s done with a sense of social purpose, there’s nothing wrong with thinking more commercially.’
Turning the focus to the ramifications of the Grenfell Tower disaster, Mr Petty called for greater investment and empowerment of RPs.
He expressed the hope that in the aftermath of what he described as a ‘watershed moment’, the government would not conclude it had to choose between ‘essential regeneration and improvement, and the desperate need to create new homes’.
‘That’s a choice I hope the government will avoid us having to make, because really we need both.’