Last week there was a piece of good news for the Government that you might have missed:
“Annual housing supply in England amounted to 222,190 net additional dwellings in 2017-18, up two per cent on 2016- 17.”
So that hits the (pretty arbitrary) target of 200,000 a year, set by Brandon Lewis when he was Housing Minister in 2015, to get to a million more homes by 2020.
These are new homes. But not all are built from scratch – some are converted from buildings that had been used for something else:
“The 222,190 net additions in 2017-18 resulted from 195,290 new build homes, 29,720 gains from change of use between non-domestic and residential, 4,550 from conversions between houses and flats and 680 other gains (caravans, houseboats etc.), offset by 8,050 demolitions.”
On the other hand, various claims have been put out that we “need” more than 200,000 extra homes a year.
When Sajid Javid was the Communities and Local Government Secretary, in 2016, he said:
“Even if the number of people coming to live in this country falls, we’ll have to build at least 220,000 homes a year for the next decade just to keep up with population growth. 220,000 new homes every year, just to stand still. To maintain the status quo.”
A year ago he said:
“If we’re going to do more than just stand still, if we’re going to make serious inroads into tackling this nation’s housing crisis, we’re going to have to build at least 300,000 homes a year.”
Last year’s Conservative Manifesto said:
“We will meet our 2015 commitment to deliver a million homes by the end of 2020 and we will deliver half a million more by the end of 2022.”
It all has a bit of a whiff of central planning about it, doesn’t it? The Government doesn’t produce figures for how many new dishwashers or pairs of trousers we need each year. Then again the market is allowed to operate in those areas. If the state was building the “housing units” – in the spirit of Harold Macmillan – or the dishwashers or trousers, then such targets might have some relevance. As it is, such plans are pretty much cheerful guesses.
The other problem is that suppose meeting “need” means increasing supply to an extent that house prices do not increase in real terms. Would that be fine and dandy? No. It would simply mean the status quo was maintained. Millions unable to get on the housing ladder. Millions in overcrowding. Millions paying extortionate rent in the private sector, or caught in shoddy accommodation in the public sector. Paralysis restricting people from being able to move. So that is not fine and dandy – unless you are Jeremy Corbyn seeking to gather in the votes of those angry with the current arrangements.
What is needed is a sufficient supply of new housing to allow a steady and substantial fall in house prices over a period of several years. That would require bold action: to make it much easier to win planning permission (provided the new homes are attractive); and releasing a huge amount of surplus state land for development.
Of course, the amount of new housing is not the only figure to keep track of. Within that total, the share of tenure can also vary.
The Dwelling Stock Estimates for last year showed “the owner occupied dwelling stock increased by 262,000 and the private rented stock decreased by 46,000. The social and affordable rented stock increased by 3,000 dwellings and the other public sector stock decreased by 1,000 dwellings.” That meant that homeownership did go up – albeit by only half a per cent. It rose from 62.4 per cent to 62.9 per cent. The problem is that it meant the private rented sector was diminished. Tinkering around with schemes such as Help to Buy and clobbering the buy to let market will tilt things a bit towards those buying to become owner occupiers. What is really needed is to have more homes becoming available – rather than fiddling around assisting or penalising one group of buyers over another.
It’s not all doom. There is an important increase in supply which these figures don’t capture: Many existing properties are being extended to provide extra bedrooms. Walk along terraced streets in London and it won’t be long before you see builders at work. This could allow for greater scope for the old fashioned arrangement of taking in lodgers – especially if the Government had the sense to increase the Rent a Room tax relief.
The upshot is that overall the housing situation is stable – perhaps it is getting very slightly better. The hitch is that that is another way of saying it is still pretty dire for many people. What is the Government going to do about it? One strategy would be to compete with the Labour Party for the number of “units” the state will build. That would be flawed as a strategy. Nobody believes that the taxpayer would be able to fund building on the scale required. Even if it was viable to borrow the hundreds of billions, past experience is that they would be pretty awful places to live. Apart from these practical points there is also a political and philosophical difficulty – such a contest of who is most socialist would inevitably be won by the Labour.
The other strategy, more in keeping with Conservative principles, would be to allow the housing market to function – to release land from the Government’s grasp and lift the restrictions.
So far the Government is making a token pursuit of both strategies. But not doing enough to make much of a difference.