Private renters need support but we don’t need to build more houses!

The Joseph Rowntree Foundation has published a report on the serious problems facing renters in the private sector –Renters on low incomes face a policy black hole: homes for social rent are the answer. The report illustrates the problems facing many tenants in the private rented sector.

Yet the solution proposed is seriously flawed. For one thing it uncritically accepts the Government’s 300,000 housing target, despite the fact this target is way above any realistic target (more like 170,000 a year). It suggests that tenants would be better off if they transferred to social housing but to achieve this aim more houses should be built. What happens to the houses which the tenants are already occupying? As the problem is one of cost and affordability not supply then we do not need to build additional houses to support existing tenants.

A better option would be to transfer private sector housing to community sector housing in the long term, in the short term reducing private rents would be more appropriate.

As for housing targets, a higher proportion of the 170,000 needed each year should be geared towards social housing while cutting the numbers of luxury homes and limiting the use of property for second and holiday homes.

It is not right that the high cost of private renting is leaving almost one million families paying rents they cannot afford. This is leaving nine in ten of these families in poverty, with some family budgets more than £100 a week below the poverty line as a result. The Government’s current plans don’t come close to addressing the problem. There is an urgent need to ease the pressure on these families to reduce poverty, improve living standards and allow more people to save for their
family’s future.

The majority of the Government’s policy responses – Housing Benefit; the affordable rent scheme which lets properties at up to 80% of market rates; and homeownership products like Help to Buy, First Homes and the Mortgage Guarantee Scheme – are either not working for this group, or only working for a small proportion of them.

The homeownership products that form the cornerstone of Government housing policy are out of reach for the majority of this group: homes bought through Help to Buy would only be affordable to 2% of low-income private renters, and most of the current products, including the mortgage guarantee schemes and First Homes, are unaffordable to nine in ten low-income renting families. These products work for people already on the cusp of homeownership, but there is a policy black hole for lowincome renters.

Housing benefit plays a vital role in helping low-income households with their housing costs, but years of cuts and freezes have undermined its effectiveness. Around half of the 956,000 families paying rent they can’t afford receive Housing Benefit but are still
struggling. By itself, subsidising high private rents through the benefits system is not a sustainable solution to this problem. Housing Benefit costs the state around £30 billion a year, a large proportion of which goes to private landlords.

The Government must step up its housebuilding efforts to reach its target of 300,000 homes a year and must ensure that 30% of these are homes for social rent. In the near term, this would meet the needs of the 1.1 million households on the social housing waiting list, as well as people experiencing homelessness, and support the Government’s own aim to reduce homelessness and end rough sleeping this parliamentary term. Over the long term, it could lift 600,000 people who are renting privately out of poverty; provide more than half a million households with a home they can afford; and ease the pressures of high rents for the majority of the other half a million households paying rents they cannot afford, many of whom will be on social housing waiting lists.

For more: https://www.jrf.org.uk/report/renters-low-incomes-face-policy-black-hole-homes-social-rent-are-answer

Camborne and Redruth – stations on the line?

The Pool Vision consultation which ends this month, is suggesting that Pool should become a town in its own right. It also proposes a new rail halt, but there are already stations at both Camborne and Redruth. Is it sensible to have three stations within a four mile stretch? With a station at Pool would the rail authorities consider it more cost effective to cut out the stations at Camborne and Redruth with a loss to the communities of both towns.

https://letstalk.cornwall.gov.uk/poolvision

Cornwall housing strategy – time for a change

A housing strategy should recognize that building more houses in Cornwall is not the answer to the housing crisis. Controls over second and holiday homes, restrictions on housing built to attract people to Cornwall, particularly luxury houses are all essential elements of a policy. Where permission is given for housing the emphasis should be on social housing. [Its not housing supply that is the reason behind high house prices, low interest rates have led to asset prices including housing increasing].

House values soar – but for most people its irrelevant

The newspaper and Zoopla itself imply that people are sitting on a gold mine – its sort of statistically true but irrelevant. Most people have one property which they live in. If they sell (unless they move downmarket or to a cheaper area – which may not have the advantages of the area they live in), they will need a similar amount of money to buy another property. Not really any better off. Now if you have a property portfolio then yes you could sell off some property and use the money for something else.

The problem is that houses are assets as well as providers of housing services, and with low interest rates and incomes generally rising house prices have risen.

Sitting on a gold mine: value of British homes soars by £1.6 TRILLION over the past five years – with 11.9 million homes increasing in value by over the £49,000 average‘.

The total value of homes in Britain has risen by 20% – a huge £1.6tn – in the past five years, according to new data from Zoopla, the only website to provide the real time monthly value of every home in the UK. There has been a sharp acceleration in the total value over the past year in particular, driven by soaring demand for homes and the pandemic-led search for space. Of the £1.6tn, over a third (£550bn) of the increase has been in the last 12 months. 

With almost 12 million homes increasing in value by the national average of £49,000 or more over the past five years, homeowners can use Zoopla’s My Home to see how much their home is worth. 

The total value of homes in Britain currently stands at a staggering £9.2tn. The majority of this (£8.2bn) is held within 23.5 million privately-owned homes, whilst a further £1tn is held within five million social homes. 

https://www.zoopla.co.uk/press/releases/sitting-on-a-gold-mine-value-of-british-homes-soars-by-16-trillion-over-the-past-five-years-with-119-million-homes-increasing-in/

https://www.theguardian.com/money/2021/oct/14/britains-homes-could-be-worth-92tn-on-open-market-report-shows

Cut back on flying

A sensible idea although the idea should be to reduce air travel substantially with limits on international flights.

Domestic flights should be banned and long-distance train fares subsidised, transport campaigners have urged, highlighting the relative environmental and financial costs of air and rail travel. The Campaign for Better Transport (CBT) called on ministers to outlaw internal UK flights if an equivalent train journey took less than five hours and to resist calls for any cut in air passenger duty. Mandatory emissions labels on tickets and a frequent flyer levy should also be introduced, the charity said.

The demands came before the 27 October budget, in which the chancellor, Rishi Sunak, may decide to cut taxes on domestic flights in response to pressure from the aviation industry, a possibility mooted by the prime minister earlier this year. Such a move could, however, prove an embarrassment a week before the UK hosts the Cop26 climate conference in Glasgow.

https://www.theguardian.com/uk-news/2021/oct/11/ban-uk-domestic-flights-and-subsidise-rail-travel-urges-transport-charity

We DO NOT need to build 300,000 houses!

Actually we don’t need to build 300,000 houses a year! We already have 1.2 million more houses than households and to meet household need we only require about 170,000 a year!

Boris Johnson’s election pledge to build 300,000 new houses a year is in serious jeopardy in the face of labour and material shortages that are causing major disruption across the economy, industry figures have warned. A commitment to reaching the target by “the mid-2020s” was included in the last Tory manifesto as a key part of the party’s offer to increase home ownership to relieve the housing crisis. However, analysts already believe it is “almost impossible” to meet the manifesto pledge under the current conditions. Construction firms have complained of unavailable transport, a severe lack of materials and continued staff shortages among bricklayers, drivers, ground workers, joiners and plumbers.

https://www.theguardian.com/society/2021/oct/10/tories-manifesto-pledge-to-build-300000-houses-a-year-now-almost-impossible

Some information for the BBC and Paul Cheshire

As we mentioned yesterday the BBC has used Paul Cheshire as its housing expert. He still asserts that we need to build more houses to deal with the housing crisis. However, the evidence from a wide range of sources is that supply is not the problem, so below we set out some links to the alternative evidence!

Cornwall – not building enough houses – you cannot be serious?

The BBC is running a series on the housing crisis, visiting a number of houses to ‘explain’ the housing crisis.

The first episode featured a house in St. Mawes. Professor Paul Cheshire when asked to explain high house prices in Cornwall said Cornwall is one of various areas “which are desirable places to live, where there has been a surge in demand but have not been building enough houses to meet that demand. So in Cornwall house prices have about tripled in the last twenty years“.

Oh dear, sorry Professor Cheshire, you seem unaware of the work carried out by numerous individuals and groups who have illustrated that rising house prices are the consequence of low interest rates together with rising incomes, not a lack of supply! Oh and for your information, Cornwall has been building houses, well above the pro rata level for England and has a surplus of houses – 115 for every 100 households.

Paul Cheshire still clings to the ‘supply is the problem’ myth despite evidence to the contrary.

[Those who have debunked the supply myth include: Ian Mulheirn, Bank Underground and Simon Wren-Lewis (Mainly Macro)].