How seriously can we take the government’s pledge to build 1 million homes in 5 years?
Housing Minister Brandon Lewis was quoted in the BBC Inside Out London programme on 21st September as saying that the Government aims to build a million new homes in England in the next 5 years or 200,000 homes a year. Neither the Conservative Government nor the previous Coalition government had a national housebuilding target, although on occasions Ministers acknowledged that there was a need for at least 240,000 new homes a year. Whether the figure of one million is, or is not, a formal target is unclear, as there is no announcement on Government websites. The Inside Out programme was focused on the housing crisis in London, and there is no Government target for London, though the Mayor has a London target of 42,000 homes a year.
The Minister is not saying how the 200,000 houses will be delivered. Labour in their general election campaign said they would aim for 200,000 a year by 2020, but not necessarily every year, for the next 5 years. The Lib Dems offered a target of 300,000. Given completions last quarter were 33,280, getting to 200,000 a year means that output needs to be nearly doubled, and unless tens of thousands of flatpack homes are imported for instant construction, there is clearly no chance of 200,000 being achieved this year or next year. Perhaps Brandon Lewis is counting beds in sheds and all those office to residential conversions being undertaken without a requirement for planning consent.
The key issue is, however, not the numbers, but what kind of new homes, where and for whom. The Government has not said how many of the new homes would be affordable, even in terms of its own definition that homes for sale below £450,000 in London and £250,000 in the rest of England are now considered to be affordable, as are any rented homes at up to 80% of market rent – even if the market rent is, say, £1,000 a week.
A more appropriate definition of affordability would be that no household should spend more than 30% of their income on rented housing or 40% on owner occupation – the definition in the original 2004 Livingstone London Plan; but the Government refuses to be that specific. High numbers of new homes don’t meet local housing needs if they are sold for investment abroad and left empty for all or part of the year.
We also need houses as well as flats, and family-sized homes as well as studio flats in tower blocks. The average cost of a London home on the market is now over £500,000 – more than 10 times the average household income – in some areas of inner London the ratio is 20:1; not much use when you can only get a mortgage at 3.5 times your household income.
The Government thinks it can get more homes built by relaxing planning laws and by giving money to developers or house-buyers. This actually does little to increase the volume of housing output – most major house-builders are making very substantive profits without increasing output, and giving grants ( as under the Housing ISA initiative) or loans to purchasers just inflates house-prices again.
The Government is doing nothing to control either land value – a critical element of housing costs - or to stabilise or even reduce house-prices. House-prices and private rents continue to go up much faster than average household incomes. If the government really wants more genuinely affordable housing, it has to be prepared both for to compulsorily purchase land for housing councils at its pre-housing value that is without the ‘hope value’ and to provide capital grant to build low rented council and charitable housing association homes.
Many Housing Associations and an increasing number of councils are behaving in a manner rather similar to that of a private developer, focusing on maximising asset value and rental income, rather than on meeting the most acute housing needs of those for whom accessing the market is a distant dream. This is a message for opposition parties as well as for the Government.