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07.02.17

Housing paper marks policy shift to rent in bid to save ‘broken’ market

The government has announced plans to reduce unfairness and increase diversity in the housing market, admitting that the current system is “broken”.

In its much-anticipated housing white paper, published today, the DCLG outlined several measures intended to speed up and facilitate housebuilding while making house ownership more accessible to younger people.

Notably, the strategy marks a major shift in policy as prime minister Theresa May signalled a desire to focus more intently on renters as opposed to home ownership – although the government insisted it has not abandoned plans to reverse the decline in ownership.

Housing minister Garvin Barwell acknowledged that the proposals would represent a “change in tone” from the previous government, especially with regards to Margaret Thatcher’s “home-owning democracy” vision that David Cameron advanced during his years as PM.

Amongst other measures, the white paper included plans to amend planning rules so councils can plan for more build-to-rent properties, as well as a view to make more longer-term tenancies available in the rented sector.

It will also consult early this year, ahead of bringing forward legislation as soon as time allows, to ban unfair letting agent fees to tenants with a view to improve market competition and give renters “greater clarity and control over what they pay”.

Local government bodies have had a mixed reaction to the announcement, calling the policy measures “encouraging” but equally branding it a missed opportunity for the government to be bolder.

Introducing the white paper, communities secretary Sajid Javid admitted the country’s housing market is broken and said the solution “means building many more houses in the places that people want to live” – all the while reaffirming his commitment to the green belt.

“Walk down your local high street today and there’s one sight you’re almost certain to see. Young people, faces pressed against the estate agent’s window, trying and failing to find a home they can afford. With prices continuing to skyrocket, if we don’t act now, a whole generation could be left behind,” he added.

“We need to do better, and that means tackling the failures at every point in the system.

“We are setting out ambitious proposals to help fix the housing market so that more ordinary working people from across the country can have the security of a decent place to live. The only way to halt the decline in affordability and help more people onto the housing ladder is to build more homes.”

One of the flagship reforms of the announcement is a new standardised method of calculating housing demand, backed up by a requirement for local areas to produce a “realistic” housing plan and review it at least every five years.

The DCLG has also shortened the timescale in which developers must start building after planning permission is granted from three years to two years, to force them to act upon granted permission. SME builders will be encouraged to enter the market through an increase in loans.

Other measures include the increased targeting of starter homes at first-time buyers who would otherwise be priced out of the market, intensifying focus on building homes for affordable rent and Rent to Buy alongside shared ownership, while making longer-term tenancies available in private rented schemes.

Once again, the government has stressed that the green belt will be protected as it outlined its intention to “radically increase” brownfield development in town centres and “bring life back to abandoned sites”. The ultimate vision is to “breathe new life” back into high streets, turn abandoned shopping centres into new communities, and boost the density of housing around transport hubs.

The role of councils

The LGA welcomed the announcement of the white paper, identifying “encouraging signs” in the government’s willingness to tackle the housing crisis, such as greater council powers and flexibility around starter homes. But the association nevertheless argued that councils could be given even more responsibility.

“Local government believes even more needs to be done to rapidly build more genuinely affordable homes to help families struggling to meet housing costs, provide homes to rent, reduce homelessness and tackle the housing waiting lists many councils have,” said the LGA’s housing spokesman, Cllr Martin Tett.

“For this to happen, councils desperately need the powers and access to funding to resume their historic role as a major builder of affordable homes. This means being able to borrow to invest in housing and to keep 100% of the receipts from properties sold through Right to Buy to replace homes and reinvest in building more of the genuine affordable homes our communities desperately need.”

County freedoms

Counties felt much the same way. The chairman of the District Councils’ Network (DCN), Cllr Neil Clarke, welcomed a greater emphasis on flexibility around type and tenure, including a renewed focus on affordable homes and rentals – but stressed that district authorities will need greater fiscal freedoms to “fully unlock their ability to build more homes”.

This includes removing the HRA borrowing cap, the use of Right to Buy receipts and other borrowing freedoms, all of which the DCN will continue to fight for in its response to the white paper.

Despite this, the DCN was pleased to see some of its long-standing recommendations being taken on board, such as speeding up housebuilding by giving councils powers to make developers build within two years of granting planning permission.

“This will address our concerns relating to the gap between the number of planning permissions granted by district councils and the number of new homes completed,” noted Cllr Clarke.

“We also welcome proposals to increase planning fees by 20% from July, with the prospect of a further 20% increase to councils who are delivering new homes for their communities. For too long, council planning departments have been under-resourced to deliver local planning, and the DCN has lobbied tirelessly over many years for fuller cost recovery.”

He added that the DCN will now fully examine the white paper’s smaller print, including plans for a Housing Delivery Test and proposals around the standardised way to calculate housing demand.

Major shortcomings

The Local Government Information Unit (LGiU) was more sceptical in its response. While it embraced proposals to bring more small builders into housing, the organisation remained unconvinced that the paper goes far enough to tackle the “democratic deficit” in the UK’s planning system.

It cited its recent survey in which a majority of councillors claimed that the system tends to prioritise developers over local communities, warning that far from addressing the problem of a centralised system, the white paper looks set to exacerbate the issue.

“We desperately need more housing, but we also need the planning system to be democratically accountable,” said the chief executive of the LGiU, Jonathan Carr-West. “That's why councillors need to be at the centre of it. This white paper is a missed opportunity to put them there.”

The LGiU added that the ambitions of the paper will be difficult to achieve without further resources, noting continued cuts to council planning departments. Its research from last year also found that almost 90% of local authorities believe that government housing targets are unattainable due to a lack of planning resources.

The National Federation of Builders also lambasted the white paper, which it argued lacked ambition. The DCLG’s pledge to loan £3bn to SMEs, for example, is “outdated and shows its failure to enable SME housebuilders to play a greater role in addressing the housing crisis”.

(Image c. Yui Mok - Press Association Images)

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