Say what you like about the contents of the Housing White Paper published earlier this month, but there was certainly a considerable amount of hype around it and, rather importantly, what it would contain.
Whether, in the end, the Paper lived up to that hype perhaps depends on your political persuasion – from one perspective it was a new chapter, outlining numerous fixes for the UK’s ‘broken housing market’, while for others it was something of a ‘damp squib’ regurgitating already-announced policies and doing little to convince in terms of actually meeting the large (and growing) ‘housing gap’.
Much has been made about the perceived new shift in government policy that the White Paper appears to signal – that is, a move away from a ‘homeownership at all costs’ approach to one which is much more ‘tenure neutral’ recognising the need for quality housing for renting and the needs of tenants in ensuring they have housing security and can plan for the long-term.
I think many in the housing and mortgage markets would agree that placing all your eggs in the home-ownership basket has been something of a mistake, and righting this particular wrong is perhaps long overdue. However, the ambition to own one’s own home is not going to go away and therefore the need to build more homes for ownership is still as necessary as it was the day before the White Paper was published. In effect, we have major supply issues around homes for ownership and homes for rent, and part of me (and I suspect many others) wonders whether we are anyway closer to delivering enough stock for either.
However, let’s focus on the positives – regardless of whether they’ve been announced before. There is plenty in the paper to consider and to suggest that we might get closer to building those 250,000 new homes required each year, including a new fund for smaller builders to utilise, ‘use it or lose it’ requirements for developers who haven’t begun projects within two years, more support for local authorities and housing associations to build, freeing up of more public sector land for building, and more pressure on councils to review their housing needs and use the same formula to ascertain local demand.
On the rental side of things, the government intends to encourage more institutional investment in building private rental sector properties, it wants to improve the safeguards around renting, wants to encourager longer tenancies to give more certainty, and get rid of rogue landlords. Again, all laudable endeavours and ones that recognise the growing numbers who are renting and hopefully works to make that experience far better for all.
So, can it deliver what we need in this marketplace? Can it deliver the increase in property numbers, in areas where people want to live? Can it fill the gap in any reasonable timescale when, with each year that passes, it grows bigger and bigger? Can it offer up ‘affordable’ homes knowing what we know about house prices compared to average incomes and the difficulties, in particular, first-time buyers have in saving the necessary deposit to get a mortgage to get on the ladder? Can it bring in SME builders and developers who have not come back to the market in any great numbers post-Credit Crunch? Can it discourage land banking? Can it deliver after many decades of neglect from governments of various hues?
There are no answers at the moment but the sceptics amongst us might well think that, given recent history, given the variety of schemes, funds, announcements and supportive measures we’ve had which haven’t got us to the numbers required, the government faces an uphill battle. Which, of course, doesn’t mean it shouldn’t be pursued with all the resources at its disposal, because the fact of the matter is that doing nothing is not an option, even if many people believe more could be done. There will of course be others who believe a policy of, for example, 100k new houses each year, allowing the gap to grow, means house prices continue to rise and this fits neatly with the likes and requirements of a certain voter demographic – however, that might be an overly cynical take on this.
Whatever the outcome, the importance of freeing up land, encouraging house builders, focusing on affordable/starter homes, is of course right. But we should also not forget that purchasers need finance, and that the mortgage market for first-timers in particular needs to improve, especially around the provision of high LTV loans. Building the properties is one thing, but let’s not forget that they need to be bought and therefore a joined-up approach with lenders is also vitally important, especially when certain properties will not be available to all.
Pad Bamford is business development director at AmTrust Mortgage Insurance