Think of a number

July 1, 2015

100,000 seems to be a popular number. I use it in my Freeing Housing Associations report, where I argue the sector as a whole could be building 100,000 affordable and market homes a year.

The recent report Building New Social Rent Homes commissioned of Capital Economics also argues for building 100,000 homes each year, for social rent.

Few disagree with the premise that we need to be building many more homes. Ever since the Kate Barker report, the 240,000 number has become ingrained in our psyche. Few serious commentators question it. I make no bones – we need to build 240,000-plus homes a year, probably 300,000 a year, to make decent inroads into the housing shortage backlog. But currently these numbers feel like wishful thinking.

At the Chartered Institute of Housing’s annual conference last week, during my debate with Colin Wiles of the SHOUT campaign, I suggested that we do not need to build 100,000 affordable homes a year within that 240,000 context, whether social rent, affordable rent or otherwise. My reasoning was threefold:

First, affordable homes make up only a sixth of the homes in our overall housing stock, according to the Department for Communities and Local Government’s English Housing Survey. If we are to maintain that proportion in a world where we build 240,000 homes, we would only need to build 40,000 affordable homes a year.

This does of course abstract from the additional affordable homes we need to build on top of that to replace those sold through Right to Buy (there were 12,304 Right to Buy sales in 2014/15, plus some preserved Right to Buy). So it’s probably nearer 55,000-60,000 a year under current policy (I actually argue 60,000 in my report).
Second, we cannot consider the affordable housing sector in isolation of the market housing sector. What happens in the market has ramifications for the affordable housing sector and the pressures placed on it.

Nothing illustrates this more than what happened to the social housing waiting lists in the 2000s, when they grew from 1m households in 2000 to 1.7m in 2010 and not because affordable housebuilding fell (it did not), but because affordability in the wider market grew so much worse, in turn because market housebuilding was much too low.

That’s partly why, in Freeing Housing Associations, I argue for many more market homes to be built by the large housing associations as part of their social mission. It wasn’t just about increasing theirfinancial capacity to cross-subsidise affordable housebuilding (ie through private market sales).

Third, in order to drive up overall housebuilding numbers, we need more permissioned land to be released into the system by local authorities. It is simple: without more permissioned land, we cannot build more houses, and affordable homes built will displace market ones (as an example of this, in their cost benefit assessments of affordable housing, government officials treat affordable housing as being only 50% additional to overall housing supply). Social housing grant could rain from the heavens but displacement would remain.

Defining ‘affordable’

So what should affordable housing be? Many argue that affordable rented homes are not truly affordable and I have much sympathy with this argument. But for me, housing does not have to be social rented for it to be deemed ‘affordable’ for everyone.

That’s why I believe exemplary housing associations should decide what’s affordable for their owntenants and have their own policies for sub market rents, tailored to the individual tenant and their needs. In this world there would, eventually, be no ‘social rents’ or ‘affordable rents’, just each housing association’s own individual rent policies.

This would be subject to the limit rent applied to their overall portfolio, as an ultimate layer of protection stopping housing associations simply hiking up rents. Notwithstanding rent independence is not actually a Policy Exchange idea – the Fed has been calling for it for many years now.

We do need to see the bigger picture in our thinking about affordable housing supply. We do not need to build 100,000 affordable homes a year. We certainly don’t need to build 100,000 social rented ones – incidentally, social rented homes cannot be justified on future housing benefit saving alone, though more on that later.

What we do need to do is build at least 240,000 homes a year and probably around 60,000 of those affordable, allowing landlords to decide flexibly what their affordable offer is. That would also help housing associations build the more mixed communities many are seeking, as well as support a much more coherent and socially cohesive housing supply policy overall.

This blog originally appeared on Inside Housing

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