Monday 6 February 2017

The Tories and Affordable Renting

Housing is a major sticking point for the Tories. They know it, we know it, and the public know it too. On their watch, first with their LibDem friends and now alone with a majority thinner than a major donor's tax return, the bottom fell out of the house building figures. Cash strapped councils made poorer by a deliberate attempt to destroy local government services had no readies to produce social housing. The Tories curbed housing association building plans by announcing the extension of right to buy to their tenants (plans now quietly dropped). They left towns and cities across the Midlands and North scarred by cancelling Labour's housing pathfinder renewal scheme while, perversely, stumping up the cash for demolitions of "undesirable" housing stock. And have sat by while buy-to-let and second home ownership took off for the fortunate few. Indeed, their Mayor of London encouraged international capital to park its cash in property with deleterious consequences for ordinary house buyers.

This paralysis can be put at the foot of a generous reading of Tory motives. Because they believe the private economic activity is always the preferred provider for any service, allowing the state to retreat would encourage the magic market pixies to step in and make available provision instead. It's nonsense, of course. The state of the market discriminates in favour of those with piles of cash and/or easy access to equity. It responds to property investors over young people trying to get on the housing ladder, driving prices up. And this is ably assisted by limited supply. Why should developers try meeting market demand for housing when deliberate under-building ensures greater returns on investments? No, these economics are so obviously distorted and broken that the usual ideological idiocies about the market serve only to highlight the situation's absurdity.

As with all things in politics, it's the interests, stupid. Under Dave and Osborne nothing was done because the property developers, the landlords, the home owners whose assets inflated under galloping house prices were and remain key cohorts of Conservative voters. This layer of petit bourgeois owners shading into the big landlord chains benefited from low numbers of new builds and the restrictions on social housing. Likewise, under his Blessed Blairness New Labour did bugger all to stymie the degeneration of the property market in the name of aspiration, of wanting to capture the Kirstys, the Phils, and the Sarah Beenys in the nice swing seats. Unfortunately for the Tories, this situation cannot continue. Locking millions permanently out of the housing market while core supporters carry on coining it stores up social and political problems. The party that, in the 1980s won over layers of working class people by giving them a leg up into property was in danger of becoming the party that denied their kids and grand kids similar help. How then to sort the problem without going "full communist" by building 200,000 new homes a year, as per Ed Miliband, without causing average house prices to fall and hitting the investments and asset prices of its nearest and dearest supporters?

In their new white paper, Housing Minister Gavin Barwell has come up with an ingenious solution. Forget affordable housing, let's have affordable renting. What Barwell proposes is a recasting of the rental market. In a move redolent of working towards the leader, he proposes the introduction of long-term tenancies that provide stability for renters and landlords alike. A system not unlike the lengthy lets that are par the course in Germany, in fact. It reiterates the guillotining of letting agents' fees, but also hints at "government help" (i.e. bungs) for developers to build homes for "affordable" renting, something the House Builders' Association have dived on with alacrity. On all the Sunday talkies, Barwell ritualistically reiterated the commitment to building a million new homes before 2020, but it was said with the kind of enthusiasm reserved for policies destined for disposal down the memory hole.

It goes without saying, but I'm going to say it anyway: this policy is a load of rubbish. It does little to address the housing problem. It does next to nothing to solve the shortage in social housing stock. But, then again, one shouldn't be mean about young Gavin's efforts: he can't well be expected to solve a problem he didn't set out to tackle. Secure tenancies certainly make for touchy-feely one nation vibes, but expanding the buy-to-let market - which is what the government are signalling - provides more opportunities for landlords and developers in such a way to stymie the numbers of new builds entering onto the open market for prospective owner-occupiers and first-time buyers. Prices therefore remain largely protected. As for the problem, well, it gives the Tories the appearance of doing something, except this something, as always, is about protecting the interests of their own.


Paul Ewart said...

They also cut guaranteed funding in 2010, reversed the RTB receipts revers (which would have allowed Council's to reinvest in housing stock) and destroyed HA's plans by insisting that a quarter of new stock be set aside for the new 'Affordable' Rent (80% of Market Rent). HA's budgets and long term plans were thrown into disarray.

Blissex said...

«an ingenious solution. Forget affordable housing, let's have affordable renting.»

That's just PR, because if there were a large number of «affordable renting» opportunities house prices would fall a lot as many would switch to renting from buying.

«the appearance of doing something, except this something, as always, is about protecting the interests of their own»

That's called politics. A very nice book about english culture reports from the 1950s, about the english preference for fair compromises:

«The Labour party is a fair compromise between Socialism and Bureaucracy; the Beveridge Plan is a fair compromise between being and not being a Socialist at the same time; the Liberal Party is a fair compromise between the Beveridge Plan and Toryism; the Independent Labour Party is a fair compromise between Independent Labour and a political party; the Tory-reformers are a fair compromise between revolutionary conservatism and retrograde progress; and the whole British political life is a huge and non-compromising fight between compromising Conservatives and compromising Socialists.»