Link-dump: energy efficiency, regeneration, densities, buy-to-let and more August 1, 2006
Posted by Brickonomist in Housebuilding, Housing economics, Housing investment, Housing markets, Housing need, Linkage, London, Planning, Regeneration.add a comment
Apologies for the light posting of late, which was due to more work demands and some very pleasant weekends away. There’s a lot to catch up on so here’s a quick link-dump – I’ll try to come back to one or two of these items in more detail later.
- The Sustainable Development Commission has published ‘Stock take: delivering improvements in existing housing‘, which details “the technical options available for minimising the energy and water consumed and waste produced by residents of the existing housing stock”. The big question for me is what can be done to improve the efficiency of privately owned homes, with a particular question mark over privately rented housing, which the report rightly identifies as suffering from a ’split incentive’ problem – the tenant doesn’t have the incentive to invest in upgrading the home when she’s not going to be living there long, and the landlord doesn’t have the incentive to do so because she doesn’t pay the bills. Personally I think the landlord should pay some of the bill, but then I would say that because I’m a tenant. See also “Reducing the Carbon Impact of Private Rented Housing“
- England’s Housing Timebomb, from the National Housing Federation, features a prediction from Oxford Economic Forecasting that “the average house price in England will increase by around 50% by 2011, from just under GBP195,000 at the beginning of 2006 to GBP286,000, equivalent to 9.2 times the projected average salary for 2011″. The study concludes that housing associations should therefore be building or refurbishing 80,000 affordable homes each year instead of the current 40,000, which would obviously require much more funding from the state. They might well be right, but this one might get filed under “They would say that, wouldn’t they?”.
- The Town and Country Planning Association has published a commentary by Julie Cowans with the ungainly title of “Cities and regions of sustainable communities – New strategies”, but the potentially radical message that traditional approaches to addressing poverty (focusing on the “worst” estates first) should be abandoned in favour of proactive policies aimed at creating mixed income communities, i.e. enticing middle-income households into poor areas and trying to capture the resulting increases in land or property values. This has already excited some comment in the housing blogosphere (such as it is): Hannah is sceptical, Kevin pretty enthusiastic. I think Cowans may be drawing on the findings of this work, which I’ve started reading but have yet to finish. Anyway, hope to say more on this in due course.
- According to CB Richard Ellis, there has been an extraordinary increase in the density of new residential developments in London, no less than a quadrupling (in terms of habitable rooms per hectare) in just four years. They seem to mostly put this down to policy changes, but surely the huge rise in land costs (which obviously isn’t entirely unrelated to policy) is the main driver? Interesting quote: “We found schemes within regeneration and other special policy areas are frequently gaining planning permission for greater density than is recommended in the London Plan”.
- Labour-run London boroughs are building a lot more affordable housing than their Conservative counterparts, according to Inside Housing: “The 11 Tory authorities in power before the election were due to deliver just 18 per cent of grant funded homes in the capital.” Word on the grapevine is that some incoming Tory administrations have effectively vetoed large numbers of affordable housing developments that were going through the planning stage. Certainly, I don’t expect Hammersmith & Fulham council will be delivering 65% affordable housing in the next few years, as it has in the past.
- And finally, the Financial Times celebrates ten years of buy-to-let in the UK
Reduced recycling restricts reinvestment July 1, 2006
Posted by Brickonomist in Housing economics, Housing investment, Housing markets.add a comment
I’ve posted before on how little net state investment there is in social housing in the UK. In large part this is because of the Treasury’s long-standing recycling initiative: it takes from local authorities three-quarters of the capital receipts from sales of council homes through the Right to Buy and uses them to fund its Decent Homes and new supply programmes. So it’s interesting that Right to Buy receipts look like they’re about to drop sharply just as the government has been making noises about spending much more on new social housing. Inside Housing has the details:
Right to buy proceeds set to plunge
By Martin Hilditch
Published: 30 June 2006
Plummeting right to buy sales look set to cut the amount of money the government makes from the programme by a quarter of a billion pounds.
Official statistics on the number of people buying their homes through the scheme in England in 2005/06 are
expected to show that sales fell by almost 50 per cent, Inside Housing understands.London is likely to see the biggest drop in sales although a decrease is expected in most regions. Yorkshire & Humberside is anticipating that the number of people exercising their right to buy will have fallen by a quarter.
In 2004/05, there were 49,983 homes sold through the right to buy. Figures for 2005/06 are due out next month.
Steve Partridge, director of Housing Quality Network, said the government, which takes 75 per cent of the capital receipts from right to buy sales, was likely to take the biggest financial hit.
A 50 per cent drop would see receipts fall by £250 million or more, he said.
‘It will certainly be a very interesting issue in the spending review because presumably they are going to have to downsize their forecast of right to buy receipts.
‘If that drops to £250 million then that is a big hole. It is now at the stage where even the increase in prices is not going to compensate for it.’
The fall in sales could also affect councils’ and arm’s-length management organisations’ ability to bring their homes up to a decent standard.
Many business plans have been based on the landlord having fewer homes to improve and more right to buy receipts to spend on the work.
‘I have seen in a number of councils it [the number of sales] just go through the floor,’ Partridge added. ‘One downside financially is that there might be more homes to make decent.’
A number of local authority sources told Inside Housing that right to buy sales had been hit by the growing affordability problem around the country. With a fixed discount and rising house prices tenants were thinking twice about buying, they said.
The amount of time a tenancy has had to run before residents could buy their homes was also increased from two to five years in January 2005.
One source said that government officials had warned them that the fall would have an impact.
‘What is coming through from government is that funding will be tight next year because of the drop,’ she said.
A London based source said the reduction in sales could be partly blamed on a reduction in the right to buy discount in the capital from April 2004.
Giving with one hand, taking with two June 19, 2006
Posted by Brickonomist in Housing economics, Housing inequality, Housing investment, Housing need, Party politics.add a comment
24dash is a pretty good site for news on housing and other areas of social policy, and they’ve done well in recruiting Richard Best of the Joseph Rowntree Foundation as a columnist. His latest adds some good detail on a subject I posted about recently, namely the paucity of net government investment in housing:
what people may not appreciate is that a whole series of changes to housing policies have sent billions of pounds to the Treasury. More than enough money to boost the supply of decent, affordable homes …
… over the last 20 years:
* Receipts from the Right-to-Buy sales of Council housing have yielded around £45 billion – but only a quarter has been recycled into improving public housing.
* The abolition of Mortgage Interest Tax Relief (MITR) – which was the corner stone of the Duke of Edinburgh’s Inquiry into British Housing, which celebrated its 20th anniversary last week – has boosted tax receipts by £30 billion, plus a further £3 billion each year.
* Stamp Duty when anyone buys a property (plus a major part of the Inheritance tax) brought in £6.5 billion last year alone.
* The Treasury has not had to put up the money for loans to housing associations through the Housing Corporation because housing associations have been borrowing – more than £50 billion since 1990 – from banks and building societies instead.
* Because of the improved economic climate, with lower levels of unemployment, the government has been paying out less in Housing Benefit to help low-income tenants.
Not convinced about that last one, but housing is clearly generating a lot of revenue for the Treasury – the Right to Buy alone has been easily the most lucrative privatisation of all. Directing a bit more of this money back towards housing seems only fair, and it’s not like there’s nothing to spend it on: Best highlights the need for an extra £2-£3 billion a year for new affordable housing, a safety net for low-income home-owners, help for elderly or vulnerable homeowners to get repairs to their homes, and bringing council homes and estates up to a good condition. He concludes:
The contrast between large financial gains to the Treasury from changes in housing policy and the continued level of misery created by bad housing, is very striking.
If only a modest proportion of the government’s increased revenue was to be recycled, a vital contribution could be made to defusing the growing crisis in British Housing. Come on Gordon Brown, housing needs a better deal!
The money pit, not April 27, 2006
Posted by Brickonomist in Homelessness, Housing investment, Party politics.add a comment
In a revealing answer to a written parliamentary question, Housing Minister Yvette Cooper makes much of the fact that “since 1997 the Government have consistently invested more in housing than they have received in receipts [from sales of council housing]“.
This just goes to show how tiny tax-funded investment in housing is: for the first six of those years, investment exceeded receipts by an average of only £1bn a year, and in 2004-05 the net investment of around £2.4bn amounts to around one quarter of one percent of England’s GDP.
To put it into a bit more perspective, consider that in the most recent year with available data (2002-03) housing accounted for 1.2% of all government expenditure, compared to 21% for health, 14% for education, and 6.5% for defence. That year, our government spent more on “Culture, media and sport” (1.6%) than on housing.
Housing didn’t always have such a low priority for government. In 1980-81 housing accounted for 6% of government spending, and even Thatcher’s government spent more on it than New Labour.
So what happened? Perhaps today’s government thinks the problem of inadequate or insufficient housing is a relatively minor one today. Is that really tenable when a million children still live homeless or in overcrowded or unfit housing, with serious consequences for their health and education?
