The best way to address some of the key battlegrounds of the 2015 election, such as creating growth, reforming welfare and tackling concerns about immigration, is by building more homes. I was therefore delighted when Ed Miliband this week decided the new shadow housing minister Emma Reynolds will attend shadow cabinet whenever her portfolio is on the agenda.
Given that housing touches on practically every policy area, I fully expect Emma will find herself attending every meeting! The move is a signal of the rising importance of housing as an issue – indeed, for the first time in memory, housing was the most popular theme for fringe events at conference this year.
As shadow Europe minister, Emma proved herself a formidable operator and I look forward to her bringing her sharp intelligence and campaigning skills to housing. Labour has always had a very strong relationship with the housing sector and has already laid down a strong basis to move forward, and I’m sure Emma will continue this good work.
In this context, I couldn’t help but speculate what her adviser’s briefing might say about the key questions that Labour will need to think about …
1. How can we address the backlog and future shortage of housing?
We are in a housing crisis and it is only going to get worse. A recent report by London Councils, which represents London’s boroughs, found that there is an existing backlog of 283,000 homes in the capital alone. This will only get worse as London’s population is set to increase by over a million by 2021. Radical and bold thinking is needed to spark the supply.
2. What can the government do to help local authorities build more?
Councils are key to solving the housing crisis, but in an area of restricted council funding, where can the money to build new homes come from? One solution is to promote flexible housing funding arrangements for councils: for instance, the housing sector recently joined together to campaign for the government to lift arbitrary restrictions on councils undertaking sensible borrowing against asset streams to invest in new homes. A manifesto commitment to relaxing these rules could deliver 60,000 homes and create 20,000 jobs – at the stroke of a pen.
3. How can we help the private sector build more homes?
Private developers are absolutely crucial to expanding housing supply, but just 27 companies are responsible for around 70 per cent of the housing starts in London. Yet 20 years ago, around two thirds of housing was built by companies employing fewer than 500 people. Encouraging more small businesses into the market would be a One Nation way of reforming the market to deliver more homes.
4. How can we reform the planning system to create these homes while protecting what’s important?
It is, of course, vital that the planning system provide a balance between economic, social and environmental concerns, but it also needs to be a modern system which is geared towards the problems of today. One potential idea would be to encourage local regeneration by allowing greater housing density around suburban rail stations – providing well-connected and sustainable homes.
5. How can we improve security in the private rented sector?
Expanding home ownership is, however, simply not going to be the answer for everyone. We need reform to ensure that the private rented sector offers a decent range of tenures, which are genuinely affordable, secure, and offer young families the ability to put down roots.
All in all, the challenge is great. But the electoral rewards for giving people that basic right – a decent home – are great too, and now these big questions have a direct voice on the new shadow cabinet, I am delighted the solutions will be discussed at the top table.
———————————————————
Steve Bullock is the directly elected mayor of Lewisham and London Councils’ executive member for housing
———————————————————
and not a single mention of the million empty homes, some of which are being sold now in Liverpool for £1…
That’s because there aren’t a million homes, Andy. There are 279k (http://england.shelter.org.uk/campaigns/why_we_campaign/building_more_homes/empty_homes) – barely enough to address one year’s worth of the housing we need. Empty homes do not have the potential to address the housing shortage. I for one am glad that Steve Bullock ignored such red herrings and focussed on real solutions.
Love it when the long term figure is used to justify a chosen reality….
Housing crisis & a construction industry crisis resolved by building more then selling them for a £1 a few years down the road….
Prefer tendering to revamp the empties (to ease most of the construction ‘crisis’) then selling at affordable (but not a £1) myself but that’s probably just a red herring and not a real solution….
These are old homes in area that have had low demand for decades. A friend of mine once lived just off Princes Avenue, across from where they recorded the “Boys from the Blackstuff” scene of taking Yosser’s kids into care. There were empty houses there then; loads of them.
Understated on the private rented sector, Steve. We need new, simple offences to deal with landlord crime. Professional criminals will not be driven out of the landlord business without Confiscations of the criminal assets and prison sentences
Question 6: How can you reconcile consumer demand for affordable houses to purchase with consumer demand for house prices to rise above inflation year on year?
These are irreconcilable. We need to recognise that the idea that housing costs will constitute an ever-decreasing percentage of personal income is probably out of the window for a few decades. House prices rise because the property market is distorted by a huge subsidy towards home ownership which has inherent attractions that should need no tax subsidy. The benefits of being master of your own home etc outweigh the downside of buying an asset that you cannot take with you when you die.
So to calm the property market down the first thing to do is kill this nonsense of 95% mortgages, which mean far too high a level of gearing and placeing vulnerable home-buyers at frightening risk in the event of a wobble in the housing market or a sharp rise in interest rates, both of which are quite possible in the next five years. The effect of the gearing is that if you put £10,000 down on a £200,000 house, even a 5% rise in value of the property means your capital (after paying off the mortgage) has risen from £10k to £20k, a 100% rise. No other assets like shares can be bought on margin, thank goodness, as that was what fuelled the 1929 Great Crash. So why do we permit this scale of gearing for property-buying?
Next we need to kill the subsidy to mortgage-lenders that is fuelling the price rises. The world and his dog are pointing out how insane it is to pour petrol onto a bonfire yet Osborne persists.
Thirdly we need politicians brave enough to tackle the fact that a house is an asset like any other, and should not be free of capital gains tax on its appreciation. Yes, there would need to be some form of indexation so a value increase over 30 years is not treated equally to one over 5 years; yes, there would need to be a de minimis rule so that the small gains can be ignored; yes, there would need to be some way of recognising the major improvements done to a property during its ownership. But the idea that an asset should go scot-free of taxation because we think home-ownership to be a “good thing” socially is absurd.
One reason for our sluggish economic performance as a nation is that too little risk capital goes from small investors into local small and medium sized enterprises, and the reason for that is that the first, major and only big investment made by Joe Soap is into his house, not elsewhere. Popular capitalism has been interpreted by the government as Sid putting in his £750 into buying a minute slice of a mega-corporation and hopefully hanging onto them long enough for the wide boys to have made their profits and left; control over these mega-corporations still remain in the hands essentially of the directors until a take-over or concert action by major institutions displaces them.. If more people invested in local firms they could see, whose directors they knew and whose products they understood, then we might have na enterprise economy with risk-taking more at its heart.
Would removing the investors in housing who are there not to own a home to live in but as an investment that appreciates disproportionately aid the home-building programme? Yes, funnily enough, I think it would. Because if the only people buying homes were those doing so for homes to live in themselves or to rent out without making a disproportionate buck, we might get more the kinds of homes we need long term and less the shoeboxes that are being built which are just problems for the future in tha making. Of course we also need land strategy policies and policies to control land hoarding.
We need to have a mansion tax and also tax higher earners to enable us to provide affordable housing for people on low incomes. Morgages need to be more accessible and we need to stop the greedy solicitors charging extortionate fees during the process of buying a home. Very simple policies that could facilitate a better and fair housing policiy.