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Jules Birch is an award-winning blogger who writes exclusive articles for Inside Housing
Election year is upon us and the housing hints have begun
We are beginning to see what the main parties plan to offer voters on housing – but, Jules Birch asks, are they empty words?
Ahead of what will almost certainly be an election year, the past couple of weeks have brought some intriguing hints about what the main parties will be offering the voters on housing.
Away from the big speech by Sir Keir Starmer and the working assumption from Rishi Sunak, the hints came in interviews with housing secretary Michael Gove and shadow housing minister Matthew Pennycook published just after Christmas.
Mr Gove told The Times that the Conservatives would “definitely” have a new offer for first-time buyers in place before the election, with a plan to be announced either in the March Budget or in the manifesto.
One option for a “big offering on housing” said to be under consideration is government support for fixed-rate mortgages with much longer terms, which would mean first-time buyers could put down smaller deposits.
Mr Gove said: “We have been asking the question, how can we ensure that people with decent incomes who are finding it difficult because of the scale of deposit required can get on to the housing ladder? I don’t want to pre-empt anything… but it’s about looking at some of the rigidities in the mortgage market which they haven’t got in other jurisdictions.”
In the US, mortgages are fixed for as long as 30 years, but that is only possible because of guarantees provided by the federal government since the 1930s.
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Labour is also promising a “comprehensive mortgage guarantee scheme” while the Times story is backed up by a Treasury source who says chancellor Jeremy Hunt wants to explore the idea with lenders as interest rates fall.
However, governments have been making noises about long-term fixed rates since the 2000s and whether they can work in a very different UK mortgage market is a big question.
Other options under consideration by the government are said to be a new version of Help to Buy and the reform or abolition of stamp duty.
These are hardly new ideas, but one option floated last year was the extension of Help to Buy to all homes rather than just new build ones.
Both options superficially appeal to first-time buyers while actually driving up prices, to benefit either house builders or existing owners.
“Governments have been making noises about long-term fixed rates since the 2000s and whether they can work in a very different UK mortgage market is a big question”
The Treasury source admits as much by adding that Mr Hunt considered help for first-time buyers in the Autumn Statement but decided “not to do anything that would pull against the Bank’s attempts to reduce inflation”.
The fact that the thinking does not seem to have moved much beyond a rehash of the Tory Greatest Hits 2010-23 (not that there are enough for a full album) speaks volumes. It sounds more like a short-term plan for political survival than a long-term plan for housing and even then it may not work.
The shadow housing minister did not say much that was novel in an interview with the Financial Times but he did reveal some interesting extra detail about existing Labour policies.
We already knew that the party will not follow the examples of Scotland and Wales and abolish the Right to Buy in England.
Instead, discounts will be reduced and the shadow minister was explicit that tenants will “get the discounts they got in 2012”.
That was when the policy was ‘reinvigorated’ under the coalition, with the maximum discount increased to £75,000 (and £100,000 in London in 2013) and rising in line with inflation each year after that.
Before 2012, there were caps on discounts ranging from £16,000 in most of London and parts of the South East to £34,000 in most of the Eastern region.
As the graph below shows, the increases had a significant impact, with ‘eligible sales’ by local authorities (the vast majority Right to Buy) doubling between 2011-12 and 2012-13 and doubling again by 2014-15.
Sales have fallen more recently but are still running at four times the level seen before 2012.
The ‘reinvigorated’ discounts were of course accompanied by a bogus pledge of one-for-one replacements for additional homes sold. In 2022-23, only 3,747 replacements were started or acquired.
Combine these trends in sales with demolitions and the switch from social to affordable rent and around 200,000 social rent homes have been lost in a decade. The net annual loss is still running at around 14,000.
Last September Mr Pennycook pledged that Labour would go “net positive on social housing numbers” by building more than are lost.
With no room for spending commitments, it sounded like a minimalist promise that would still require a significant increase on the 9,561 social rent homes built in 2022-23.
It’s not clear whether “the discount they got in 2012” means in cash terms or as a share of the value of the sale but either way we can expect a big fall in Right to Buy sales.
In the short term, it seems logical to expect a rush to take advantage of the higher discounts before they are reduced.
In the longer term, falling sales would make the ‘net positive’ pledge much easier to meet without any increased investment.
“Last September Mr Pennycook pledged that Labour would go ‘net positive on social housing numbers’ by building more than are lost”
The shadow housing minister also fleshed out some of Labour’s other policies, including a welcome sense of urgency about the “new generation of new towns” promised by Sir Keir at the party conference.
Mr Pennycook made clear that this would include extensions to existing towns, saying that: “It’s whatever works for each place. The mechanism by which we want to select these areas is for the secretary of state to put a taskforce together on day one of a Labour government to report back within six months.”
He also repeated pledges to change the National Planning Policy Framework to re-impose planning targets and to reform compulsory purchase orders so that councils can buy land at lower prices.
Given the severe constraints on public spending imposed by party leadership, progress on housing will depend on these supply-side policies, with the implication that more new market homes will deliver more affordable homes via reformed Section 106 agreements.
Whether progress can come quickly enough to meet Labour’s pledge of 1.5 million new homes in its first five years is much more doubtful.
Jules Birch, columnist, Inside Housing
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