For the first time in a long time, it seems that housing has taken the headlines with all three parties vying to address the growing housing crisis. Indeed, at the Labour Conference it was the most popular topic amongst activists. Interestingly too there are clearer differences in policy between the parties.
The Tories celebrated their changes to the welfare system, including the bedroom tax, and looked to further measures including withdrawing housing benefit to those under 25 not 'learning or earning'. Meanwhile their coalition partners, the Lib Dems want to launch a review of the bedroom tax. In contrast Labour has pledged to abolish it completely.
There was also a difference in emphasis regarding new homes. The Lib Dems voted to allow councils to pool their borrowing cap, the Tories focussed on help to buy and reforms to the planning system. Labour pledged to build 200,000 new homes by 2020, many of which would be affordable.
The timing of these policy announcements seems to fit in with the parties making themselves appear ‘ready for government’ for the general election in 18 months’ time. I hope we see more detail on the competing policies as we approach May 2015.
Supply and demand
As a nation we currently need in the region of 250,000 new homes a year yet we build less than half that. The housing shortage is something the sector has been making a lot of noise about for a long time and I have lobbied and made my views known too. Building new homes isn’t just about ensuring we are able to give people a roof over their heads. It stimulates both the local and national economy and generates jobs. As David Orr put it at a fringe debate at the Conservative conference, “The debate on housing supply has shifted from ‘can we do it’ to how can we do it.’”
The main problem is that the grant funding model coupled with welfare cuts make the building of new homes by housing associations a less viable proposition. Derwent Living has managed to continue building by using surpluses from commercial operations to fund the development of new affordable homes. Obviously this approach doesn’t work for everyone and there are those in the sector who aren’t geared up to operate like this and those who see it as too much of a risk.
This appears to be borne out by the recent failure of Cosmopolitan. At Derwent Living we have a thriving commercial arm which is tightly managed and essential if we are to meet our target to build 250 new affordable homes a year, mostly without grant.
Funding will make all the difference
For the sector and the sake of the economy the grant funding of old has to come back – without it the affordable housing sector will continue to flat-line. The ‘help to buy’ initiatives introduced by the coalition are welcome; of course they are, especially if targeted at first time buyers. But they are good only for those can afford to save for a deposit and those able to keep up with mortgage payments especially if interest rates rise. For those without access to any kind of savings - or even in many cases a simple bank account - housing options will continue to be very limited, especially for those who end up spending the last few pounds in their pocket on a spare bedroom.
Counting the cost
The welfare changes seem to lurch from one PR disaster to the next at the moment. Headlines still feature vulnerable people most affected by the bedroom tax. Derwent Living has been affected, and out of around 700 residents who are subject to the bedroom tax many are struggling to pay the shortfall. We’ve had to make some really tough decisions and will have to continue to make them - in the end we have to collect the rent. Derwent Living’s properties are mostly debt funded which means that we borrowed money to build and buy them. We have to repay the loans as well as maintain and repair properties from the rents we collect.
There are people who think we have vast reserves of cash sloshing around, but that’s just not true. We have to repay the loans – we don’t have a choice. Where there are surpluses we make the money work to provide new affordable homes.
With the introduction on universal credit on the horizon, the collection of rent will get even more difficult as housing benefit will no longer be paid directly to us but will go to claimants – some of whom have never had a bank account or managed that amount of income before. We like many other housing providers, have to do much more to help people handle these new challenges. It is easy to forget how worrying the idea of a bank account is to some people and how challenging monthly budgeting will be.
We’re 18 months from the next general election, so the next round of party political conferences will be the last before it takes place. Let’s hope that housing is still featuring in the minds of our politicians in a year’s time. By then they’ll have to have clearer, detailed and well costed policies on which to campaign and to which they can be held publically accountable.