Housing crisis

Johnson’s futile policy announcement is not an answer to the housing crisis

After the vote of confidence earlier this week, Boris Johnson on Thursday turned his attention to the ongoing housing crisis to help him escape his own political crisis.

The solutions he offered, however, were relics of the past that will not solve the problem of unaffordable housing, high rents and substandard properties. Chief among these was a resurrected purchase right for housing association tenants, as well as the ability for people on benefits to count that income towards a mortgage. Injecting more demand into the housing market is utterly futile, however, when housing supply has not kept pace. Homeowners can expect an increase in the value of their properties. For tenants, however, a reprieve is unlikely.

The extension of the right to purchase to housing associations has been widely discredited by housing industry commentators. In response to Johnson’s announcement, Pete Apps, associate editor of Inside the housingstated in a Twitter feed how the idea disintegrates as soon as it hits the real world of housing association finances. To make it affordable for tenants and to maintain the financial solvency of housing associations, he estimates that the government will inject around £3billion a year to fund the purchase of properties, while no new homes will be built in direct consequence.

The other key part of Johnson’s announcement was to allow benefit payments to go toward a mortgage. First, as with purchase assistance, making more money available to purchase a home will only drive up prices if more properties aren’t made available. Second, the UK benefit system is far from generous and most renters have little or no savings for a down payment. In this context, how will the finances of individuals and their families who are trying to cope with a mortgage payment probably much higher than their social rent, and who come up against the benefit ceiling, evolve? Finally, even where the policy of the right to buy has succeeded, it fails. Experience with social housing shows that much of the stock sold there ends up as private rental housing, with lower quality unregulated rents – and without investment in repairs and maintenance.

In a interview yesterday with ITN, the Secretary of State for Leveling Up, Michael Gove, said the government’s ambition was to be like the post-war Churchill and Macmillan governments. These administrations have added hundreds of thousands of homes to the UK housing stock. Conveniently, Gove missed Churchill and Macmillan’s reliance on the planning reforms introduced under the Labor Party, which in 1945 faced a housing crisis so severe that it considered nationalizing the entire housing stock ( and all UK lands). Throughout this period, private rents were also regulated, protecting tenants from rent increases.

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Compared to this ambition, the government’s proposals seem a poor imitation. The Leveling-Up white paper, released in February, included a goal to halve the amount of substandard housing in this country by 2030. If Johnson and Gove are serious about that goal, they must look for alternatives, not dwell on ideas of the past.

And if the government is serious about bringing down a housing crisis-shaped monster that successive administrations have created, then the solutions are clear: real investment in social housing, rent regulation in private rental housing, and an end to no-fault evictions ( as he had promised to do in 2018). Fundamentally, we need to end the economic and social model that privileges owner occupancy and provide decent, safe and affordable housing, regardless of who owns it.

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