The National Audit Office’s recent stock take of England’s housing landscape provided further evidence (for anyone still requiring it) why the Government badly needs to get a handle on country’s housing crisis.
With 227,000 additional households predicted to be formed each year in England between 2011 and 2021 and an annual average of 166,000 additional homes in England over the last 10 years, the NAO calculates there is now a cumulative gap between the number of homes built vs number of households formed of about -370,000.
With demand continuing to rise this has had an explosive effect on house prices. The NAO quotes estimates that England’s housing stock is worth £5.6 trillion in 2015 and increased in value by more than £1 trillion between 2010 and 2015.
Will the Government’s target of 1 million new homes by 2020-21 fill the gap and start to ease house price inflation? It doesn’t seem like it.
As the NAO points out, the 1 million homes target is for ‘net additions’ rather than just new developments. On that basis the Government is already on track to meet the 1 million homes target as it needs a minimum of 174,000 net additions.
For 2015-16 there were 189,650 net additional dwellings in England. New buildings represented 164,000 of this overall figure, with the rest made up of properties changing their use from non-domestic to residential.
The report also further under lines just how reliant the Government is on the house building industry its house building targets as a result of the decline in public sector housebuilding from the 1980s onwards. As the NAO states, many of the Government’s housing policies are designed to keep the housebuilding industry well-financed and incentivised to build houses.
Hence the Communities Secretary Sajid Javid’s recent comments about major developers’ land banking and the Housing Minister Gavin Barwell’s comments about house builder leasehold schemes have been such a departure.
But the report provides a number of good examples that demonstrate why adopting a unified approach to housing policy is vital if the Government wants to continue to see an expansion in house building.
In particular, how policies owned by different Government departments can be in tension with the housing policies of the Government’s lead department for housing, the Department for Communities and Local Government.
The NAO gives the example of the Treasury’s decision in 2015 to reduce by 1% annually the rents Housing Associations and Local Authorities could charge tenants. While the purpose of the reduction was to protect taxpayers from the rising cost of housing benefits and tenants from rising housing costs, the Office for Budget Responsibility have forecast it will lead to Housing Associations building 34,000 fewer homes.
Analysis from the Chartered Institute of Public Finance & Accounting suggests that the reductions in social rent will have an even worse effect on Local Authorities, with no councils stating they would have the available cash to build any new homes between 2017-18 and 2028-29.
Clearly, if we as a country are ever to produce the types of annual numbers that will plug the gap - 200,000, 250,000 or even 300,000 properties each year - then encouraging Local Authorities and Housing Associations to build more rather than less will be a key part of the solution as well.
The BSA has long argued that the Housing Minister needs to be a Secretary of State position. That doesn’t seem high on the list of the current Government’s list of priorities, but the NAO’s report highlights why, with housing criss-crossing across so many different government departments, a consistent approach is essential.