The Labour Party’s plans for the housing market are as far-reaching and radical as the rest of its proposals for the country (Prospect's housing report is kindly sponsored by RICS, Sovereign Housing, Atkins and the Building Societies Association)by Jay Elwes / December 12, 2019 / Leave a comment
How does the Labour Party plan to tackle Britain’s housing problem? “‘Housing for the many’ is a plan to build a million new affordable homes over ten years,” said John Healey, Labour’s Shadow Housing Minister, “but with a fresh, new, Labour definition of what ‘affordable’ means.’”
At the moment the definition of “affordable” can be anything up to 80 per cent of market rate. “In some areas that can be £1,500 a month rent,” said Healey, adding that the term has been so misused that it’s now “mistrusted by the public. You so often find yourself in any public meeting and [when] someone uses the term ‘affordable,’ you get this murmur of dissent as people think ‘it’s not affordable to people like me and people I know.’”
While the current definition of affordable is linked to market rates, the Labour definition would be set at a third of average local incomes, “so that the definition of affordable in Barnsley is different to that in Battersea.”
The majority of homes built under the Labour plan would be rented at controlled rates, Healey said. Any properties sold would also have mortgage costs linked to a third of average incomes. “In other words we [would] do what Labour did—and that great Bevan programme did—after the Second World War: you build for those most in need and you build for those on low incomes as well.”
“Simply by building more market homes, you can only ever influence price at the margins,” Healey said. “If you want homes to be more affordable, you have to build more affordable homes.”
As such, the Labour Party’s plans for the housing market are as far-reaching and radical as the rest of its proposals for the country. Whereas the Conservatives have acknowledged that the housing market needs reform, Labour intends to replace the market with a mechanism that sits largely under government control.
“Of these million homes, they would all be ‘Labour’s Affordable Homes,’” said Healey. “They wouldn’t be in the private sector. If we are going to build to meet the best part of our long-term plan to [address] the housing crisis, we are going to need more of a mix.”
“At the heart of this will be the biggest council house building project in this country for nearly 40 years.”
And what about the role of the big building companies? Any attempt to build on the scale Labour proposes would inevitably require their know-how and capacity. “The scale of the crisis means we’ve got to demand more and expect more from every part of the industry, from commercial house builders to housing associations to councils.”
“For me the best yardstick of the crisis,” said Healey, “is if you take a measure over the last 10 years, you see over a million people on council house waiting lists. Last year the number of social rented homes built was 6,430.”
“The total house building numbers are not up to the peak under Labour before the financial crash. So we’ve got a house building crisis.”
But there are also a million more households in private rented homes than ten years ago. For young families, Healey said, most of these people will never be able to own their own home. Labour wants to put new legislation in place to allow “open-ended tenancies, controls on rents, controls on standards, tougher enforcement powers,” all “looking to correct the flaws in what is a failing market for many.”
And at the far end of the housing problem are the homeless. “Over the last ten years, the number of people sleeping rough on our streets has more than doubled. So part of our housing crisis is a homelessness crisis.” Labour intends to end rough sleeping “within one parliament.”
“The great tragedy of this,” said Healey, “is that we know what needs to be done because we’ve done it before when faced with similar levels of homelessness in the early 2000s.”
“We need a commitment at the heart of government,” Healey said, going on to mention the possibility of a “task force led by Jeremy Corbyn” to address the problem. “We’d require housing associations to set aside 8,000 of their homes so that people in hostels… would have somewhere safe to go.” This would be backed by a £100m winter fund to help to “beef up the front line and hostel provision,” to help get people off the streets. This would all be funded by putting a national levy on second homes, “so that people who’ve done well out of the housing market would pay a bit more each year to help those who’ve got no home at all.”
Labour would not reintroduce capital gains tax on the sale of principal private residences, he said, but the party “would get rid of the so-called “Bedroom Tax.”
“The final element in all this is the home ownership crisis,” Healey said. “The number of under-45s owning a home compared to ten years ago is nearly a million fewer.”
“So you can see how on all fronts we’ve got a housing market which is systematically failing people and a housing policy which is failing to help people.”
The roots of that, for Healey, lie in the policy decisions of the last decade, especially in the cuts to housing benefit. He is also critical of government reductions in building low-cost homes. In 2009, Healey said, 40,000 such homes were built, compared with 10,000 this year. If the Conservatives had kept on building homes at the 2009 rate, he continued, there would be 180,000 more social rented homes in Britain.
The solution that Labour proposes—a mass building programme—presupposes the mass availability of suitable land. Does it exist, along with all the accompanying and highly-complex permissions that are needed before building can begin?
“Permissions aren’t the problem,” said Healey, remarking that last year there were 350,000 permissions granted, “and yet the number of new homes built was under 200,000.”
“One of the failings of the last decade has been to outsource the building of homes that we need to the big developers,” he said. Regulations have been relaxed so builders don’t have to build a mix of homes and are allowed to convert office blocks to housing without planning permission. This is a “big green light,” for developers. The result has been “big bonuses and big profits.”
Instead, Labour would encourage local councils to borrow to build new homes, and would remove the local borrowing cap. Government would also offer loan guarantees to underwrite that borrowing.
And as for the cost of building one million new homes, “we are working on that now,” said Healey. “It depends on our plans to take some of the profiteering out of land and the land market.”
And what of the private sector system of planning permissions, which is an unwieldy mess? Under Labour’s plans, this system would sit alongside a huge, state-run building system—would a Labour government seek to reform the private planning system to make it more efficient, or would it have a political interest in leaving it unreformed and inefficient, privileging instead its own public building works?
“It’s absolutely not either/or” between the two systems, said Healey. “If you look at the few years when we were building to meet an expanding population in the 1960s… you had councils building at least a third of those [new homes].”
“Councils can’t just build without going through the planning system, so it’s a single unified planning system.” The real problem, Healey said, is that the locations that are given the go-ahead tend to be the “easy pickings,” for developers—the most lucrative land. Labour wants to see more power given to councils to ensure that, when developments get the go-ahead, these include the right mix of housing, not just the large, high-margin, expensive houses in the most desirable areas.
And what about the land for these new homes? “To be perfectly frank, with the plans we’ve got for an English Sovereign Land Trust, the ability to acquire the land at close to the current value without the land profiteering that comes into it—that will help to reduce land costs.”
Will the Trust have powers comparable to the current compulsory purchase mechanism? “The Sovereign Land Trust, when we get the legislation in place behind it, will have some of those compulsory purchase powers. It will also be a system in which the cost of purchase will be closer to the current land value rather than the fully developed, or ‘hope’ value.”
“It’s not new,” said Healey. “We did it after the war with the new towns. What’s been done can be done again.”