Solving our housing problems isn’t simply a question of building more houses – although that would be a start. As the Housing strategy report being presented to the Council’s Policy and Resources committee this week illustrates, the questions of what, where and how to build are complex. Sadly, our Council remains constrained by central government rules, an over-reliance on the private sector, and its own wilful misjudgements of how to push forward with the resources and tools it has available. Nothing that is proposed is radical enough to make a major shift in the supply and cost of housing. Not for the first time a lack of imagination and a rigid “the market knows best” dogma is preventing the Council from doing its job of looking after the interests of the people of the district.
The strategy document is of necessity long and very detailed, so summarising it runs the risk of over-simplifying the key issues, as well as ignoring the expertise which has been put into it by the officers of the Council. However, picking through it shows up some interesting underlying assumptions, some of which are clearly the result of political constraints imposed either by Government or the Council’s ruling group, and some missed opportunities. Taken together, all this means that targets are likely to be missed, and the real need for genuinely affordable housing in the district will remain unfulfilled.
Let’s begin with the challenge the Council faces.
The key issue is population, which is forecast to rise by 14% by 2031. That alone requires 16,000 new homes to be built. For comparison, there are currently only 66,777 homes in the district, so that’s 24% more homes which have to be built in the next 13 years. . In addition, there were 2,312 households (that’s the number of families, not individuals) on the housing needs register in 2017.
The current plan is to meet that demand almost wholly through private sector building. The problem which emerges from that approach is that the need is for smaller homes, especially for the lowest earners and new households, and mostly in the town and City centres. But of course what developers want to build are 3 and four bedroom houses, mostly in the rural areas, because that’s how they make the most money. Further, of course, developers only build when it suits them, because what they make money from is the difference in the value of the land when they buy it and when they sell it with a house on top. Because of the way housing finance works, the nominal value increase shows up on their balance sheets as soon as they get planning permission. Add into that the inflation in land values as demand for housing grows, and you can see the balance sheet swell without any work being done, while borrowing costs are artificially low. That’s the joy of capitalism, for you, right there. From that point on building and selling houses is simply the mechanism by which the developers release the value of the land as profit. Which is something they do when it suits their financial position, not when it suits the Council.
Now we come to the key issue. In this district, to buy a home in the cheapest 25% of the market would cost THIRTEEN times the income of someone in the lowest 25% of earners. That’s so obviously not affordable that people have no option but to rent. Rents, however, have increased by 20% over a period when earnings have risen by only 6%.
So the Council says it will ensure that “all developments … must include 30% Affordable Housing.” Which would be great, except their record over the past three years has only delivered 21%. So how are they going to meet that target? They don’t say. That gap between a stated aspiration and any realistic mechanisms to achieve it is, sadly, a feature of the strategy.
Anyway, there’s another problem with “affordable” housing, which is that it’s not actually that affordable. According to the Government, an “Affordable Rent is … no more than 80 per cent of the local market rent (including service charges, where applicable)”. Since local rents have been driven up by student accommodation needs at least 30% of Canterbury households are unable to afford private rents.
Now you might think the obvious solution would be to build more publicly owned homes for rent. That way, you could control rents, build the sizes of property needed in the places they are needed, and thereby raise some money from rental income for future building. Investment, in other words. However, thanks to the Government, while it’s OK for the Council to borrow millions to buy Whitefriars, it is not OK to borrow any money to build social housing. And while some Councils have worked around this, ours simply will not.
To make this worse, the number of Council-provided homes has gone down rather than up in the last 3 years, due to the Right to Buy and Government restrictions on the re-use of the £3 million raised from those sales. Now the Government intends to extend Right-to-Buy to Housing Associations, funded by the Council selling even more houses. That’s a policy which even our Council says it is “concerned” about. Strong words, by their standards.
What stands out from all this – which is only a fraction of the strategy – is the lacklustre response of our Council. In the last 3 years it has bought just 47 homes at a cost of £10 million, or £213,000 each. It has built precisely 6 homes in that period. Yet houses are much cheaper to build than to buy, and if the Council adopted best practice building techniques and built on land it already owns, it could build some of the much needed smaller homes for about half that price. In short, the response from the Council has been slow and cautious even while the problems get worse. This is outrageous in the face of a worsening problem renders the lives of thousands of local people miserable and condemns then to poverty because of the cost of housing – if they can find anywhere to live at all.
This heavy reliance on private builders is no sort of solution to our housing crisis. A Council which was really fighting to address the issues should be arguing to end, not extend, Right-to-Buy, and it would be adopting innovative solutions to get Council-owned housing built quickly. It would also enforce requirements for genuinely affordable homes to be built in all the new developments in the district, not allowing the developers to wriggle out of their commitments.
Of course, there are problems with the housing market that lie outside the control of this or any Council. The way in which developers are funded and the way in which planning permissions get “banked” by developers so that property values soar while they do nothing has to be addressed. The lack of effective rent controls, the scandal of empty properties, the fact that homes let to students or for AirB’nB type use avoid paying Council Tax … all these problems are national.
But we need our Council to fight these things and argue for change with Government. Working together, Councils across the Country are trying to do this. Ours fails to make any attempt to make the case for change, which is clearly a responsibility it should take on. So while the aspirations of the Housing Strategy are fine, they fail to deal with the root cause of the problem. We ought to expect more than this supine acceptance of the status quo from our Council.