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What can we expect from the Housing White Paper?

In the Autumn Statement, Phillip Hammond announced that the Government’s Housing White Paper would be delivered by the end of 2016. Setting out the Government’s long term plan for delivering homes and tackling the UK’s housing crisis, the hotly anticipated white paper is expected to include significant measures to speed up house building. Here, in the second blog of our Moving into 2017 series, our Head of Product Development John Scally, discusses what we might be able to expect in the Housing White Paper and how this might affect the issues of lack of supply and affordability in the current housing market.

Homeownership and addressing the issue of affordability has been high on the agenda of political leaders since the 1920s. The cynic may hypothesise a correlation between effective home ownership solutions and the likelihood of re-election success, but the issues are multi-faceted and other political pressures can readily come to the fore. Public interest continues to put any housing white paper at the top of the political agenda.

Most recently David Cameron’s government set out a clear commitment to accelerate supply and build more affordable homes, one million during the term of the Parliament.1 However, despite favorable housing policy and an economic upturn, aspirations remain significantly misaligned to reality. Developers have made strides to increase production, with further capacity enhancements in the pipeline, but owner occupation between the ages of 25 to 35 is falling2. Latest estimates suggest we’re around a million homes short of what’s needed3 and current run rates continue to under-deliver, so what can we expect from the white paper?

Rhetoric suggests the overarching vision of a million new homes in this Parliament is likely to be retained. However, creating a market that “works for everyone”4 requires a fundamental change in approach.

Gavin Barwell was quoted that he “wants to see more of everything” - more new-built homes on the open market, more Private Rental Sector (PRS) homes, more Shared Ownership, and more homes at sub-market rent5. So we should anticipate a broad range of measures intended to meet the country’s needs across all tenures, unlock resource, widen delivery and speed up supply.

The Government’s recently announced £5bn funding to support its housing ambitions6, of which £3bn is for homebuilding (Homebuilding Fund) and £2bn to unlock public land (Accelerated Construction Fund) provides some insight into how it intends to fulfill its aims7. However, delivery is not solely dependent on funding so policy measures are likely to focus on support for SME developers, custom-builders and those using modern methods of construction8. Equally, we are hoping that policy will look to improve pace of delivery through swift granting of planning permission and minimising time between approval and build.

The aspiration of 200,000 Starter Homes by 2020 was a major manifesto commitment, and the Conservatives’ flagship proposition to deliver affordable housing9. The White Paper is expected to set out next steps for this scheme, and it will be interesting to understand the plans for the next three years.

Whilst some schemes are not yet delivering the housing needed, Shared Ownership, which has been established for over 30 years, continues to have a material impact, with many families reaping the benefits of this tenure. For this reason alone we should expect Shared Ownership to remain high on the Government’s agenda but success necessitates private developers engage alongside Registered Social Landlords. That’s simple in theory but consumers need the same protection afforded by Housing Associations if Private Shared Ownership is to make a difference and help bridge the shortfall. Lenders may continue to shy away from schemes, leaving the consumer exposed to unnecessary conduct risk. For this reason the current objective of 135,000 homes by 202110, for which a funding round was conducted in the summer, is already a significant challenge. Applications demonstrate demand but practical solutions are needed if Private Shared Ownership can deliver homes consumers can borrow against with confidence and security.

That said, there should be no doubt this type of tenure provides a solution for key issues encountered by many aspiring to buy their own homes today, namely affordability and size of deposit. Given the attractiveness of the scheme in both respects we may see a desire for more.

We’ve also seen the Government’s recent interest in a “buy as you go” scheme, put together by the National Housing Federation. More details are expected soon but we know this proposal would offer sub-market rent combined with the long-term opportunity to own11. It’s unknown whether the pending White Paper will support similar initiatives.

In summary, the Government appears to be taking a pragmatic approach to tenure-neutral housing and tackling issues that have slowed delivery. The rhetoric to date suggests these positive moves are likely to be welcomed by developers, consumers and lenders alike but, with so many schemes already available and more expected, the Government needs to ensure policies are complementary to facilitate incremental home ownership rather than risk cannibalising existing, well-established and effective solutions.

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This article contains public sector information licensed under the Open Government Licence v3.0 www.nationalarchives.gov.uk/doc/open-government-licence/version/3/

1 http://www.publications.parliament.uk/pa/ld201617/ldselect/ldeconaf/20/20.pdf

2 http://visual.ons.gov.uk/uk-perspectives-2016-housing-and-home-ownership-in-the-uk/

3 http://www.telegraph.co.uk/finance/property/11653052/Britain-to-be-one-million-homes-short-of-housing-its-people-by-2025.html

4 http://www.independent.co.uk/news/uk/politics/autumn-statement-housing-policies-housebuilding-down-obr-a7434666.html

5 http://www.independent.co.uk/news/uk/politics/tory-council-housing-housebuilding-gavin-barwell-conference-live-2016-a7341946.html

6 http://www.telegraph.co.uk/business/2016/10/08/the-regeneration-of-urban-areas-is-key-to-housing-needs-of-tomor/

7 http://www.telegraph.co.uk/business/2016/10/06/government-calls-developers-bluff-by-promising-to-buy-the-homes/

8https://www.planningportal.co.uk/news/article/418/javid_promises_housing_white_paper_with_significant_new_planning_measures_by_year_end

9 https://www.gov.uk/government/news/pm-the-government-will-directly-build-affordable-homes

10 https://www.gov.uk/government/collections/shared-ownership-and-affordable-homes-programme-2016-to-2021-guidance

11 http://www.mortgagesolutions.co.uk/news/2016/11/07/mortgage-free-buy-go-scheme-autumn-statement/