Memorandum by the Kent Housing Group (AH
51)
This paper refers mainly to the issue of "the
relative importance of increasing the supply of private housing
as opposed to subsidised housing". However, other issues
are touched on where relevant to the question in hand, in particular:
— "The economic and social impact
of current house prices"; and
— "The relationship between house
prices and housing supply".
The Barker Review of Housing Supply (2004) contends
that increasing the rate of house building is essential to making
the housing market more affordable (or at least in lessening the
sharp upward trend in house prices). The fact that demand for
housing is increasing, coupled with the fall in construction rates,
it is argued, has been contributory to the sharp rise in house
prices in recent times. Therefore, it would seem that the key
to achieving greater affordability is to reverse the negative
trend in construction of new houses.
The report goes on to suggest figures for the
amount of housing required to effect this change. It is stated
that reducing the trend of real house prices to reasonable levels
will require between 70,000 and 120,000 new private sector houses
to be built per annum in addition to current levels of provision.
Additionally, an increase of 17,000 per annum in the supply of
social housing is suggested as necessary to meet the needs of
new households. Further, if inroads are to be made into the backlog
of need for social housing, an additional 9,000 (on top of the
17,000) social houses will need to be built each year.
However, although one must accept that an increase
in the building of new houses is essential to achieving greater
affordability, it is doubtful that the specific proposals for
increased supply in the private and social sectors strike the
correct balance. To explain, the essential problem with the current
focus on increasing the supply of private sector housing (a focus
that is duplicated in the Barker Review) is that such properties,
once built, are introduced onto the market at the current market
value. As a consequence, no real competition is drawn into the
market and it is hard to conceive of how this will have a significant
impact on house prices. Indeed, the building of such houses, if
retained as the primary focus of Government activity, will most
likely result in simply encouraging people to borrow more than
they can truly afford, as evidenced by the recent 66% rise in
Mortgage Repossession Orders, relative to 2004 figures.
It is my contention that the solution to the
issue outlined above is a far greater amount of social housing
than is currently being proposed (even by the upper limit of the
Barker Review). When one looks at the most recent housing needs
surveys across Kent, it can be estimated that there is currently
a Kent-wide shortfall of approximately 7,500 affordable homes
per annum. If one compares these figures with those of the Barker
Review (the maximum recommendation being for an additional 26,000
affordable homes per annum for the whole of England), it can be
seen that the Review's figures are insufficient to meet need.
Therefore, it is my recommendation that a more significant proportion
of the proposed additional house building be constituted of social
housing. Actual figures could be calculated from housing needs
surveys across the country, although it should certainly be no
less than the current standard Kent-wide practice of requiring
30% of all significant new developments to be made up of affordable
housing.
The recommendation above should also contribute
to increasing affordability across the whole of the housing market
(rather than merely in terms of providing more affordable housing),
in that it should help to address the issue of demand, whilst
also injecting an increased level of competition. To explicate,
the provision of even greater levels of social housing should
serve to draw a significant amount of current demand (predominantly
in the form of first-time buyers) out of the private sector housing
market and thus help to address the significant factor in the
increase of house prices. In addition, the fact that social housing
provides houses at subsidised rates may also aid the process of
making the housing market more competitive in general, as the
private sector market may be forced to "compete" with
the social housing sector, to a certain extent. Finally, an increased
focus on social housing helps to avoid the problems associated
with buy-to-let landlords extracting new-build from the market
and superficially inflating house prices.
Another significant issue for Kent (East Kent,
in particular), on which levels of affordability impact, is that
of stock condition in the private sector. For example, in the
Dover District 13% of private dwellings are classified as "unfit",
as compared to the national average of approximately 7%. The issue
in East Kent is that it has a high percentage of older housing
stock, which is commonly associated with a higher incidence of
poorer living conditions. However, the building of new private
sector houses is unlikely to be able to remedy this situation,
as the people who currently live in such households are typically
either on low incomes or in receipt of benefits (and therefore
incapable of buying such accommodation). However, the recommendation
of an increased focus on social housing (as made above) would
again obviously be relevant to this case, in that it would create
the potential for those currently living in "unfit"
dwellings to move on to high quality new-build and thereby also
increase competition, perhaps resulting in landlords improving
the "fitness" of their rented accommodation.
Finally, on the issue of the relative deprivation
of East Kent (and the perceived need to regenerate), it is important
to note that simply building new homes is not sufficient. To explain,
I feel that it would be inappropriate to press ahead with the
building of new homes in such areas without coupling this with
regenerating the area as a whole. In other words, the regeneration
of such an area requires an additional focus on making full use
of the existing stock. New-build, although important in contributing
to making an area more attractive to live, will be of negligible
real impact if it is not ensured that the area as a whole is a
pleasant one to reside in (as the demand for such houses will
be limited). This can only be achieved through ensuring that regeneration
is tackled across the board (eg employment, education etc), together
with maintaining current housing stock at levels that do not fall
too far below the standard of new properties. Therefore, addressing
the issue of Empty Homes and its causes (ie general deprivation)
is essential in fully utilising the potential of new-build properties
to affect change in the housing market. The building of new homes
cannot therefore be treated in isolation. Additionally, it is
worthy of note that bringing empty homes back into the housing
market will help to increase affordability in the same manner
that building new homes should, and in a more cost-effective manner.
To conclude, it is my contention that the Government
and the Barker Review have placed too much emphasis on increasing
the supply of private housing as opposed to subsidised housing.
Therefore, it is contended that a more significant amount of the
additional housing provision envisaged should be constituted of
social housing. Such an approach would contribute more effectively
to the Government's aim of affordability than would the current
recommendations and would most likely have some additional peripheral
benefits, such as improving the overall standard of living conditions.
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