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A basket of measures, covering all tenures of housing, is needed if enough finance is to be made available to tackle the country's housing crisis. There is no one 'silver bullet' with which the housing deficit can be removed. Many of the measures in the Government's housing strategy will provide a welcome boost in the short to medium term. However, further action and a longer term approach will be needed if we are to see a sustainable change in housing supply. The country has not come close to delivering the number of homes it needs for many years, and this has been exacerbated by the recent financial crisis.
Institutions and structures that have traditionally ignored housing should be encouraged to invest. Increased investment from large financial institutions and pension funds may not be a panacea, but could make a significant contribution to the building of new homes in both the private and social rented sectors. Public sector bodies and housing associations should take steps to encourage institutional investment. Vehicles such as Real Estate Investment Trusts should be revamped to encourage investment in housing. The Government should also consider whether the remit of the Green Investment Bank can be expanded to cover housing and, potentially, wider infrastructure projects.
While institutional investment could play a greater role, the private rented sector will continue to be dominated by smaller landlords. The Government should bring forward proposals to simplify tax and regulatory structures to encourage private landlords to expand their portfolios and invest in new build housing.
The Affordable Rent model is the Government's flagship policy for affordable housing. We have concerns: how it will play out in different parts of the country; whether it is a decision to 'let housing benefit take the strain'; and whether it is sustainable over the longer term. The Government should address these issues in bringing forward proposals for the future delivery of affordable housing. There are also wider questions about the future financing of housing associations, as lending from traditional sources becomes less readily available. In particular, the Government should consult on the future role and status of the historic grant that sits on housing association balance sheets and is potentially an untapped resource.
Local authorities have a vital contribution to make to the delivery of new housing supply, by working in partnership with developers and housing associations, and by making land and finance available for new development. The recent reforms to the Housing Revenue Account are welcome and could potentially increase the finance available for new housing supply, if they allowed local authorities, within prudential limits, to safely increase their capital borrowing. We are concerned about the impact of the Government's proposals to revive the Right to Buy upon the social housing stock. In the longer term, in line with the spirit of localism and moves to self-financing, we recommend that the Government give councils greater freedom to decide on the best housing solutions for their communities.
The Government can also support the building of new homes for owner occupation: it should ensure the NewBuy Guarantee scheme is achieving its aims and maximise the opportunities for the involvement of smaller builders and lenders; it should take steps to encourage investment in shared ownership and shared equity mortgage products and make them understandable; and it should continue to make public land available for development, whilst ensuring that the best deal is secured for the taxpayer. There is particular merit in public bodies contributing their land to a joint venture model.
If the gap between housing supply and demand is to be met, other models of housing delivery should also be promoted. Self and custom build schemes in particular have significant potential to deliver a major contribution to housing supply from a new source, but we should not underestimate the institutional change necessary to achieve this. The Government, local authorities and lenders should take action to overcome the barriers to self and custom build development, and there should be a commitment to getting pilot schemes underway very quickly.
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