Will the chancellor’s bid to halt the decline in owner-occupation work?
The Autumn Statement’s extra investment for housing towards the end of this parliament is very good news. We could never hope to address our national supply crisis without government action. But the way it will be configured means a massive boost to homeownership, apparently funded in part by reductions in investment in affordable rented homes in later years. By the end of this parliament, investment plans will have swung away from their traditional focus on social renting and will be dominated by low cost homeownership schemes. Clearly the Chancellor wants to halt the decline in owner-occupation that began a decade ago – but will his plans work and what are the implications for those who can’t afford to buy now and still won’t even under the Chancellor’s schemes?
The plans imply a huge further switch in funding towards stimulating the private sector. This was already the focus of the Chancellor’s schemes before today, with a total of £32 billion earmarked for stimulating the market, double the amount earmarked for affordable homes via social landlords. Now there will be an even bigger emphasis on homeownership, with more than £4 billion of new investment going towards building starter homes and easing access to ownership via Help to Buy.
Investment plans set by councils and housing associations will again need to be revised. Not only is the shape of government spending due to change, especially after 2018, but their income is going to be hit by rents being limited to local housing allowance rates. Given that welfare reform has already hit landlord incomes, arrears are likely to get worse. Rents are already being cut by 1% over each of four years, so the overall effect is almost certainly to be further downwards revision of social landlords’ investment plans and in output of affordable rented homes.
The government also announced changes to way temporary accommodation for homeless people is funded. Instead of this being retrospectively via housing benefit payments to individual LAs, it will now be included in an up-front allocation given to all councils. This effectively means a move from a demand-led system to a fixed budget based one giving greater certainty to central government, but risking local authorities being out of pocket if demand is greater than expected or the allocation is a cut on previous years’ funding. It will need further work to understand the detail before we can be sure of the precise implications.
Indeed, much of what the Chancellor proposes is only known in outline form. Will the effect of extra capital investment be beneficial all round even though social housing investment is to be hit? Indeed, will the private market respond to today’s announcements to the degree the Chancellor expects, given that private house building has hardly been shifted by so many earlier schemes to boost the market? It’s too soon to say, but no one can any longer complain that housing is being ignored by politicians.
It is already obvious that the effects will vary greatly from one part of the country to another – investment in the north of England will be affected by the introduction of the LHA caps, and Scotland, Wales and Northern Ireland will all be hit by both the benefits changes and by changes in their block grants. As the detail emerges, it will be our job to keep politicians focussed on the implications, especially for those who still won’t be able to afford to get on the homeownership ladder.
Original post: Inside Housing