Budget series: Look beyond building houses

This post first appeared on our old blog on 17th November, 2017.

Thoughts from our Director, Campbell McDonald, on the Housing policies he hopes to see from the upcoming Budget.

The UK housing market is broken. A commonly agreed position, with Government releasing a paper entitled exactly that in February of this year. The root cause of this broken market is that there simply aren’t enough homes. To meet demand, the UK needs to build up to 275,000 new homes per year compared to the 160,000 that have been built per year on average since 1970[1].

It is possible the Budget will include announcements to increase supply, but with limited funds in the coffer the scale of measures risk being inadequate. It is more realistic that positive impact might be attempted through changes to stamp duty. This became especially topical after it emerged Government’s takings from stamp duty surged last year whilst house prices slowed. New measures could include allowing pensioners to be exempt from stamp duty as a tool to encourage older people to downsize and free up homes for younger families, or, conversely, exemption could apply to first time buyers.

However, more must be done than simply increasing or rejigging housing supply. The recent U-turn on capping housing benefit in line with private sector rents was a welcome announcement for social and supported housing providers – the first positive news they’ve had since the policies of Austerity made their operating environments ever harder.

In a dream budget scenario the Government would place a significant emphasis on specialist housing for our ageing population. Solutions to alleviate the pressure caused by an increasing ageing population are now vital. Whilst the MOU on promoting health through the home has coordinated good intentions, not enough practical action is being taken to ensure that supply of specialist housing with care meets demand.

As we argued in a previous article, the frail and elderly often find that after a hospital stay their homes are no longer quite tailored to their new support needs. Investing in new forms of housing and adaptations to existing homes, alongside investment in more care for this cohort, has the potential to vastly speed up and improve the hospital discharge process – which is vital in turning around the currently unaffordable levels of hospital demand and bed-blocking in the health system.

The National Housing Federation made a welcome Budget submission in September[2], calling for certainty on housing association rents post-2020 and putting in effective funding mechanisms for supported and sheltered housing. We couldn’t agree more.

Our work with specialist providers of Extra Care/Retirement Villages in this space has shown us how impactful the roll out of these models can be, and a dream budget for us would include a dedicated fund for the development of housing with care.

A dream budget would also slow down the roll out of universal credit to ease the impact on social housing tenants and providers. At the minimum, implement changes that speed up payments to tenants to stop them going into rent arrears. Alongside this, allowing the housing portion of the benefit to be paid directly to landlords, as is the case for some supported exempt accommodation providers, would further reduce risk to social housing providers.

The problems universal credit create couldn’t be more acute. In Islington, the council reported 81% of claimants were in arrears compared to 29% across all its tenants[3]. This pattern is the same elsewhere, with Plymouth Community Housing revealing that 69% of its tenants on universal credit are in arrears[4]. In an uncertain market, universal credit is playing a highly detrimental role.

[1] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/590464/Fixing_our_broken_housing_market_-_print_ready_version.pdf
[2] http://www.housing.org.uk/resource-library/browse/submission-to-the-autumn-budget-2017/
[3] https://www.theguardian.com/society/2017/sep/16/universal-credit-rent-arrears-soar
[4] https://www.theguardian.com/society/2017/sep/16/universal-credit-rent-arrears-soar

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