Wat kunnen we leren van de Britse woningmarkt

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What can we learn from the

British Housing Market?

Professor Mark Stephens I-SPHERE, Heriot-Watt University, Edinburgh Housing Conference, The Hague, 12 November 2014

Picture: Crown Street, Glasgow

First World War: • Rent control 1915 • 1919 Housing Act – first

Government subsidies • Housing provided by local

authorities

Quick overview of housing policy

Mass building programmes post 1945 • Era of “social democratic consensus” • Mass council house building programme • Big push to clear the slums and remove

shortage

• Worst of shortage over by early 1970s

Economic and

political turning

points

Right to Buy • Flagship Thatcherite policy • Possible due to erosion of housing debt • Contributed to the “residualisation” of the

sector

Public housing not replaced

• Decline in new build local authority housing began with IMF crisis in 1976

• Combined with Right to Buy this meant that the sector declined from its peak of housing around 33% of households in 1980

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1988: Housing associations chosen as the main providers of new social rented housing

• Capital grant from government (reduced over time) • Greater reliance on sourcing private finance:

• Mortgages from banks • Larger ones issued own bonds

• Government intermediary also used to access markets

• No govt. guarantee but rental stream “underwritten” by Housing Benefit.

Large Scale Voluntary Transfers (LSVTs) 1988 -2000s

• Local authorities permitted to transfer their entire stock to a housing association from 1988 (tenant ballot required).

• Valued at net present value of future rental income (“tenanted market value”)

• Where stock had low/ negative value, subsidy was required – Glasgow had almost £1bn debt written off to facilitate transfer of stock

• Since 1988:

• 1.2 million dwellings transferred in England • 182 = whole stock transfers

• 116 = partial transfers • £6.2 billion housing debt repaid

• £21.3 billion finance levered in to new associations

Housing association building up to the crisis

• Completions fall below 30,000 p.a.

• Use of planning system (s106) to subsidise 65% of affordable housing completions

• Cross-subsidy from shared equity products • Use of reserves

• Sector consolidates

2011-15 “Affordable Homes Programme” • Context = 60% cut in housing capital subsidy budget • Envisages 80,000 “affordable” homes over 4 years, mostly

provided by housing associations • Total subsidy = £1.8 billion

• Capital subsidy per unit will be cut to average of 14% • Much greater reliance on private finance

• Rents on new houses and on some relets will be higher – up to 80% of market rents

Housing Benefit

_{Housing Association sector today}

dwellings 10 largest HAs: • > 0.5 million units • 24% of HA total • 14% of all social housing • Largest LA = Birmingham = 64,000 properties

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Key issues in future of Housing Associations

• Demanding greater freedom over rent setting and allocations

• Want more liberal valuation model to facilitate gearing of more private finance

• Wider activities – e.g. “employment commitments” • Preparing for era with no financial subsidy? • Charitable status?

Private renting

in mid 1990s

• Deregulation 1989 • Market rents • Insecure

• Rise of Buy-to-Let landlord • Now overtaken social renting • Diverse composition • Housing Benefit cuts

• Reluctance of institutional investors –

• role for HAs?

Assessment

• Housing system largely broke the link between income poverty and housing deprivation

• Market and policy now suggest: • Falling owner occupation • Higher rents in social housing • Less social housing (relative) • More private renting at market rents • Less support from Housing Benefit

• Implies strengthening of link between income poverty and housing deprivation.

And finally…. Some Do’s and

Don’ts

• Do make sure overall supply is adequate. • Do re-invest the proceeds from social housing sales. • Do make sure housing associations are accountable • Don’t shift subsidies too far to housing allowance – it pushes

rents up and has to be paid forever. • Don’t exclude the poor from social housing