I don’t think it’s just my mathematics, but I’m really struggling with the Coalition’s claims on their progress to “get Britain building”. According to this press release, “…the Government’s action to get Britain building again will play a vital and central role in getting the country’s economy on the road to recovery”. Fair play you would have thought if only the numbers bandied around supported the proposition. These are the bullet points in which DCLG want us to take an interest:
- That he [Grant Shapps] has already identified enough Government land to build 80,000 homes, and is now working with organisations including the BBC and Royal Mail to find even more unused sites for housebuilding – meaning Ministers are on course to release enough land for 100,000 homes by 2015
- Details of the NewBuy Guarantee scheme to help those aspiring to buy newly-built properties to do so with just a fraction of the deposit that’s normally required; and
- That he is devolving power from Whitehall to Town Halls, ending a long-standing “tax on tenants” in a £19 billion deal enabling councils to keep the rents they collect and invest the money in their homes.
Enough land for 100,000 new homes.
When you look at the land release strategy for say the MoD, you discover that the majority of the land is targeted for release in 2015 and is expected to provide urban extensions of several thousand homes at a time. In the real world then most of the land that is being released will not result in new homes until 2015 at the earliest and taking a realistic view on phasing, it is likely that these 100,000 new homes will be delivered over the period 2015-2025 at best. In other words we can expect that the land release proposed might deliver on average 7,000 new homes per year over the next fifteen years. Just to remind you, in December 2010 DCLG estimated we need to build around 232,000 new homes per year to deal with the increase in population, (the vast majority of which (72%) is due to simple population growth and not inward migration by the way). Should we really congratulate Mr Shapps and his team at DCLG for identifying enough land for just 3% of the new housing we need? Where does he propose the remaining 97% will be built?
The details released are:
- New build homes valued up to £500,000 will be eligible
- You will have to be a UK citizen to be eligible
- The scheme will aim to help up to 100,000 borrowers to access 95% LTV mortgages
Firstly these are not details, they are the headline facts about the scheme. Details might include the cost to the applicant in terms of interest rate and fees etc or the total value the government intends to guarantee (I hope it’s not 100,000 x 95% of £500,000 = £47.5billion).
Secondly, my memory is not fantastic but I thought the banking collapse was due to banks lending too much money with too little prudence to people, who had too little equity. Am I foolish to think this scheme represents a Government subsidy to the banking system to encourage imprudent lending to people, who wish to live beyond their means?
Housing Finance Reform
Some good news, I guess, in that councils will once again have control of their housing stock, the revenue generated from it and the costs associated with repairing it. Mrs Thatcher wouldn’t have liked it but there we are. What I fail to see is how this will get more homes built so as to get “…the country’s economy on the road to recovery”. Answers on a postcard?
Mr Shapps also mentioned £420 million ‘Get Britain Building’ investment fund, which might help deliver 16,000 new homes, or about 6% of one year’s new homes requirement and the £500 million Growing Places Fund, money LEPs will hopefully spend on infrastructure projects which might impact on housing schemes perhaps. Presumably these were not headline bullet points in the press release because they are relatively minor. Finally he also announced the New Homes Bonus allocations, which will see £432million paid out to councils apparently reflecting 159,000 net additions to the council tax register. Little of this money will be used to provide further housing, nor was it ever intended to, so again I’m not sure how this policy will deliver more homes. A small aside on the maths, DCLG latest housing supply figures show that only 121,000 new homes (including reused empty homes) were delivered between April 2010 and March 2011, so it’s unclear what 24% of NHB will be paid out for. Perhaps someone can be bothered enough to put in a FoI request.
I suppose in time we will see what effect these much vaunted strategies will actually have. Of course housebuilders will eventually increase housing delivery as the economy improves but all forecasts suggest that won’t happen for several years and meanwhile government policy seems toothless. I might be surprised but sadly I’m reasonably confident I won’t be.
Meanwhile, my own housing strategy is on the verge of delivering four stunning new homes in Faversham. Do please take a look!