Striking Gold

Last week a new council scheme in Norwich was judged to be the UK’s “best new building”, winning the RIBA’s prestigious Stirling Prize, and beating off competition from London Bridge Station and an opera house, among others. This is a remarkable achievement: not only is it the first-time social housing has won the prize, but it reflects a (perhaps short-lived?) renaissance of council house building across the country.

If you missed it, Goldsmith Street comprises almost 100 Passivhaus homes designed by Mikhail Riches, a mix of two storey houses bookended by flats with private balconies, all at social rent. There is generous space for bikes and prams, and it is car free with play spaces dotted throughout the site. The judges described it as:

“A modest masterpiece. It is high-quality architecture in its purest, most environmentally and socially conscious form…This is proper social housing, over ten years in the making, delivered by an ambitious and thoughtful council. These desirable, spacious, low-energy properties should be the norm for all council housing.”

Hear, hear to that.

The Passivhaus standard means that the homes are cheap to run, costing no more than £150 a year to heat.

One resident said: “The ceilings are really high and there’s loads of storage…The boys share a bedroom but it’s so big it could be two bedrooms. There’s so much space that honestly you don’t know what to do with it.” Residents are already reporting improvements to their mental and physical health. That is what good, affordable social housing can do.

The scheme has faced some criticism for its cost – £1,875 per square metre, excluding fees. But I have always taken the view that quality will out, and that it makes sense to take a very long-term view of social housing.

We should pride ourselves on adopting different values and principles to speculative housebuilders, who move from site to site often without much care for the long-term impact of their schemes.

I think the Goldsmith Street homes will still be standing a century from now, unlike some of the shoddy places that have been built over the past fifty years by private house builders, and, dare I say it, housing associations.

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Housing Blues

Last week’s Conservative Party conference didn’t offer much hope for our sector. As I predicted in my July blog Johnson on housing, the government’s primary objective is to boost hime ownership, and there was barely a mention of any plans to invest in social housing.

Communities Minister Robert Jenrick and his deputy as Housing Minister Esther McVey (he was once her deputy – how times change!) both said they were “tenure blind” but the tenor of their speeches and comments during the week was very clear. Here’s a précis:

“The property-owning democracy is a perpetual goal for which our party strives to ensure thatevery generation has the opportunity to benefit… I believe in ownership as the bulwark of individual freedom, bringing security, dignity and independence… As Conservatives, weknow that owning a home is not just about the four walls around you, it’s about investingin your family, saving for the future and putting down roots in a community (can’t peoplein social housing also put down roots?)… We are on the side of hard-working people who want the sense of security that comes with homeownership.. We are on the side of hard- working people who want to play their part in our property-owning democracy.”

And so on and so on.

The big announcement was a proposal that all new housing association homes for rent should be eligible for shared ownership, with occupants buying as little as 10% of their homes initially, rising in 1% chunks. This follows on from the recent policy announcement (login required) that aims to revamp and revive shared ownership.

This could be extended to existing homes “on a voluntary basis”, an echo of the Voluntary Right to Buy (VRTB) deal that was struck with the National Housing Federation in 2015. Many commentators felt that this would make it harder for providers to build new homes, especially if it’s made a condition of grant, which could deter lenders.

Take up is predicted to be low: Shelter ran the figures and showed that 75% of social housing tenants couldn’t afford it, rising to 94% in London. Who wants to own 10% of their home and be responsible for 100% of repairs, especially if, given current concerns about fire safety, you’re handed a bill for thousands of pounds to remove cladding?

If this scheme proves unpopular, I can imagine that VRTB will be put back on the table.

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Money for Nothing

Thomas Cook went bust this week with the loss of 9,000 jobs, and misery for thousands of travellers. The government was asked to cough up £250m to keep it afloat but refused. As a general rule, it is Conservative policy not to interfere in the workings of markets. Firms must be allowed to succeed or fail without government intervention, regardless of the consequences.

Yet over the past six years the government has been intervening on a titanic scale in the biggest market of all – the housing market – and the consequences have been all too predictable.

I am referring of course to Help to Buy. When it was launched in 2013 many people argued that it would be a monumental waste of taxpayers’ money. If you pump billions of pounds into the demand side of the housing market without any corresponding increase in supply then prices will rise. Any housing student will know that, in economic terms, housebuilding is inelastic – it can take years from conception to completion – so new homes are slow to appear when demand increases.

Just to rehearse the story to date: the equity loan scheme is the main component of Help to Buy. It gives buyers of new homes (up to £600,000 in value) a 20% loan on their property (40% in London). They cough up a 5% deposit so they then need a 75% mortgage (55% in London). The loan is interest-free for the first five years and has to be paid back within 25 years, or when the property is sold.

The government owns the loan book, administered by Homes England, so they are taking a punt that house prices will continue to rise, otherwise their investment will fall.

Help to Buy was meant to be a short-term fix to the collapse of the housing market. It aimed to restore the confidence of buyers and builders, but it has become semi-permanent. At the end of last year, 211,000 properties had been purchased with loans totalling £11.7bn. The latest estimate is that Help to Buy will consume £29bn of public funds by 2023, eight times more than the original estimate. From April 2021, the scheme will be restricted to first-time buyers and there will be lower regional price caps. Some developers are selling 50% of their homes under Help to Buy.

 

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Staircase to heaven?

As I predicted in my previous blog Johnson on Housing, this government’s primary housing focus will be on home ownership, making life easier for first time buyers in particular.

The government recently issued a discussion paper titled Making home ownership affordable, and one of its primary aims to is to revamp shared ownership.

It proposes a “national model for shared ownership” that will make it easier for shared owners to buy and sell their homes, and to boost “staircasing” – the process by which you buy additional chunks of your property – by allowing owners to buy 1% of the unsold value at a time, instead of the present 10%.

Five years ago I wrote a report for Gateway Housing Association on staircasing. At the launch, then National Housing Federation CEO David Orr described shared ownership as “the tenure that refuses to die”. It’s always been a kind of twilight tenure, attractive to some, understood by few (some people still think it means sharing your home with others!), andthere are still lenders who can’t quite grasp how it works.

The principle of shared ownership is sound – a transitional tenure between renting and buying– but it is beset by complicated rules and has been hit by some bad press in recent years: poor construction, steep service charges, a lack of interest by landlords, and a lack of clarity about who it is for.

The concept of staircasing implies that shared owners can fairly swiftly move up and out of the tenure. In fact, a Cambridge University study in 2012 found that shared owners were less mobile than other owners and the costs and complexity of staircasing were major barriers to mobility. If you can’t buy bigger portions of your home, then it becomes hard to move on to outright ownership.

My report for Gateway found that those who staircased had an average income of £10,000 more than those who had not, and they also had greater access to savings and inheritances. Obviously, income is a key barrier, but the fees involved in buying extra shares were also identified as a significant obstacle.

 

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