A Budget for Housing?

By Lee Sugden, chief executive, Salix Homes

A rather jovial chancellor stood at the despatch box this week to deliver his second budget of the year. I am not sure about his jokes about cough sweets and Jeremy Clarkson, when we are dealing with something as important as our countries future they seem rather irrelevant. On the other hand, maybe it shows a human touch behind the scripted words.

The sector has seen a warming from Number 10 in recent months, many attributing this to ex Housing Minister Gavin Barwell who is the Prime Ministers advisor in Number 10.  Announcements at the Conservative conference and recent back-tracking on Local Housing Allowances for Social Housing notable examples. Indeed, immediately before the budget this week, in Prime Minister’s Questions, the PM provided a robust defence of Housing Associations use of reserves and surpluses!

So, expectation was high for this budget that some key announcements would be made to deliver the PM’s commitment to make Housing a personal priority! Did it deliver?

The headlines were bold with over £44bn to be invested in loans, guarantees and other capital instruments. You probably are wondering, like me, what capital instruments are. They certainly don’t sound like shovels in the ground do they?! When you start to unpick the headline figure, the £15.3bn of this was new financial support for housing with the rest having already been committed in this parliament.

A bit of further digging, and the £15.3bn includes over 10 different programmes, by far the largest being £8bn in funding guarantees (so not actually funding!!) for private house building. Indeed there was nothing more directly for affordable housing other than the extra £2bn that had previously been announced in the Conservative Party Conference.

Another headline was the removal of stamp duty for first time buyers for homes up to £300k. Although on the face of it very welcome, my initial instinct was who buys their first house at £300k!! Soon after the Government’s own independent financial regulator the Office for Budget Responsibility said that this announcement was more than likely going to result in an increase in house prices and not open the floodgates for first time buyers.

All this got me thinking about the Housing Crisis. Yes we certainly do have one but is it really a housing crisis?? The challenge it seems to me is not one of will or desire. Housing Associations including Salix Homes are stood ready, willing and able to build new affordable homes. Neither is it not one of funding. To be fair there is a good supply of grant to support new affordable homes. My view is it is a crisis of land supply.

If you want to build affordable homes, in places where people want to live, then you are almost guaranteed to have private developers there first.  Any available will almost certainly have been land already bought and banked for the future. The availability of land is the key to unlocking the capacity of Housing Associations (over £1bn just in Greater Manchester) to start the house building programme that this country needs.

If the Prime Minister really wants to make housing something that defines her premiership then she could start by recognising we have a Land Crisis and release public held land to Housing Associations to build the affordable homes for the future.