Landlord News

Government Not Solving the Housing Crisis

Em Morley - May 28, 2015

For anyone struggling to get a roof over their head, housing is the biggest social challenge in Britain today. But it is believed that housing policies did not alter the outcome of the general election.

This was not because housing is unimportant to voters, but the political parties did not seem to have a similar approach at tackling the crisis. The divide between housing policies left the public confused at what would be done, and this was particularly the case in London, which has been hit the hardest.

In the capital, the housing crisis has worsened dramatically in the last five years. Property prices have increased 9.5 times faster than wages since 2010 and private rents have grown by 20%, as new housing supply has dropped.

So-called affordable rents are now unaffordable to even middle-income households in nine out of 32 London boroughs.

Government Not Solving the Housing Crisis

Government Not Solving the Housing Crisis

As a result, homelessness and rough sleeping levels have risen, worsened by benefit cuts. Welfare reform and increasing prices have also affected the social set up of the capital. Local Housing Allowance (LHA) claimants have been pushed out of central London boroughs, with claimants in these parts falling by over a quarter. The number of claimants in outer-London areas has risen by 12,600.

Right to Buy

The Right to Buy extension, outlined in the Queen’s Speech yesterday, is thought to be an expensive mistake. The policy is likely to cause a reduction in stock, as tenants buy housing association homes and council properties are sold to fund the policy.

Read more about how it will work here: /right-to-buy-extension-explained/.

And even the Conservatives cannot agree that it is the policy we need, with one advisor commenting: “If we have £4.5 billion to spend on a housing policy, explain to me why aren’t we spending it on more housing?”1

It appears that giving away houses will not be as effective as simply building more, with some arguing that housing association tenants already have a secure home.

Help to Buy

The Conservative manifesto did not emphasise enough the need for increasing supply and therefore balancing prices. Instead, they proposed expanding the Help to Buy scheme and introducing the Help to Buy ISA. The Government is therefore focusing more on the demand issue rather than the root of the problem.

Benefit cuts

Further welfare cuts will put added pressure on low to middle-income families. The plan to cut the benefit cap from £26,000 to £23,000 could move more people out of prime areas, as already seen in London.

Homelessness could also worsen, as housing benefit could be abolished for 18-21-year-olds on Jobseeker’s Allowance.

Private renters

And the Conservative manifesto did not even cover those renting from private landlords. Spiralling rents and poor conditions have been affecting these tenants for years, and they could be in for another tough five years. But how could the Government forget them? There are now 11m private renters that have been overlooked.

There is no Right to Buy for private tenants and no mention of controlling rents or regulating the sector.

The only boost that renters could benefit from would be the substantial increase of new home supply, which would have the best impact generally for all.

1 http://linkis.com/a2mTI