On 7 February 2017 the Communities Secretary, Sajid Javid MP, presented to Parliament the government’s long-awaited housing white paper, 'Fixing our broken housing market'.   The paper acknowledges that housing in England, particularly London, is completely unaffordable for most people, and attempts to address the chronic housing shortage.  In a radical departure from accepted policy, the paper sees the Conservatives moving away from their home-ownership mantra, to focus on improving the situation for ‘generation rent’. 

The broken housing market

What is clear is that the serious issues with the current housing market need to be addressed quickly. Fewer homes have been built in England in the last five years than since the 1920s, yet we have a steadily increasing population. Homelessness is rising and the gap between the ‘haves’ and ‘have-nots’ is widening. Leaving aside rental income, house price inflation means that many homes make more for their owners than their occupants earn, with an average home in London costing 10 times an average person’s earnings. The soaring value of properties creates an excellent investment opportunity for those few lucky enough to afford a second (or third, or fourth…) property. These investors, in turning their hands to becoming private landlords, exploit the massive demand and limited supply of homes and sometimes let sub-standard properties at exorbitant rents to tenants trapped in ‘generation rent’. 28% of rental homes in the UK are currently described as ‘non-decent’, yet the average London rent is £1,543 per month. There is a bloated private rental market; the proportion of individuals living in the private rented sector has doubled since 2000.  The average London couple spend half of their gross earnings on rent. These tenants cannot scrape together enough at the end of the month to even think about saving for a deposit to buy a home themselves, leaving them trapped in ‘generation rent’.

These problems need to be tackled head-on and urgently by the government. Private developers cannot solve the chronic housing shortage alone. It is estimated that 250,000 new homes need to be built each year, in order to keep up with the growing population and ease the housing crisis.

The housing white paper

In summary, the housing white paper proposes the following:

  • longer ‘family friendly’ tenancies of a minimum length of three years for all new-build rental homes
  • lifetime ISAs, which provide savers with a 25% bonus on top of their maximum annual savings of £4,000 when they use their saving to buy a new home (or upon reaching 60 years old)
  • diversify the building market by supporting small and medium sized enterprise builders through the creation of a £3 billion home building fund
  • a proposed future change to the current much-criticised definition of ‘affordable housing’
  • councils to prioritise long-term build-to-rent schemes
  • councils to build upwards and at a higher density
  • councils to produce realistic local plans every five years for building new homes
  • homes to be built more quickly, through making it easier for councils to issue completion notices and in reducing the timeframe developers have to commence building new homes after obtaining planning permission from three to two years
  • retain existing policy that green belt land is only to be built upon in exceptional circumstances and to encourage the use of brownfield land

Fixing the housing crisis?

Whilst the government’s new focus upon improving the lot of ‘generation rent’ is welcomed, the white paper does not go anywhere near far enough to fix today’s broken housing market.  There is nothing in the white paper to require councils and developers to build more social housing.  In 2015/2016, of the ‘affordable housing’ built, only 20% were at social rent levels, with the rest at 80% of market rent. Under-resourced councils, with their budgets massively stretched, will continue to sell their land to the highest bidder, rather than building more social housing. There is no suggestion in the white paper that councils will be encouraged to take on the building themselves. Therefore, homelessness will continue to be an issue and struggling families will continue to be deprived of the right to secure housing.  

Promisingly, the white paper does propose to change the definition of ‘affordable housing’.  The current definition of ‘affordable housing’, at 80% of market rent or value, is far from affordable for the majority of people. 

The new, three year ‘family friendly’ tenancies will only apply to new build rental homes, thereby permitting existing landlords to continue to offer short-term, insecure tenancies.  In addition, there are no proposals in the white paper to bring in even a modest form of rent control, enabling landlords to continue to charge high rents, a substantial part of which is subsidised by public funds in the form of housing benefit. This will continue to leave generation rent unable to save for a deposit to buy a home. 

The white paper’s proposals with regard to encouraging homes to be built more quickly are positive. Over 475,000 homes in England with planning permission are still waiting to be built. It takes on average nearly three years for developers to build a new home after securing planning permission; the white paper plans reduce this time frame to two years.

However, the white paper notably does not include the government’s flagship promise to create 200,000 more home owners by the end of the current parliament, thereby throwing the achievability and credibility of the proposal into doubt. If the government is serious in trying to fix the broken housing market, more decisive, significant and forceful action is required than that outlined in this white paper.

The housing white paper: a sticking plaster for the broken housing market