COMMENT “Getting government back into the business of building houses” is Theresa May’s plan for fixing Britain’s “broken housing market”. About time too.
It’s progress, of a sort. But just as there seems to be no quick fix to the PM’s damaged authority, there will be no short-term solution to housing’s affordability crisis. Indeed, there won’t be a medium- or long-term one either if the wrong solutions continue to be prioritised.
So yes, the £2bn investment in affordable housing promised by May – the first substantial injection of funding into the social rented sector since 2010 – is to be welcomed.
But when five times that amount is being injected into Help to Buy – a policy variously described as economically illiterate, nakedly opportunistic and like throwing petrol onto the bonfire that is the housing crisis – questions about the seriousness of that commitment are invited. Not least by build-to-rent developers that are left wondering whether the government’s support for the nascent private rented sector market is sincere.
The maths is more complicated than that, of course. The £2bn could and should be used as leverage for significant private sector investment – a further £3bn could be unlocked, the National Housing Federation suggested this week. And, yes, other governmental support could follow. So perhaps we should not be so cynical.
Indeed, overall May’s was a positive message. She did not blame local authorities for a failure to deliver over recent decades, as some trails of her speech had suggested. (While there may be many areas where local authorities deserve criticism, I am not convinced this is one.)
It did not see the PM attempt to deflect complete responsibility for delivery to the private sector either. Many a minister has fallen victim to this over recent years.
Indeed, it saw May make herself personally accountable for delivering on land supply and skills. Most tellingly of all, in an aside that perhaps offers the most compelling justification for Help to Buy, May made it clear that she expected housebuilders (for which we should read developers too) to support her ambition.
“I want to send the clearest possible message to our housebuilders,” she told the conference. “We, the government, will make sure the land is available. We will make sure our young people have the skills you need. In return, you must do your duty to Britain and build the homes our country needs.”
Lecturing private sector enterprises on their societal duties always jars for me: that’s what regulation and taxes are for. But think through what is too often a non sequitur and Help to Buy suddenly starts to make sense.
With the share prices of the UK’s FTSE 350 housebuilders rising by between 2% and 4% on the back of the latest support for the scheme, the stick that accompanies the £10bn carrot is looming into view.
What the government appears to be saying is that it will support a policy initiative which has unquestionably benefitted housebuilders in return for their support for measures that will increase the supply of affordable housing. Or to paraphrase: “Build the homes we need whether or not they offer the best returns or we’ll chop down Help to Buy’s magic money tree.”
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