The housing market is enjoying the most supportive political environment for a generation. All roads lead to housing and, as far as the government is concerned, they are dual carriageways taking the market directly to those aspirational homeowners. That narrow focus provides much clarity for housebuilders charged with stretching obligations to shareholders in order to chase government housebuilding targets instead.
That is helpful, but this focus also has its downsides.
The problem is that this road has no speed limit and no exits. The direction of travel for policy has pushed Help to Buy money, and soon starter-home discounts, towards an artificially supported fringe of hopeful purchasers.
As an industry, we have lapped it up and these market props have now become an embedded part of site-level profit-and-loss statements. At the same time, policy has no real time for the rented sector, with sideswipes taken at the providers of affordable housing and at the buy-to-let investors who hold the vast majority of the UK’s private rented stock.
What about those who do not qualify for the dwindling new supplies of “affordable products” and cannot afford even these government offers of support?
Policymakers like to quote the statistic that 86% of people want to own their own home, but what does “want” have to do with the provision of public services? The gap between want and need is vast and growing.
In this context, Lord Kerslake’s stand against the Housing & Planning Bill was heroic. More than a dozen times amendments were made in the Lords, and more than a dozen times amendments were voted against in the Commons. The “ping pong” became a spectacle in itself, but it was an important airing of the nation’s conscience. It will count as a defeat for the Lords, with the housing minister perhaps rightly arguing that the government’s election manifesto commitments deserve to be upheld. But I think it was an important moment to have checked the map and made sure we are heading in the right direction.
The other big political news for housing markets, at least in the South of England, is of course the election of Sadiq Khan as London’s new mayor. Khan has inherited a market which, from a consumer perspective, is in deep crisis, but from an industry perspective has enjoyed an extraordinary several years. This imbalance is unsettling and raises concerns that the system is broken.
The question for many is whether Khan, who offered some bold and at times not obviously practical ideas in his manifesto, can unlock the solution.
These two separate political events are in fact intertwined, and therein lies a further dimension to the housing supply challenge. A Labour mayor, who has directly and publicly opposed elements of the Housing & Planning Act, is in a key position to deliver on Conservative Party commitments. The recipe is there for an uncomfortable period of posturing that could help nobody.
Perhaps another outcome is possible. Despite the stoic position from government to push through the Act, the housing minister deserves a lot of credit for the pragmatism shown in other areas to drive forward housing supply solutions. It will be for Khan to show that he can be equally pragmatic, balancing successfully the difference between his best campaign ideas and the ones that will actually count.
Many of these will be adopted from his predecessor, Boris Johnson.
Ultimately, to even conceive of getting close to target housing delivery levels, we will be relying on some pretty heroic acts, of sorts, from our elected representatives. Compromise, posturing and pragmatism will all have a role to play. In the end, I suspect a bit of bloody-mindedness too.
And in that respect Kerslake has laid down the gauntlet with his impassioned stance on delivering the right housing for Britain. Where he leads, may others follow.
Adam Challis is head of residential research at JLL
