Our regular weekly roundup of news items that interested us. This week we focus on the Government’s plan to revitalise the right to buy scheme as well as analysis on the state of the sector through Propertymark’s latest report.
Boris Johnson considers reviving Right to Buy
This week, prime minister Boris Johnson is considering reviving the right to buy policy, allowing long term tenants the ability to buy their house from a housing association at a discounted price. The idea is designed to help ‘generation rent’ as more houses will be available to buy and will allow more people to own their home. This will lead to around 2.5 million households being available to buy at a discount of up to 70%.
In addition to this, the Government is also considering axing the current policy that developers must build a set number of affordable homes in favour of making them pay into an infrastructure fund that councils can then use to fund their own projects. This, the Government hopes, will increase housing stock in areas.
However, both of these ideas have been questioned by many prominent members of the industry. Polly Neate, the chief executive of Shelter, said:
There could not be a worse time to sell off what remains of our last truly affordable social homes. The living cost crisis means more people are on the brink of homelessness than homeownership…
Shelter predicts that nearly a million people are on the ‘housing association waiting list’ across the UK looking for either supported or social accommodation. In addition to this, from the previous right to buy policy, only 5% of the housing stock was ever replaced.
Landlord Law, and indeed many people within the industry, see the right to buy policy as a bad idea (indeed, we wrote a post about the shortcomings of the policy in 2017, which you can find here). It is short-sighted: reducing your social housing supply whilst also not replacing it all for the sake of homeownership will only lead to disaster. Many of the housing problems today ( for example, high demand in certain areas) can be traced back to or at least were exacerbated by the right to buy policy that was introduced in the 1980s.
The idea to axe developers obligations to build affordable housing in their developments is also questionable. Currently, legal loopholes enable developers to get out of the obligation to build affordable housing (an article on this can be found here). This policy, whilst admittedly will close this loophole, will raise other issues, for example:
- In high demand areas, how do councils propose to integrate social housing if the more appealing areas are bought by developers? Will this lead to private housing and social housing being built in two separate areas, or will they be integrated together?
- Will all the funding go towards social or supported housing, or will it be up to the council’s discretion?
- How much funding will the council get per development? The Government must ensure it is a significant amount.
The Government may find it best to look for policies that were not already deemed a failure in the 1980s…
This week, Propertymark’s market snapshot report has indicated that the prediction of a hostile market for renters has come true with rents rising and stocks diminishing.
The report showed that there is now an expanding gap between supply and demand of properties, with tenants remaining in the same property longer than before. The fact tenants are staying in the same properties has exacerbated the supply situation also, with more tenants being reluctant to move in today’s economic climate.
The report showed that, on average, the number of landlords that withdrew their properties to sell was three per agency branch. This rose from February, when the average was two. In addition, Some 71 per cent of member agents reported rent prices increasing, which is a slight decrease from 74 per cent in February but is still significantly higher than the same time last year, which stood at 60 per cent.
Propertymark chief executive Nathan Emerson said:
When an increase in tenants staying put for longer occurs, the churn of properties that would normally come back into the market begins to stagnate, feeding the issue further…. Many landlords feel their rights are being eroded, meaning they are more likely to sell.
National Association of Property Buyers on scrapping section 21
The National Association of Property Buyers (NAPB) has this week said that scores of landlords are leaving the industry, which has given rise to soaring rents. This, NAPB has described, is a symptom of the Government’s over-regulation and a clampdown on landlords’ rights, most significantly, the end of section 21.
NAPB, while understanding the need for a change of the current eviction powers, is worried that the timing of this may cause further landlords to leave the industry.
Spokesperson Jonathan Rolande says:
It’s very important tenants renting a property have protection in place, but by imposing sweeping new powers at this juncture the government also runs the risk of driving out large swathes of landlords in one go.
Generation Rent director on insulation and household warmth
This week, Generation rent director Baroness Alicia Kennedy has claimed that a quarter of a million landlords are letting families live in homes ‘that are so expensive to heat they are illegal to let out,’
South West England is where she claims private renters are most likely to live in a home that fails Minimum Energy Efficiency Standards – nine percent of households, compared with six percent in England as a whole.
The Baroness also attacked local authorities, who she said do not do enough with the enforcement powers given to them to tackle landlords not complying with the minimum energy efficiency standards (MEES).
Baroness Kennedy, on the issue said:
A quarter of a million households are in homes too cold to be legal and with energy bills through the roof, they are paying hundreds, if not thousands, of pounds more than they should as a result…. Councils have the data and the powers they need to protect the most vulnerable tenants – but at the moment most are not using them
Newsround will be back next week