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Arhag Chair talks Housing and the General Election 2017

Wednesday, May 10, 2017

Housing needs to be a priority for all political parties in June’s election

The UK needs a joined up strategy to resolve the housing crisis within ten years and the key aims should be to increase housing supply and to tackle the growing gap between housing costs and wages.

As a provider of homes for migrants and refugees, Arhag experiences the problems of London’s housing shortage at the sharp end.

This is not just in the chronic shortage of stock but also the increasing levels of social and economic destitution, which is leading to soaring numbers of homeless.

We drastically need to increase social and affordable housing to tackle homelessness and give low-income households some real accommodation options.

I want to see the next government tackle this head on with some fundamental policy changes in social housing but also some relatively small, but potentially impactful measures to the private sector.

A few simple measures could go a very long way to increasing housing supply and move rental prices down, reducing the gap to wages.

My manifesto for housing would be a mixture of substantive changes to the housing sector and some lighter touches to regulation and tax to increase supply and push down rent in the private sector.

First right to buy must end. Social housing is there for a reason. As providers of social housing we should help our tenants to progress their lives and careers, but this should not be at the expense of the social housing stock.

At Arhag we want a sustainable system where our tenants develop with our help and when ready they can move on, either to rent or buy from the private sector.

We do this with our job training partnership with Olmec, encouraging tenants to get work and to improve careers. We want to encourage aspiration so tenants want to move out and their home can then go on to the next family that needs our help. Right to buy just takes those homes out of social housing and seizes those opportunities from others.

Second, to increase the supply of affordable housing grant funding for new build projects should be drastically increased from its current level of a flat rate £60,000 per property, which represents about 15% of the development costs to at least 40%.

HAs are reluctant to take on large-scale new builds – and the housing shortage remains. While the larger HAs were able to keep rents affordable by cross subsidising, the capacity to do this is running out, so the current Mayor’s subsidy is still not resulting in affordable housing for most people in London.

Third, the annual rent cut enforced on councils and HAs also has a big impact on building new stock. It is robbing HAs of millions of pounds each year to help the Government reduce its Housing Benefit bill. The impact is to suck money out of the housing economy and less spending on housing, means less housing! The next government must reverse this policy.

Fourth, something must be done to reduce the 20,000 empty homes in London. Many of these are being used to store the capital of wealthy individuals and have a disastrous, price-inflating impact on the housing market, starting at the top and impacting all the way down to first time buyers.

Fifth, the next Government needs to resist political pressures to reduce the commitment to spend 0.7% of GDP (£13bn) on tax income as it saves lives and helps to reduce the need for economic migration.

But perhaps a less obvious route to alleviating some of the housing problems is through the private rented sector (PRS), which I believe could play a very important role.

Working with a local charity, Arhag is currently trying to find landlords willing to reduce their rent demands to help house Syrian refugees in Haringey, North London. Sadly it’s not proving an easy task at the moment.

The PRS must be a viable option to our clients and for this to happen more landlords should be encouraged to contribute to the supply.

We should look at incentivising landlords to provide their properties to HAs and councils in return for long-terms secured rents and maintenance in the way Arhag is proposing in the North London scheme.

Another way to increase property supply relatively cheaply, could be a temporary reduction in capital gains tax on sales by buy-to-let landlords. This could vastly increase the numbers of properties on the market and help to push down prices and rent and help to reduce pressure on social housing providers,

The Government could also examine the impact of short-term lets like Airbnb. Are they reducing the number of private rental properties available and distorting rent? I’d like to see the 90-day limit on private temporary rentals through agencies like Airbnb reduced by quite a bit. This would lead to an increase in long-term lets – again taking the pressure off councils and HAs.

This article was published by 24Housing and can be accessed here