Not one housing crisis
Over 100,000 emerging households are unable to access market housing every year in England, half of them in London. Across different regions the kinds of households affected by this undersupply of sub-market housing vary hugely, but the policies don’t reflect the diversity of issues.
In the higher value markets of London and the South the main issue to be solved is affordability. High house prices and rents mean that thousands of households with incomes over £40,000 are unable to access market housing.
Land values are sufficiently high for s106 to fund some sub-market products, with grant also playing a role. These upfront subsidies allow rental homes to be delivered at a significant discount to the market, leading to a long term revenue saving compared to using housing benefit to house people in the private sector in these markets.
While the product mix is good, the volume is nowhere near enough. More supply of all sub-market tenures is needed, as well as tapping into demand for lower priced market homes (for more on this subject see our Development Spotlight: On Track To Solve The Housing Crisis?).
Quality or quantity?
By contrast, in the Midlands and North we have seen affordable rent dominate submarket delivery, with the majority of those homes delivered via grant from national affordable homes programmes (around 13% came via s106, partly due to lower land values). Where the gap between Affordable and market rents is narrow, this type of delivery is not necessarily increasing access to housing or providing much of a housing benefit saving compared to market rented housing.
But it is doing another important job in lower value markets. Grant for affordable rent supports delivery in general by increasing the viability of schemes and provides a better quality of rented housing compared to the private sector.
But should this be the job of an affordable housing programme? A more pressing housing challenge than affordability in these areas is often urban renewal, but the national focus on affordable housing numbers potentially stops it from being tackled, leaving areas of what could be affordable second hand properties unoccupied or in poor repair.
Is there a better way?
The solution is to first recognise that the housing crisis is very different across the country, and that a national or, at best, ‘London and the rest’ set of housing policies is unable to respond to the diversity of local issues and needs.
Flexible policies that target specific local issues – market access in unaffordable markets and housing quality and renewal in more affordable ones – will ensure that grant is able to be directed where it is most needed, improving value for money and making more of a dent in the crisis.
In our next report, launched on 27th November, we will look at how a different policy approach could deliver a better mix of homes, save money, and insulate housing providers from market risks.