UK Housing Crisis – Thatcher’s RTB and HA insignificance the causes

Thatcher’s right to buy policy is the definitive reason for the UK housing supply crisis and the house building completions data from official government figures proves that beyond doubt.

The lack of capacity in the housing association sector is also a key factor in the chronic under supply we simply call the ‘housing crisis’ when we have numerous crises not just one of under supply, and another is HA choice in not to build and what to build.

The 1980 right to buy policy signalled the great property owning democracy of Thatcherite ideology and as well as selling off 2 million council houses it (a) took away the council house building rationale, and (b) brought in ‘tenant aspiration’ that we still see today in political language, or a cultural phenomenon that merely renting was a non-aspirational choice of those with no ambition, a second-class or perhaps a third-class choice.

As a direct consequence we see the average number of council houses built averaging just 10,797 per year in the 34 years after Thatchers RTB when in the 31 years before it councils built 153,409 on average.  A net loss of 142,612 houses per year.

Housing Associations built on average 13,837 per year pre RTB and increased this by just 10,097 per year to average 23,934 per year.

Thus social housing has seen a yearly average reduction in new builds of  132,515 per year since Thatcher’s right to buy. Private enterprise – ie homes built for sale averaged 146.7k pre RTB and 154.9k post RTB (yet now just 108k per year average from 2010) and so the overall position is pre RTB 313.9 k homes built and post RTB 189.6k built and in total 124,294 fewer homes built per year.

It is this 124,294 fewer homes built per year since the 1980 RTB that has caused today’s crisis of housing supply and especially so as we have 8.8 million more people in the UK in 2015 than we did in 1980.

The data for the chart above comes from the governments Table 241 and the latest figures only go to completions at the end of 2014.

Numbers can always be deceiving and nothing says that more than the latest ‘best presented’ figures produced by the National Housing Federation for last year which showed just over 40,000 completions yet only 5454 of them were for social housing at a social rent.

Last year housing associations built LESS housing for social rent than they have ever done in any year since the second world war or perhaps ever!

NHF numbers which say last year was a record output for housing associations are a prime example of how numbers deceive an the typically deluded bullshit sophistry we have come to expect from them and the fact their address is Lion Court is irony personified.

The lowest post war output for housing associations was in 1962 when they built just 6020 new properties and if they were all for social rent (or at least 91% of them) which is a pretty solid assumption then last year when they built just 5454 for social rent is their lowest output in the post war period – that is a startling fact

Housing Associations are no longer social landlords as over 87% of their development last year was not for social rent and was not the equivalent of what council housing is and was, the provision of GENUINELY affordable homes for rent.

HAs present themselves as the replacement for council landlords yet in building 87 out of every 100 new properties NOT for social rent then they are not social landlords at all they are private enterprises chasing the most money.

I can understand that HA’s need to build for private rent or outright private sale to cross-subsidise true social housing for rent and if one sale is needed to subsidise one genuine social rent property then  fine (very reluctantly fine) but not when it means 7 private rentals or sales for every 1 property at a social rent level – and noting a HA social rent is still 13% above a council social rent level a figure which the HB data gives. Yet 87% non social rent can never be called social ethos or purpose

Last year the aggressively private focused National Housing Federation put out yet another plan (Homes for Britain) which said we need to build build build …

ZERO homes for social rent is the rationale of the housing associations as of all these 120,000 per year homes not one is for social rent!  Given that housing associations have never built more than 40,000 new properties before the claimed 40,120 last year, their highest previously was 38,760 in 1995 quite how they are going to triple their record capacity to 120,000 you can only find the answer to hidden in the pot of gold at the end of the rainbow reader!

A few days ago we had more high profile announcements from these private registered providers who are misnamed as social landlords with an announcement from Trafford Housing Trust (formerly Trafford council housing) who are going into partnership with London & Quadrant HA in a joint venture (JV) to deliver 2000 new homes.

Initially the JV aims to develop around 500 new homes a year, with investment from each partner in the region of £80m over the four-year period to deliver 2,000 homes.

Approximately 25 per cent will be affordable new homes designed for first time buyers, with c.25 pc for affordable rent and 50 pc new homes for market rent and sale. Any profits generated from the joint venture will be re-invested back into the local area to create more homes for local people in the years ahead

The highlighted section emboldened shows zero social rent housing in this 500 property per year plan and the highlighted section in blue is very interesting when you crunch the numbers.  Two housing associations investing £160 million to develop 2000 new properties is £80,000 per property.  The social housing ‘subsidy’ is usually around £20,000 per property which if the same £160 million was used for social rent would see 8,000 properties or four times as many – housing associations are CHOOSING not to deliver social rent on a Get rich quick, chase the money and to hell with social purpose (see update at end for more)

Interestingly, Corbyn has promised to build 200,000 houses per year and 100,000 of these per year are to be council houses.  The country needs more than 200,000 new houses per year (250,000 – 280,000) and this is also the Conservatives pledge yet they do not want any genuine social housing within that 200,000.

The problem is NOT whether Corbyn or the Labour Party is electable, the real issue is CAPACITY to build the minimum 250,000 new houses we need per year.

Private Enterprise (Barratt, Redrow, Persimmon et al) while averaging 155,000 or so post 1980 are only averaging 108,000 since 2010 and if Housing Associations continue their record of 40,000 they claim for last year then this is only 148,000 per year.  Add in the average since 2010 of 2000 council houses per year and that’s 150,000 per year which means by the end of this parliament a further housing shortfall of 100,000 per year and a further 500,000 shortfall.

The ONLY way that the UK can build enough new homes to stem the housing crisis and to prevent it getting worse is for councils to build 100,000+ properties per year.  Councils have that capacity and have proved that yet are prevented from building by political dictat and ideology.

That ideology is aspiration and the seismic cultural change Thatcher brought about with the right to buy, the culture of you must be stark raving mad not to want to be a home owner and by consequence anyone who merely rents is somehow wrong to choose to do that – the great property owning democracy posit … only resulted in a huge fall of the numbers of houses built as the chart reveals starkly and directly created the chronic national problem of under supply we now have to deal with.

The Corbyn Plan and ignoring that tag ascribes to him what thousands have said before is intriguing.

The only way the UK can resolve or even maintain the crisis of under supply at its current level is for a mass council housebuilding programme as the other two sources shows a massive lack of capacity in the housing association sector and an unwillingness by private enterprise to  build more.  Private enterprise output has fallen dramatically since 2010 so this is not a Brexit consequence or the result of a brick shortage or any other bizarre excuse that is given, it is out of intention in order to keep house prices artificially high.

Which brings me back to culture.  The ONLY way the housing crisis can be solved is with a mass council housebuilding programme which is the antithesis of the Thatcherite property owning democracy that caused the housing crisis in the first place!

Corbyn’s pledge on this puts that solution on the table and it will have more resistance from the UK housing sector which is dominated by the aggressively private focused NHF  than the general public, as this solution, which is the only solution, also reveals that housing associations are and cannot be the solution to the ‘housing crisis.’

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UPDATE –  A few weeks ago BBC website ran article called “How can the UK build more post Brexit” that included the oft heard claim from David Orr about HA housebuilding prowess:

The NHF, along with the Chartered Institute of Housing (CIH), are suggesting to ministers that £4.7bn of planned funding for shared ownership and supported housing, along with £2.3bn available to clean up brownfield sites for starter homes, should be switched to building 300,000 affordable homes, including social housing.

So the NHF say give us the £7 billion (£4.7 plus £2.3) and we will deliver 300,000 affordable (sic) homes.  That’s £23,333 per property – yet as the THT & L&Q joint venture above shows housing associations are and will not do that and the £160 million of that joint venture could produce @ £23,333 some 6,857 houses but instead is only delivering 2,000, and showing that HA’s develop not for social purpose but for their own bottom lines … no wonder the housing regulator calls them private registered providers!