The housing crisis will not be solved by selling the homes of low-income families
In their much trumpeted Housing Strategy the Government promised to “get Britain building” but today their failed housing policies and a double-dip recession made in Downing Street have led us into the worst housing crisis in a generation.
With house building collapsing under this out of touch Government, the latest Policy Exchange report rightly highlights the need to build many more homes - an argument Labour has continually made for the last two years. But the report’s proposals to arbitrarily sell off homes that are currently let at affordable rents to hard working families, are not the answer.
Why? Policy Exchange’s proposals fail some key considerations for tackling the housing crisis. Firstly, do they make economic sense? Secondly, what are the implications for society? Finally, are there better alternatives? On all counts Policy Exchange’s proposals are lacking and short-sighted.
Socially, their Government endorsed proposals would break-up mixed communities, driving low and middle income families out of whole neighbourhoods and creating ghettos of deprivation. An argument that has been powerfully made by the National Housing Federation.
Policy Exchange argues that nobody ‘has a right to live in the most expensive parts of town’. But it is not a question of rights, it is a question of what benefits society as a whole. As the Olympics proved, we are at our strongest when we are united and when we come together regardless of background or circumstance. These proposals would divide us and break up mixed communities. It cannot be right to demonise social tenants asserting they have no place in large parts of our cities.
In terms of financing, it does not take Paul Krugman to understand that their proposal to sell-off all social homes, except if their value is in the bottom half of house prices, does not make long-term economic sense. A social home is a public asset, an investment in the community which can be used time and time again.
If implemented, these proposals would see central government forcing council’s to sell their most expensive assets which provide a long-term, sustainable income stream. Imagine the outrage if the government demanded that businesses sell-off their most expensive assets in this way. Yet this is exactly what these proposals will do to local councils.
So what are the alternatives? Policy Exchange are right to say that we are not seeing the value of social homes being used to its full potential. But they are wrong in thinking that this should be done through selling off homes.
The value of all social homes allows councils and housing associations to borrow against these assets to generate monies to build more affordable homes. Selling these assets off may generate some income in the short-term but in the long-term much more can be generated by borrowing against these assets and recycling the money into more affordable house building.
In short, councils and housing associations should make effective use of their housing stock but the Government should not force them to arbitrarily sell-off social homes, breaking-up mixed communities and driving out hard-working families on low wages from whole neighbourhoods.
Rather than seeking to divert attention from the catastrophic failure of their housing policies, this out of touch Government needs a change of direction and an alternative plan for jobs, homes and growth. The Government should start by taking urgent action now with a bank bonus tax to fund 25,000 affordable homes to put unemployed building workers back to work, create jobs and apprenticeships for young people and provide a boost to the construction industry.