Britain faces a housing crisis. After 13 years of Labour, housebuilding rates have fallen to a record low, mortgage availability is severely restrained and house prices are beyond the reach of many. As a result, the average age of the first time buyer is fast approaching forty.
The outlook for the social housing sector looks bleak too. It enjoyed a renaissance in recent years, the beneficiary of a public spending splurge and section 106 agreements with housebuilders happy to share the proceeds of rising land values in return for planning permission. Neither goose will be laying these golden eggs over the next few years.
The third element of Labour’s legacy is the type of housing that was built in their period in office – a preponderance of tiny one and two bedroom flats. This was fine for a regime obsessed with unit numbers and state imposed targets, but hardly reflected the needs of real people and families.
Labour’s obsession with regional planning masked a misunderstanding of the housing and property market. Figures released this week by the London Rental Housing Company show some 150,000 stalled housing units in London alone. These are schemes that have planning permission but lack private or public investment or are simply no longer economically viable.
An urgent question for all of us is how do we get these schemes back up and running when there is little money available from either public or private sources. With almost one million Londoners on housing waiting lists, there is a desperate need for new approaches.
Fortunately, there is a glimmer of hope – the private rented sector. Traditionally made up of a large number of small investors, some with just a handful of properties, the contribution of this sector in meeting housing needs is often overlooked (while its reputation has often been damaged by the penny pinching antics of a few notorious landlords).
But now, institutional investors such as Aviva are recognising that the private rented sector could provide a way of investing in housing in the current market. New brands, such as the London Rental Housing Company, are emerging to deliver purpose built, quality and value homes in high numbers, appealing to families who are unable to afford home ownership but who do not qualify for social housing. In recent years, private equity has invested in purpose built student accommodation – can we now attract a similar investment into a more general private rented sector?
So how can policy makers support this emerging market?
First, those Councils that have significant land assets should consider committing some of this land for such projects. Once again, the parallel is universities who have teamed up with student housing developers to provide much needed student accommodation. Indeed, by swapping land for equity interests, councils can help deliver housing now while ensuring future financial return for the community.
Second, we need a sympathetic and flexible planning regime. Is it right that we should expect these projects to provide high levels of social housing? Sticking rigidly to affordable housing targets inherited from the last Government will simply kill the built for purpose rented housing sector at birth.
The private rented sector is not a panacea for all our housing ills. But it should be part of the mix. To succeed, it requires entrepreneurial drive and localist solutions, attitudes which chime with the spirit of the new coalition Government. Moreover, it can help us start building homes again in this age of austerity.