New evidence base to inform tough spending and policy decisions
To coincide with the Budget and the CIH annual conference, CIH has published an update to its well-respected annual UK Housing Review by Professors Hal Pawson and Steve Wilcox.
The Briefing Paper presents and analyses UK economic issues and key aspects of housing, drawing on data published since the last annual Review. Some main conclusions are:
1. The prospects for the UK housing market returning to the levels of sales seen before the credit crunch are slim. Although houses are more affordable, mortgage lenders have less access to funding than before – especially since the collapse of the securitisation market – and are focusing on low-risk lending, especially given tighter restrictions imposed by the Financial Services Authority.
2. First-time buyers therefore face new hurdles to entering the market. Whereas before they needed sufficient income, now they also need sufficient savings to make bigger deposits. This ‘wealth’ barrier to homeownership is worse for potential buyers whose parents are not homeowners and are therefore less likely to be able to help them out. Policy review and reform is needed to address the ‘wealth gap’ and help households to access homeownership in an ‘age of aspiration’.
3. If potential buyers face difficulty in becoming homeowners, the same is increasingly true if they try to rent rather than buy. The growth of the private rental market has tailed off with reduced funding of buy-to-let mortgages. The affordable rented sector has been cut and faces the prospect of further cuts, which means that building of new social housing may soon decline.
4. Homeowner repossession risk continues, so government needs to consider how it is going to construct a more enduring safety net for homeowners who run into financial difficulties
5. Survey data show a steady and encouraging improvement in overall tenant satisfaction across social housing in England over the past few years. With the new Westminster government committed to a slimmed-down form of regulation it remains to be seen whether the improving dynamic of landlord services can be sustained into the future. What does, however, appear certain is that the expected demise of a large-scale inspection programme should mean there is an enhanced role for tenant satisfaction measurement in monitoring service quality.
6. The squeeze on investment resources will inevitably mean a review of current social sector rents policy, but rent flexibilities and their consequences are complex and need detailed evaluation rather than over-hasty decisions.
7. Despite growth in the number of older households, there remains limited private sector provision for them, and even less shared ownership for homeowners in lower value dwellings with insufficient equity to move into appropriate private sector housing schemes. Innovative schemes now need the encouragement to enable them to flourish – and to feature far more prominently in local housing plans.
8. If the coalition government combined reform of council housing finance with a change in borrowing rules that would bring the UK into line with international standards, it could free up some modest potential for investment in housing without it counting as extra government borrowing.
Richard Capie, CIH Director of Policy and Practice commented:
‘By bringing together the latest data on the state of the economy and on the state of the housing market, the Briefing makes the interrelation between the two even more apparent. It is vital that the new government takes account of the importance of housing investment in economic recovery, and also appreciates the continuing difficulties faced by potential first-time buyers, Both these factors point towards the vital role of affordable rented housing during this period of economic difficulties.’
Professor Steve Wilcox, main author of the Review commented:
'The effectiveness of the government’s policies to support and manage the private housing market will be central to the success or failure of its wider economic, social and fiscal policies'.
Mark Cosh, European Director of 24/7 property and people protection leader SitexOrbis, sponsors of the Briefing Paper commented:
‘This is a very thorough document. The information will help us all work smarter. In doing so, it plays a vital role in helping to fill the gap between investment and housing requirements. We are delighted to be associated with the publication.’
1. The UK Housing Review Briefing Paper was be launched at CIH’s annual conference at Harrogate on Tuesday, 22 June. It is also available online
2. The UK Housing Review 2009/10 by Steve Wilcox was published by the Chartered Institute of Housing (CIH) and the Building Societies Association in December 2009. It is available to purchase at www.cih.org/publications
3. Data tables to support this paper and previous UK Housing Reviews are available at www.ukhousingreview.org.uk/