All the Tories standing for election are claiming they will work to ensure that there are sufficient affordable houses the community requires.
Tories have been building houses all over East Devon for decades yet every community is crying out for them.
What new plan do the Tories have?
Or is this just another empty gesture?
What does affordable housing mean?
The majority of us think that “affordable” means “social, council or housing association” houses. These are very much the minority.
Unbelievably, there is no single agreed definition. The most commonly referred to definition of affordable housing is set out in Annex 2 to the National Planning Policy Framework. This talks about affordable being at least a 20% discount on market rates for both rent and purchase.
As Owl reported recently: ‘Affordable housing” is a joke. The term is so subjective as to render the 80 per cent of market value definition useless. Housing is increasingly unaffordable to many, whether it comes at a 20 per cent “discount” or not. It is a problem particularly exacerbated in holiday let and second-home hotspots.
CPRE Devon showed in 2018, that the Devon average price to income ratio was 8.4 (England 7.2). This is notably higher than it was pre-recession in 2002 when it was 6.0. The average price to income ratios in East Devon is one of the worst. The ratio has been consistently over ten for the last decade.
In contrast “Social homes” have rents pegged to local incomes and provide a truly affordable, secure housing option for people across the country. Social housing is provided by either housing associations (not-for-profit organisations that own, let, and manage rented housing) or the local council.
Thatcher introduced “Right to Buy” but squandered the proceeds
In 1980 Margaret Thatcher introduced her “Right to Buy (RTB)” policy, forcing local authorities to sell council houses, if the occupant requested it, but at a discount to market value.
Unfortunately, the councils cannot reinvest 100% of the receipts. The Tory government restricted reinvestment rules again in 2021.
The net effect of selling at a discount and reinvesting only a portion of the receipts, is that local authorities have only been able to replace around a third of homes sold since 2012,
Coalition cabinet member Cllr. Dan Ledger’s recent article, pointed out that 70 RTB requests to EDDC were made in 2022. He then went on outline what he has been doing about it.
The Tories have tried “Build, build, build” but it hasn’t worked.
As mentioned yesterday, EDDC Tories in 2013 put in place a local plan to deliver an average of 950 houses a year until 2031, 65% more than needed.
Build enough houses and the developers will cross subsidise the building “affordables”?
That’s the theory but it hasn’t worked in East Devon.
Having gained planning permission on a promise to deliver a certain number of affordables, developers frequently claim later that “viability assessments” mean that they have to reduce the number.
Notorious local examples include Goodmores Farm (25% down to 5%), Evan’s Field (30 houses to 5) and Cranbrook. (67 houses 28% of total reduced to 44 just 18% when EDDC’s policy target is 25% in one case and 26% reduced to zero in another).
The CPRE mentioned above also found that the average priced new build in Devon is 18% more expensive than an existing home. At the budget end of the market (lower quartile) it’s worse, a new build is 27% more expensive.
The housing market won’t/can’t deliver
Put simply the private sector has not been able to build the affordable homes needed.
In the same year as the CPRE study, former Tory cabinet minister Sir Oliver Letwin led a review into why developers took so long to build houses.
Surprisingly, he did not blame the planning system, rather he turned the spotlight on the developers themselves. In a report to the Secretary of State he laid out a number of “fundamental explanations”.
He found that with most development in the control of a small number of developers, they effectively control the market.
They control the rate at which they release houses onto the market so as not to disturb the market price.
So no matter what targets central governments set or how aggressive local “Build, build, build” policies are; the “market” will ensure that house prices won’t fall.
The developer builds what he thinks will sell and make a profit, rather than what the communities need. Also developers don’t build specifically for the rental market.
Because of the cross-subsidy, building “affordables” and “social rented” houses come last (if ever).
Provision of Social Housing
If “market forces” won’t provide social housing then it is down to housing associations and local authorities. Independent Councillor Dan Ledger is the first in EDDC for years to grasp the problem.
He found the Tories had left EDDC’s social housing company dormant!
Have they really had a change of heart?
Anyone wondering about the Tory connection to developers might like to read Sam Bright’s ‘Bullingdon Club Britain’. It is full of interesting, and worrying, information. I recommend it as an eye opener – even for those of us with eyes already wide open!
On page 122 he writes, ‘Between 2010 and 2020, companies and individuals with a substantial interest in housing donated £60.8 million to the Conservatives – 20% of all funds given to this party during this period’.