Will the government ‘build the homes the country needs’?

Housing Minister Gavin Barwell tweeted yesterday “housebuilding now at highest level for a generation. Real progress but more to do.” Hang on – Barwell’s not the housing minister – he was thrown out by his electorate in Croydon.

Barwell is now the PM’s chief of staff, and he was commenting on figures released this week showing that 220,000 homes have been built in the last year. His closeness to the PM, together with the recent barrage of lobbying from Javid over housebuilding plans, is one of the reasons why Mrs May has emphasised her commitment to ‘build the homes the country needs’ and take ‘personal charge’ of the Government’s response.

With the baby-boomers in charge of the property-owning democracy, and millennials looking on enviously, Sajid Javid has called for a ‘giant leap’ in number of new homes built, and that we ‘have to think big’ to tackle the crisis.  Through the White Paper, Sajid has already vowed to shake up the planning system, encourage diversity and increase supply, but little real progress seems to have been made.

Next week’s budget will have already been written – the office of budget responsibility’s need to see it early demands that.  The budget will, according to briefing, focus on housing and planning, and the chancellor hasn’t always restricted himself to fiscal measures in his pronouncements, so what could be in store?

A month ago, Javid called on the chancellor to borrow around £50billion to massively increase the supply of housing, using ‘record low’ interest rates to fund building up to 300,000 houses per year. The Conservatives have a natural reticence to use Keynesian economic methods, and these plans have already been attacked by Philip Hammond and others, but this would be a radical game-changer that might live up to the hype of the early budget briefing.

The chancellor has been looking at freeing up green belt land for the past few months, but this would upset the Conservatives’ support base in the Home Counties.  Releasing green belt land would help to free up more space for housing, increase the housing supply, and would help to bring down housing costs for first-time buyers. It would also allow developers to build high-density low-rise homes in the outer London boroughs like Croydon and Barnet.

Phillip Hammond’s known choice is to remove, or significantly lessen, the stamp duty burden on first-time buyers and some older home owners. This doesn’t go nearly far enough for most of those in the property industry, who believe the significant rise in stamp duty over the past few years is the reason for the fall in the market in central London, the decrease in moves across the market, and is one of the most pernicious taxes.  The Adam Smith Institute has said that this is one of the most damaging taxes that the UK has, arguing that the money to cut stamp duty should come from raising council tax on higher value properties.

At the Conservative Party’s annual conference in October there was an announcement that £2 billion would be invested in affordable housing for a new generation of council houses. The money that has already been promised could be expanded in the coming budget.  This was on top of £10 billion for expanding the ‘help to buy’ project.

There have been calls for PD rights to be expanded.  Despite a near unanimous disapproval from councils in the south east who believe PD rights meant that shoddy offices were just converted to shoddy homes, the government appears to want to expand these rights to allow greater height in schemes.  Under the plans, developers could add more residential floors onto their built-out schemes; up to the same height as neighbouring buildings or the tallest trees, without needing planning permission. Former Architecture and Heritage Minister, John Penrose MP, is running a campaign called ‘Build Up Not Out’ to lobby for this.

We have only a few days to find out what Hammond has in store.  If he fails, Michael Gove has been positioning himself to take over the post.

With thanks to Mark Findell.

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