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Housing Stock Shortfall

The government concedes that there is currently a housing stock shortfall of more than 230,000 homes a year.

As part of the Queen's Speech on 27 May 2015, the newly appointed government have promised an extension of the Right to Buy scheme to 1.3 million housing association tenants in England.  The overall aim of the Bill is to allow more people the opportunity to enjoy home-ownership and to increase the housing supply.  In order to achieve this aim, tenants in houses will receive a 35% discount on their properties, whilst tenants in flats will receive a 50% discount.  Councils will be forced to sell 5% of their most valuable housing stock once they become vacant (estimated to raise £4.5 billion per year)  in order to part-fund the Right to Buy extension discounts.  Furthermore, councils will be expected to use the money from the sales to replace properties sold to tenants.  Remaining funds are to be invested in the new Brownfield Regeneration Fund.

However, the extension of the scheme has been widely criticised as a short-sighted act of 'robbing Peter to pay Paul'.  As noted by Samantha Jackson of 1 Chancery Lane Chambers, "a housing association's housing stock is one of the factors that facilitates its borrowing and "creditworthiness", enabling it to attract private investment to generate home building."  It is not surprising then that some public sector bodies have referred to the Bill as 'rash', warning that the effect of the Bill could lead to further depletion of social housing stock.  This is potentially made worse with the demands of an ever-increasing population.

Perhaps to compensate, the Housing Bill includes a promise to build 200,000 starter homes for first time buyers which will be sold at 20% discount below their open market value to people under the age of 40.

An alternative solution to the housing shortage has been devised in Essex by way of the Housing and Public Sector Land Project (the "Project").  The public sector partners within the Project aim to use joint developments to retain control in project management in combination with private sector skill.  By working in partnership, the public sector partners have been thus far successful in releasing surplus public sector land for development, thereby spending less on maintaining old and inefficient buildings.  In working in tandem, Project activities are planned to be realised via a number of formats and vehicles:

  • Building and selling required units
  • Establishing a trading company for the on-going aspects of the activity (i.e. the employment of full-time staff)
  • Single-purpose development/disposal companies incorporated on a project by project basis
  • Single purpose property management companies (operating rental properties retained by the partner in a development)

Another key feature of the Project is that it is designed to be as flexible as possible, allowing varying ownership structures and the right for parties to enter and leave with minimal effort. 

In praise of the Project, Claire Astbury, of the National Housing Federation, has said that, "…housing associations are keen to work with partners in Essex to bring their affordable housing development expertise to the table…the initiative represents a creative and proactive approach to tackling the housing crisis."

Perhaps, by taking the Project model one step further, councils could avail of the proposals made in the new Housing Bill to help with the replacement of stock purchased by former housing association tenants.  This could potentially symbolise a more efficient way of meeting the government's objective under the Housing Bill of constructing more affordable homes in a given area.