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Housing has ‘truly reached point of crisis and is only going to get worse’ – Family BS

  • 05/06/2023
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Housing has ‘truly reached point of crisis and is only going to get worse’ – Family BS
The housing crisis is only set to get worse unless an effective strategy is implemented, the chief executive of a building society has said.

Speaking at a parliamentary debate today, Mark Bogard, CEO of Family Building Society, said housing has “truly reached a point of crisis now, and if you look forward it’s only going to get worse”. 

The debate was held alongside the launch of a report commissioned by the mutual and published by the London School of Economics (LSE). 

Bogard said it was clear that there had been a “complete failure” of leadership among the people involved with housing and said the thinking around it needed to be elevated. 

He said housing should be one of the Great Offices of State, like the Treasury, Home Office or the foreign secretary as people cared “more about where they go to bed than foreign policy”. 

He said there had probably been “as many housing ministers as there have been years” since 2000, and as chair of the Building Societies Association (BSA) many had attended lunches with plans for the long-term, adding: “Not one has ever come back.” 

Bogard added: “We need a good framework, we need sensible incremental change and we need leadership. Without that it is just going to get worse… for owner-occupiers, first-time buyers and renters.” 

He also said more focus should be on optimising existing stock, not just building new homes. 


Little influence on policy 

Christine Whitehead, professor of housing economics at LSE, said the market had undergone several reviews which recommended long-term commitments and strategies, but the impact they had on actual policy was “close to zero”. 

For example, she was part of the team who put together the 145-page Housing Policy Review from 1975 to 1977. She said this was a “major exercise” that was never implemented because Margaret Thatcher came into power and the politics changed. 

Whitehead said there were too many decision-makers, such as the Department for Work and Pensions and the Bank of England, which meant priorities often disappeared. 

She also said following the global financial crash, property was seen as a safe investment and as a result, the housing system was now indebted and financialised. She said this meant that instead of being about the owner or tenant of a house it was now also about financial institutions. 


Encouraging the delivery of housing 

Paul Brocklehurst, chairman of Land Promoters and Developers Federation, said: “Housing cannot be solved in one parliamentary term.” He also said housing shortages would not be addressed until attention was given to small housebuilders and the regulation which hindered them from delivering houses.

Brocklehurst said while people recognised that there was a lack of housing, many objected to properties being built in their local areas. “More needs to be done to persuade communities of the benefits and the necessity for the wider society to deliver housing,” he added. 

Regarding the delivery of housing, Robin Fieth said the Prudential Regulation Authority considered self-built housing to be “high risk” under its Basel 3.1 standards. 

This is a framework which was created in response to the 2008 financial crisis and determines how much capital a bank needs to hold against risk-weighted assets. 

Fieth said the volume of self-built housing in the UK last year was “second only to Barratt (Homes). So actually, you’ve got a regulator who, at the moment, seems intent on stymieing the second largest development group in the UK”. 

He said self-built homes were relatively low risk. 


Stamp duty paralysis 

Bogard said stamp duty had stopped people from moving and questioned why the government did not keep the tax break in place as the mutual recommended, despite the Treasury seeing a greater revenue during the period because of the initiative. 

Brocklehurst said there was an inefficient use of existing housing stock, while Bogard said there were not enough suitable properties available to enable downsizing. 

Ben Everitt MP said half of the Treasury’s job was to take tax, while the other half was to spend it. He added that the government’s Levelling Up agenda gave it “more of a grip on housing demand” as it was “spending billions of pounds” on levelling up people who were left behind by providing jobs and improving communities, so housing would fall under that. 

Whitehead said the government seemed to have given up on housing because it was too difficult while Brocklehurst asked if there was a way to take politics away from the issue. 

Everitt said it should not be taken away from the government because it was a political issue and the debate needed to shift towards the benefits of housing, such as why it made lives better. However, he said the trick was that politics needed to be won first. 


A ‘coherent and consistent’ strategy 

The LSE and Family Building Society report is the second published this year relating to housing policy. 

The latest edition looked back at the several housing policy reviews published over the years, as well as the successes and failures of each one. It recommended making housing the next Great Office of State and said a strategic approach needed to be developed. 

The report said: “A coherent and consistent long-term strategy with (all party consensus) targets and policies is the aim but probably a vain hope. What is possible, however, is a medium-term framework with implementation plan which is reviewed regularly and can be adapted to changing circumstances. In other words, we must acknowledge that circumstances and priorities change.  

“The policy framework cannot just be about new building – or indeed about particular tenures. It must be about the quality, use and price of the whole stock and the housing circumstances of all households.” 

It found that many initiatives focused too heavily on demand but not the long-term supply of housing. 

Bogard said: “The greatest failure is not giving housing the status it deserves. The Minister for Housing should hold one of the Great Offices of State, alongside the Treasury, Foreign, Commonwealth and Development Office and the Home Office. It is shocking that the revolving ministerial door has witnessed 15 housing ministers, none a Secretary of State, come and go since 2010, which is bonkers. 

“We need to align the key players, including the Bank of England, the Treasury and the Department of Work and Pensions as well as the Department of Levelling Up and Housing and local authorities to ensure government-wide commitment.” 

Whitehead, who wrote the report with Tony Crook, pro vice chancellor at the University of Sheffield, said: “Macro-economic stability must always take precedence over everything else. But it is absolutely necessary that decision makers take notice of the consequences to housing and develop policies to make the sector more robust.” 

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