The Tory housing policy with no redeeming features

http://www.theguardian.com/commentisfree/2015/may/30/tory-housing-policy-no-redeeming-features

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There is, as you may have heard, a problem with the country’s budget deficit. You may also have heard that there is a housing crisis. The government’s response to these twin challenges is, in one move, to give away up to £104,000 to some lucky individuals and to reduce the country’s stock of affordable housing. Such will be the effects of the planned extension of right to buy to housing association properties.

If this seems to make no sense to you, it is because it doesn’t. The policy was presented as part of Cameron’s “one nation” – a “clear programme for working people, social justice and bringing our country together”.

This is what it will not do. It will increase the division between those who own properties and those who do not, raise rents, segregate cities, fuel house price inflation and increase the number of homes that are owned as units of speculation.

There will be no social justice in the fact that it will give some people huge benefits and make life worse for others.

For good measure, the policy requires the extraordinarily un-Tory and legally dubious step of telling private institutions – housing associations – what to do with their properties.

When Margaret Thatcher stopped the building of council housing, housing associations, which are not-for-profit private companies, also called community benefit organisations, became the main providers of new, low-cost homes.

Thatcher of course also introduced right to buy, which enabled council tenants to buy their homes at a discount. This dramatically altered the patterns of home-ownership in Britain, but seemed to have run its course, until the coalition. It was promised that units lost to right to buy would be replaced by new homes, at a rate of one to one. It turned out to be one replaced for every 10 sold

Whatever arguments there might have been for the right-to-buy council housing do not apply to housing associations. Their tenants are not the oppressed victims of vast state bureaucracies. They are generally people with a good deal, living in well-managed developments on low rents.

Some of them would naturally be delighted to get a free gift from government. But of all the pressing and dire problems in modern British housing, the plight of housing association tenants is not one of them.

It gets worse. The plan is that, to finance Cameron’s giveaway, local authorities will be forced to sell the properties that they own in high-value areas, when they become vacant. As David Orr of the National Housing Federation points out: “We don’t just lose one rented home, but two. Two rented homes lost to social renting forever to allow one lucky household to own a home.”

It also means that in time English cities – the proposal is for England alone – will lose one of their best attributes, which is that people of different incomes can often live close by and that they are less divided into social ghettos than, for example, in American cities.

As Orr also argues, the extension of right to buy will reduce housing associations’ ability to invest in new housing and it is “a very ineffective way to support the aspiration that many have to become home owners”.

He says that, for the cost of right to buy, a million new homes could be built for shared ownership. The policy does nothing for the 9m people paying rent to private landlords, who might want either to buy or to move to a better standard of rented accommodation or the 3m adults living with their parents.

It is particularly grotesque that the government is coming over so generous to one group of people when, through the bedroom tax, it is forcing others from their homes. “We are the party of working people, offering you security at every stage of your life,” says the prime minister, using his now favourite form of cant, but it is perfectly possible to be a working person, or an industrious person who through retirement, disability or bad luck no longer works, and be made desperately insecure by Cameron’s policies.

The underlying assumption is that ownership is the only desirable way of having a home and it is the only way of being a full and emancipated member of society. Therefore, goes the logic, the government should hand them over by any means possible.

It is desirable that people should buy if they want to, but it is also essential that private renting and renting from housing associations and councils should be attractive and achievable. Owning doesn’t suit everyone and it brings insecurities and restrictions as well as freedoms.

It is also hypocritical of Cameron to champion home ownership for some at the same time that his policies make it more difficult for others. The current tax regime strongly encourages people who already own their homes to acquire more as buy-to-let investments.

Changes to pension law further promote speculation by individuals. Reforms presented as helping first-time buyers, such as the lowering of stamp duty on cheaper properties and the help-to-buy programme of government loans, end by pushing up prices. Again, the main beneficiaries are people who own homes and building land. The bottom rung of the property ladder is pushed still further away from those not already on it.

Some might sympathise with the idea that the value of council properties in expensive areas might be unlocked for the common good; when a house is worth many hundreds of thousands or even a few millions, it might be reasonable to ask if it is the best use of a public asset to let it at a low rent, in effect making it a huge gift to its tenants.

But if so, there is no reason why the proceeds should become a huge gift to someone else. It should also be pointed out that these bizarre prices are not an act of nature, but of the inflationary policies that this and previous administrations have pursued. The people who live in these areas didn’t ask for them to be part of an insane game of Monopoly.

The government, what’s more, is selective in those whom it chooses to squeeze for their property windfalls. It has made it easier to convert shops, pubs and offices into homes, which gives a sudden surge of unearned wealth to the people who own them, while asking for little in return. Councils, however, must have the uplift in their properties extracted from them.

Orr’s organisation represents housing associations, so might be expected to have a position on the right to buy their properties, but the policy has also been condemned from every direction, left and right: the British Property Federation, Chartered Institute of Housing, Shelter.

The Institute For Fiscal Studies said it would “worsen the UK’s underlying public finance position”. When suddenly unveiled in the election campaign, the extension of right to buy was widely ridiculed, including from the conservative commentator Dominic Lawson.

It looked like an electoral bribe, which could conveniently be dropped in the haggling of the new coalition that everyone thought inevitable. Possibly it was a more effective bribe than anyone imagined, but in any case there is no coalition and no haggling.

Often a terrible-looking government policy comes with some redeeming features or hidden logic, but not this bad imitation of Thatcherism. It is plain terrible.