Theresa May’s conference speech on Wednesday sealed her fate as an unlucky politician.
After the signage behind her – extolling the Government’s creation of a functioning country – ironically fell apart and a jeering prankster waved a P45 at her, there’s been heavy focus by the punditry on these and other tragi-comic incidents during the address which were largely out of May’s hands.
Far less energy, however, has been devoted to assessing the actual policies May announced, over which she does have direct control. The Prime Minister’s announcement of an extra £2bn for social housing seems particularly overlooked. Lazily billed by most commentators as a well-intentioned way of solving the UK’s now entrenched housing issues, the announcement actually amounts to a cumbersome statist step in the wrong direction.
Put simply, the Government wants to throw money and state power behind building 25,000 social homes for rent, before moving onto a wider strategy of encouraging more for sale housing (hence the recent extension of the Help to Buy scheme).
The Government thinks this plan will ease the housing supply crisis, particularly in London. It won’t. Why? Because the people who are most affected by the housing crunch – those under 35 and in full-time employment – don’t want to be either social tenants or homeowners.
For one, many in this demographic want amenities, convenience and an environment not typically found in social housing. Many would probably be disqualified by their incomes anyway.
As for fuelling the for-sale market via state-sanctioned borrowing, the Government seems to have forgotten the essence of the demographic they’re trying to help: ‘Generation Rent’. For those who crave flexibility, traditional notions of home ownership are redundant. Some young professionals are choosing not to commit to a 95 per cent mortgage, tens of thousands of pounds in fees and a lengthy and undignified approvals process to buy a place that ties them down for potentially a decade.
What the Government should be doing instead is unleashing the beast of build-to-rent. Purpose-built rental developments offer a combination of quality, flexibility and convenience, filling a gap in the market for many people who are stuck in substandard or overpriced housing, priced out of or turned off of homeownership, and earning too much to qualify for social housing.
The issue is supply. The sector needs more investment if it’s to reach the biggest possible audience. There is a substantial and growing group of institutional investors ready to put around £100bn in build-to-rent, but the Government isn’t exactly making it easy for them.
Bonkers policies like last year’s Stamp Duty hike for multiple homeowners mean the sector can’t compete fairly with build-to-sell developers (who don’t pay this charge). Stiff local planning rules also hamper build-to-rent developments achieving a scale where they could offer great amenities at surprisingly low rents. Cut out these road blocks, let investment flow and build-to-rent could flourish. In turn, this could bring down rents and improve the quality of private rented properties.
So, instead of speaking like a poor man’s Jeremy Corbyn on housing, May should have innovated and unburdened a sector that could actually impact on solving the country’s systemic housing crisis: build-to-rent. She would have got a better response from the under-35s listening outside the conference hall – and probably a better response from those listening inside, too.
£ Fizzy Living is a provider of private rented accommodation aimed at young professionals