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Tax break to help the housing crisis is making things worse

New figures released today by leading flat and house share site SpareRoom, reveal that the Rent a Room Scheme tax threshold increase, introduced in 2016 to encourage more people to let out their spare rooms to lodgers, has actually done more to boost the short term lets market.

The Rent a Room Scheme tax threshold was increased from £4,250 to £7,500 per year on 6th April 2016, following a six-year campaign by SpareRoom, backed by Shelter, Generation Rent and the National Landlords Association. There are around 19 million empty bedrooms in owner-occupied properties in England alone – if just 3% of these (570,000) were let out on a residential basis, it would unlock housing equivalent to a city the size of Liverpool.

Yet the failure to restrict the scheme to residential lets has meant a boost in short term lets rather than residential. According to SpareRoom data, there were 68,604 new lodger adverts in 2017 – 8% lower than the number in 2016 (74,684). This decline, which came on the back of seven years’ consecutive growth, continued into 2018, as demonstrated in the table below.

At the same time short term lets via holiday sites like Airbnb have seen a huge spike, rising 200% in ten UK cities between 2015 and 2017[1]. In London particularly, there has been a fourfold increase in Airbnb listings since 2015, this reduces residential housing supply and pushes up rents for people looking for long-term homes[2].

Matt Hutchison, SpareRoom Communications Director, comments: “These figures clearly show that the benefits we hoped to see from the government’s Rent a Room Scheme have been undermined by a new surge in short-term rentals. Given the fact we’re not building new homes in anywhere near the numbers we should, we have to do more to better use existing stock. The UK has a housing crisis, not a hotel room crisis.”

A chart showing the changes in the number of listings on SpareRoom from homeowners looking for a lodger

[1] According to the Residential Landlords Association, Airbnb listings in ten UK cities increased by almost 200 per cent between 2015 and 2017


Source: Property118

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England’s housing crisis: Is a distracted government the last to listen to obvious answers?

Chris Bailey of Action on Empty Homes asks if in England’s housing crisis, is a distracted government the last to listen to obvious answers?

In England, it is often said that debate amongst national policymakers is out of touch with reality on the ground (let’s leave Brexit aside for a moment on the reality question). In recent years successive governments have been lambasted by social action and charitable lobbyists over the impact of what has officially been labelled ‘austerity’ and unofficially is more commonly referred to, at least by demonstrators against the policy, as ‘CUTS’.

It is partially to sidestep this binary debate that so many of us now talk the language of investment rather than expenditure. The Coalition for Community Investment (1) is thus in this space, arguing for central government to re-engage with the regeneration of areas of England variously described as ‘left-behind or ‘in decline’ – naturally we prefer the term ‘under-invested’ because we know that it is investment which always makes a difference, short-term, long-term and social impact-wise.

The Coalition for Community Investment draws together organisations from across the housing world. Members include private landlords groups, such as the Residential Landlords Association; social and affordable housing providers like the National Housing Federation, Northern Housing Consortium and National Community Land Trusts Network; and campaigning organisations like Action on Empty Homes, Crisis and Shelter; as well as representative bodies, such as the Federation of Master Builders and Locality.

In looking at these ‘under-invested’ areas of England, some commentators also draw comparisons between industrial decline, low-value property markets and Brexit support. They use this to create a narrative of ‘left behind’ or alienated protest voting. But this is by no means clear-cut; not least because in the last year two-thirds of English councils experienced rising numbers of long-term empty homes. And oddly the subject of Brexit didn’t come up when our research team visited areas of decline blighted by large numbers of empty homes. Paradoxically these are also areas experiencing housing need and with high levels of street homelessness (for all that many of these areas did vote decisively ‘Leave’, some argue as a kind of protest against marginalisation or ‘austerity’ itself).

Writing this on the day that a Cabinet Minister told Parliament that government policy was, in fact, responsible for a rise in the use of food banks, an admission variously described by commentators as ‘bonkers’ and ‘cynical’, it is striking to reflect that we are in the grip of a national housing crisis yet are building fewer social homes than at any time in recent history (or the last 70 years at any rate) (2) and have cancelled all national programmes to invest in bringing empty housing back into use.

It is not wholly unreasonable to assume that the fastest rise in numbers of long-term empty homes in England in a decade is related. Absentee investors soak up huge amounts of property in both high and low-value markets in England, yet incentives to house people in these homes are few and far between. Public policy relies on recently introduced punitive taxation but emasculates much of its impact through three factors:

  1. A two year wait for empty home tax premiums to kick in after it is established that a home is empty for no good reason (owners in care, homes caught in probate disputes, and other reasonable explanations being sensibly excluded from enforcement; and therefore not causing the enforcement clock to start ticking)
  2. A very low level of taxation on residential property due to the unwillingness of any government to grasp the nettle of revaluation of private housing stock in England, for nearly thirty years (since 1991) – years which have seen historically significant rises in value, coupled with increasing shortages of supply.
  3. A wide range of potential evasion routes coupled with under-resourced enforcement. For example, housing declared to be ‘second homes’ can be left unoccupied with no Council Tax Premium payable. At 252,000 these currently out-number England’s 216,000 long-term empty homes – yet many hard-pressed council officers suspect some will, in fact, simply be empty homes, though this is difficult to prove. Given that the identification of empty homes is the council’s responsibility, the one benefit of recent rises in tax premiums may be to gradually incentivise this work and even fund it: though there is no guarantee that income will be ring-fenced for such work.

A recent UCL study covered only a third of Britain but found what it called 340,000 under-used homes and proposed that simply supporting new build was unlikely to end the housing crisis. Summarising the study’s findings the Daily Telegraph reported:

“Housing worth £123 billion is barely used in Britain, researchers have calculated, and have called for a 1% tax on second homes to dissuade people from keeping hold of a mothballed property.

“A new study by University College London (UCL) concluded that building new homes is not the answer to Britain’s housing crisis as they are likely to be bought up as second homes or investments in the most popular areas. Researchers collected information from around one-third of local authorities in Britain covering 40% of the population.” (3)

The dedicated government empty homes funding which ended in 2015 was a £200 million programme which ran from 2012 and included both funding channelled both through local authorities and directly to community-based housing providers. Overall this programme brought nearly 10,000 properties into use for around £24,000 public investment per home. (4)

With all this in mind, The Coalition on Community Investment decided to poll MPs on their attitudes to the housing crisis and the growing blight of empty homes. We also asked their opinion on a range of policy interventions, many of which have already been road-tested by successful but now cancelled government programmes. (5)

Action on Empty Homes can also call on learning from its national programme of effective demonstration projects demonstrating that with financial backing empty homes can provide valuable housing for those in housing need. These community-led projects deliver housing in even the most challenging environments. These are areas the government often calls ‘low demand’, despite their lengthy social housing waiting lists and large numbers of residents housed in property, acknowledged to be inadequate or over-crowded; and often funded wholly or partially by state benefits.

The results of our MP polling were striking, at a time when homeless families in temporary accommodation have hit a ten-year high of over 82,000 (including 120,000 children); while rising levels of street homelessness are a source of national concern.

And as with some other major current policy debates we could mention, we see a striking dichotomy between national government policy and the views of Members of Parliament across the house, regardless, in most cases, of political affiliation.

ComRes polling of MPs commissioned by Action on Empty Homes for the Coalition on Community Investment shows huge cross-party parliamentary support for action on empty homes:

  • 86% of MPs polled agreeing that the government should place a higher priority on tackling empty homes.
  • 72% rank action to bring England’s 216,000 plus long-term empty homes back into use as one of their highest two priorities for combatting the current housing crisis.
  • Over 80% also supported targeted funding for local authorities, charities and local organisations to buy, lease or refurbish empty homes.
  • 68% believe landlords who own empty homes which have been vacant for more than a year should be required to bring them back into use.
  • 77% support charging a council tax premium on empty homes after they have been empty for a year, rather than the current two years.

At Action on Empty Homes and the Coalition for Community Investment, we support a mixed economy approach to solving the empty homes problem. We believe in using both enhanced powers of enforcement and in funding action at local level. We call for significant targeted investment (of around £450 million) set against initial targets for delivery of 20,000 empty homes returned to use and for significant improvements in the worst-hit communities.

Action on Empty Homes also support calls for a major national programme of social housing construction but believe that returning empty homes to use is a potentially easy win for the government, not least now. As the government looks to ameliorate the impact of past decline and current uncertainty on England’s most vulnerable communities. The public agrees with us. Recent polling shows levels of support for action at similar 80% plus levels to those amongst legislators. Now we hope that the government will listen too.

Source: Open Access Government

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Affordable housing finance scheme relaunches to help people at risk of homelessness

A Community Benefit Society working to end the housing crisis by providing affordable and emergency housing to people who need it most is launching the second round of its secure property-based financing arrangement.

Providing an “ethical alternative to buy-to-let”, Reap from Equfund sees ethically minded investors lend their money to provide decent, safe, and affordable housing for people at risk of homelessness.

Reap invests in property to provide affordable rental homes for people in housing need. Every acquisition is rigorously assessed to ensure it can provide a durable and reliable cash income stream for investors. The management of the property is handled entirely by Equfund.

With a minimum investment of £15,000, investors will receive a fixed monthly income (from the rental income) with a flat interest rate of 3% per annum without the associated risks, responsibilities and inconveniences of being a landlord. 100% of the original lump sum is returned to the investor after five years, and the invested amount and their monthly income is unaffected by voids or (maintenance costs) if the property requires maintenance.

The first round of Reap raised over £3,750,000 when it first launched in 2015, double the target amount. In this second round, Reap has transitioned from primarily investing in and refurbishing long-term empty homes to acquiring properties that are ready to move in. This transition, which was brought about by the worsening housing crisis in the UK, allows the company to act with greater speed in providing housing for those most in need and to allocate more investors’ funds against property.

Reap protects investors’ money by only borrowing 85% of the property value and the loan is registered against property at HM Land Registry much in the same way a mortgage is

Unlike many other property schemes, there are no fees involved and Reap guarantees to secure the investment against UK property and does not rely on property price growth to generate an income for investors. Each property has its open market value assessed by an independent chartered surveyor, and investors can arrange to visit a property prior to allocating their funds against it. For further security, and to limit exposure to any single property or locality, investors can request to have their money split and lodged against more than one property.

Reap actively rents to tenants in receipt of Local Housing Allowance or Universal Credit, with the belief that doing so is an important step in breaking the cycle of housing poverty caused by rampant discrimination of people in receipt of housing benefits. Reap goes as far as to assist LHA tenants with the paperwork required to claim their correct allowances and will help to submit this to the local council on their behalf.

Andrew Mahon, director at Equfund, said: “With the government seeking to gain more control over the private rented sector, the buy-to-let market has become progressively complex over the last 12 months, and the next 12 months will see yet more considerable changes to the sector. Investors no longer see much sense in putting their hard-earned money into a market that increasingly offers less rewards and more headaches and exposes them to great risk if they’re not fulfilling all of the new regulations.

“With Reap we’re offering a viable alternative to this broken system that not only tackles the growing housing crisis in the UK with a long-term solution, but also provides a stable and predictable income for socially responsible investors who still want to have a slice of the property market.

“We’re proud of the work we’ve done. We have a proven track record over the last decade in addressing the housing crisis with ethical and sustainable solutions. This second round of Reap will turbocharge the all-important work we do of putting a roof over the heads of those who most need it.”

Source: Scottish Housing News

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Is the great property market crash of 2019 almost upon us?

I’ve seen one or two speculative headlines lately exploring the possibility of a crash in the property market, perhaps by as much as 50%, they scream.

Well, that would be nice, wouldn’t it? If we see the cost of homes plunging to half their value now, I’d make some drastic changes to my investing strategy. I’d pile into property and property-backed investments because the great disconnection between prices and affordability will have mended. Once again, property would be affordable, and I think that would sow the seeds for the next bull market in real estate.

The two-decade property bull
I can remember the last time that prices dropped so low that property investing seemed like a no-brainer. It was around 21 or 22 years ago, and it’s etched in my memory because I did well in property in the following bull market myself. Some friends of mine recently sold a property they bought back then too. I did a quick back-of-a-fag-packet calculation and worked out that the price at which they sold was around double what they ‘should’ have made if the value of their home had merely kept up with inflation over the past couple of decades.

I think my rough sums help to illustrate that something is out of kilter in the property market. And, oh, how many of us have been willing prices to plunge. Prices have been so high for so long that a whole generation has almost been locked out of affordable property.

However, through 2018 there were signs that the property market could be topping. At the very least it seems to have paused its meteoric rise. Could 2019 finally be the year that we see prices fall in a meaningful way? Maybe. And one thing that seems to be dragging on buyer and seller confidence is the long-running Brexit saga. Of course, we’ve still got to pass the official EU leaving date of 29 March, and any extension period if one arises. Then, after that, we need to settle into the new post-Brexit environment. I think the whole Brexit-thing has the potential to dampen enthusiasm in the property market for the rest of 2019.

Two ways for affordability to be restored
Overlay the affordability issue, and it won’t take much to get the market sliding, in my view. How about recession in Europe after Brexit? Or rising interest rates making mortgages more expensive to service? It might feel like fantasy given how low interest rates have been for so long. But look at the economic indicators Britain is throwing off at the moment: massive employment, wages rising faster than inflation, and the biggest budget surplus on record in January. Indeed, the UK is trading well and things could keep on getting better, which could push inflation higher. The traditional damper for inflation is higher interest rates.

Then again, with wages on the rise, perhaps we’ll see more stagnation in the property market allowing affordability to catch up, rather than a dramatic plunge in property prices. Either way, I see the buy-to-let investment proposition as unattractive until property is affordable again. Yet there’s a massive opportunity to invest in the stock market, and the uncertainty of Brexit could be helping that situation. Dividend yields, in general, are higher than they’ve been for years, so that’s one market I would pile into.

Source: Yahoo Finance UK

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A Brexit-induced price drop won’t fix the housing crisis

The average home has leapt from £81,536 in 1988 to £473,882 in 2018 – that’s a 481 per cent increase.

If the cost of a pint of milk (26p in 1988) had jumped up at the same pace, it would now cost a whopping £1.52 – three times the current price.

Anyone who has watched the news or read the papers in recent years will know that we are neck-deep in a housing crisis, and it extends way beyond the capital. Half of young people in the country have no chance of ever buying a home, and private renters on lower incomes spend an average of 67 per cent of their earnings on rent.

Already the situation is out of control, and that’s before we factor in Brexit, the harbinger of economic instability.

Many have blamed Brexit for the recent slowing and occasional fall of house prices in London – but could this actually be a blessing in disguise?

Could falling prices mean that a few more young professionals will be able to climb onto the first rung of the housing ladder?

As they move into homeownership, will that free up rented homes, causing private rents to fall? Will those on lower incomes then be able to afford their rent again? Will the whole market become more affordable, suddenly meaning that – hallelujah – the housing crisis is over?

Alas, I’m afraid not. And here’s why.

First, falling house prices are often a symptom of an economic downturn or recession. This affects people’s spending power, whether they are first-time buyers saving for a deposit, or homeowners who see the value of their existing property stall or fall into negative equity.

That will make houses harder to either buy or sell in relative terms.

Second, inflation is expected to go up after Brexit, which means that people’s incomes will be squeezed regardless of their homeownership ambitions. And banks are generally less keen to lend when house prices are heading downhill.

And finally, house prices are still at historic highs. In London, the average property is 13 times the average wage.

House prices may fall, but it’s the fundamentals of the London market – volatility resulting from under-supply – that causes these problems.

A drop in house prices is yet another symptom of the crisis, not a cure for it. We have a severe and worsening housing shortage in this country, and in particular a shortage of homes at the more affordable end of the market.

There are more than a million households on the social housing waiting list, but the government only delivered 6,000 new social homes in the whole of England last year.

The sadness we all feel at the number of rough sleepers on the streets turns to dismay when we realise that this is just the tip of the iceberg: almost 280,000 people in England are currently homeless.

To truly solve our housing crisis, we must build a whole raft of homes that are affordable to a whole lot more people. That is why Shelter is calling for 3.1m new social homes over the next 20 years.

Some naysayers will claim that it’s impossible to do, but we’ve done it before – after the Second World War – to great economic success and public acclaim. We can do it again.

Our vision for social housing would offer the chance of a stable home to millions of people who fail to qualify under the current system. It would provide much-needed security and a step up for younger renters desperate to get on in life and build a brighter future for themselves and their family.

The current housing situation amounts to a national emergency. Brexit-induced price falls won’t solve the problem. Building more will.

Source: City AM

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Government housing targets under fire from UK watchdog

The government’s method used to assess the number of homes needed to fix Britain’s housing crisis is “flawed”, according to the UK’s public spending watchdog.

In a damning new report published today, the National Audit Office (NAO) has said that the government’s planning system “is underperforming and cannot demonstrate that it is meeting housing demand effectively”.

Such remarks add to growing pressure facing the government, which has pledged to support the delivery of 300,000 new homes ever year by the middle of the next decade.

“For many years, the supply of new homes has failed to meet demand. From the flawed method for assessing the number of homes required, to the failure to ensure developers contribute fairly for infrastructure, it is clear the planning system is not working well,” said Amyas Morse, the head of the NAO.

Morse added: “The government needs to take this much more seriously and ensure its new planning policies bring about the change that is needed.”

Ian Fletcher, director of real estate policy at the British Property Federation, said: “The findings from today’s report by the National Audit Office must be taken seriously by politicians. We have seen positive changes to national planning policy over the past year, but progress cannot be made without more resource at a local level. Planning has seen some of the most severe reductions in spending in recent local government cuts.”

Despite the government’s 300,000 target for the mid-2020s, the NAO said today that on average only 177,000 had been developed annually between 2005 and 2018, with the number failed to exceed 224,000.

The news comes in the same week as London mayor Sadiq Khan has faced accusations of “falling short” on housing targets after new figures showed home registrations tumbled 10 per cent last year.

There were 16,069 new home registrations in 2018, down from 17,932 the year before, according to the National House Building Council (NHBC), a warranty and insurance provider for new homes in the UK whose statistics provide an indication of the health of the market.

Andrew Boff, member of the London Assembly which scrutinises the mayor, said: “Before he was elected, the mayor said that delivering affordable housing would be his number one priority. Yet Khan has consistently failed to reach his own housing targets and these new figures show that he continues to fall short.”

Source: City AM

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Will we finally crack the UK’s housing crisis in 2019?

We are in an era when one topic alone – the dreaded ‘B’ word – dominates not just the media and Parliamentary timetable but conversations at dinner or chatting over lunch at work.

Although the fact that MPs were debating low-level letterboxes right before voting whether to accept the Prime Minister’s Brexit deal is a good example that life continues even in the most adverse of circumstances!

No matter how trying the circumstances, it is vital that the government does not allow important topics like the mortgage market and supply of new housing to fall by the wayside, especially given the continued uncertainty in the market.

We are still a long way from the 300,000 new homes we need to be producing every year to get a handle on our housing crisis.

The government’s own preferred measure for housing delivery is net additional properties, for the simple reason that this measure takes into account new builds, conversions and where commercial units have a change of use to residential.

These figures come out annually and the latest ones show a large uptick in the volume of homes produced. From 124,000 units in England in 2012/13 to a more respectable, but still inadequate 222,000 in 2017/18.

A 79% increase in production in five years is obviously a good sign. However, relaxing the rules around changes of use and conversations played a big part.

Can private house builders now expand sufficiently to build the volume of homes required?

The good news is that latest quarterly figures for the house building sector show new build starts to be growing.

In Q3 2018 there were 38,000 new starts over the quarter alone, up from 33,000 the previous quarter. The last time quarterly levels were this high was 2007 when quarterly new starts of just under 40,000 were typical.

The blot on the landscape for new house building is the demographic trends facing the house building sector. The Federation of Master Builders’ House Builders’ survey for 2018 showed skills shortages for bricklayers, carpenters, joiners and site managers.

The FMB survey found 44% of small and medium-sized house-builders in England considered a shortage of skilled workers to be the major barrier to their ability to build more new homes.

All of which makes expanding the percentage of housing delivered by offsite construction a key priority.

The BSA published its study two years ago on the barriers facing Modern Methods of Construction (MMC). The government has made good on its commitment to assist the wider industry finding a solution by setting up a technical working group on MMC.

It is vital that in 2019 the group delivers a solution that the market as a whole can have confidence in to ensure we see the quantity of housing this country desperately needs.

Why open banking has not opened the floodgates (yet)
The anniversary of open banking has been and gone with, much like open banking itself (so far), little consumer interest.

Regulators are similarly ambivalent about open banking, with the Bank of England’s deputy governor recently arguing that the “jury is still out” on whether open banking and PSD2 will ultimately be a gateway to a bigger change.

Our assessment of consumer attitudes suggests that, unsurprisingly, consumers who like using digital services for banking are generally interested in new technology and have a good understanding about financial services in general.

The big question will be how interest in open banking broadens out from the early adopters to the wider public. There is still widespread consumer discomfort in sharing their personal details via an app, though this may gradually be receding.

Likewise, there remains nervousness among many using an app or digital-only service for mortgages. However, any nervousness about sharing their data with a third party firm may start to dissipate once borrowers see the services that are being offered.

For example, consumers will see it as a more attractive prospect if it provides a service that gets the best deal, one that can monitor and manage their money or uses technology to offer a faster service than other providers.

For many of the new fintechs that are looking to offer new services to consumers using open banking, the slow take up is no bad thing.

The BSA hosted three of the new fintechs looking to shake up UK financial services using open banking at our Digital Mutual event last year. The message coming loud and clear from all three firms, was that the gradual roll out and even the low visibility of open banking itself, were all advantages (at the moment!).

The true value of open banking will ultimately be if it can provide a personalised service to consumers and for the industry, a better understanding of customers, so that they can serve them better. If it can do these things, a quiet revolution will be inevitable.

Source: Mortgage Finance Gazette

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London needs micro-homes to solve the housing crisis

Everyday, thousands of city workers are forced into excruciatingly long commutes from the outskirts of London, because living in the city centre – and, frankly, most of the capital – is simply unaffordable.

Micro-housing would allow Londoners to commute less and live more. Never mind if that’s more time to join a gym class, meet friends at restaurants, catch a show or a Spanish class. What matters is that it’s more time for you, and less time stuck on the train or in a car.

Housing is the most crucial problem facing London.

In the past 20 years, London’s population has grown by 25 per cent, but the number of homes has only grown by 15 per cent. More people and not enough housing has pushed up prices, creating an affordability and ownership crisis.

The proportion of income spent on housing has grown from one fifth of incomes 15 years ago to one third of incomes today. If you’re among the city’s lower earners, it’s highly likely to be taking even more of your pay packet.

Because of high housing costs, many are forced to endure insufferably long commutes, live in overcrowded share flats or, most worryingly for the economy, leave the city altogether.

The loss of capable people has serious ramifications for Britain’s economic productivity. All too often people end up taking lower paid jobs elsewhere, which hold them back and mean that they are less productive.

Chang-Tai Hsieh and Enrico Moretti from the University of Chicago estimated that US GDP is 13 per cent lower than it otherwise would be because people are not able to live where they would be most productive.

The damage to the UK’s GDP from people living where they are not the most productive is likely to be even higher.

The housing crisis is not just an economic policy problem – it also has serious political ramifications.

Housing affordability issues, particularly among young people, are damaging trust in the entire free market system. This is driving young people into the hands of extremists like opposition leader

Jeremy Corbyn, whose interventionist policies would only make things worse.

Which is where micro-houses come in. Currently blocked by housing guidelines and local authorities in the UK, this creative solution could help ease some of pressure on the market.

As urban policy researcher Vera Kichanova makes clear in a new paper for the Adam Smith Institute, when it comes to housing, small is in fact beautiful.

Micro-homes are nothing like what you are imagining. They are not cramped sub-divisions of existing units. Rather, micro-houses are stylish, modern homes that use space intelligently. They win prestigious architectural awards. They often include shared game rooms, gardens, co-working spaces, living areas, and additional services. They help combat loneliness with group activities and communal spaces.

In short, they are perfectly suited to the fast-paced inner-city lifestyle craved by many millennials.

There is no standard definition of micro-homes, but they can perhaps be best understood as purpose-built homes that are below the existing 37 square metre space standards for an apartment.

Micro-housing projects have been a huge success in New York City, Hong Kong, Tokyo, and, in the few cases they have been allowed because of legal grey areas, London.

Carmel Place in New York City, which was completed in 2016, contains apartments that are just 24 to 33 square meters. The project won an award from the American Institute of Architects.

London is home to The Collective Old Oak, the world’s largest micro-apartment building, which offers 546 private units and a wide array of communal spaces.

Micro-housing is not a substitute for more fundamental planning reform, such as ending the prohibition on building out or adding extra storeys on famously short London buildings. And it goes without saying that nobody should ever be forced to live in a micro-property.

However, the choice should be available for those who prioritise living closer to work and entertainment over a large house in the suburbs.

These smaller properties would ensure that the land in the city centre is used more efficiently, providing an important piece of the puzzle to address London’s housing crisis.

It is the responsibility of local authorities, particularly in central London, to think more creatively about how to deliver more housing. They can start by abolishing arbitrary restrictions on room sizes, and declaring themselves open to micro-housing.

This would encourage architects and builders to propose such projects across the city.

In designing housing guidelines, local authorities should remember: it’s not the size of your home that matters, it’s how you use it.

Source: City AM

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New homes alone won’t solve the housing crisis

The Shelter housing commission’s report (Cross-party call to build 3m new social homes, 8 January) stands in danger of simply racking up change-of-use inflation in land prices, putting the unearned value uplift of as much as 70% into the pockets of speculators. Unless the basic structure of housing provision in the UK is changed to restore to local authorities powers of compulsory purchase, with taxation on the land-value enhancement, this will be the unintended consequence.

The result of right-to-buy has been the sell-off of 60,000 council homes with a £3.5bn public subsidy, and 40% of that stock finding its way into the hands of private landlords, who rent it back, often to the same local authority at hugely inflated rates. A straight transfer of public wealth into private hands.

Have the report’s authors studied the 2016 research that showed unimplemented planning consents for nearly half a million homes in England and Wales? Or that in the same year, according to government data analysed by the online estate agent HouseSimple, the number of empty homes in England rose for the first time in a decade to 205,293, representing £50bn worth of vacant property stock?

Research shows that there is little evidence of a shortfall in the housing stock. The crisis we suffer from is largely the result of acute maldistribution within an economic structure which encourages maximum consumption of a scarce resource by those with the means to command the market, at the expense of the many with little or no access to capital. Land value taxation is one mechanism which would very swiftly and relatively painlessly provide a counterbalance to this vicious cycle of ever increasing disparity of wealth distribution. The Housing And Planning Act should be rescinded, restoring security of tenure to existing tenants.

The equalisation of VAT on refurbishment with the current zero rate for new housebuilding would remove a 20% incentive to demolish and redevelop. With a level playing field, an objective cost comparison could be made between proper maintenance and redevelopment, with all the social cost the latter involves.
Kate Macintosh
Winchester, Hampshire

• Before we start spending a projected £225bn on concreting over huge tracts of increasingly precious green space, how about doing more with the existing housing stock? Rent control, much longer tenancies with, obviously, an end to no-fault evictions, penal taxation of property left empty, and the compulsory purchase and improvement – or redevelopment – of substandard rental accommodation, and thus its conversion to social housing, would collectively be quicker and cheaper. Sure, all of that would soften prices, but the issue is homes, not investments, and spending power released by lower housing costs – both personal discretionary and for government in housing benefit savings – would flow into the wider economy.
John Worrall
Cromer, Norfolk

• This report is good news. But there is also an urgent need to overhaul the standard approach to the design and governance of low-cost housing so it accommodates home-based work. This is often restricted or even prohibited in social housing, which is generally currently designed to models developed in the early 20th century specifically to prevent this working practice. This is short-sighted and discriminatory – social tenants have as much right to work from home as anyone else.
Frances Holliss
Emeritus reader in architecture, London Metropolitan University

• The current social housing crisis is an artificially created problem begun by the political dogma in the 1980 Housing Act and developed into a crisis by the political ineptitude and inertia of governments of every colour over the four decades since.

For almost the whole of that period house prices have gone up faster than wages. It takes a bear of very little brain to realise that sooner or later both house purchase and rental become unaffordable, which is, of course, exactly what has happened.

The good news is that because it is an artificially created problem, we have the ability to solve it. However, the cost has been estimated to be as much as four HS2s, while the net cost might be less than one. This sounds like a rather good deal to me, since failure to get to grips with it is going to tear at the heart of our society over the next decades.
Robin Howell
Bridgwater, Somerset

Source: Yahoo Finance UK

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There’s only one way to fix the housing crisis: build more

From free marketeers on the right to proponents of central planning on the left, cries to fix Britain’s broken housing market have become deafening.

The solutions, of course, differ greatly depending on where along the political spectrum you stand.

Yesterday, for example, Shelter issued its latest call to action, proposing three million new social homes to be built over the next 20 years. The housing charity points to the high costs and levels of insecurity among renters, and makes a link between “insecure unaffordable private rentals” and the rise of homelessness across Britain.

Shelter has correctly identified two key problems: that home ownership is becoming increasingly unaffordable, and that the rental market is not set up for long-term, stable tenancies, as seen in other countries.

It is also correct that other government policies to fix the problem, such as the Help-to-Buy scheme, are not an effective use of taxpayer money and actually distort the market by tinkering on the demand-side.

Building more social houses, however, is only one small part of a solution that must go far further. After all, the UK is already in the top three European countries in terms of social housing stock.

It’s not the lack of building social houses that is the key problem, but the lack of building full stop. This is set to be the worst decade for UK house-building since the Second World War, continuing a downward trend that has lasted half a century.

The result is that, even with the recent slowdown in house price growth, one in three millennials will never own their own home.

Unfortunately, this is where politics comes in, with endless arguments over who should build what kind of homes where and with what funding. For too long, stringent planning restrictions have prevented building in places where people actually want to live.

This needs to change – and in some cases it finally is, with a cross-party plan to redesignate areas of the so-called green belt within 10 minutes’ walk of a station to build a million extra homes around London.

There are other things we could do, from exploring high-tech construction methods like modular homes to repurposing disused retail and warehouse space to building new commuter towns with cutting-edge transport links, as well as looking into reforming the rental sector.

However, without more building – and lots of it – the housing crisis is only going to get worse, and is set to throw a spanner in the works of any government, from any party, that hopes to improve business competitiveness, social mobility, and standards of living in the UK.

Source: City A.M.