White paper offers no plan for fixing the housing crisis

Jean Liggett
16 February 2017

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The government's recent housing white paper has many shortfalls says Jean Liggett, as she offers a property industry perspective on the plans.

The Housing White Paper is fairly weak, and will not deliver on the government’s objectives. Nor will it sufficiently address the 25% rise in rents over the coming five years, as identified by the Royal Institution of Chartered Surveyors. That rise will see rents rising faster than property values. 

Meanwhile, the shortage of skilled labour in the building sector (carpenters, bricklayers, electricians, plumbers and more) has been left unmentioned by the white paper. With the UK leaving the European Union, this is likely to get worse, but what is the government doing to set up colleges, and apprentice programmes, to fill this gaping skills gap? 

The UK is so far behind models like Germany. It’s no surprise that Germany is a manufacturing powerhouse, as they have apprentice programmes and in-house training programmes. Chief executives of companies in many cases have worked their way up after starting on the floors. It provides for better communication and productivity, as well as creating a funnel for future skills development.

Instead of addressing this need, the UK government’s approach seems to be to pass the buck to local councils. As it is right now, due to austerity for a number of years, councils have had to cut back on key services. That has meant that planning departments are understaffed and the many of the experts working in them have moved on to other jobs. 

I am not sure that the government yet has the answer in translating planning permissions given for housing to the delivery of the properties. One of the reasons for this is under-funded planning departments in councils. Where is the money? Maybe Theresa May expects them to be alchemists.

I agree that the planning procedure needs to be simplified, but the onus seems on the councils to sort this out, with the government using a ‘carrot and stick’ approach.

There seems to be some confused buck-passing to housing associations as well. Just recently, the government was telling housing associations that they would have to offer tenants ‘right to buy', thereby selling off their stock. They would be without sufficient funds from the government to build more housing. Now there seems to be a plan to support housing associations to deliver more homes through a package of measures - a complete change of direction. 

Of course, if implemented well, then that could certainly boost the number of homes available. However, funding commitments seem to fall short of what will actually be required. For example, the Housing Infrastructure Fund of only £2.3 billion is just pennies. This translates to very little money per council across the UK, and thus will have little or no impact on addressing the acute housing shortage that the UK is facing. 

The funds of just £7.1bn for housing and local authorities for a more flexible affordable homes programme, is also not very much money in a nationwide context.

At least the government recognises the importance of the buy-to-let sector to fill the gap in the housing market. This creates a win-win situation for the community, tenants and the developer. City centre apartments at developments like Victoria House in Liverpool are essential for filling this gap.

However, I am not in agreement with the ban on letting agency fees. I appreciate my opinion may seem unpopular, but agents offer a service and need to be remunerated properly in order keep their doors open. By banning letting agency fees, the doors become wide open for online agents such as Purple Bricks and the like who offer an inferior and sometimes non-existent localised service in the community for tenants.

As a former tenant a number of years ago, I do agree with the white paper’s observation that tenancies must be longer than six months and one year (STAs). When I lived in New York in my 20s, I had a contract for three years, which provided a much greater sense of stability.

However, while the inclusion of such a measure is positive, overall the white paper leaves me feeling that the government has given up on home ownership, hasn’t entirely understood how much the changes to stamp duty are going to impact on the rental sector, and has no plan for fixing the UK’s housing crisis.

Jean Liggett is the CEO for Properties of the World.