Affordable homes to rent – not buy – will rebalance the property market

Locally generated building is good for everyone

Share
Related Topics

Headlines about rising house prices may persuade observers that the housing crisis is over, and that the nation can safely return to the behaviour that caused the financial crisis in the first place. This would be a tragic waste of a huge economic opportunity.

The national housing crisis has been a long time in the making: a lack of housing that can be afforded by young working families, while rents soar; the future of farming at risk, because there is nowhere for retiring farmers to live; unsustainable villages becoming the preserve of wealthy retirees, with schools and post offices closed down.

For decades, in contrast to every other developed Western economy, Britain has been underinvesting in new homes. The consequences are all too apparent: two million families on council waiting lists for affordable homes, annual expenditure of over £20bn on housing benefit. The number of new homes built every year needs to treble, to around 300,000. No wonder Shelter could only raise half a cheer for last week's news that housing starts in England rose 7 per cent to 110,000 in the year to June, generating headlines that "Britain is building again".

Half of the new homes should be for rent or shared ownership, built on brownfield land in urban areas and in small developments alongside villages where the new homes house local families, are welcomed by local people, and where the land is invested through a Community Land Trust.

In a report published at the end of last year, the Future Homes Commission showed how the housing crisis could be turned into a massive opportunity for economic growth. Trebling the number of new homes built every year for 20 years would add at least 3 percentage points to annual GDP growth, an economic prize comparable to the impact of shale gas on the North American economy. If half of the new homes are in sustainable communities of rental or shared ownership properties, these would be funded by pension funds and international real estate investors. No additional government funding would be needed.

Despite the scale of the housing crisis and the size of the economic growth opportunity, local authority pension funds' pressing need for better investment returns, and the relaxation of Treasury constraints on these funds (which could free up as much as £30bn for investment in rental housing and infrastructure projects), progress towards the goal of trebling the number of new homes built every year has so far been disappointing. The Government's Help to Buy scheme does nothing to make housing more affordable or for would-be tenants, and a new house-price bubble could form.

Far from being embraced as a massive economic and social opportunity, the housing crisis is deepening; and millions of couples are having to postpone setting up home together. Nationally, the average age of first-timers buying without parental help is 33; in rural areas, where wages are lower and house prices are higher, it takes even longer. Local Enterprise Partnerships (LEPs) are backing affordable housing, and Lord Heseltine ensured that over £5bn of EU growth funding was allocated directly to LEPs, bypassing both Whitehall and local councils. Now there is no planning bureaucracy standing in the way of local communities having the homes they want and at prices they can afford: well-designed and energy-efficient homes can be built for £100,000. LEPs could kickstart the expansion of build-to-let homes and communities.

By separating developments of homes for rent and shared ownership from market housing, both sectors would benefit. Market housing would not be compromised by the need to accommodate a percentage of "affordable" homes (which are anything but). Towns and villages could have the number of new homes they wanted, rather than huge developments which rarely go ahead. Existing social landlords would be well-placed to manage the completed developments. These, in turn, could be sold on to pension funds and other investors, freeing up LEP funds for more local schemes.

The LEPs now have all the tools to address the local housing crisis and generate economic growth of over 3 per cent a year which will be sustainable for a generation, without leading to another house-price bubble. Now it could be harvest time, turning the local housing crisis into the economic and social opportunity for which the countryside has been waiting for decades.

Sir John Banham, chairman of the Future Homes Commission, is a former director general of the CBI

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Maths Teacher

£110 - £200 per day: Randstad Education Leeds: Secondary Maths Teacher for spe...

Business Analyst - Surrey - Permanent - Up to £50k DOE

£40000 - £50000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***ASP.NET Developer - Cheshire - £35k - Permanent***

£30000 - £35000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***Solutions Architect*** - Brighton - £40k - Permanent

£35000 - £40000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

Day In a Page

Read Next
 

Taking on Ukip requires a delicate balancing act for both main parties

Andrew Grice
Today is a bigger Shabbes than usual in the Jewish world because it has been chosen to launch the Shabbos Project  

Shabbes exerts a pull on all Jews, and today is bigger than ever

Howard Jacobson
Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker