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You Want Affordable Housing? Perhaps you need an HMO...

You Want Affordable Housing? Perhaps you need an HMO...

At every public meeting attended recently where housing has been discussed, a classic example of political double speak has reared its head.  There is always someone in the audience who demands more affordable housing and there is always a politician on the platform (and this applies to all parties) who promises more affordable housing. Why is that of interest - well, more often than not local landlords are blamed for 'pushing up prices' which have made houses unaffordable and also, it is time someone told both sides of this debate the truth.

 

So, when a member of the public says, "We want more affordable housing" what they mean is "My son / daughter / nephew / niece / grandchild / whoever wants to buy a house and they cannot afford to do so, they cannot even find anywhere to rent in the area they like"

When a politician responds, "We have rules that state that 30% of all new housing developments of any size must be affordable" what they really mean is "Sorry, your relative is young, so probably only earning an average wage at best, let's assume £30,000 a year. This means they can only afford a mortgage on a house costing £120,000 but the average house price in the city is now over £200,000. So they cannot afford to buy a house, sorry, but we cannot help. They should consider renting but with the average renter nationally spending 41% of their income on rent, that means your relative may be able to afford something in the city but only if they are average or above earners - most are not. When we say 30% of new houses will be 'affordable' what we mean is that these new houses will be subsidised, either by the government, the council or some other agency in order to make them available below market price - they will not be available for sale to your young relative but will be offered to those at the top of the councils housing list - these are the most vulnerable and most needy and probably do not and will not include your very nice, hardworking relatives, sorry"

Obviously, no politician is going to be this honest. As Jean-Claude Juncker said, "We all know what to do, we just don't know how to get re-elected after we've done it..."

So, what is the solution? For the past 1,000 years most people have not been able to afford their own house. It is good that so many now want to - but with successive governments doing everything they can to push up house prices and thus make home owners 'feel richer', it is hard to see how things will change.

There are a couple of simple things that could be done - firstly, apart from being more open on what an affordable home is, politicians need to ensure that all developments are treated equally. The Tipner new homes development by Radian was abandoned as they could not make the numbers work based on the rules. Conversely, City & Country were allowed to drop plans for affordable housing as part of their development at Kingston Prison because they could show that it was not financially viable. Why is it that all these new student halls can be built to low design standards, with no viable use other than students and with no provision for affordable homes? So, change number one - make the rules on affordable homes clear and applicable to ALL developments without exception.

The second step would be to encourage and promote homes which are affordable instead of demonising them as they do today. If you are under 35 and on benefits, the most you are allowed for accommodation is £65 per week. At the moment, a room in a student hall will cost more than double that and a room in a city HMO around £100 per week. So, what do we do? Short of sending these people out of town the better solution would be to encourage people to 'think communally'   - live together with similar people while you save for your own home, live locally in a shared home so you are close to work and don't need a car,  encourage HMO conversions as it improves the fabric of the city - local landlords are regenerating the city one home at a time.....

Steps 1 & 2 above are logical but probably not politically acceptable, so lets think out of the box with a 3rd option.

There is a widely held belief that 'Buy to Let landlords snap up all the houses and push ordinary home buyers out of the market'.  We would argue that the system in which we operate pushes anyone who does not have £50k spare cash and a great credit score out of the market. But whichever of these alternatives is true, lets suggest an alternative:

- Landlords invest in property because they believe it safer than equities, bonds or other financial instruments, typically because they can see and touch it

- The property they invest in is either existing or newly developed by a big developer as they are the only options

- When local councils free up land for housing, they sell it at below market value (typically) to a big developer who takes most of the profit from the build

- What if, local councils offered land, a plot at a time, to local landlords to develop?

- Instead of competing with 'young marrieds' for existing stock, we could use our '50K spare cash' plus bridging finance to build new homes and add to the stock available, which we could rent or sell but the net effect would be positive for all

- And instead of any profit being taken out of the local economy by some national builder, everything involved in the build could be a benefit to the local economy - local trades, local materials, any returns or profits spent or invested locally.

Obviously, this is the 'landlord view' and many will ignore it because of that, so in the interest of balance, a view from young members of the local student labour group:

"The McCarthy and Stone development on the seafront consists of 97 apartments.Savoy House Retirement Homes In Southsea Hampshire McCarthy Stone

66 of these are classified as "assisted living" and therefore exempt from affordable housing planning obligations.

The remaining 31 apartments are classified as "retirement living" and should have been required to adhere to the 30% affordable housing planning obligation.

However, surprise surprise the developer pled poverty and submitted a secretive viability assessment which "proved" it would not be profitable enough for them to provide the 30% affordable housing.

So instead they were allowed to get away with a commuted sum of just £197,376 towards affordable housing. Which would be enough to purchase 58% of one 2 bedroom apartment in the completed development.

Absolutely scandalous if you ask me.

Read more about viability assessments and affordable housing in our recently published report which can be found here: https://portsmouthlabourparty.org.uk/affordablehousing "

We have invited the authors of this paper to come and talk to us at a future meeting.

And finally, a view on affordable housing from the Deputy Leader of PCC, Cllr. Luke Stubbs (Conservative), "Social housing is subsidised housing and someone has to pay the subsidy... even if delivered by housing associations the general recognised figure for the level of subsidy (per dwelling) is £60,000"   Sounds like it is cheaper to let local landlords develop the land then... If it were an option, I would happily sell my portfolio of 'existing houses' and use the money for a series of new build properties in the city if it were an option, would you?

 

Written & oral information and advice from the Portsmouth & District Private Landlord's Association is given in good faith, but no responsibility whatsoever is accepted by the Association or it's officers for the accuracy of it's information & advice nor shall the Association be held responsible for the consequences of reliance upon such information.

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