Britain's Bad Housing

Andrew Gilligan does not like builders. It’s fine to have prejudices, but does that warrant being given an hour of prime time Channel 4 Dispatches to conduct a personal hatchet job on them? On the one hand, it’s good to have well-known faces like Gilligan getting to grips with the serpent that is the UK housing scene: on the other, it would be refreshing to have a guide without such an obvious axe to grind, one who is prepared to give a little airtime over to the housebuilders to defend themselves. Whilst it seems relatively easy for career journalists to get the opportunity to make programmes for the likes of Dispatches, I have yet to see anything on terrestrial TV that shows how life is on the other side of the trenches.

Gilligan certainly didn’t pull any punches. He started with a stiff jab to the mid-riff: he took Stephen Nancarrow, of Inspector Home, with him around a Bryant estate and literally pulled it to bits. It made for good knock-about TV, but Nancarrow admitted it was possibly the worst example of finishing that he had come across. As it is his job to uncover sloppy finishing, it did rather rather smack of being a fit-up. Presumably 99.9% of new homes are better than these, but that of course didn’t get mentioned. Instead the NHBC got lampooned for passing these admittedly shoddy homes.

Then it was the turn of Greenwich Millennium Village and the problems some of the residents have had with noise issues between flats. Whilst it was conceived as an exemplar development, it is often forgotten that it was built to the pre-2003 Part E noise standards. As was pointed out by the NHBC in the builders defence, the development met the regs in force at the time, it was just that the regs were inadequate. Who is culpable for that? The builders? The NHBC? Or the government? For Gilligan, there was no question. It had to be those big, greedy developers and their tame lackeys in the NHBC. Me? I’m not so sure.

Not that the government got off scot free. There was the obligatory laugh at John Prescott who was shown showing off his £60,000 house. Gilligan nipped up to Allerton Bywater in Yorkshire to find that they were for there, for sale, for a minimum price of £225,000. QED: Prescott’s an idiot. Strange for me to be riding to his defence, but not even John Prescott ever thought that a house that cost £60k to build would sell for £60k.

The restless Gilligan then rode on to dig up some underhand dealings by St George in Fulham. To help get their Imperial Wharf development up and running, a PR firm was hired to fake letters of support to local councillors. Even worse was afoot in Manchester, where a lobby group, Media Strategy, was hired to help lower the affordable housing targets set by the North West plan. And some accusations of bribery were re-aired against developers gifting money to the Labour Party: apparently you can get away with this as long as the gifts are not to individuals. What struck me was how small the amounts involved were. £5,000 to get to develop a casino site? You’d lose that much on a good night at the tables. Gilligan’s implication was that the whole development scene was corrupt from top to bottom and that the feeble planners were in the pay of the developers.

Gilligan’s tactic was to dig up dirt wherever he could find it. His point seemed to be that Britain’s housebuilders are useless, greedy and corrupt, whilst their political masters are stupid and naïve. As essays go, it hung together well, and made for compelling viewing. It is just that his basic premise was a little lazy. It’s all very well reducing the debate down to a reworking of the old 70s Marxist them’n’us routines, it’s just that reality has an annoying habit of being a whole lot more complex to understand. There is a very different story waiting to be heard from the housebuilders, but you won’t ever come across it on Dispatches.

The best contribution to the show came from Paul Finch, once editor of the Architects Journal, now a CABE commisioner, who pointed out that the big problem here is that the government has abdicated responsibility for affordable housing to the private housebuilders. It is something this blog has touched on recently too: we are in unknown territory here.

Gilligan didn’t concern himself with these niceties; nor did he stop to question whether an affordable housing programme was the correct solution to our current problems, which is strange because he wrote a thoughtful piece about this in the Evening Standard recently, questioning the assumption that we can build our way out of our housing problems. His sole interest in this programme seemed to be to bash the housebuilders. At the end of the show, the landbank issue was raised: you could spend a whole hour on this topic alone and still not get to the bottom of it. Kelvin Macdonald of the RTPI was interviewed and tried to give a reasoned assessment of the issues involved, but Gilligan simply didn’t want to hear it and concluded the interview with the statement that builders are deliberately holding back land in order to keep prices high. As they say, never let the truth get in the way of a good argument.

I guess I am nitpicking. As a sometime builder, my hackles do still rise just a little every time the London media gets housebuilders in their sights. Because the result is always the same: a bloody televisual massacre. I suppose I shouldn’t be so sensitive; hunting housebuilders is good sport and, let’s face it, they are so thick-skinned that the odd bit of bad publicity never did any of them any harm. I don’t suppose Tony Pidgley even bothered to watch it, so I don’t see why I should get the hump. It’s just that halfway through Gilligan’s piece, I had the strong sensation that I had seen this same programme before several times over, and it was not the one I wanted to watch anymore.

Bogus private sales

One of the many irksome features of an estate agent’s life is the vendor who apparently withdraws their property from the market, only to complete a private sale shortly afterwards with a purchaser who the agent had introduced. Most contracts expressly forbid such delinquent behaviour on the part of the vendors, at least for a significant time period, but it can be hard to enforce any penalty as the details of the house sale are kept private. It is estimated that anywhere between 1 in 10 and 1 in 4 withdrawn properties go on to complete the deal privately, thus denying the estate agent their contracted fee.

Now the Land Registry is offering a service specifically aimed at estate agents wanting to keep tabs on what happens to withdrawn sales. For a small monitoring fee, the Land Registry will contact the estate agents with details of completed sales on their withdrawn properties. If the contract terms have been breached, the agent will then have a relatively easy task to reclaim their fee.

If you want to know more about this scheme, contact David Lockett at the Land Registry in Coventry.

How housing demand is assessed

The housebuilding lobby insists that demand for new homes is outstripping supply, and that this has been the case for many years, decades even. But whilst it is fairly straightforward to measure housing supply, how is demand assessed?

One place to look is Kate Barker’s review into the state of UK housebuilding. Her brief was to look at supply side issues but she does acknowledge that the relationship with demand is complex. She makes the crucial point that simply increasing the supply of new homes may in itself affect demand: Higher rates of housebuilding could also lead to higher household formation rates. (Barker Report 1.43). But she doesn’t really explore these issues in any depth.

A more fruitful area to dig in is the work of the Cambridge Centre for Housing and Planning Research. They have produced various pieces of research on housing need and housing demand. One piece in particular, More Households to be Housed: Where is the increase coming from? by Alan Holmans and Christine Whitehead, is very pertinent and seems to set out the methodology for how these figures are calculated. Which is:
• work out how many more old people there are going to be
• work out how many more broken families there will be
• work out what net migration levels will be.

The answer habitually comes out at something like 215,000 extra households per annum. So this figure is taken as the basis of housing demand. And if we build less than this each year (we do), this is responsible for the shortage of housing and, it follows, the increase in house prices.

But dig down into Holman’s and Whitehead’s report and you can begin to uncover a number of assumptions and guesses that call into question the accuracy of their work.

• whilst it is easy to measure the marriage rate and the divorce rate, because each event is recorded, there are no accurate figures for co-habiting couples, nor for what happens to couples (both married and co-habiting) once they separate. How many couple up again? No one knows, they just guess.
• migration rates: everyone knows that the amount off net migration in the past few years has been enormous, but no one knows just how enormous. Not until the 2011 census will there be any hard figures to go on, and even then, it is widely anticipated that illegal migrants will mostly not appear on the census
• longevity: we are as a population living longer and the models build in an assumption that life expectancy rates will continue to increase at the rates they have done over the past century. But will they? Again, no one has a clue.

But even if their assumptions are correct, there is still a fundamental flaw in the way their demand figure is arrived at. It’s all just too mechanistic: the model makes no allowance for the fact that demand is itself affected by supply. The size of the average household has been falling consistently ever since records began, but does this represent a profound social change or is it simply a reflection of the fact that there are far more houses around now and, given the choice, many people would prefer to live on their own or in small units. Back in Victorian times, it was not unusual to have families of seven, eight or nine living in two-up, two-downs. For them, this was normal; for us it would be seen as appalling overcrowding.

What this demonstrates is that our standard of living has increased and we now expect to share bedrooms with no more than one other person. And without setting a notional accommodation standard for the country as a whole, how is it possible to determine whether our housing demand is real or just aspirational. If our aspirations are to live in smaller and smaller household units, then we cannot hope to meet demand until such time as everybody has a house of their own. Or maybe two. Why not?

So demand as it is now defined will remain unquenchable. If we were to be building, say, 300,000 new homes a year, rather than 180,000 that we manage at present, we would simply be the moving the goalposts and would fine that the demand for new homes had inexplicably risen to 350,000 a year. And probably work out all manner of household formation statistics as if to prove it. The tail appears to be wagging the dog.

So behind this lies a debate which has yet to be started. The subject is this: Is it the responsibility of government to provide a home for everybody who wants one? And does this include everyone who pitches up on our shores in future? Or do we now have to accept that that there must be limits to household growth, and learn to adapt to what we already have?

Insulation sales up just 5%

Picked up this intriguing snippet from someone who works for Sheffield Insulation, our largest supplier of insulation for the construction industry. He said that insulation sales were up by about 5% as a result of the changes brought about in 2006 by Part L revision. In theory, they should have increased by a lot more.

Also on a similar theme, a prominent boiler manufacturer tells me that sales of non-condensing boilers, which should have been kicked into touch for all time by Part L changes, are in fact holding up well. Many installers are still quite happy to fit whatever the householder wants. As far as the replacement boiler market is concerned, Part L compliance is optional, as there is no way of enforcing it.

The Housing Green Paper: an idiot's guide

If you are anything like me, you will feel no excitement at all at the prospect of having to read yet another government initiative on housing. You sort of know what’s going to be in them and the prospect of wading through 130-odd pages of badly written, self-congratulatory twaddle is enough to make any grown man groan. I’m no different.

However, thanks to the miracle of pdf, I have done a numbered word search, which will enable you to weigh the import given to various key words, from which you can deduce everything you need to know about this document. Here follows the number of times each of these words or phrases appear in the document:

Planning 288
Affordable 235
Sustainable 161
Mortgage 124
Design 121
Supply 108
Green 89
Rural 72
Social Housing 58
Demand 52
Eco-town 51
Flooding 40
Brownfield 35
Zero carbon 28
Shared Ownership 27
Children 22
First time buyers 18
House Prices 17
Barker 16
Regional Spatial Strategies 14
Key worker 9
Section 106 6
Delivery Vehicles (and they are not talking about vans) 5
Green Belt 4
Lifetime Homes 4
Crime 3
Buy to Let 2
Self build 1
Gardens 1
Immigration 0
Fire 0
Sound 0
Neighbours 0
Detached 0

On Affordable Housing

We are going to hear a lot in the next few days about Affordable Housing. It’s at the very centre of the government’s agenda for the future of housebuilding in the UK, as set out in the Green Paper. It sounds like a vaguely worthwhile concept but when you get down to examining the details, the whole concept is littered with inconsistencies and problems.

Take the very word affordable. What does it mean? Behind it lies a wider idea that housing generally has become unaffordable to all but the richest sectors of society; this is pretty much self-evident to anyone living in the South-east of England at the moment. But just what should be done about it? There are lots of policy options out there from doing nothing right through to nationalising all land. Somewhere in between these two extremes are many tax incentives and/or penalties which could be used to make home ownership more or less attractive.

The government’s chosen response is to push for more subsidised housing (with the subsidies coming from the developer’s profits, not taxpayers’ money). But is it right to build a subsidised housing sector at all? We’ve been here before and it didn’t work too well last time. Subsidised housing adds to the social divide and makes another one of the government’s key objectives, social mobility, even less likely. There are other options. In egalitarian Sweden, they don’t have any social housing: instead, they subsidise rents for people in housing need. This way they neatly avoid building ghettos of housing for the poor.

There is another problem that has so far not been discussed, as far as I am aware. Affordable housing schemes are largely financed by money taken from the theoretical profits made by developers on their private market housebuilding activities. This is governed by the so-called Section 106 agreements, the bane of every housebuilder’s life. However, it follows that the very existence of our affordable housebuilding programme has now become dependent on there being lots and lots of new unaffordable housing. And the more expensive it gets, the better it is for the affordable housing sector, because more profit can be creamed off from the housebuilders.

Thus we are creating a paradox similar in many ways to the government’s stance on drinking and smoking. Whilst we are constantly being told what grief these awful habits cause, the NHS itself is hooked on their tax revenues. So it is with social housing. Whilst the government and the local authorities keep saying something must be done about the affordability crisis, they now have a vested interest in keeping ordinary housing unaffordable, because that’s the only way they can deliver affordable homes.

The whole housebuilding sector is slowly becoming a sham, a modern day version of Robin Hood economics. First make the rich even richer by restricting the supply of building land; then rob them blind to build homes for the poor.