The Great British Property Scandal

Tonight Channel 4 will broadcast a new Great British Property Scandal TV programme. It follows the progress that has been made over the last eleven months since the original series was broadcast and investigates new scandals that it has uncovered of properties left empty when people need homes. 

These TV shows matter. Even the English housing minister admitted it: “we’re in a housing crisis”. Simply put, there are more people who need homes than homes available to live in. Yet fewer homes are being built at any time since 1928.
The Great British Property Scandal TV series could not have come at a more important time. By late 2011 there was consensus that British housing supply was in a mess, and calls for building more homes were sounding increasingly hollow. But one idea was gaining momentum: if we can’t build enough houses, why not get Britain’s million empty homes back into use? It was not a new idea, my own organisation has been campaigning on this issue for 20 years with some success, but never before had the idea been put so forcibly to the British public, and so publicly to the government.

George Clarke was the man to do it, and over the course of a week in December last year he told the scandalous story of how 1 million homes were lying empty when so many people were left without a decent home at all.

The scandal George exposed was not just that homes were left unoccupied, but that public money was being used to systematically empty and demolish perfectly good houses. Standing in a wasteland that had previously been a street of houses, George berated the system that has left us with 2 million households in housing need and a million homes lying empty.

Of course government policy was never intended to create the housing problems we now face, but there is no escaping the fact that some government housing policy has failed. The Housing Market Renewal Programme started in 2002 aimed to clear streets of old houses in areas where the housing market had collapsed. The aim was that the cleared land would attract developers who would build new homes. Perhaps predictably the cure turned out to be worse than the disease. The acquisition and demolition programme blighted already troubled areas, and the 2008 economic downturn caused developers to lose interest in building replacement houses. With thousands of houses emptied and many more flattened, government funding for the programme was withdrawn last year. Many cities in Northern England are left with a patchwork of derelict land and empty houses.

The scale of the problem should not be doubted. If building new houses was proving difficult this would be no easy fix either. But George’s campaign has attracted huge public support and triggered off action in government too.

In the year since the first Great British Property Scandal series was broadcast, the government has introduced an empty homes grants programme and has helped us set up the National Empty Homes Loans Fund. Low interest loans to help get empty homes back into use in an affordable way will be available, through us, early next year. In the last year similar funds have opened in Wales, Scotland and there will soon be a fund in Northern Ireland too. Councils are being encouraged to charge higher council tax on empty homes to incentivise owners to get them back into use - and councils themselves are being rewarded when they get empties back into use.

Most important of all, other new empty home refurbishment programmes are starting to spring up. The grants and loans programmes are making it possible for long term empty homes to be brought back to life, providing affordable homes for those in need.
The new housing minister has yet to say it, but there can be little doubt that we are still in a housing crisis. Nevertheless the progress on this one issue over the last year has been nothing short of remarkable.

Don't Build More Homes

My article was published on the Guardian's website earlier in the week with the slightly unfortuante title "Don't Build More Homes" The point I'm making is not that we shouldn't build more homes. I'm convinced we do need more in the South East and a few other parts of England,  the purpose of the article was to examine why they are not getting built.   In my view the current low house building rates are a symptom, the core problem is affordability. Here is the article:

Am I alone in getting bored with the "build more homes" answer to every question in housing? We hear it daily from politicians, housebuilders, and lobby groups as if it were a mantra. Whatever the housing problem, it seems, the only answer is to build more homes and the way to do it is for government to provide more subsidy to housebuilders. In theology, mantras are not supposed to be questioned, but I think it's time we subjected this one to a bit more scrutiny.

Let me first point out that I'm not saying we don't need more homes; quite clearly we do in some parts of the country. But addressing it by finding new ways to subsidise housebuilders has not only failed (housebuilding has fallen to 100,000 units a year), it is counterproductive.
I've visited three countries in the past couple of years that have had big housebuilding programmes: Spain, Ireland and Portugal. What I saw there saddened me. Not only do their building booms appear to have worsened their economic situation, the new homes they produced appear to be having little social benefit.
It strikes me that the major housing problem in the UK is not supply (technically there is a million house surplus in England), but people's ability to afford housing. Median house prices are more than six times median earnings in England – double what most experts think is sustainable.

Essentially people's wealth has not kept up with house prices. Why? Obviously not enough people have seen their incomes rise, but I'd argue that government policy, introduced with the best of intentions, has made the other side of the equation worse. Subsidies to housebuilders, artificially low interest rates, mortgage rescue, bailing out failing banks and subsidies to social housing have all either helped house prices rise faster than they would have done otherwise, or prevented house prices dropping.

The fallacy with building your way out of the problem is that people still can't afford the houses you build. This is what Spain, Ireland and, to a lesser extent, Portugal found. In fact to get the building boom going in the first place they had to offer builders big tax breaks and subsidies, and then offer further subsidies to help people buy them. There is a large lobby in this country to do the same here. Apart from whether we could afford such an approach, I just don't think it works. Housebuilders following subsidy guidelines in Spain and Ireland built houses that people didn't want and couldn't afford. People didn't buy the houses, even when they were subsidised. They remained empty and now, most galling of all, some of them are even being demolished.

You might argue that it's different in England, but it's happened on a small scale here too. The last government's strategy of brownfield development aligned to subsidy programmes like housing market renewal led to a large amount of inner city flat developments. Much of what was built sold slowly and required government bailouts to prevent whole scale abandonment. Even now there are hundreds of empty flats in town centre developments in places like Ipswich. Places which then, and still, claim to have a housing shortage.

It appears that no politician can face it, but the only answer is to let house prices drop to their natural level in relation to incomes. That would require a less-interventionist approach, ignoring the appeals of the housebuilding lobby and having to deal with the consequences of what would undoubtedly be serious human impact through repossessions for example.But after this had happened house prices would be in balance with incomes and people would buy houses again. This would create the demand that would get builders building again.

Stalled development and long walks for the milk

I like this blog, although its rather odd name fails to explain what its about. The pint of milk test was as far as I can remember first coined by think tank IPPR as a theoretical test on the accessibility of new developments to local services. The implication was if it took you more than 10 minutes to walk from the development to a shop where you could buy a pint of milk  it really was cut off and badly located.

Somewhere that almost certainly fails the pint of milk test is IYLO, an unusual building built on a traffic island a good 15 mins walk from Croydon town centre. The glossy website brochure describes IYLO as "Inspiration for Life"  and "the only 100% private development of its size in London" ( a euphemism that I'll explain later). What it fails to mention is that the block of 182 flats is unfinished and 100% empty. Work on the building stopped in 2009 when the developer went bust, it briefly restarted last year but the new owner went bust too.  In an attempt to get things going again the council agreed to drop its social housing requirements (hence the 100% private tag). It apparently worked,  the building was recently sold to a Chinese development company for a knock down £10m (£55k a flat). If you are feeling confident, and don't mind a long walk for the milk you can buy one now, if enough people do the same work will no doubt restart. If not Inspiration for Life may still be a long way off in Croydon.

5,000 demolitions make no sense

Does this make sense to you?  Over 5,000 houses are set to be demolished under a programme that was supposed to be for re-housing people.

The programme is the Housing Market Renewal(HMR)Transition Fund. The guidance for the fund (down load avaialble here) said “ It is intended to fund acquisition of homes/ relocation of individuals (with some funding for linked costs eg. relocation expenses) and at the margins some site security or clearance costs.”

Launching the fund, and commenting on the predecessor HMR programme that he had wound up Housing Minister Grant Shapps said “There was widespread public controversy over anobsession with demolition over refurbishment, the lack of transparency of thePathfinder quangos, large profits by developers, the demolition of our nation’sVictorian heritage and perverse incentives being given to run downneighbourhoods.

He added that councils "should not be pursuing large-scale demolition"

And yet that is exactly what councils are doing. Information obtained by Empty Homes under the Freedom of Information Act shows that councils have been awarded funding for demolishing 5,125 homes and renovating just 113.

In our view this is in itself a scandalous waste. Many of these homes could be brought back into use, and the £70m of public funding that is being poured into this exercise could have paid for renovation instead.

What on earth is going on?  Despite the guidance, and despite what ministers have said, councils seem to have got a completely different idea. A source at Hull City Council told Inside Housing “It could not have been made any clearer: this(transition fund) was intended for demolitions.”

Made clearer by whom? According to Inside Housing "Grant Shapps is understood to be concerned by the move, and has ordered a review of how the funding is being spent."

Pathfinder - and you thought it was over

Housing minsiter Grant Shapps has made his views on Housing Market Renewal very clear. He didn’t like it. In fact he disliked it so much that he brought the whole programme to an early end last year.... Or so we thought.

Housing Market Renewal or Pathfinder as it was more commonly known was a large government programme that aimed to regenerate the housing market in nine of the poorest areas of the North and Midlands of England. Between its inception in 2003 and its end last year it spent £2.3bn on demolishing 30,000 houses and causing 15,000 to be built.

Quoting SAVE Britain’s Heritage Shapps said “From the start, pathfinder showed an appetite for destruction....The classic English terraced house was demonised as “obsolete”. Whole neighbourhoods were declared surplus at the keystroke of a consultant’s laptop. Bureaucratic arrogance reduced communities to inmates of a “Zoo”—Zone of Opportunity—for house builders. Statisticians assumed compulsory purchase and eviction for demolition were acceptable measures for householders in a property-owning democracy. Quite predictably, the cure turned out worse than the disease.”

The decision to end Pathfinder was one we supported, although public investment in some of the poorest communities in England should be welcome, the use much of it got put to was in our view counterproductive. The programme that was originally intended to regenerate communities ended up demolishing them. It was also ineffective in reducing the levels of empty homes, despite that being one its major aims.  There are still about 40,000 empty homes in pathfinder areas, about the same as when the programme began.

But stopping Pathfinder has not proved as easy as it sounds. Local authorities had a pipeline of properties lined up for demolition. First an area was “red-lined”, many residents moved out voluntarily, owners were then bought –out , the reluctant ones subjected to compulsory purchase. This land assembly process took years, and so to stop it any point left thousands of people and homes part way through the process.

After strong lobbying from pathfinder councils, the government eventually agreed that simply turning the funding tap off was not enough. They agreed a transition fund that it announced would allow an orderly wind-down and allow people stuck in the middle of it to be re-housed. The fund originally £30m (later topped up to £35m) was agreed for the five worst affected areas: East Lancashire, Hull, Merseyside Stoke, and Teesside. Applications were approved late last year. 

Announcing the funding Grant Shapps was again strident in his criticism of the pathfinder programme:“Under the previous controversial scheme, local communities in some of the most deprived areas of the country were told they would see a transformation of their areas. But in reality, this amounted to bulldozing buildings and knocking down neighbourhoods, pitting neighbour against neighbour, demolishing our Victorian heritage and leaving families trapped in abandoned streets. This programme was a failure and an abject lesson to policy makers."

Given the language and the tone that surrounded this fund, you might very well expect that it would be made available for reversing the pathfinder policy. But to most people’s astonishment the government’s funds are to pay for more of the same. Charles Clover writing in yesterdays’ Sunday Times said   "The bid for Merseyside, which Shapps approved, goes far beyond rescuing isolated households. Under this “exit strategy”, councils on Merseyside will demolish another 2,369 homes by 2018, on top of the 4,489 destroyed already. There are no proposals for refurbishment.”

The approved Teeside bid sets out its ambitions clearly “the individual local authority forward strategies for the majority of these areas in the short-medium term is demolition followed by grassing over until market conditions improve.”

 Pathfinder it seems is far from over.

Why are councils knocking down council houses when there is a shortage of affordable housng?

Sounds barmy doesn't it.  But Nottingham city council have identified nearly 1000, and Birmingham over 1200 homes that they have lined up for demolition. If all councils demolish at the same rate it will mean 60,000 affordable homes are to be demolished across England, with only vague plans that some of them will ever be replaced.
Perhaps even more scandalously it turns out that most of these homes are occupied. The tenants will be evicted and presumabaly put into temporary accommodation.

What could possibly justify this huge upheaval of people and such a big loss of affordable homes? The shocking answer is -  accounting reasons!

The government has decided to allocate it's own housing debt  to councils as part of the scrapping of the HRA subsidy system. Essentially all councils with council homes take a pro-rata share of the government's £23billion housing debt in exchange for keeping rental income on their housing stock. The driver for this was partly councils'  unhappiness with the current system, but surely also a desire from Treasury to remove a huge debt off the public deficit.
The unintended consequence is that councils are seeking to avoid the debt by demolishing houses. Each council house they own will attract around £12,000 of debt.Get rid of a 1000 houses and you avoid £12m debt.

Housing minister Grant Shapps was on You and Yours on Radio 4 with me yesterday sounding reassuring. Although he didn't deny that councils will demolish homes to avoid debt, he said that there was unlikely to be an overall increase in demolitions from this measure.   Hmmm... I'm not convinced. This looks like the policy people missed the consequence of thier policy. I don't like Nottingham and Birmingham's oppurtunism and cynicism, but have no doubt who is really repsonsible for this disastrous policy. Treasury.

Want to know where all the empty homes are? You can't

Imagine for a moment that there is a map of the whole country that shows where every empty home is, how long it has been empty, and who owns it. Imagine too that it is published on-line by the government, it is continually updated and is free to use. Wouldn’t that be amazing for organisations that refurb homes and create affordable housing?

Putting aside the privacy issues for a moment, who should be allowed to use this map? Should it be freely available to everybody?

If not, who?

Imagine no longer. The map actually exists as I described. It’s called the Empty Homes GIS Toolkit and is published by the Homes and Communities Agency. They, in conjunction with Ordnance Survey, who actually own the maps, decided, probably wisely, that access should be restricted. Unless you have signed something called the Public Sector Mapping Agreement you aren’t allowed to see the map.

Who is allowed to sign this agreement? Not, me, and not you, unless you work for what is considered to be a public sector body. This leaves the rather bizarre situation that:

Housing Associations
Housing cooperatives
Housing Charities
Universities …are banned from seeing the map

But Government departments, and local councils, and others including
Royal National Lifeboats
Mountain rescue services
Cancer registries
Areas of Outstanding National Beauty … are allowed full access

Now let's come back to those privacy issues. You wouldn’t want details of empty houses being broadcast to everybody would you? So the line has to be drawn somewhere. That somewhere appears to be between government and non- government organisations. The implication being only government organisations can be trusted with keeping information about property secure.  But a quick look at the list of signatories shows that the UK’s biggest broadcaster, the BBC has full access to the map.

So here is a goldmine of information that could be invaluable to housing associations and other affordable housing providers and help get empty homes back into use. That is hampered by a set of rules that prevent those that could use it actually seeing it. If ever there was a case of nonsensical bureaucratic rules that needed changing it is surely this.

Football wrings the last drops of money from thier communities

From London to Liverpool England’s richest football clubs are wringing the last few drops of money out of their communities by boarding up properties and homes for future developments.

Football is, or at least was, the working mans sport. The great clubs of this country were founded in the gritty working class areas of our towns and cities. The founder members of  the Football league from Blackburn , to Stoke, to Everton were set up where the men lived who worked in the heavy furnaces of Britain’s industrial heartlands.

Life was hard, but for ninety minutes on a Saturday afternoon working men could go and cheer and jeer their team a few minutes walk from where they lived. It created communities and identities for areas that frankly looked pretty much the same. Perhaps in the back of many football supporters’ minds was the remote possibility that they, their son or grandson could one day become a player for the club too. Occasionally it happened; Stanley Matthews was born around the corner from the Victoria ground where he became a legend for Stoke City, Bobby Moore was born just up the road from West Ham in Barking, and Paul Gascoigne was born over the river from Newcastle in Gateshead.

But many things have changed. Football has become a mega business. The Premier league (where Blackburn, Stoke and Everton still play) has become the biggest revenue-generating league in the world. Broadcasting matches to vast worldwide audiences and recruiting vastly paid players from every corner of the globe.

The working class man might well ask what this has all got to do with him and his hometown anymore. First the heavy industry disappeared, then the club moved away from their grimy inner city homes to smart corporate stadiums on the city ring road.  Finally the once remote chance of his son playing for the team disappeared altogether.

The final insult is the dismissive way some of the reaming inner city clubs are landbanking property around their grounds. This week housing minister Grant Shapps criticised Liverpool council and football club for the delay in redeveloping Anfield stadium.  This extraordinary saga has been dragging on for the best part of fifteen years. In the late 1990s Liverpool FC’s neighbours Everton asked the council if they could build a new stadium in the nearby Victorian municipal park; Stanley Park. Not surprisingly the council said no. But in a breathtaking act of cheek Liverpool FC then made the same request but with the added threat that if they didn’t get what they wanted they would move away from Liverpool altogether. Fearing that they would loose vast income from the club the council capitulated. Planning permission was given in 2008, but a change of ownership of the club meant the proposal was put on hold where it still sits. Meanwhile the club keeping its options open had acquired houses around its existing Anfield ground. All of the houses on Kemlyn road were demolished in the early 1990s to make way for a new stand. Homes in nearby Skerries and Lothair Roads were bought up and boarded up. To the club’s credit the Skerries road houses were eventually renovated and sold, but today virtually every house in Lothair road remains empty and boarded up waiting in case the club change their mind again and decide to expand their current stadium.

In London many houses on Tottenham high road stand empty and boarded up following August’s riots and arson. But fifteen have been empty for much longer. They form the frontage of the road behind which Tottenham Hotspur’s White Hart Lane ground sits. The properties were bought by the club for an apparently aborted plan to build a public piazza in front of the ground. These weren’t just any old buildings they included Georgian and Victorian houses many of which are listed buildings. The demolition of buildings like these would in normal circumstances be prohibited, but taking a leaf out of Liverpool’s book the club threatened to walk away altogether if it didn’t get what it wanted. Plans were mooted that the club would move into Wembley stadium and a bid was submitted to set up home on the site of the Olympic stadium.

As the country searches for answers as to why the inner cities erupted into disorder and violence in August, some of the football clubs that once defined these areas might pause for thought.  Have their actions and search for wealth added to the sense of purpose and stability of the areas they represent?  Or have they exploited them and threatened to walk away if they don’t get what they want? The streets of vacant property surrounding football grounds suggest the latter.

Councillor Richard Kemp and Why Houses Must Go.

Grant Shapps has again stepped in to delay the demolition of the Welsh Streets in Liverpool.  This saga has been dragging on now for seven  years. So long in fact that you would be forgiven if you'd forgotten what the point of the demolition was in the first place. So here is Councillor Richard Kemp to explain. Councillor Kemp is the leader of the Liberal Democrats in local government and vice chair of the LGA, a councillor on Liverpool City council and vice chair of a housing association. He is by all accounts a highly respected figure in local government and housing circles. But he has, as one Liverpool resident put it to me last week, “got blood on his hands.” This is of course metaphorical blood. But the polarisation of opinion on housing in Liverpool runs so deep that it would make little difference if it were real blood. Cllr Kemp has not only instigated many of the housing clearance programmes in Liverpool he is actively in favour of continuing the policy of demolishing houses and the Welsh Streets is his next target. In a recent blog post he explains why.

It (housing market renewal demolition) was predicated on a fact – Liverpool has too many two up two down Victorian properties for which there would not be a market to the current extent even if they were modernised.

A worrying start. This isn't a fact, it's an opinion, and one that doesn't stand up to much scrutiny. In areas where homes were modernised such as Chimney Pot Park in Salford the demand has been huge.

Anyway he goes on : We actually went and asked a vital group of people a simple question in 1998, “Why did you move out of Liverpool?” The answer was complex but compelling. They were moving because our services were crap and the housing did not meet their aspirations. They wanted to live in 3 bed roomed detached and semi-detached homes in a nice clean area with a good school. We didn’t provide any of these things.

The comment about crap services is refreshingly honest, but the rest is bizarre. Is this not how cities are supposed to work? People move to the best housing they can afford. They aspire to better housing, and if they can afford it they later move out to semis in the suburbs. The fact people did so in Liverpool is entirely normal. This is not to say that the Welsh Streets were without problems, but it hardly justifys knocking them down.  Had the Welsh streets had been left alone another generation of people would have followed. But the Welsh streets were not left alone. Instead the council consulted residents on whether they should be demolished. Cllr Kemp explains:

They (residents of the Welsh streets) overwhelmingly supported limited demolition. In the Welsh Streets for example after a 3 year consultation process 68% of local residents voted for a demolition programme and only 15% voted against. That’s democracy in action.

Note the word “limited” The consultation actually showed 338 against and only 97 in favour of the near total demolition of the Welsh Streets that is now proposed. It certainly isn’t democracy in action. But what would replace the demolished houses? Kemp explains:

In their place we would create demographically balanced housing with different types of accommodation and different tenures for different people at different times of their life. In other words we would build housing inside which communities could form and neighbourhoods would flourish.

Yet virtually no housing has been built to replace any of the houses that have been demolished in Liverpool. There are no plans for replacement houses in the Welsh streets. No subsidy to pay for new affordable housing. So what was it all for?

In Liverpool 8 if you brought up your children well, gave them a good education there was almost an inevitability that they would move out and take your grand children with them. In other words we had housing policies which by accident or design broke up families and communities because we allowed no flexibility of provision.

So the answer is to demolish the houses and move everybody out guaranteeing the community would be broken up?
Kemp's explanation shows the very strange thinking that led to this bizarre policy. On the one hand diagnosing real social problems and yet prescribing answers that only make things worse. Anyway  it all ought to be academic now. Not only has the government stepped in to try and stop the demolition, they have withdrawn the funding that paid for the whole programme. This might sound bleak, but there is an answer, It's one I have already proposed to the council, and one I will explain in my next post.

The Budget and how the housing sector got it wrong

The budget will no doubt grab headlines for the Chancellor’s neat little fiddle to petrol prices, but I’m more interested in what’s behind some similar footwork on new homes.

The budget introduces First Buy a £250million programme that it is claimed will help first time buyers buy homes. It does this by an equity share scheme that builds up enough capital to create a 25% deposit for a first time buyer. The cost is met partly by the government (10%) , partly by the housebuilder (10%) and partly by the buyer (5%). In this way a first time buyer who can only afford a deposit of 5% of the purchase price of a house can satisfy the lender’s requirement for a 25% deposit.

Commenting on this today, the housing sector is full of medical analogies. Richard Capie of the CIH on the Today programme this morning described it as “an adrenalin shot in the arm for the housebuilding industry which is still in intensive care.“ 

Campbell Robb at Shelter described it this afternoon as “sticking plaster on a broken leg” he went on “We now have a construction industry on its knees and the lowest levels of house building since the 1920s.”

This to me illustrates what is wrong. The housing sector has confused itself with the housebuilding industry. Every housing problem that is raised whether it be homelessness, overcrowding, poor living conditions or affordability the sector’s answer is “ we need to build more houses” Except the housing sector doesn’t actually build any homes. The housebuilding industry does. From the housebuilders point of view this is no doubt great news. They have had their business elevated to a moral necessity by organisations with the public goodwill of Shelter and the credibility of the CIH.

But few people stop to ask two important questions. Why is housebuilding so low?  and if it were to magically accelerate would it really solve all the country’s housing problems?

The answer to the first is easy. Housebuilders aren’t building, because few people are buying. Housebuilding is just a business operating in a market. Right now what it produces is judged by the market to be too expensive, and by lenders to be too risky (because lenders judge houses to be overpriced) .What would any other business do? Obviously drop its prices. But the housebuilding industry sees itself as a special case, and the housing sector reinforces this belief. Instead they think it is the duty of the state to construct new ways for people to afford homes at high prices, and also its duty to take the risk of the inevitable house price drop away from lenders.

The answer to the second question is harder to answer. Let’s just say that a million new homes are built this year (ten times what is predicted). Would it solve lots of housing problems? Given that as I discussed a couple of weeks ago there is no overall housing shortage in this country, who would buy them and who would live in them? As the vast majority of the homes would be for private sale, it is fair to say they wouldn’t be bought by people in housing need. Perhaps there would be a trickle down effect. Perhaps the oversupply of houses would cause overall house prices to drop. All these things are possible. But we would inevitably end up with far more vacant homes (probably about a million more). I think it’s highly likely that homelessness, overcrowding, and poor living conditions would be largely unaffected, but arguably housing affordability might be improved.

So what’s really behind Firstbuy? The package is available to first time buyers who buy new homes. I don’t have figures, but the vast majority of first time buyers buy second hand houses. First Buy is therefore simply a form of subsidy to help the housebuilding industry. Campbell Robb said today “Today’s announcement will help less than one per cent of people struggling to get on the housing ladder, leaving them more likely to win the lottery than be helped through this small-scale scheme.” He may well moan about it now, but by lobbying on behalf of housebuilders for so long the housing sector can hardly complain when the government takes them at their word.