An overview of theGovernment’s Housing Strategy

East Midlands Councils8th December 2011

Nick Stripe – DCLG

A Vision for Housing

“A thriving, active but

stable housing market that

offers choice, flexibility and affordable housing is

critical to our economic and

social well-being.”

“Getting house building

moving again is crucial

for economic growth.”

“We will not achieve this by

attempting to control the

market from Whitehall.”

The Housing Strategy

Sets out a package of reforms to:

• get the housing market moving again

• lay the foundations for a more responsive, effective and stable housing market in the future

• support choice and quality for tenants

• improve environmental standards and design quality

Underpinning objectives:

• affordability

• stability

• quality

Context – Government Priorities

• Deficit reduction

• Economic growth

• Social mobility

• Localism & decentralisation

• Reforming public services

• Transparency

For housing, this already means change and reform …..

Smarter regulation

A new approach to

growth

Planning

reform

Social housing

reform

Powerful

incentives Affordable housing

investment

Local market

place

&

housing offer

Decentralisation

Challenges

• Supply

• Demand

• Lending

• Affordability

• Price volatility

• Demographics

• Community views

• Wider economy

House building rates have fallen

40000

60000

80000

100000

120000

140000

160000

180000

200000

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

Starts

Completions

0

House Building Starts and CompletionsHousehold projections average 232,000 per year to 2033

Land supply and planning permissions granted are often lowest in the areas of highest demand

Recovering from recessions

THE RECOVERY IN COMPLETIONS, RECESSIONS PAST

(ANNUAL, ENGLAND)

0

50,000

100,000

150,000

200,000

250,000

300,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Years after the peak

Ne

w h

om

es

1980s 1990s 2010s

Tightened lending conditions

-

200

400

600

800

1,000

1,200

1,400

Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

£bn

-2

-

2

4

6

8

10

12

£bn

Stock of Mortgages outstanding (LHS) Net Lending (RHS)

Deposit (%) paid on mortgage completions for house purchase (UK)

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

%

All

FTBs

Source: CML

Affordability remains a major issue…

2010Affordability Ratios 2000

Affordability ratio England

2010 = 7.0144% of LAs had

affordability ratios >7.7

Affordability ratio England

2000= 4.21

6% of LAs had affordability

ratios >7.7

2000

House price volatility

-10

-5

0

5

10

15

20

25

30

35

40

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

%

Annual house price change in England 1970 – 2010

• Impact on owners,

buyers, sellers,

builders and lenders

• knock on impact to

wider economy

• Upturns vs

downturns

Changing demographics

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500

Under 25

25-34

35-44

45-54

55-64

65-74

75-84

85+

Ag

e o

f h

ou

seh

old

refe

ren

ce p

ers

on

Households (England)

2033

2008

+154%

+45%

+46%

+9%

+19%

+16%

+16%

+10%

Rising waiting lists

Households on LA housing waiting lists

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

1,600,000

1,700,000

1,800,000

1,900,000

2,000,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

England

East Midlands

Community views

W ould you support m ore house s be ing built in your

loca l a re a ?

0

10

20

30

40

50

60

Homeowner Non-homeowner

% o

f re

sp

on

de

nts

No I wouldn't

Yes I would

Don't know

Source: YouGov survey for National Housing and Planning Advice Unit (NHPAU)

Housing and the economy

Housing and the economy

Housing and

the housing market

Direct effects on

the economy

House building/construction(contributes directly to GDP)

Repairs and maintenance

(contributes directly to GDP)

Expenditure associated

with housing market

transactions

Impacts on wider consumption

through: confidence,

expectations, wealth and collateral effects, and the

characteristics of mortgage debt

Geographical labour mobility/ labour market flexibility

Impacts on work incentives,

e.g. from sub-market rents

Indirect effects on the economy

Capital

investment,

competition and

innovation

Level of

human capital

Long-term

Economic Growth

Macro-

economic

stability and

management

Skills

and

skill

matching

Enterprise formation

Housing Strategy

£30m support for custom home builders

Reconsideration of agreed planning

obligations

Support for locally planned large scale

developments

£400m Get Britain Building fund to unlock

stalled sites.

Additional £50m for

tackling worst areas of empty homes

Indemnity scheme to

provide accessible mortgages for new build

Funding infrastructure

through £500m Growing Places Fund

Releasing public-sector

land with the capacity for 100,000 new homes

Land

Auctions

Build to Rent

Design and

Sustainability

Self

financingRight to Buy

Fraud, tenancy abuse

and high income tenants

Support and protection for the vulnerable

A new deal for older people’s housing

Encouraging more affordable housing

So what next?

• Effective delivery of current programme

• Monitoring the impact

• New models of funding

• Collaboratione.g. Local Authorities and Housing Associations

• Innovation- following HRA Reform- design- business models

• The next Spending Review