What did Boris Johnson announce on housing in his speech in Blackpool today?

Today’s speech was delivered during a tough week for the Prime Minister, following the vote of no confidence in his leadership on Monday which he won by a smaller margin than he was anticipating. Political commentators now see Boris Johnson on a mission of political revival ahead of the two by-elections this month (Wakefield and Tiverton), including the delivery of today’s housing policy speech at Blackpool and the Fylde College. On housing, his speech focused on expanding home ownership for those living in housing association homes and for those on low incomes. Here’s what Johnson announced:

 

Extending the Right to Buy to housing association tenants

The expansion of Right to Buy to housing associations was heavily trailed in the run-up to today’s speech where Johnson confirmed Government intend to go ahead with the policy. It is expected that discounts of up to 70% will be available to those living in housing association homes.

Johnson said he wants to give greater freedoms to housing association tenants to buy their homes and said Government are planning to work with the sector over the coming months to bring the new scheme forward “within existing spending plans”.

Extending Right to Buy (RTB) to housing association tenants is not a new Conservative Party policy, it was first suggested by David Cameron and then Theresa May but it has been continuously dropped. Now Boris Johnson is dusting it off once again.

In an interview this morning, Michael Gove confirmed that the scheme would be capped initially and grown over time, stating each home sold will be replaced “like for like, one for one”, which was echoed in Johnson’s speech this afternoon. Under May’s Government, a voluntary scheme in the West Midlands was piloted to test the policy’s feasibility, it showed that replacement homes would likely include more shared ownership properties with fewer for rent. This is a huge risk to the already low level of socially rented homes across the country, especially with the knowledge that only around 5% of the homes sold under RTB so far have been replaced, despite government commitments.

Across the North, there are supply concerns due to expected low value sales receipts in many areas not being able to cover the costs of delivering new replacement social homes. The Northern Housing Monitor shows the shortfall of social homes when comparing average annual affordable home completions in recent years against identified need is -81.3%, the largest shortfall in provision across affordable home types in the region:

Michael Gove has recently said that we need to be building more social homes and bringing a new RTB policy forward now puts this ambition at risk, signalling there may be a degree of disconnect between DLUHC and Number 10. Though the detail has not yet been revealed, the West Midlands pilot estimated a national roll-out of the policy would cost Treasury around £15bn over a decade to cover the discounts – a high figure that could be used elsewhere to achieve the Government’s existing housing commitments, such as the levelling up mission to improve housing quality and achieving net zero targets by bringing social homes up to Energy Performance Certificate (EPC) Band C (the energy efficiency benchmark) by 2030.

There are also concerns around housing quality: historically, RTB has led to the sale of the most attractive social homes in higher demand areas, with those who cannot afford to buy a property left with reduced choices. Over the long-term, depleted social housing stock could see further demand shifted to the private rented sector and rising numbers of homelessness.

The NHC’s housing association members are already facing enormous pressure to deliver on important but competing agendas: increasing the supply of good quality, sustainable, affordable homes; retrofitting existing homes to reduce carbon emissions and reduce household energy bills; and delivering on building safety. Though Michael Gove has confirmed this new policy will not affect the Affordable Homes Programme, there are concerns around how housing associations’ resources will be impacted by it.

We await further details to be published by Government about how this could be taken forward in practice.

 

Mortgages for housing benefit recipients

Another key announcement was also about expanding home ownership, coining a new slogan ‘Benefits to Bricks’. This would see those receiving housing benefit able to use that income to apply for a mortgage, switching the stream of housing benefit from rent to mortgages.

Johnson made reference to the level of housing support (£30bn) currently “being swallowed” by private landlords and housing associations through rents and the potential to change rules on welfare so “working people” can start to put housing benefit towards a mortgage.

There are questions here about how this would work in practice, especially around households’ ability to save for a deposit with the capital limit for means-tested benefits being £16,000 and any savings above £6,000 being treated as income, therefore reducing the level of income received.

With the surging cost-of-living, it’s also difficult to see how the Government can envision people at scale being able to save a deposit to buy a home, even in areas with lower value properties. There are further affordability concerns about how low-income households will be able to maintain their homes in the long-term and the impact of this on levels of poverty and quality of life in the owner-occupied sector.

As with the Right to Buy announcement, the demand for these changes is uncertain, therefore the scale may be limited when they are introduced.

Boris Johnson also announced there will be a comprehensive review of mortgage products on the market to “unbolt the door” of home ownership by looking at how people (especially young people who are in the “ludicrous situation” of being able to prove they can pay high rents but cannot get a mortgage) can access low-deposit mortgages. The review will report back in the Autumn.

 

Other announcements

Additional announcements today included plans to “supercharge” leaseholders’ ability to buy their own freehold. There was also a reference to plans to use more publicly-owned brownfield land to ramp up housebuilding – the NHC supports plans for brownfield renewal in the North, with the Northern Housing Monitor identifying the North’s brownfield capacity as having the potential to generate over 300,000 homes across 5,000 sites.

The speech also covered pressures on households due to the rising costs of food, energy, childcare and transport. Johnson highlighted the £37bn package of support provided so far to help with the cost of living (both targeted and universal). On the gas crisis that is driving up energy bills, Johnson referenced their track record on developing off-shore wind and their plans to expand nuclear power as alternatives to gas. The NHC will continue to make the case on behalf of our members that a key solution to the cost-of-living crisis, the gas crisis, and the climate crisis is to insulate homes at scale and transition them to clean heat in the medium- and long-term.

Please do not hesitate to follow up on this with the NHC by contacting Anna Seddon (Policy and Public Affairs Manager) at anna.seddon@northern-consortium.org.uk.