Ken Gibb's 'Brick by Brick'

Housing, academia, the economy, culture and public policy

Towards a Housing Solutions Platform

This week I had my first trip to Brussels and participated in a roundtable established by the Friends of Europe to discuss pan-European steps to deliver more affordable housing supply and in particular discuss examples of genuine financing innovative housing solutions found in different member states. This is happening not long after Housing Europe published their 2017 State of Housing in the EU.

This may not sound exactly riveting but it was actually a fascinating day on many levels – how the EU and its different cogs and gears work; how such meetings are organised and conducted; who says what; and, what can one derive from the substance of the discussion. The roundtable was set up as a large square table in classic style with more than 40 folk assembled around it. No break-out sessions or smaller conversations but instead a series of short and some even briefer contributions marshalled by the chair for the best part of 4 hours.

I was one of the first speakers talking about evidence influenced housing policy, what works and the potential value and risks of housing policy transfer or mobility given national institutional differences, contexts and the like. After my bit was over I was able to just sit and listen. There were several very interesting themes running through the day:

  • Housing First was a recurring cross-national motif. There was an excellent presentation by Finland’s Y-Foundation and also by Tom Bennett who runs the Housing First Transition Fund in Glasgow. The Finnish contribution, by Juha Kaakinen, included the nice point that rough sleeping was tackled so effectively in Finland for two reasons – Housing First but also additional affordable/social supply.
  • From the chair in particular, but also around the table, there was much made of the need and potential utility from rigorous economic evaluation of the wider net benefits of preventative housing interventions regarding homelessness and affordable housing supply – critical to making the social, economic, public finance and infrastructure arguments for the wider benefits attached to more and better housing. I thought this also spoke to evaluability assessments which brings stakeholders together before an intervention begins, work through a shared theory of change and decide collectively an agreed evaluation process.
  • Many cities face problems with short term ‘touristic’ letting most notably through Air BnB. There are clearly lessons to learn and share from the experiences of cities like Barcelona and Paris.
  • The growing importance of partnership by public and private sectors with foundations, endowments and philanthropy especially with regard to filling gaps, providing patient capital and supporting the gathering of rigorous evidence.
  • The difference in size, scale and opportunity is of course very important across EU members but this led to an interesting line of discussion that smaller countries like Finland and Scotland were better placed in some respects to experiment and innovate with new and interesting delivery models. The focus on smallness also raises the question of spread and scale of successful projects – this is a challenge colleagues wrestled with in What Works Scotland.

My own wider reflections on the day were threefold: first, finance and subsidy are part of an irreconcilable, irreducible conundrum for low cost housing (its cost can only be reduced via different more or less novel ways of providing and subsidising – equity, land, construction and finance). My Canadian colleague Derek Ballantyne argues that in reality there are few genuine innovations, merely different ways of assembling and packaging these elements but they all involve different ways of subsidising, taxing and profiting from elements of the delivery of new housing and how it is subsequently operated. Ballantyne also concludes that it all comes down in large to political commitment to resource the subsidy, in whatever form it comes.

Second, and related, there are really two choices – first, the size of the macro resource commitment by governments to housing (made up of capital and other finding subsidy, tax breaks, guarantees and personal housing subsidy). Cut the programme and less is possible:  it may force states to divvy up what is left in different ways – spreading shallower subsidy further or focusing on fewer units but with deeper subsidy. Alongside the macro challenge are, second,  the myriad micro housing delivery models which are more or less efficient, cost-effective and/or prone to perversities, unintended consequences and other problems. There was much talk about using public finance devices to lever in private equity participation, though we must watch out for possible moral hazard.

Finally, I was struck listening to the discussion of public funding and subsidy how much of our housing subsidy is actually lost through home owner tax breaks and also inefficient taxation such as transaction taxes rather than, for instance, more efficient recurring taxes on land. I was reminded of Hernando De Soto’s phrase ‘dead capital’ concept that he applied to unused property-based collateral. I wondered if there might be mileage in a new phrase, ‘dead subsidy’ referring to wasted, and often capitalised, housing tax breaks (and of course ‘dead tax’ might also apply to those transaction taxes and their own micro-allocative inefficiencies)?

A little unexpectedly, I found the platform format and discussion rewarding and thought-provoking. This was in no small part down to the efforts of the chair (Dharmedra Kanani) and also the choice of discussants put before us.  I have only mentioned a few of the big ideas circulating yesterday. I am sure we will hear much more from this group in the months and years to come.

 

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Disruptive Ideas for Housing Land & Infrastructure

I chaired a panel session this week at the annual Homes for Scotland conference in Edinburgh. The idea was that our four speakers would consider land and infrastructure challenges around the risks and opportunities created by disruptive changes. These disruptions are novel ways of delivering housing, changing how funding and infrastructure is done in order to deliver more housing that is less expensive and can, arguably, and to different degrees, alter the way our housing system functions.

The populariser of the disruptive innovation concept, Clayton Christiansen, argued that small scale innovators take root and outcompete incumbents. They are, in other words, a silent but growing threat to business as usual. In this context innovations aimed at either using land value uplift capture through planning law reform to fund new infrastructure (rather than from scarce public finances); or, separating out land and infrastructure (into a common good fund underpinned by a state guarantee) and a separate element for the build cost – serves to offer a threat to the status quo business model of land oriented speculative housing developers.

The planning reform proposal, from Thomas Aubrey at the Centre for Progressive Capitalism, and the plan to separate out land & infrastructure from bricks & mortar (Matthew Benson from Rettie and Co) were the central examples provided of disruptive challenge in the panel session.

They entered this lion’s den this morning on the premise that the current housing system is broken – new housing needs to be affordable or at least considerably less costly, there needs to be much more of it and infrastructure critically needs to be funded upfront to facilitate new home development. Typically, in the UK, unlike much of continental Europe, this is funded by central government in different ways and from a range of government departments. It is typically not, and despite initiatives like community infrastructure levy, in the form of capturing (part of) land value uplift on the granting of planning permission.

There is thus a public finance argument in favour of such a shift – a charge or tax could in principle reduce the requirements on public revenues to pay for new infrastructure. Second, lower priced housing costs and the development of the long term funded investment in a common future fund – could reduce the cost of housing over time and again reduce important aspects of the housing budget (ie by reducing unit costs). As my colleague Christine Whitehead has often said, one measure of good housing policy is its capacity to reduce the cost of housing to households and the tax payer.

Our first speaker, Nicola Woodward (Lichfields), went further and argued that new housing and an efficient housing stock, are essential economic infrastructure, vital to growth and productivity. My colleague Duncan Maclennan has been making this argument for some time and indeed goes on to argue that benefit-cost ratio metrics that propose large productivity impacts for things like transport investment are often mis-specified and overstate value relative to housing investments and which in turn are often understated. This is partly about attribution i.e. increased densities attribute to transport rather than housing social returns, but also due to a failure to properly consider the counterfactual i.e. the cost to the economy of not investing in housing. Duncan’s argument, till now at least, seem to have been more positively received in other places like Canada and Australia than here.

What about the critical responses? One interesting response from the panel was that those who might feel that these sorts of new models or reforms to planning would damage the interests of the existing players – were essentially missing the point in that the objective is to improve the working of the housing system. There will be losers and they will typically be loud while winners will probably only whisper at best. So, the political economy of pursuing this credibly is both interesting and challenging. Two possibilities suggested were, one, to set up demonstration pilots; or, second, to attempt forms of innovation in planned new towns.

It might be pointed out second that using funds from value uplift for new infrastructure for roads, schools, water, etc. means those funds cannot be used for S75 affordable housing. On the other hand, as Matthew Benson pointed out, his model could be applied to any tenure mix including social housing and it would all be cheaper than the current new supply status quo. A worry was also expressed that this class of reforms might impact on house prices, though the direction of impact was not completely clear to me. Benson argued in any case that house prices are dominated by the existing stock and the proposals suggested would not in reality be big enough to affect the overall housing market.

Will these or other similar ideas actually disrupt land and planning to support more, less costly, housing supply work? How will they relate to wider community plans, the work of the new Scottish Land Commission and the upcoming planning legislation coming in Scotland? Some of these ideas are not unlike more traditional disruptive ideas like land community truss. Perhaps we therefore need a suite of ideas that can be used at different times across our range of market contexts. I am sure the debate will continue.

 

 

 

Trends and change in Scottish Housing

This week the Scottish Government published the new trends summary for annual housing statistics across Scotland. There is always something interesting or surprising to be found here and I thought would briefly identify and comment on a few things that struck me (all figures from the new trends summary).

Level of completions

  • In 2016-17, there were 18,539 total completions, the biggest total since 2008-09 but still well below pre-recession levels. Looking at the composition of the total, private completions were down a few hundred at 13,187, housing associations built 2,748 units (428 units greater than 2015-16) and councils built 1,143, much the same as the previous year. However, rehabilitation and conversions accounted for more than 1450 units
  • Within specific council area patterns vary significantly. In our largest cities, for instance, 76% of new supply in Edinburgh is private sector but only 32% is in Glasgow (fully 42% was housing association development).
  • Long term trends suggest private housebuilding, while on an upward trajectory, is still well below the average over the last 20 years.
  • The first diagram show very long trends back to 1920 for the share of housebuilding completions between private and social sectors.

 

Scotsupply

 

Level of affordable supply programme completions and its composition

  • Scotland is spending more than £3 billion of public funds in order to build 50,000 affordable units in the current Parliament, 35,000 of which are to be social. In the first year of this programme, 7,336 units were completed, below the averaged target of 10,000 but 13% up on the year before. Just under 2/3 of these were new build and the rest were either rehabilitations or off the shelf purchases.

Tenure shares and tenure change

  • Tenure change in Scotland continues to be noteworthy. The bulletin points out that in 1981, 40% of the Scottish dwelling stock was owner-occupied, rising to a peak of 63% but then fell back over the last 6 years to just 58% in 2015. Alongside this has been the remarkable growth of the private rented sector, trebling as a share of all units since 1999 and increasing from 10% to 15% between 2008 and 2015.
  • The second chart shows the movement on absolute numbers of the three main renting tenures between 2001 and 2015. The PRS is now comfortably the largest of the three.
  • Locally, home ownership varies from 83% in East Renfrewshire (2015) to 44% in Glasgow (2015). Private renting (also in 2015) varies from 4% in East Renfrewshire to 27% in Edinburgh. For social housing shares, and always the outlier, East Renfrewshire has 12% of its stock in social renting tenures compared to 37% in West Dunbartonshire.

 

tenure

 

Local authority evictions

  • The data indicates that for 2016-17, there were 1,421 evictions or abandonments associated with council tenancies. This equates to 15% of court actions initiated, 5% of all proceedings issued and 0.5% of all lettable stock.

Trend in LA lettings

  • A long term decline in local authority lettings has stabilised. In 2016-17, there were 25,788 lettings, slightly down form the previous year, and 40% of lettings were to homeless households  as against 38% the year before. At the beginning of the previous decade, there were more than 50,000 lettings a year, though much of the reduction is due to stock transfer in general and Glasgow’s transfer, in particular.
  • Only an incomplete proxy for social need or demand, local authority housing lists (and common registers) were standing at, as of 31 March 2017, just over 162,000 households, a 3% decrease on the previous year and the 9th successive annual decrease.

The arc of the RTB in Scotland

  • Just under half a million public sector (and stock transfer) homes were sold under the council house sales right to buy scheme, now ended in Scotland. The third chart shows the rise and fall of annual sales.
  • In 2016-17, RTB sales totalled 3,510, up 38% from the previous year. Locally sales were highest in absolute terms in Fife, North Lanarkshire, South Lanarkshire and Glasgow.

RTBScot

Lots to think about in this data but it would be nice to join this up with private market data (via the Centre for Housing Market Analysis) and housing association data from the Scottish Housing Regulator, Maybe one day? I am working with colleagues at the Urban Big Data Centre at the University of Glasgow on monitoring the private rented sector through letting and adverts data – that might help to further close the data loop.

 

 

Exploring the Scottish Economy

My last official act with Policy Scotland is to participate today in a launch for our edited book ‘The Scottish Economy: A Living Book’. I edited this new overview with Duncan Maclennan, Des McNulty and Michael Comerford. We are immensely grateful to all of those who contributed to the book’s 19 substantial chapters. We think it is a genuinely useful and serious contribution to an empirical understanding of both the state of key sectors and the economic challenges the country faces.

Of course, Scotland is a place for different kinds of economic debates – those that mirror wider conceptual and empirical debates elsewhere about macroeconomic policy, government intervention, national strategies and what works. But is also, rightly or wrongly, where so much of the constitutional debate about Scotland turns. Just in the last week, both aspects of these debates have surfaced as a result of the Scottish Government’s publication of the new GERS data on Scotland’s public finances and in the anticipated economic strategy content of the new Programme for Government to be launched next week.

This book has a unique history. Sir Alec Cairncross established the Department of Social and Economic Research at the University of Glasgow after the 2nd world war as an empirical research–intensive group of social scientists. In the mid 1950s, he edited a book entitled ‘The Scottish Economy’, featuring an empirical account of all the major Scottish sectors, which involved wrestling with often quite primitive data, but as was characteristic of the diagnostic investigative approach, often featuring remarkable forensic analysis of what was available. Of course, post war Scotland is in some respects now barely recognizable but many root issues and characteristics like inequality, spatial variation, the problems confronting Glasgow and the debates over strategy, productivity and growth still to the fore.

The Department of Social and Economic Research begat the Department of Urban Studies in the 1990s and now Urban Studies is a successful subject area in the School of Social and Political Sciences. The ESRC Centre for Housing Research, led by Duncan Maclennan, was located within S&ER, where, for a couple of years, Sir Alec’s daughter, Liz, was a researcher with us. We thought that as a commemoration of that excellent path breaking empirical study, we should seek to re-create its essence 60 years on. Although the subject material has changed (we don’t, for instance, have a chapter on the church in Scotland), we have, we hope, produced a significant substantial volume that should add value for academics, students, political and commentariat classes across many domains in Scotland. Retaining the link to the history of the book, we were delighted that Frances Cairncross could offer a foreword and Laurie Hunter, long term head of the department of Social and Economic Research, could add an afterword, too.

The book has a series of five chapters at the beginning of the book that are broad-based about the history of the Scottish economy since the 1950s, including one on the development of economic policy, alongside chapters on fiscal matters, the contemporary landscape and the Scottish population. We then move on to a series of sector or more topic-specific chapters concerned with issues as diverse as: oil and gas, infrastructure, rural Scotland, education, health, housing, the environment and renewables, the financial sector, urban Scotland, women in the labour force, local government finance, inequality and poverty, and government’s place in economic strategy. Chapters combine careful analysis of descriptive material with reflection on current and future challenges.

The main strength of the book is that we have assembled many of the key writers academic and non-academic who can write with authority on these matters (and they have done so). Second, a distinctive feature is the ‘living book’ element, by which we mean the updatable accompanying website which visualises much of the data contained in these chapters. The empirical focus is a drect legacy of the original Cairncross volume and we hope readers will find it useful. We also intend to use the website to provide periodic additional content, perhaps through blogs and author/editor notes.

In this way, and short of further editions (which we hope there will be an appetite for in time), we hope to overcome the classic problems such volumes face (subsequent events overtake the book). Our main such example, which only features in the introduction, is Brexit. Several of our authors (and indeed one editor) are thoroughly versed in the economic debates around leaving the European Union but our timescales precluded adding a further chapter late in the day. I hope the website will be able to host a series of contributions on that pivotal topic.

It is a nice way to sign off from Policy Scotland and I would like to thank my editorial colleagues, all the 33 contributors, the publisher and Policy Scotland staff and interns and for doing such a great job throughout the project. I wish the new director Chris Chapman well and Policy Scotland continued success. The new housing evidence centre, CacHE, will be working directly with Policy Scotland and we will have many continuing overlapping strands.

 

 

 

 

 

 

 

Starting Again

This week, I have begun a new job. I am still at the University but the UK Collaborative Centre for Housing Evidence (CaCHE) opens its doors for business. We are still recruiting and setting up systems, policies and procedures but it is finally underway.

CaCHE has been the best part of two years in the making and reflects a long gestation period as ESRC wrestled with how to deliver on its decision to prioritise housing alongside the increased focus on evidence and what works in policy terms more broadly. Eventually, the decision was taken to go for a broad-based multidisciplinary approach, one that should encompass a consortium of universities and non HEI partners. It was also clear (to us) that it needed to encompass the whole housing system and all that features within it, and that the new centre should be genuinely-UK wide and embrace the devolved UK and the different types of markets and housing contexts found across the UK.

Our consortium building process was premised on early sign–up of partners, seeking to do justice to the scope of what we thought would emerge. We embraced the housing system approach and also a pluralist basis by which to assess and review evidence about housing. Importantly, we also decided to fully commit to a co-produced mode of priority-setting. We will set our evidencing and research priorities according to what representative knowledge exchange groups up and down the country tell us are the key priorities.  More so than ever I am convinced this is the right way to go, not just to get buy-in from the wider housing policy and practice world but because it confers legitimacy and a sense of genuine collaboration. It also shapes the way we have to write, report and communicate.

Last May, the ESRC and other funding partners, Joseph Rowntree Foundation and the AHRC, published their call specification incorporating six research themes (housing and the economy; understanding the housing market; choice and aspirations; housing and health education, employment, etc.; place, design and neighbourhoods; and, multi-level governance). Each theme had a lengthy shopping list of possible research projects. We decided to ‘announce’ a dozen exemplar/learning projects either evidence reviews or secondary data analyses which would help us refine our approach to evidence reviews, alongside up to ten PhDs co-funded by the partner Universities. Beyond that our collaborative knowledge exchange model would generate our priorities.

We constructed a large team based around contributions from the universities of Glasgow, Sheffield, Reading, Heriot-Watt, Cardiff, Sheffield Hallam, Ulster, Bristol and St Andrews, plus non-HEIs: the Chartered Institute of Housing, the Royal Town Planning Institute and the Royal Institution of Chartered Surveyors. The National Institute of Economic and Social Research also made a major input into our bid. Subsequently, the University of Adelaide has also come on board. More than 200 individual collaborators supported out bid with an interest in working with us, as did more than 20 other partners. The submission date was in October, interviews in January 2017 and we were publically announced as the successful consortium in April and due to start at the beginning of August 2017.

And it is a large team – 30 co-investigators spread across 6 themes and 5 sub-national geographies, plus a data navigator hub, secondment programmes, early career researchers, as well  as research, knowledge exchange and administrative staff. The centre is a distributed across the UK but administered form Glasgow. Even our leadership team is spread far and wide based in Glasgow, Sheffield, London and Cardiff. As many have said, directing and leading this new initiative will be challenging but I am sure also very rewarding. I am very fortunate to have been able to work closely with Craig Watkins from the very beginning of this project and we are doubly fortunate to have so many other excellent positive colleagues to work with and to that end I would include the international advisory board we have assembled, chaired by Lord Kerslake. As is often the way with new collaborative ventures, it is great to work with new people and to see them and our practices in a different and new light.

I decided that the new centre should be a break with the past in a different way too. We are locating off the Gilmorehill campus and shifting eastward to the social sciences research hub in the east end of Glasgow at the Olympia building in Bridgeton. We will share our space with the Glasgow Centre for Population Health and other Glasgow University social scientists. I think this will bring both focus to our work and allow us to contribute to the city civically and in partnership with those we share the research hub with, as the University intends.

I will be nearly full-time in the new role so I am giving up directing Policy Scotland, something I have done since 2013. I am also standing back from What Works Scotland which I helped develop and then co-directed for three years. Both roles have been tremendously rewarding and have re-energised me. Lessons from these two entities made important contributions to what became the CaCHE model. Policy Scotland allowed me to work with policymakers, Parliament and practice and to hopefully learn a little about how to do so more effectively.  What Works Scotland has taken me into new academic areas, forced me to think much harder about collaboration, co-production and evidence. Ideas about pluralism, dialogical approaches, multi-disciplinarity and a much more open attitude to evidence has been a great tonic for someone hitherto steeped in economics methodologies (admittedly a bit more plural and heterodox than some). I am therefore very grateful to colleagues in both institutes and wish them both well in the future. Both will be working with the new housing evidence centre.

It will be a few months before we are fully operational; indeed, we are not formally launching till October. But from August 1, it will be live and I for one cannot wait to get started.  It is a new start (and feels like one) but it is also great to be forging ahead with an ESRC funded housing research centre – exactly the same type of organisation where I started my career in Glasgow in the 1980s.

Housing New Zealand

I have just finished a short trip to New Zealand and on the way through the airport I picked up a book on housing by Philippa Howden-Chapman, a professor of public health at the University of Otago, called Home truths: Confronting New Zealand’s Housing Crisis. Written in 2015, it is a cry to roll back perceived inequality, improve housing conditions and build a more joined up and evidenced policy framework based on housing rights, affordability, fairness, sustainability and a focus on the system as a whole.

I have read a wee bit about the Auckland housing market which is particularly unaffordable and speculative;  and many years ago in Glasgow we entertained civil servants working on housing policy in New Zealand – but this was my first opportunity to read and digest a proper overview of the housing system as a whole.

The author focuses on a number of large issues, at the heart of which lie the commodification of housing, the run down and selling-off of state housing, the leaky homes scandal that saw 80,000 new homes built with faulty cladding, the lack of regulation in rented housing, the privileged tax status of owners and investors and a mess of housing subsidies.

The result is a poisonous mix of unaffordable housing, speculation, government and media opposition to social housing, exclusionary zoning and land supply that fuels sprawl and the car economy.

What is to be done? Howden-Chapman calls for four key policy reforms plus a number of follow up ancillary ideas. These involve:

  • subsidising mortgages for first time buyers but in ways that will not push up prices.
  • the promotion of corporate and institutional private renting investment to transform the sector in New Zealand
  • increased supply of inner city social housing including not for profits
  • tying rental subsidies to independent assessments of rental housing quality.

Additional policies proposed include regular assessments of housing condition through surveys and in turn comprehensive needs assessment. The author also calls for statutory responses over emergency homelessness and for the return of mandatory inclusionary zoning of affordable housing within new developments, wider support of brownfield higher density and compact city style urban management. Overall and consistent with these ideas, there should be a comprehensive national strategy for housing embracing the health and wider economic consequences of better housing.

Drawing on recent writing by Kate Barker, the author bemoans the short termism of New Zealand – something exacerbated by a three year electoral cycle. This fundamental lack of fit with long term housing problems is a universal problem and one of course I bang on about a lot of the time in these posts.

It reminded me of the point recently made by Anthony King in his 2015 Pelican book on Who Governs Britain? He was also deeply concerned with short termism and the inability to do enough systematically about difficult long term problems. He argued that, while they have plenty of inter-party rivalry, Nordic countries’ political parties often demonstrate a capacity to do a good job of coming together to build consensus and undertake policy proposals through national commissions that all, government and opposition alike, can sign up to and stick with over a period of time (i.e. over a succession on governments) to make headway with questions that the Anglo-Saxon countries just find insurmountable.

Perhaps this is how both New Zealand and the UK might overcome such wicked problems? Britain has a long and inglorious record  of using royal commissions to put things in the long grass. Could a formal and properly resourced cross party commission on topics like housing be made to work? Surely worth further thought and consideration?

A small addendum. Our flight this evening from Wellington to Sydney included one Boris Johnson and his FCO entourage fresh from his maiden visit to New Zealand. As probably the only Glaswegian on the flight I was tempted to engage with the great man concerning his widely reported comments the other day on arrival to NZ that the traditional Maori greeting of rubbing noses might lead to a head butt in a Glasgow bar. But he was in business class and I was in economy….

Sydney, Incidentally

I am working in Australia for a week. It is mid-winter (allegedly) and people are wearing coats (as are many pets). Yet it is the same temperature here as it is in Scotland and really quite nice, all in all. I am at the University of Sydney working with colleagues on research about mechanisms to boost affordable housing supply in Australia, part of an AHURI project led by Nicole Gurran. I have spoken at three events and participated in three other more informal meetings. Next, we head on to Wellington to see family for a few days before returning to Glasgow and the actual start date of the UK collaborative Centre for Housing Evidence (CaCHE) on August 1.

Several of the meetings have been directly relevant to the new housing evidence centre. I met Ian Winter, the director of the Australian Housing and Urban Research Institute (AHURI) and discussed the ‘space’ between housing research and housing policymaking and policy influencing. In recognising the common interests between us (CaCHE is loosely based on the AHURI model), we explored how we might work together. For me, it is clear that AHURI delivers some of the best housing research anywhere – there is much to learn from them.

I also participated in an interesting knowledge exchange event about social housing regulation chaired by Michael Lennon, formerly of Glasgow Housing Association. My job was to provide an overview of regulation in the UK and its key role in supporting both capacity and the wider evolution of the sector. Hal Pawson (University of New South Wales) contrasted the UK position with that in Australia and the need for a working, national, comprehensive system across Australia. While the UK regulatory system has changed several times over the last 25 years or so, and faces the considerable challenges of reclassification now, it has undoubtedly been an essential element in the growth, stability and progress of the sector.

The AHURI project on affordable housing supply involved a public lecture event (again, I was to identify and draw lessons from the UK) before we had an ‘inquiry panel’ day where the three projects that constitute our inquiry were discussed with policy and practice experts along with the research team and AHURI. The inquiry seeks to build an evidence base about affordable supply mechanisms across Australia, drawing on international evidence, and operating at different levels – from federal government and state down to specific sites and case studies. The material has all been categorised around recognition of local context, assessment of specific mechanisms and evaluation of outcomes on the ground

The inquiry panel day was a bit like a Joseph Rowntree Foundation advisory group meeting for a programme of research. It was an excellent discussion and it was great to hear the presentations from Nicole, Steven Rowley (Curtin) and Bill Randolph (UNSW) as well as the great contributions made throughout the day by Vivienne Milligan (UNSW). It is clear that there is considerable variety in practice across the country and that good things are going on in Western Australia, in particular. I was really impressed by the quality of the policy instruments discussion regarding the interplay between market, finance and planning. Bill and his colleagues presented a very helpful (and intuitive) stripped-down spreadsheet model of specific affordable/market developments which allow the user to vary policy and market assumptions and with which one can see the impact on key financial outcomes.

It has been a very enjoyable week with much to reflect on for CaCHE. Thanks to Nicole and her colleague Catherine Gilbert for all their help and hospitality while I have been in Sydney.

 

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I have been in Toronto as part of a second workshop for the Shaping Housing Futures programme. This is a tri-country knowledge exchange activity thinking about how housing challenges in the UK, Australia and Canada can be analysed and understood with a view to developing feasible and credible new housing policies in each housing system. […]

Private Renting Redux

This post follows three different rental market developments in the last few weeks. First of all, I chaired Professor Peter Kemp speaking in a seminar reflecting on Scottish market renting and PRS policy from the remove of England (though he is a former colleague of mine in Glasgow). Peter was joined by an excellent panel of  Rosemary Brotchie, Nick Bailey, Susan Aktemel and Anna Evans. Second, the Scottish Government published online their instructions for landlords and tenants regarding the new private rental tenancy that will come into effect for new tenancies in December 2017. This will assume tenancies are ongoing unless specific mandated conditions for termination are met (and are verifiable). It also creates the right for councils to seek local pressured rent zone status which would allow them to seek caps on annual rent increases (though not on initial contract rents. Third, my new colleague in the Collaborative Centre for Housing Evidence, Tom Moore, has recently published an (currently) open access paper in the International Journal of Housing Policy contrasting regulation and rental policy for the PRS in each of the UK’s four nations.

Tom’s policy review paper does the interested reader a great service by laying out the background context and policy divergence across the UK in terms of tenure security, regulation and affordability. While all four nations have experienced considerable growth in private renting since devolution, there are both common and distinct trends across the home nations. While traditionally a sector of transition, more people are living longer in the sector and more families and other longer term household structures are opting for the rental market. A key question is the contribution of either lack of choice forcing people into the sector or whether the sector is a destination of choice (perhaps this also suggests the weakness of the use of the word ‘choice’). Tom stresses that not only are tenure rights and regulation very different across the UK (with England as the default most deregulated n most regards), none of the UK nations approach the levels of protection and regulation found across much of the continental Europe.

Moore stresses that to the extent that more low income households are now in the sector, their vulnerability may exacerbate inequalities and disadvantage. Second, he rightly emphasises the importance of greater tenure security in policy discussions as the sector grows in importance. Third, management practices by some landlords remain a cause for concern.

There is much to like in this paper especially the comparative analysis of divergence across the four nations. If I was being picky I would challenge a few points: Scotland does have limited policy control over housing-related aspects of the housing elements of universal credit and discretionary housing payments. They can also top up and create new benefits – but they have to pay for them out of their budget. Second, I think the paper downplays important UK level ‘reforms’ of the sector, particularly via HM Treasury (the Scottish Government chose to follow the 3% uplift in stamp duty via the devolved Land Building Transactions tax).  I am also one of those people sceptical about rent regulation and in particular the ability of people like the rent officer to find a balance between tenant and landlord interests. Scotland’s reforms will be an important natural experiment for Scotland and the rest of the UK.

The Glasgow seminar with Peter Kemp was both stimulating and challenging. Peter made many important points. First of all, he noted that there is a definite asymmetry in terms of the new Scottish tenancy in that it is considerably easier for a tenant to leave under the new settlement than it is for a landlord to end a tenancy. Second, he stressed that the likely cap on rent increases is likely to be CPI plus 1% – which, compared to the Scottish average rents as described as ONS is actually quite high (unaffordable areas excepting).

While there was some concern in the seminar about policing the landlord grounds for repossession of property, there is clearly much anticipation about the impact the new tenancies will have for Scottish housing.  There was also a focus on other concerns of the moment like short term tenancies and Air BnB.

For me, Peter’s most insightful comments concern the changes to the tax regime for private landlords. Until listening to Peter I had generally considered these to be a tax grab that was rather unthinking about its housing system consequences (ie reducing the supply of lets just when the rest of the market is difficult to access, possibly pushing rents up). That may be true but I interpreted what Peter said as a sort of blindside attack on individual ‘mum and dad’ landlords in favour of the corporates – not by subsidising them (although there is some of that going on  via guarantees, etc.) but by using the tax system to penalise small landlords. (who make up 90% of the supply side)

How so? First, they do this by charging an 8% surcharge on capital gains tax compared to other assets. Second, there is the 3% surcharge on the tax on buying properties if you are a landlord (which may help potential first time buyers but might just push rents up or broadly discourage investment). Third, mortgage tax relief has been cut to the basic rate (unlike for other forms of investment business loans) and this is also has been turned into a tax credit which essentially means that rather being applied to corporation tax, it is now really a turnover tax and this has the unintended (?) consequence of pushing many small-scale landlords into higher tax bracket. There is concern in the sector that will lead to a large scale departure of small scale landlords. Will this gap be closed by other providers? Will first time buyers fill the gap as properties come onto the market – perhaps to an extent but they still face high deposits even if prices weaken.

This highly dynamic sector is the fulcrum of the housing system and its segments and interdependencies remain comparatively poorly understood and recorded. This has to change. And now social landlords are increasing their interest in and provision of mid-market rent – slightly sub market rents on short tenancies aimed at key workers (though this will also have to change for new tenancies after December in Scotland). How will this new sector niche perform and will it impact on the quality of the traditional private offer (and indeed how will it impact on social tenancies also provided by the same landlord)? Peter made much of the growth of the sector but did point out that it started from an incredibly low base in the 1980s – perhaps is the real international comparison to note-  just how did the UK end up with such an infeasibly small sector, something which of itself creates much deeper inflexibilities in the wider housing system?

 

Good for the Gander? Reflections on the 2017 Housing Studies Association Conference

goose 1 is a goose that for three days strongly defended its space on the main way into the conference on the York Campus at Heslington. It appeared to be protecting its partner and made the odd aggressive shift in direction if any delegate came too near its mate in the undergrowth. I am no David Attenborough but it reminded me of years jogging round Strathclyde Park and carefully avoiding the personal space of gangs of Canadian geese or the attention of fairly abrasive Lanarkshire swans.

The conference this year was themed around precariousness and financialisation and how the housing sector is becoming more unequal, insecure and unstable. Plenary speakers included Oliver Wainwright from the Guardian, Shelagh Grant, CEO of the Housing Forum, Dinah Roake ex of HCA , Paul Quinn from Clarion Housing Group and Bob Colenutt from Oxford Brookes. The final plenary involved David Madden from the LSE and Blase Lambert, CEO of the Confederation of Co-operative housing. The conference dinner also included a memorable talk by the ineffable Ian Cole.

Financialisation and the precariat are well-met topics and they worked well with many of the workshop papers and for once a conference theme seemed to retain purchase across the full event. Not that everyone agreed of course with very different views circulating and also some concern that perspectives were a little too metropolitan and London-focused (something conceded by David Madden co-author of In Defense of Housing). There were also debates about the proactive role of the state in facilitating speculative mega real estate projects and a degree of vagueness about the transmission mechanism that might export people out of unaffordable, overcrowded cities. A key theme throughout was what can be done about these processes – do we despair or are there ways to fight back? There was talk (Madden again) about housing movements but I quite liked Glen Bramley’s discussion point that in fact an important (albeit atomised) housing movement are those older equity-rich often suburban home owners (and sometimes BTL investors) who are such a break on progress with respect to increasing housing supply.

I heard some interesting conceptual papers by David Clapham, Keith Jacobs and Tony Manzi, as well as a good paper using Australian evidence on private landlords from Hal Pawson. Duncan Bowie reprised debates about housing tax reform. I did a paper (co-authored with Duncan Maclennan) on Brexit and housing, the fundamental premise of which can be summarised by we don’t know the rules of the game regarding the rapidly approaching negotiations so we cannot really scale or estimate the impacts. Many economists feel they will be negative depending on the scenarios for how Brexit plays out, but we cannot in turn say much specific about housing impacts other than some likely directions of broad consequences via lost trade and growth, out-migration, risks re European funds and EIB, but much more fundamentally, risks to housing policy arising from possible break-up of the UK itself as a consequence of leaving the EU. More to follow on this I am sure.

The conference has a nice informal and friendly feel to it. This was complemented unexpectedly in a city centre bar by a very impressive four piece jazz band playing standards via an excellent trumpeter. Well done to the organising committee. Roll on 2018.

I missed a fair bit of the conference, in part because unexpectedly, the ESRC decided bring forward  the announcement of the UK housing evidence centre which made Thursday a bit of a social media blur but it is great to finally have it in the public domain.  More on that subject in a later blog.

‘The geese are flying westward’ is a fine song by Bill Fay (check it out) – but I am now heading north on the east coast line, eventually back to base for what I hope will be a quiet weekend.