The Ministry of Housing, Communities & Local Government has been accused of ‘wasting time and resources’ on housing policies that ‘come to nothing as ministers come and go with alarming frequency’.

In a scathing report published today, the House of Commons Public Accounts Committee states the ‘cycle of policy invention, abandonment and reinvention, stringing expectant young people along for years’ is ‘deplorable’.

The PAC reports that since 2015, not one of the promised housing programmes has delivered its objectives.

Starter Homes fail to deliver

In 2015, the MHCLG put forward the Starter Homes scheme promising discounts for 200,000 first-time buyers.

It set out the legislative framework in 2016 but didn’t put in place the necessary laws to make the affordable homes initiative a reality.

By 2017, Starter Homes had been abandoned, although it was not until 2020 that MHCLG formally announced the end of the policy.

Some 85,000 people had registered their interest in Starter Homes since 2015, only finding out five years later it had been a waste of time.

The MHCLG spent around £173 million on brownfield land preparing for the building of Starter Homes, net of receipts from onward sale of land to developers.

Homes England forecasts that around 6,600 homes will be built on the sites prepared using funding intended for Starter Homes, but only 36 per cent will meet the current definition of affordable housing.

First Homes

MHCLG’s next housing initiative is First Homes but is unable to say when they will be available for first-time buyers.

First Homes differs from Starter Homes as they will be sold at a higher discount, only to local first-time buyers. That discount will be passed on to future buyers when First Homes are resold.

New legislation is not needed for First Homes as they will go through the existing planning system.

The discount will be funded through developer contributions and local authorities will be expected to ensure 25 per cent of affordable homes built by developers contribute to the First Homes initiative.

But the report says the reliance on developer contributions to fund First Homes is part of an opaque, complex mechanism which risks less money being available to local authorities for housing and infrastructure.

Although MHCLG does not have a timetable or target, it is planning a pilot to build 1,500 First Homes ‘within the next couple of years’. It wants to learn from the pilot before further planning of the new scheme.

300,000 new homes target

MHCLG cannot clarify how it will achieve its ambition of 300,000 new homes each year by the mid-2020s, made even more challenging by the current uncertain housing market conditions, it says.

It has plans to increase the range and variety of new homes that are built, speed up building, encourage more small and medium-sized developers to build homes and encourage developers to build out sites and not land bank.

Definition of affordable housing

The report notes there is an alarming ‘blurring’ of the definition of affordable housing and MHCLG says it means different things in different settings.

Homes England uses the formal definition in the 2018 version of the National Planning Policy Framework: broadly, ‘affordable’ means homes for rent, sale or shared ownership at less than market rates.

Comment

Chair of the Public Accounts Committee Meg Hillier MP says: “The department for ‘housing’ is at risk of losing the right to the title.

“It has serially, constantly failed to deliver affordable new homes or even make a serious attempt to execute its own housing policies or achieve targets before they are ditched, unannounced – costs sunk and outcomes unknown.

“MHCLG needs to ditch instead the false promises and set out clear, staged, funded plans, backed by the necessary laws and with a realistic prospect of delivering.

“It also needs to ditch what is becoming a hallmark lack of transparency, if it is to have any hope of rebuilding confidence among future tenants and owners that the decent, safe, affordable homes they want and need will ever be built.”

Recommendations

The PAC has made a number of recommendations to MHCLG.

Firstly, MHCLG should be open with Parliament and the public when policies change or are abandoned.

As part of the First Homes pilot, MHCLG should model the effect of funding the scheme from developer contributions on local authorities’ ability to fund local infrastructure; and other housing needs such as social housing. It should also set out clearly how the secondary resale market will work.

MHCLG needs to set targets and map the path to meeting its ambition for 300,000 new homes a year by the mid-2020s. It should clarify how its range of housing schemes, including First Homes, will each contribute to this target.

A clear definition of ‘affordable housing’ is needed and MHCLG should write to the PAC within one month setting out what this is.

Homes England should write to the PAC every six months giving an update on the numbers of affordable homes created, and of what type and tenure.

First Homes are aimed at people who want to buy and have incomes that allow them to do so – they do not help people to move out of temporary accommodation or the homeless, which require more social housing.

To address this, Homes England is trying to encourage the building of smaller, cheaper homes through investing in modular construction; and encouraging demand for this type of home given the doubts of some local planning authorities.

The long-term success of MHCLG’s housing policies depends on it working effectively with players across the housing sector, and increasing its efforts to work more closely with local authorities and developers.

It must not lose sight of the needs of those who are unlikely to be able to buy or rent a home in the UK property market without support.