Affordable housing: Where next?
In 2007, when house prices were still soaring, the government promised to build 70,000 affordable homes a year by 2010/11.
But the housing prices crash and the subsequent slump in the construction industry meant the plans were quietly shelved as building work on new homes ground to a halt across the UK.
With housing prices falling towards more affordable levels, the debate has moved from a serious projected housing shortage to the lack of mortgages.
How is the government tackling the housing shortage, and what is it doing to make the available stock affordable?
Sarah Routledge surveys the current state of affordable housing.
The Labour Party's report Building Britain's Future pledged an extra 20,000 new homes over the next two years.
These will be available to rent or buy, and the government is spending £1.2 billion this year, and a further £1.5 billion next year, to meet this target.
Not only will this help solve the housing crisis, it will create 45,000 additional jobs, the government says.
In all, this will enable local authorities to build 3,000 additional council homes over the next two years and 10,000 new homes for private sale.
Allocation rules for social housing will also be changed to make the system fairer - such as prioritising those who live locally and those who have spent a long time waiting - and councils will keep all the proceeds from house sales and rents.
Five million waiting
But even adding these extra properties only brings the annual figure up to 55,000 new affordable homes per year - significantly below the government's target of 70,000, set two years ago.
Liberal Democrat Treasury spokesperson, Vince Cable, says: "I don't think that is anywhere near enough.
"This is one area where the government could be doing a lot to combat the recession, by acquiring, or allowing RSLs [Registered Social Landlord] to acquire and finance accommodation that can't be sold, at a discount; authorising the building of new homes and converting occupied or unoccupied private rented property, helping landlords or themselves, making rented accommodation much better."
The National Housing Federation (NHF), which represents social housing organisations, has welcomed the extra cash and says it will work with the government to implement the plan.
But there is an urgent need for new housing projects, director Ruth Davison says: "With up to five million people on waiting lists in England alone, we are facing an unprecedented housing crisis."
Ms Davison also welcomes the changes to the allocation system, but rejected the myth that people do not get affordable housing in their locality because of migrants.
"The real problem is a lack of supply - that is at the root of our nation's growing housing crisis," she says.
Supply and demand
The construction industry, which builds new homes both for sale to private buyers and for social housing, has given a mixed response to the proposals.
Reallocating government money for housing recognises the importance of maintaining housing provision and of house building to the economy, the Home Builders' Federation (HBF) says.
"However, ensuring the banks restore some sensible levels of lending is paramount if any boost is to be sustainable," executive chairman Stewart Baseley points out.
Homebuilders Barratt and Redrow have also raised this point.
Barratt said social completions were 45.3 per cent lower at 2,069 over the last six months, compared to last year, and social housing accounted for 15.7 per cent of total completions, in contrast to 20.4 per cent last year.
But this is not due to a lack of demand, the firm says. Interest is up from the last six months with more visitors coming to view sites.
Mark Clare, group chief executive, says: "We are not, however, going to see a sustained improvement in trading conditions until the availability of mortgage finance, particularly in the higher loan to value segment, recovers."
Rival builder Redrow also says the most significant concern to the industry is "the chronic shortage of mortgage supply exacerbated by the widespread practice of down valuations by surveyors representing mortgage lenders".
The Communities and Local Government select committee has backed the homebuilders' concerns in a report and is urging the government to do more to open up the mortgage market.
Dr Phyllis Starkey, chair of the committee, says: "We welcome the additional investment the government has made in building homes for social rent and in low-cost home ownership. But this won't on its own be enough to meet demand.
"The availability of private mortgage finance is crucial, and the key to unlocking that finance is the Treasury's asset-backed guarantee scheme."
The asset-backed guarantee scheme was introduced to improve banks' and building societies' access to wholesale funding markets and help support lending to creditworthy borrowers, by guaranteeing mortgages.
But mortgage lenders are criticising the scheme for only covering the least risky mortgages and only covering banks and building societies, excluding specialist lenders.
MPs must keep the pressure on the Treasury to improve the scheme so finance starts to flow again, the committee says.
Until it does, the government will struggle to meet any of its housing targets, as "house-builders simply will not build homes which they cannot sell" the committee warns.
Ownership over renting
However, there are those who argue buying property is not the only route for good quality, affordable housing.
"At the moment, mortgages are, and should be, only available with a substantial deposit," says Mr Cable.
"Unless they are, the buyer risks being trapped in substantial negative equity and we have to get away from the culture that everybody has to own a house, regardless of their circumstances and getting into debt."
Making more options available to everybody, such as good quality rented accommodation - both from private landlords and from social landlords - would help solve the affordable housing crisis, Mr Cable believes.
Dr Starkey backs this message in the select committee's report.
"Whether from necessity or choice, significant numbers of people rely on private and social rented housing - and may continue to do so for much of their lives.
"Their needs and aspirations are every bit as important as those of home owners.
"Yet for thirty years government policy has focussed on promoting home ownership, with insufficient attention given to the rented sectors. We now need a vigorous debate to review this approach and formulate a more coherent vision to guide effective housing policy and investment into the future."
Clearly there are solutions to the housing crisis: but they are complex and need a serious debate on our own expectations.
However, this is not something that can wait: with millions waiting for decent accommodation and thousands more at risk of losing their homes through rising bills and lost income, there has never been a better time to tackle the problem of affordable housing for all.
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