Welsh Government Housing White Paper

Last week, the Minister for Housing, Heritage & Regeneration, Huw Lewis (Lab, Merthyr Tydfil & Rhymney) published the Welsh Government's white paper covering housing strategy, entitled "Homes for Wales".

It sets out several key delivery aims this Assembly term and beyond:

• 12,500 new "affordable" homes of which:

1.  5,000 will be empty properties brought back into use
2.  500 will be cooperatively owned

• Improve existing homes energy efficiency
• Improve housing services to vulnerable people, including the vision of ending family homelessness in Wales by 2019

How it will all work

A new Housing Bill is due in 2013 as part of the Welsh Government's legislative programme. The bill would improve the private rented sector and prevent homelessness with the aim of, as I said, ending family homelessness by 2019.

Alternative models of finance are cited, with the £100million redevelopment of the Ely Bridge site in Cardiff – via a not-for-profit partnership if private and public sector companies – given as the flagship for a new form of co-operative home ownership. A "Welsh Housing Bond" is mentioned as a possible way of freeing up extra capital funding to build new homes, in addition to the investment mentioned in the recent Infrastructure Plan.

Several other bits of legislation, and levers are mentioned:

• Peter Black's (Lib Dem, South Wales West) Member's Bill for Park and Mobile Homes
• Local authorities will have the power to charge a higher rate of council tax on properties left empty for more than a year
• Introduce new statutory duties for Gypsy & Traveller camps
• A definition for "Community Land Trusts"
• A bill on Tenancy reform sometime in the Assembly term

Recently, as part of the budget deal between Labour and the Lib Dems, the Welsh Government announced that they want to provide 95% mortgage guarantees for first-time buyers of new built homes.

Social housing rents are due to be standardised and more closely regulated. This aims to ensure that people are charged a similar level of rent whether they are renting from a local authority or a housing association.

Specific reforms planned for the private rented sector will include new standards, new licencing for private landlords (long overdue) and compulsory registering of private landlords.

A comprehensive assessment of homelessness services is included, which will require more cooperation and collaboration between relevant authorities, changes in definitions of homelessness and new duties placed on local authorities.

Closer examination

Local authorities already have statutory duties with regard finding accommodation for the homeless, and those with children are a high priority. Technically speaking, family homelessness shouldn't exist.

Aiming to end it by 2019 is a brilliant pledge, but digging below the surface, I doubt there are any families in Wales, or a tiny number, who are "functionally homeless" – that is without any roof over their head. Single people, and couples without children are a different matter.

The idea for co-operative home ownership is novel and wholeheartedly welcome. I'll be posting more thoughts on how Wales can develop its urban areas in the near-term. However, I hope that this new co-operative isn't the fudge of the rather complicated shared equity, which results in a resident paying both a rent and a mortgage. It won't work as long as house prices remain ridiculously high.

Releasing public sector land for just 500 new homes (whoop-de-doo) seems pointless, but every little helps I suppose.

One of the good pledges is to bring more empty properties back into use. 5,000 are earmarked. It's a good start, but it's nothing dramatic or radical.

It's sensible, but we don't know where most of the 22,000 empty private sector properties mentioned are. You have to make sure homes are in places people actually want to live.That in itself is a difficult balancing act:

• Do you want to retain young people in rural areas?
• Do you want to move people out of places like Cardiff into the Valleys?
• Do you want to move people from the Valleys towards the M4 corridor? Or from rural north & mid Wales to the A55 corridor and Deeside?

They mention a pledge to "abolish the Housing Revenue Account Subsidy" (HRAS) system – which leads to Welsh local authorities returning large sums of money to the UK Treasury. However, HRAS is already due to be abolished sometime this year (in England at least). I'm not sure why the Welsh Government are so keen to advertise that they've been slow to act.

It's clear now that there's a cross-departmental link between the capital investment aimed at energy efficiency and housing. That's good, and something I like to see. However, it's ridiculous that a nation that's a net-exporter of energy, and with a massive potential for renewables has such a poor track record on fuel poverty. Aim higher than 100MW, please.

The private landlord reforms are the standout pledge. If they can pull that off, it'll be an excellent development. However, I have concerns – firstly that it might discourage people from becoming private landlords in the first place, possible reducing private rental supplies and secondly that any "fit and proper person" test for landlords won't be matched with a "fit and proper person" test for prospective tenants.

There are aims of tackling anti-social behaviour and domestic violence, but I see these as toothless without criminal justice powers to back it up.

On homelessness, I'm afraid that the Welsh Government's broadly positive aims to reduce it might be exploited by local authorities elsewhere in the UK to "dump their problems on us". Despite the trend of falls in homelessness numbers, the Welsh Government could inadvertently let the UK Government off the hook for their welfare and housing reforms, and being left to pick up the pieces and the price tag.

The key underlying issue not addressed

Housing in the UK, and in Wales, is far too expensive. No amount of state-aid is going to change that.

This week, Shelter Cymru have revealed that tenants face "administration" costs of £600. Hopefully the reforms to private tenancies announced in this white paper can lead to reforms here.

The white paper lists that the average Welsh salary is £23,800 and the average house price is £113,000. That's a house price/earning ratio of 4.7, much higher than the long-term average of nearer 3.5. Now if you could get it down to a ratio of 2.5-3, that would be what I would personally consider "affordable".

The new policy of providing 95% mortgages for first time buyers of new built homes, however incredibly specific that is, is short-termism. In the long-term, house prices in Wales, and probably the UK as a whole, are going to have to come down to a more affordable level, instead of using money to prop prices up, and burden first-time buyers with more mortgage debt that they other would be able to afford. It's a policy for house builders, not first-time buyers really.

The thought of taking any sort of action that reduces house prices however fills politicians with dread.

So how do you get the cost of housing to fall without spooking people? I've written on this before, but here's a summary of some ideas:

• Dramatically increase supply – new towns, planned urban expansion in larger settlements.
• Cheaper building materials – new forms of prefabricated and modular housing.
• A planning revolution – Completely discount objections based on property values. A new Planning Bill is expected during the Assembly term, we'll see what happens there.
• Land Value Tax – To promote development of "fallow land".
• New models of ownership – Including those mentioned in the white paper.
• Longer-term private rental agreements – Make renting for 30 years+ attractive. We'll see if the tenancy reform bill mentioned will add greater clout in this area.

Housing should, ideally, not be seen as a financial investment but as something purely functional. That's what happens in nations like Germany, for example. It's something Wales should probably aim to emulate in the long-term, and concentrate on other sectors of the economy besides construction to boost economic growth and prosperity.

Negative equity is a vote loser amongst "upstanding citizens" who have bought into it in good faith, however we don't need to continue to have our politicians prop up the biggest pyramid scheme in existence.