2011, a year of change for the housing sector
Although we in the housing sector all expected change in 2011, few predicted the extent and pace of it throughout the year, writes Brian Johnson, chief executive of Moat.
Metaphorically, the sector has resembled a bazaar, with policies, frameworks, standards and directives all shifted and traded at pace.
In 2011, much of the sector's attention naturally focused on housing-specific reforms, such as the introduction of the new framework, changes to the standards, and the re-invention of Right to Buy. But if affordable rent represents the single greatest change, we approach 2012 cautious and uncertain about another: welfare reform.
This year saw the announcement of two key welfare reform challenges; proposed housing benefit under-occupation rules, and the introduction of direct payments to tenants. Much of the detail for these reforms, as well as others including the benefits cap, is yet to be worked out through secondary legislation to be introduced throughout 2012.
Although supportive of the philosophy behind many of the reforms, we will be arguing for changes to the way in which they are implemented. For instance, we have identified that proposed under-occupation rules would lead to a chronic stock mismatch, making it impossible to re-house everyone affected by April 2013. We are also concerned about the impact of direct payments on the sector's risk profile, which would lead to a higher cost of borrowing, and therefore a reduction in our build capacity. Finally, we believe that unless the benefits cap is indexed for inflation, that rent levels on smaller properties will become unworkable across the South East. This would have a direct impact on our build programmes.
In looking back on 2011, perhaps the greatest surprise is the extent to which departments have pulled in separate directions. It seems that the Department for Communities and Local Government has embarked on a programme to increase housing supply. The Department for Work and Pensions is preparing to implement reforms that are certain to do the opposite. We want to do everything we can to ensure that reforms are implemented sensibly, in a way that does not negatively affect housing supply.
As we catch our breath from 2011, we must not underestimate 2012, which is shaping up to be a critical year for our sector. Housing professionals should spend their festive period preparing for a challenging, memorable and sector-changing year.
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