Features of Housing Policy and Finance - Coursework Example

A briefing paper on Housing Policy & Finance (C) Evaluate the degree to which government’s policy agenda is supported by its social housing financialpolicies. Since the 19th century, the debate regarding the government policies on housing has been on full force. In the 1970s, the policies added a clause of increased rent in the housing policy. This change was however a highly inadequate tool to combat inflation(Malpass, 2005; Mullins, 2006). Of course this step aided the rise of the entrepreneurial spirit and the house prices faced a massive increase. After that however, this inflation led to highly unstable timesin the economy. Now, the difference between the rental and first year cost in mortgages is hard to state and the only reason for this is because of the deposits escaping the house benefit. Other than that, the need to increase the income and bargaining power in order to move on has been hampered by unemployment, special needs, and the least desirable dwellings and areas(Malpass&Murie, 1999). Therefore, in severe times, the system always seems to fail. Of course, the blame can be easily put on the restricted objectives of the social housing. The separated residual housing provision and the dependency of policy on selected Registered Social Landlords (RSLs) can also be mentioned here as it is very faithfully working towards decreasing the private landlord solution and their number has been rising since the deregulation of housing markets in 1988 (Garnett, 2005). The social housing financial policies thus have a sizeable effect on the degree to which government’s policy agenda is supported.Since housing is also taken as a form of market, it holds a very compound supply and demand route. Thus, the government agendais highly affected. This can be said so, because of market closure, as in this area, finance contains only a few big players in credit allocation because the market contains the roles of future values and borrowing which is what this market is paid for, and market volatility, since the buyers and sellers are the only part of the market that is dominating at a given point in time. Certainly, the affect can also be traced to the externalities and uncertainty(Spicker). After the 1988, the social housing construction was seen to be increased in the times of a new financial regime. Since then, many programs have been dependent over the financing that is private in nature so that the public capital subsidies can be aided. The private funds are thus collected from the financial institutions. The data justifies the previous statement by stating that as a housing benefit, rent subsidies have been largely increased. This means that when the government’s policy agenda is considered, a strong support by its social housing financial policiesis identified (Lomax, 1996). The government aims to hand locals a strong financial incentive that motivates them to invest in areas such as affordable housing. This means that the government has made the public land available to the house builders and supporting communities so that efficient development that is according to the wants of the locals is formed. The UK government believes that the private rented sector is made to ensure the fulfillment of the housing need. Therefore, this sector is handled by a sound legal framework so that it can meet its objects in a timely and cost effective manner. The government thus has a strong support for the development and investment in this market (Laffin, 2009). The concept of efficient social housing being provided by the local government revolved in the minds of political parties in the era of 1970s. It is also observed that the local authorities has more freedom in ensuring and stating the amount needed to be built, how much they want to build, pattern of provision, as well as how they were managing that stock. However, in the beginning years of the 70s, particularly 1974 to 1979, it was observed that the performance of local authorities had decreased. This lack of performance was mostly apparent in the areas of the management of the housing stock. Until then no major changes in the social housing delivery or on the structural side was made. At this point, the civil service advisors had started to favor direct central control but the Labor ministers stood against them and favored the municipalization model. Considering the Conservatives, their main stance was against the consensus present. Under such circumstances, the argument was concluded with the fact that if municipal housing is taken apart, as it was seen as the key electoral base for Labor, the factor of key electoral base for Labor could be erased. This was suggested to be done through the right-to-buy. The proposed tool was also aimed to ensure effective solution to the problems that were developed because of socially homogeneous social housing estates. This is so because they viewed the municipal housing as a policy failure as well. Further it was made sure that a movement from the municipal into the voluntary sector was made that had been done through the shift of policies. Therefore, it must be noted that the local authorities are mainly dominated by the labor and since the inception of 1980s, the policies made by the government worked towards taking these powers away from them in the beginning. The policies thus shifted towards more indirect, governance-type controls. The problem of housing was identified again in early days of 2003 (Local Government association, Audit Commission and National Housing Federation). The detection was easy because of the fact that the rate of homelessness was increasing, the house prices were increasing that directly hit the house affordability, and the waiting list for public housing began to increase. As the financial policies have a sizeable effect on the degree to which government’s policy agenda is supported, at this time, the conservatives had not given the factor of additional affordable house which intensified the presence of such problems in the southeast of England and London. Therefore, the government policies began to be directed towards the problem of housing supply from the existing stock. In the same year, White Paper Sustainable Communities and the Deputy Prime Minister, John Prescott, began to consider the increasing population, the need for housing and the housing abandonment. This was thus a major step to change and set the policy by the government to build 2 million new homes and 3 million new homes by 2016 and 2020 (Communities and Local government). (D) Assess the effect of financial considerations on housing organizations’ own policy decisions. As a medium sized housing authority that holds housing stock, one must realize that the housing stock is obviously our biggest asset. Statistics state that in the UK, the number of homes provided amounts to approximately 4 million due to the use of below market rents (Communities and Local government). Therefore it is necessary that the company stays protected from defenselessness and delivers high quality social homes as well as flexibility. Currently, the environment of protection that the organizations like this involve in presents a fair and legal framework regarding the allocation priority for social housing. Efficient management of homes through tenantsthat are well supported can bebetter understood with the example of Tenant Cash-back scheme and the Tenant Empowerment Program by the government. Furthermore, the winning war with under-occupancy, over-crowding, tenancy fraud, and anti-social behavior through social landlords is also included.Other than the earlier stated, threemore areas where the protection is granted due to the government policies are the development and funding of a new model of Affordable Rent, locally controlled system regarding the housing services, where the authority lies with the locals that ensures a good shift from the Housing Revenue Account Subsidy System and the introduction of Decent Homes programtoan improvement in stock (Communities and Local government). However, the company would face problems in three basic areas that still need to be addressed by the social housing policy makers. The first question is the availability of adequate private money at sensible and rational rates. In such a situation, it is advised that the associations like this company, work towards attracting the future and present lenders to the market by making it look striking enough in their eyes. Here, rental income scheme is a necessary factor to be mentioned. Secondly, the presence of high procurement costs and rent makes the dependence of many individuals over housing benefit. Therefore, as perpetual dependency is not established, it become difficult for companies to obtain a personal subsidy system. In such a situation, the option of decreasing grant rates exist as it makes organizationsmore attractive. Thirdly, there is a huge doubt that building schemes and rehabilitation projects would hardly produce balanced communities. This is so, because mostly smaller organizations cannot achieve this goal and as for the larger ones, they have done nothing but concern from political as well as the academic side(Lomax, 1996). Evidently, it has been generally observed that the private lands, regarding their investment, are receiving a ROI much larger than the cost related to the borrowing in the area of government or owner-occupiers. Hence the problem of poor value for money arises as the rents charged are too high as compared to the cost incurred after acquiring them in low demand places. In UK, these landlord are given very high rents which hands them real returns which is done before capital gains are acquired. This means, that the entire picture does not look very good for the public. However, there does lay a disadvantage considering the enabling and strategic roles of the local authority, hence the combination. Currently, measure that handed budgetary devolution has been encouraged. This means that finances regarding social housing are welcomed as it aids efficiency (Laffin, 2009). Currently however, a question regarding the government policy regarding the central and local control of social housing finance has been silently rising. It is doubted that the central government in the UK has been quietly grasping its control back. This question has been raised by the HCA and TSA whose concern can be traced back to the 2008 as well. In this era, the contribution made by the housing in the privatization has been highly debatable. Commentators on the other hand say that this can be taken as privatization as it involves the movement of state assets to the public sector(Ginsberg, 2005). The policy is thus to return the power in the hands of the local communities regarding the housing and planning area. Also, the government has aimed to make them autonomous so that the character of the neighborhoods is protected in the drive for localism. The government’s policy regarding the new affordable houses thus aims to ensure an increase in houses that are affordable in nature, that are free for rent as well as ensuring opportunities for the owners (Joseph Round Tree Foundation, CIH). The government aims to do this through the use of the right to buy option or the access to finance and mortgage. It must be noted that the local authorities are mainly dominated by the labor and since the inception of 1980s, the policies made by the government worked towards taking these powers away from them in the beginning. However, the policy thus states that the locals no hold the power to decide if new homes need to be built because they know where it is needed and are well informed in deciding how to make their own communities successful. The locals will be given attractive financial incentives that would motivate them to invest in affordable homes (Communities and Local government). The housing policy must then become a part of the political debate as this is the most basic form of human goings-on. Also, for the economy to function in an efficient manner, the affordability, and quality is highly important to consider. It has been observed that there has not been a sound holistic approach taken to deal with the problem of housing policy. Other than that, the turnover of the mediocre and uncommitted housing ministers must also be taken into considerations (Audit Commission). Therefore, the policy is just slightly developed in nature and is thus segmented as it has been constantly hit by patriotic reflections and the crisis management related to the knee-jerk catastrophe. Regardless of the policies present, there is still the need for a medium and long term strategy for the UK whose deep rooted inefficiencies in the policies are directly affecting the personal, social and economic life within the nation. The results of such failures can be seen everywhere and can be seen from sporadic poorly synchronized cycles, rents and the destabilizing and adverse effects on the mobility of labor (CIH). References Audit Commission [Available Online] Accessed 15 February from: www.audit-commision.gov.uk, CIH [Available Online] Accessed 15 February from: www.cih.org Communities and Local government, Housing, [Available Online] Accessed 15 February from: http://www.communities.gov.uk/housing/about/ Communities and Local government, Social Housing,[Available Online] Accessed 20 February from: http://www.communities.gov.uk/housing/socialhousing/ Garnett D. and Perry J, Housing Finance CIH, 2005 Ginsburg, N., The privatization of council housing. Critical Social Policy 25: 115-135, 2005. Joseph Round Tree Foundation [Available Online] Accessed 25 February from: www.jrf.org.uk, Laffin, M. The Limits of Local Governance: Has Local Social Housing Provision been Nationalized in England, Durham University, UK, September 2009. Local Government association [Available Online] Accessed 15 February from: www.lga.gov.uk Lomax. G, Financing Social Housing in UK, Housing Policy Debate, 6 (4), 1996 Malpass&Murie, Housing Policy and Practice, 5th ed., 1999 Malpass P., Housing and the Welfare State, Basinstoke, Macmillan, 2005 Mullins D. &Murie A., Housing Policy in UK, Basinstoke, Macmillan, 2006 National Housing Federation, [Available Online] Accessed 15 February from: www.housing.org.uk Spicker, P., An introduction to social policy, [Available Online] Accessed 15 February from: http://www2.rgu.ac.uk/publicpolicy/introduction/housing.htm Read More