The loudest voices in this debate are typically the already well-housed
By Shreya Nanda, chair and co-founder of Labour Yimby, and Islington councillor
The UK is in the midst of a housing crisis. How did we get here? From the mid-20th century, successive governments made a series of policy changes, relaxing lending, scrapping taxes on property, abolishing rent controls, selling off council homes and failing to build more.
There was also a shift in the country’s economic geography. As we opened up our economy to international markets from the 1970s, and shifted from manufacturing to high-value services, economic activity became increasingly concentrated in a few large cities.
Our housing stock failed to shift with it. It could have been different. We could have adjusted to our new economic reality. We could have implemented a more flexible planning system; or initiated active state intervention to expand and densify our cities. We didn’t do either.
Together, these changes made people who happened to own land or homes in prime locations, particularly in London and the south-east, very rich. And they left those seeking housing in those areas worse off, paying increasingly high rents for increasingly cramped and poor-quality homes.
How should we address this problem? There are a number of options. We can keep the distribution of the existing housing stock the same, but address affordability, and redistribute ownership. We can change the distribution of the existing stock, for example by encouraging downsizing, or by penalising empty homes. And we can build more homes.
These first two sets of reforms are much-needed. Currently, the balance is far too far in favour of landlords and the well-housed. But they only get you so far. The UK has some of the oldest, smallest and poorest-quality housing stock in the developed world. The only way to address this is to build more.
The housing crisis is massive in scale. If we want to solve it, we should make every effort we can. Instead of listening to the loudest voices shouting against new homes (typically the already well-housed), we should start listening to the nearly 70 per cent of renters who support building more homes in their local area. We should be ambitious on social housing delivery. But most importantly, we should aim high. One and a half million homes is a good start, but far from enough.
The “Build, Build, Build” mantra is no solution to a complex structural crisis
By Josh Ryan-Collins, Professor of economics at the Institute for Innovation and Public Purpose, UCL
The UK needs a lot more affordable housing. But is building 300,000 homes a year the solution? Here are three reasons why not.
First, the UK’s housing sector is not capable of building at this scale. Since the 1990s, successive governments have said they will increase supply and been unable to, averaging around 180,000 new dwellings per year. Most have blamed the planning system. But the more fundamental problem is that the UK residential construction sector is dominated by a small number of large private sector developers who lack incentives to build at a rate that would reduce house prices.
The only period in the UK’s post-war history when new homes were being constructed at the rate now targeted was the 1950-70s, when around half of new stock was provided by the public sector, unencumbered by the need to generate a financial return. Whilst the announcement in the budget of an additional £500m for the Affordable Homes Program was welcome, it will be nowhere near enough to get to these levels of housing.
Second, the evidence suggests that the expansion of the housing stock has a limited effect on housing affordability in aggregate. Estimates of the sensitivity of UK house prices to increases in housing stock consistently show that a 1 per cent increase in housing stock delivers a 1.5 to 2 per cent reduction in house prices. This contrasts with a 306 per cent increase in mean nominal English house prices since January 2000.
Third, recent research demonstrates that a strategy focussed mainly on building is incompatible with carbon emissions targets.
What’s the alternative? Much more focus on the existing stock. This is inefficiently distributed, with the number of homes underoccupied by retirees vastly exceeding households in overcrowded conditions. A major reason for this is the demand for housing’s role as an investment asset. Incentives should be given for homeowners to downsize. None of this is to say that more supply is not needed, especially in cities. But the bulk of this should be affordable and will probably need to be provided by the public sector. Prioritising the right to housing as a place to live rather than a financial asset is the key to addressing the structural crisis in the UK’s housing market.
We need clear aims and a singular vision to solve the housing crisis
By David Orr, chair of Clarion Housing Association and project leader at Homes for All
We have a national housing crisis. The indicators are clear. Nearly 1.3 million households are waiting for a social home in England. One in five children are living in overcrowded homes and 150,000 children are in temporary, insecure and often low quality homes, the greatest number ever. A generation of young professionals feel locked out of home ownership. A rapidly increasing number of older people live in insecure private rented homes. The oldest and, by most measures, poorest quality homes in Western Europe are energy inefficient, expensive to heat and contributing to global warming. The list is endless.
This isn’t a description of some problems in an otherwise functioning system. The system is broken and requires a systemic, long-term approach to fix it. Our new government has made a welcome commitment to publishing a proper long-term strategy for housing next year. I have argued for this for years and I am confident that it will be a serious attempt to address the problem. But there is an even more fundamental step which is missing. ‘Strategy’ is defined as a plan of action to achieve an overall aim. We don’t have a clear view of what the aim is.
We need a clear statement of a vision for housing. It might be that ‘everyone should be able to live in a warm, dry, energy efficient and affordable home in a functioning community’. Apparently obvious, yet not stated. Without such a vision, how can we develop the strategy, or route map, to get us there? And it needs to be legislated to ensure the best possible chance of long-term success. There is a flow here which any business would recognize – vision, strategy and governance arrangements to ensure delivery.
It is hugely heartening to have a government which clearly wants to make a difference, and which has already made a very positive start by providing more investment in social homes. This is the critical starting point. Without building many new affordable rented homes, the system will remain broken. There are many partners, including Clarion, who want to get behind the government in a spirit of national partnership in pursuit of shared objectives. There is a chance right now for Labour to do something truly transformative by articulating that vision for housing.
This article first appeared in our Spotlight Housing supplement, published on 29 November 2024.
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