The Government’s new white paper on housing, entitled ‘fixing our broken housing market’, is not going to fix anything except the share prices of the large private development firms. As Simon Jenkins writes in The Guardian: ‘it is a stew of fake news, old clichés and pretend solutions’. It is long on consultation and very short on the radical measures needed to solve the UK’s housing crisis. It dodges all the big issues on reforming housing taxation, including the council tax, regulating rents and tenures, and on public responsibilities for housing provision. Even the very small measures it does propose come hedged with qualifications and get-out clauses.
As our research at the Llakes Centre for Learning and Life Chances shows, home ownership amongst 18-34s is only half of what it was 25 years ago, and the decline has affected all social groups. But the Government’s proposals won’t create the genuinely affordable housing to reverse this trend for young people.
The White Paper’s diagnosis of Britain’s housing crisis is simplistic in the extreme. It claims that the problem is ‘simply’ that we do not build enough homes, because of excessive planning regulation and lack of competition in the building sector. It is certainly the case that we have not been building enough homes, but the wider truth is not so simple. The Office for National Statistics (ONS) calculated that there were roughly 27.5 million dwellings (excluding long-term vacant houses) and 26.5 million households in 2013. We have more housing units and more rooms per person than ever, and, on the government’s own figures, there are currently some 600,000 homes left vacant across the country. The trouble is that much of the housing is in the wrong places and the wrong the people are buying it up, including foreign investment buyers and buy-to-let landlords. Our real problem is in the supply of genuinely affordable housing, particularly for young people and first-time buyers.
The Government’s solution is to provide more incentives for a wider range of developers to build, through a £3bn fund for small building firms, the relaxation of planning regulations, and additional pressures on local authorities and neighbourhoods to draw up ambitious plans for development. But private developers will never build enough homes, and certainly not enough homes of the right kind. It is in their interests to hoard land, keep supply restricted and prices high.
The Government is promising 250,000 new ‘affordable’ homes in this Parliament but it wont deliver on this number and they wont be affordable to most people anyway. The measures to increase the supply are derisory and, in fact, weaker even than what we had before. The requirement used to be that 20% of the homes in new developments had to be affordable homes. The White Paper’s provisions for ‘Starter Homes’ now includes just a ‘policy expectation that housing sites deliver a minimum of 10% affordable housing.’ Unacknowledged in the White Paper is that the Government has recently diluted its definition of ‘affordable.’ This now means at 80% of market value which equates on average to homes priced at 6.4 times average incomes.
The ‘hoped for’ 10 percent provision is not going to help many young people or even those on average incomes. The White paper says Starter Homes ‘should be available to households which need them most, with incomes of less than £80,000 per annum.’ Does the Government really think the most needy include households in the top fifth of incomes?
The only way Britain is going to build enough affordable homes to rent or buy is to allow Local Authorities to make a bigger contribution. In the years between 1950 and 1980 over 300 000 homes were being built each year, almost half of them in the late 1960s by local councils. After the Right to Buy policies introduced in the 1980s, and the limits then placed on councils replacing the homes they sold, they have built fewer and fewer homes – and housing associations and private developers have failed to fill the gap. In 2012 less than 100,000 homes were built with only a third for social housing. Local councils built just 3,000 homes.
New home building has picked up a little since then, and the White Paper says the Government is encouraging councils to build. But a cap on local authority borrowing for house building remains, and councils are still not allowed to use the receipts from the high quality homes they are obliged to sell for building new homes. It is only the Government’s ideological fixation on market solutions, and it’s refusal to acknowledge the public responsibility of central and local government, which holds back the solution to Britain’s housing crisis.
Government proposals for longer three-year private tenancies are, again, a wish in the right direction. But they would only apply to new-build rentals. There are no proposals at all on controlling rental prices, which are spiralling out of control in most larger cities, and currently cost the average tenant half their gross household income.
Proposals to encourage older people to downsize are equally half-baked. For example, those in large houses with unused rooms are to be encouraged to downsize, with Government committing a further £400m for 8,000 new sheltered housing units. The principle is laudable but the scale of the intervention pitiful. A better way to encourage older people to downsize would be to scrap stamp duty for the elderly and to raise council tax rates for larger homes to a level that reflected the actual value of the properties.
But all this is way off-limits for a Government that only believes in market solutions and which consistently privileges older home-owners over young renters and would-be buyers.
A longer version of this post appears on the Llakes website here
Andy Green’s new book, to be published by Palgrave in Summer 2017, is entitled: The Crisis for Young People: Generational Inequalities in Education, Work, Housing and Welfare
Photo by Joe Wolf via Flickr Creative Commons https://creativecommons.org/licenses/by-nd/2.0/legalcode