It doesn’t have to be this way on housing

by Andy Hull

England is a rich country that is failing to properly house its people.

The root of the problem is that demand for housing massively outstrips supply: we are now building around 100,000 new homes a year – the lowest level for a century – when we need to be building at least twice that number. If we continue at this rate, by 2025 unmet housing demand will be greater than the housing capacity of Birmingham, Liverpool and Newcastle combined.

As a result, home ownership has become an unaffordable aspiration for too many, with house prices having tripled in a decade, while wages were left to stagnate. Unless first-time buyers have access to the ‘bank of mum and dad’, raising the deposit required to buy a home is now a real barrier, compounding inter-generational inequality. Meanwhile, social housing – a scarce resource rationed on the basis solely of need – is being residualised to the point that it houses only the poorest and most vulnerable. So, the ‘squeezed middle’, including a young ‘generation rent’, is being funnelled into a poorly regulated private rented sector that remains a tenure of resort rather than choice.

This has two serious consequences. First, too few people enjoy a secure, decent and affordable home. Second, housing threatens to segregate our society.

It doesn’t have to be this way. In a new IPPR report, Together at Home, we offer an alternative strategy for housing in England, arguing that, done right, housing can be a force for integration in our society.

The security and control that homeownership brings make people more likely to get to know their neighbours and invest in their communities. But opening up sustainable homeownership to a wider range of people can’t happen unless we first build many more new homes. In order to do that, we need to find new sources of finance, reform our sclerotic planning system and shake up our dysfunctional development industry, while maintaining sensible credit control. Our policy prescription covers all these bases.

Not everyone will want, or be able, to own their own home. So we do need a better rental offer too. That means a better balance between the private rented sector, which needs to be more secure, and the social rented sector, which needs to be more flexible. We argue for new family tenancies offering five years security in the private rented sector and fixed-term social tenancies as the norm. We also suggest new ‘something for something’ deals between local authorities and local landlords, codified in mandatory licensing regimes.

There are huge regional variations between housing markets that make a one-size-fits-all approach ineffective. And we will never find a national welfare solution to a local housing problem. So, we should dissolve the division between spending on housing benefits and spending on new homes and then devolve this money, power and responsibility from Whitehall to local authorities through Affordable Housing Grants. Through this radical act of decentralisation, as opposed to the coalition’s half-hearted localism, we can start to shift the balance back away from public spending on subsidising rents towards investing in bricks and mortar.

Over four years we currently spend £95 billion on housing benefit and less than £5 billion on house building. England needs more homes. But there is no spare cash to pay for them. That means we need to do more with the money we’ve got.

Andy Hull is a Senior Research Fellow at IPPR


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7 Responses to “It doesn’t have to be this way on housing”

  1. Nick says:

    when we need to be building at least twice that number

    ===========

    Or curtailing the demand.

    e.g Doing something about the problem created by Gordon Brown, according to Ed.

    Namely unfettered migration.

    Reduce the number of migrants, and hey presto, housing problem solved. Lots of jobs available for the unemployed, benefits bill down, …

    Now all you have to do is come up with some criteria about the migrants the UK needs.

    A simple test applies. Does each migrant pay more than 11K a year in tax? (40 grand per migrants). The 11K is government spending divided by the number of people in the UK.

  2. Anon E Mouse says:

    As long as immigration continues to run at 250K extra people a year we will never do it…

  3. Tris says:

    Perhaps if houses didn’t cost on average somewhere around 6 times Mr Tout le Monde’s salary, before tax, people would be able to attempt to buy them; maybe if the banks had taken the billions that had been released in quantitative easing and loaned them out to people to buy houses, instead of shoring up their balance sheets, there would be less of a problem; maybe if the government had over the years built affordable houses to rent, thinking about people who couldn’t afford to hop on to the idiotic race for the skies of the house inflation ladder, then poor people would have somewhere to live.

    Where there is no vision; the people perish.

    Where the politicians live in a parallel universe to ordinary people, there is no vision.

    We are badly served by Westminster.

  4. ad says:

    If we have record high house prices, and record low house building, money is not the problem. Planning restrictions are the problem.

  5. uglyfatbloke says:

    Yes, property is hugely exp[ensive cmpared to anytime in the past, but which government would be prepared tolet house prioces drop to a realistic level and thereby damage the perceived wealth of millions of voters. Blair, Brown and Darling liked the boom in property prices..as did Thatcher and before her WIlsona dn Callaghan. It made people think that they had an investment that was rising in value. Vameron and Miliband would lie to see property prices rise for the same reason.
    Ad is not wrong though. Planning departments are just so hard to deal with. Lots of people who need a bigger home would be better off building an exension that moving house, but planning departments make that very difficult and expensive.
    It’s not just in England either. The Welsh and Scottish governments have tried (a litle bit) to reduce unreasonable restictions and accelerate the processes, but have faced massive obstruction form local authorities.
    Additionally, no party is willing to do anything to reduce the buying process to a reasonable price…Obviously that’s not because so many MPs are solicitors….

  6. This is a really good blog and we have booked marked your page keep up the good work

  7. Same old labour some one elses fault if they get into power there will be no changes made thye will blame cameron and clegg for the first 3 years

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