As Tim Leunig pointed out last week, housing plays an important role in most people’s concept of social mobility, a point highlighted in Stephen Gilbert’s piece over the summer recounting his own personal circumstances:
Last year I was probably the only MP to be elected while still living with my parents. Of course, I’d moved out of home and, like many others, had to move back again. It’s a symptom of the fact that housing policy in the UK is in crisis. We have millions of people languishing on social housing waiting lists, first-time-buyers priced out of the market and in private rented sector tenants facing increased rents with decreased security of tenure and standards.
But what are the options when it comes to the supply of and demand for housing?
1.Increase the housing supply: free up the spare bedrooms
The Intergenerational Foundation has pointed out that more than half of the over-65s live in homes with at least two spare bedrooms and overall more than a third of the housing stock has at least two spare bedrooms. Their solution is to suggest tax incentives to encourage people to move to smaller properties so that the overall supply of bedrooms is better used. A different but complimentary approach could be to increase the financial incentives to take in lodgers.
Either way, some people may object that having worked all their lives to make a home for themselves, they should not have to move or take in a stranger, which is why politically it is only carrots (such as tax incentives) rather than sticks (such as restricting the single person Council Tax discount if there are spare bedrooms) that are likely to be a runner. (However, the proposals to let councils to reduce or remove the Council Tax discounts on second homes could reduce their number and so see more intensive use of the housing stock via this route.)
In the social housing sector, the government is taking some moves on the equivalent issue, by – for example – making home-swapping easier.
2. Embrace families living together
One of the causes of increased demand for housing is the average size of households falling as the tendency of families across generations to live together has fallen. For the family members wanting to move out and get a place of their own, it would not be a popular thing to say, but one option is for politicians to decide that having more members of families having to live together is not necessarily a bad thing – and even can bring some benefits, such as in the case of older people. Don’t expect any party to headline this policy at a press conference any time soon though.
3. Reduce population growth
The other part of increased demand is increased population. The question of whether government should or indeed can significantly influence net migration numbers is often picked over. Less talked about is the degree to which services such as social security and health should or should not encourage families to keep below a certain birth rate figure. It is worth noting though this written question with David Laws has asked:
To ask the Chancellor of the Exchequer what cost savings would accrue to the Exchequer from restricting (a) child benefit and (b) child tax credit to three children only for children born after 1 January 2012 in each year from 2012-13 to 2020-21; and if he will make a statement.
4. Build more council homes / social housing
The number of council houses has taken two huge hits in the last thirty years: first the introduction by Margaret Thatcher of right to buy, and then the collapse under Labour in the building of new council houses. In 2010, there were only two new council houses built per Parliamentary constituency on average. Ask almost any MP about the housing casework they get at their surgeries and you will see how strikingly low that number is.
The current government set out plans last autumn to build 150,000 new social homes over the next four years, which will see the first net increase in the social housing stock for thirty years. That is a very welcome break from recent history but still leaves plenty of suggestions being made about how to fund more construction, such as the IPPR’s recent suggestion that council pension funds could be encouraged to invest more in social housing developments or the possible expansion of the Green Investment Bank’s role into providing more green housing.
5. Make it easier to build new housing
Most of the debate on this centres around the planning rules, but there is another, lesser talked about option. Even in areas of high housing demand and high property prices such as large parts of London, there are patches of semi-derelict land left that way for years and where building on it would make the site considerably nicer.
A long-standing Liberal Democrat policy has been to alter the perverse incentive in the VAT system, whereby building a new home gets less taxed than renovating an existing one.
Moreover, any form of tax on land values would strongly encourage getting land back into use as quickly as possible. Incentives could also be provided via financial support to land owners who cannot afford to (re)develop land.
But this is all also partly an issue of tracing land ownership, which can be remarkably complicated. I’m many months into an attempt to track down the owner of a patch of land near me, not because I want to build on it but in order to find out who is legally responsible for the dumped rubbish on it. The principle is however the same: tracking down owners can be hard and often there is only limited incentive for anyone to put that effort in. As a result, land continues to stand unused.
The government’s New Homes Bonus goes some way towards tacking that by providing councils with a stronger financial incentive to get empty homes brought back into use and new homes to be built.
At some point this merges over into…
6. Require landowners to use, let or sell property
Around 350,000 homes in the UK have been empty for more than six months. Given the IPPR’s prediction of a housing shortfall in England of 750,000 homes by 2025, getting a realistic proportion of those homes into use would not solve all the problems but could be a very major contributor.
So far the legal power to force land to be brought back into use are fair limited, with only 60 orders having been issued by local councils under the scheme brought in by Labour to let them force empty properties back into use.
What is your views on these options: which appeal the most or the least?
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14 Comments
pretty busy today – will post on Stephen’s interesting article if and when I have time. However – the big news of today – there is no post on in the public thread, ie the letter from Stephen Haseler, Richard Grayson, Ruth Bright, Linda Jack and others backing Compass Plan B. Is anything yet up? If not, why not? I predict this will be a record breaker in LDV comment columns.
Locally they’ve got rid of the council tax discounts on empty properties, which hopefully will lead to some owners bringing them back into use. Yet some of the empty properties are in need of repair before they can be lived in.
A lot of private sector housing is beneath the Decent Homes standard whether through greedy landlords or homeowners not having the capital to do repairs.
Personally I live in a three bedroom property. Before that I lived in a two bedroom house just to myself (running a business from home), but now I share with my wife.
Elderly people have told me about the shortage of bungalows and long waiting lists (even for those with a medical need). It’s not just quantity of houses the country needs to get right it’s type too. There are also inner city areas of residential properties that have been demolished, now just a pile of mud as government regeneration schemes stall.
Activities under your 5 and 6 have the potential to make the real difference, and are areas with which policy has thus far not really engaged. Action on second and empty homes is welcome, but we have to factor in the spatial dimension – they aren’t necessarily in the areas in which people want to live. Cracking the tough nut of underoccupation raises a huge range of difficult issues about the public/private divide and what the state can and can’t seek to manipulate. I don’t expect there will be much action on this front.
There is a lot going on under your 4 – but it deploys some of the same ambiguities that Mr Shapps is prone to. Council house building was killed off not by Labour but by reforms the local authority finance system at the end of the 1990s and the Thatcher govt’s preference for new development through housing associations using mixed funding. Labour didn’t help by then refusing to reframe the definition of public borrowing in a way that would allow council building to recommence. The limited increase in social housing under Labour was *net* in part a result of demolition of poor quality properties and RTB sales. The govt claims about 150,000 new social homes (since boosted to 170,000) is *gross*. Yet they’ve announced trying to revive the RTB. So *net* increase will be less. And Mr Shapps’ recently announced “pay to stay” wheeze is likely to accelerate the RTB (indeed it may implicitly be intended to do so). Also, it is debatable whether these 170k Affordable Rent properties constitute social housing as we have conventionally understood it (the rents will in many areas be much higher; some local authorities have withheld their support because AR increases the poverty trap; some RPs are concerned about the downstream revenue risk). The AR policy is a one-off manoeuvre anyway because it relies on sweating housing association assets. It isn’t a policy that will last beyond 2015. So IPPR (and others) are right to say we have to look for other solutions – if govt isn’t willing to put any real money into social housing.
One other thing I think IPPR (and others such as BSHF) have raised – and it is something that policy has largely avoided – is the nature of the building industry in the UK. Speculative builders make a lot of their money from land price appreciation while holding it vacant (taxing land would discourage this). But there are often concerns about local monopolies on land suitable for development. There is some evidence that rates of construction can be structured to maintain firms’ cashflow and sustain prices rather than to meet local housing demands/need. The industry is relatively concentrated, and Britain is unlike many other European countries in lacking a strong self-build sector. Policy attention on the nature of the supply side could help.
Alex Marsh is dead right – the 170,000 figure is not only a rearranging of the goalposts of what constitutes ‘social housing’, it is also a one-off policy. Plus, 65,000 of that total are actually homes funded by the last Labour Government but which are being completed under the coalition. So it’s rather sneaky, if not downright duplicitous, to take credit for them.
I work in housing and planning and we spend hours each week to trying to come up with new policy solutions to the housing crisis. And while there are lots of helpful small interventions that will help – tackling under-occupancy and removing discounts for second homes for example – they fundamental problem is a lack of supply. And in the absence of the private sector building the homes for those most in housing need, the state has to step in and do it. The multiplier effect means that at least £2 of benfeit to the economy is created for every £1 spent building homes, so it would help, rather than hinder, our economic recovery to borrow to build. Sadly Nick Clegg is so entralled by George Osbourne’s economic madness that he will never advocate such a sensible policy.
London Liberal is entirely right. Small measures will only make small dents in the problem. Investment in building homes is what’s needed, not only to go some way to solving this housing crisis but as a much needed boost to the economy.Affordable housing needs to be built, there’s no question of that.
1) It is surprisingly difficult to define bedrooms. Are you allowed a study? What about a dining room? What about a dressing room? Are you allowed more than one sitting room? My LSE colleague has blogged about the difficulties here: http://spatial-economics.blogspot.com/2011/10/empty-bedrooms-and-housing-crisis.html. Remember too that downsizing yields a profit, so anyone who has not done so is unlikely to move as a result of small incentives.
2) How?
3) Let’s skip that one.
4) Social rents don’t cover land and build costs in the areas with the biggest waiting lists. SH needs subsidy, and that is costly.
5) Yes! Of course I support Community Land Auctions, but then I would.
6) We have low rates of empty homes by international standards. There are only 300k that are empty for over 6 months. The rest are empty because the sole occupant is in hospital, the house is up for sale, it is a void between lets, it is been renovated, etc. The 300k are worth investigating, although note that only 1 in 6 are in London or the SE, where housing need is greatest – http://spatial-economics.blogspot.com/2011/05/empty-homes-scandal.html
If you want people to be better housed, get more houses built. It really isn’t rocket science!
Am I the only one who objects to the idea that, after arguing that you have an urgent need for housing and/or are homeless, it’s then okay to say “I don’t want to live in that area”?
We’ve got homeless people in one city and empty homes in another? I have a solution: a bus. There’s no way it’s worse than living on the street.
7. Phase the replacement of deadweight taxes with national LVT, precepted locally, and let the market do the rest.
That also negates any need for the other 6.
How about a Bill forcing land registration within, say, 2 years of its Royal Assent? All “unclaimed” land is a windfall to the district council.
Registration is up to whoever thinks they have sufficient evidence of title; the High Court can sort out civil disputes after the event but at least the land will be on the Register.
If you can’t prove title you couldn’t sell or lease it anyway, so I can’t envisage it being “unfair” on anyone.
Land registration doesn’t have to be expensive if it’s straightforward, but it would all add up to a helpful windfall to government as well as finally getting the UK’s land registration completed.
Building more houses just will not work so long as they are considered “the best investment” so people are encouraged to hold onto them even if they don’t need them as form of savings. The only way build more houses will work is if you take the brave step to make home ownership a poor investment when it is ownership beyond your immediate need. Otherwise, building more houses is just producing more gambling chips rather than more places for people to live.
This is extremely difficult to sell politically, I agree. But the alternative has either to be fruitlessly concreting over to try and meet a “demand” that can never be fulfilled, or the hell that is the current housing situation, and I do not use that word “hell” lightly. How I wish posey people who think they are achieving something by erecting tents in the way of other people were instead to go out and SELL to ordinary voters the idea that taxes on land and other ways to stop houses becoming gambling chips are the necessary way forward? But that wouldn’t be so much fun, would it, and hmm, they’d stand to lose out on their own inheritances wouldn’t they, given that most of them, are young people with very prosperous parents.
They ask “What would Jesus do?”. Well, he was hard on the rich, but harder still on scribes and hypocrites.
The one point I note you are missing significantly is bringing empty council homes back in to use.
In my town (Ashford, Kent, population 58,000), we have 1,000 council homes out of use, through damage, that would have a significant impact on the two year waiting list for council housing.
I have Gurkha residents who are living 12 to one three bed house because the Council cannot house them, yet across from me there is a fire damaged property that has been empty for the last 4 years.
I would advise everyone to FOI their local councils to get a better idea of how many homes stand empty and openly challenge getting them back in the running.
As someone struggling to buy a family home in a city stuffed with sinngle occupants of large houses, this is an issue that has to be addressed. Supply of these houses is a real problem. They only come up when the owners die or can no longer live in them.
Meanwhile families are forced to extend inadequate houses. Getting large houses onto the market would a) reduce prices by increasing supply and b) put mobey into the economy and the exchequer.
We should stop faffing around and build more housing (and less office space). If needs be we should offer tax incentives to pension funds to invest in building housing. In the town where I live there are many empty offices, many built in the last 10 years that have never been used. Still the planners grant permission for more office space, even though it will likely sit empty. The rules around planning have to be reformed to stop the hogging of development sites for long periods. Even in London a site large enough for the Olympics was found, and huge sites like Battersea Power Station stay undeveloped for years and years
We should have more funding for housing developments, there are too many housing developments that are abandoned midway through development due to lack of funding from the government.