Housing: six things that could be done

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.

  • LondonLiberal 1st Nov '11 - 10:46am

    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.

  • 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!

  • Andrew Suffield 1st Nov '11 - 7:37pm

    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.

    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.

  • Andrew Duffield 1st Nov '11 - 8:03pm

    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.

  • Matthew Huntbach 2nd Nov '11 - 3:08pm

    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.

  • 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

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