Do we face a housing crisis in Britain? It might not seem like it if you bought your house 20 years ago, but for everybody renting, or trying to buy, it’s out of control.
Consider these astonishing facts.
Britain spends more on housing benefits than any other rich country.
New houses in Britain are smaller than every other western European country. Dutch people, who live in one of the world’s most densely populated countries, live in houses 21% bigger than Brits.
Britain’s homes are cold and damp and expensive to heat too. Recent studies show that we have among the worst insulated in Europe too.
And while London looks like the richest part of Britain, it has the second highest poverty rate when you account for housing costs. Even if you are on the typical London full time salary of £33,000, you will, on average, spend more than half of your post tax income on rent.
All of these reflect decades where we haven’t built enough homes.
Since 1990 Britain’s population has increased by 10 million people. Our housebuilding hasn’t kept up. We have so little spare capacity that Britain has fewer empty homes than Finland.
New evidence shows that all housebuilding, even for the richest people, brings down prices for everybody, as it sets off a chain of moves through sequentially cheaper housing. For instance in Auckland, New Zealand, when they allowed more housebuilding, rents fell 25% relative to Wellington, where this didn’t happen.
We have two choices on housing.
We can pretend that housebuilding is just a local issue – and up to the local council. As Lib Dems this has a powerful appeal.
The problem with this is that people move between councils. House prices and rents ripple across the country as areas grow or if they refuse to build housing.
London’s boom in the last 30 years has made it unaffordable for many people already.
If you can’t afford to rent in London, you will move to somewhere more affordable in the Home Counties. Hundreds of thousands of people have done this in recent years.
And conversely, if London builds a lot of houses it will simply suck in more people from other areas, meaning that prices stay high.
Housing simply can’t be fixed by a single council alone.
The only possible answer to this is a national housing target.
A national housing target means that we can build enough housing for our increasing population, as well as tackling the problems that we already face.
Yet our housing policy paper, going to Conference next week, currently calls for us to abandon a national target. This will only mean less housebuilding. Nobody ever abandoned a target because they wanted to do more of something.
If we’re serious about tackling climate change, reducing poverty and increasing opportunities for Britons, then we have to reinstate this target at Conference next week.
* Rob Blackie is a candidate for the 2024 London Assembly elections. A former aid worker, he advises charities and corporates on strategy.
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24 Comments
You make comparison with Finland. Finland’s population has risen from about 3.1M to around 5.7M over the past 100 years – less than doubled. Meanwhile the population of England and Wales has risen from 18.3M to just under 60M – more than a threefold increase. Therefore you can not consider a national housing target without also having some regard to a national net immigration target. Without this, demand for housing will always exceed available supply.
See thread https://www.libdemvoice.org/betrayal-of-a-generation-73806.html#comment-584438
I had some support in that for my comment (14/9 10:42:-
‘“There are issues with the way the target is allocated geographically”
Indeed. Such as the presence/absence of services (public transport, schools, shops, communit facilities etc.), risk of flooding (insurance issue), local housing needs.
The target on its own is far too simplistic. If it allows big developers to build mostly executive houses wherever they want, for maximum profit, irrespective of local needs and without the necessary public services – why should anyone be surprised if/when a local community affected rises up in protest about such developments?’
It’s not just population growth that has caused the problem but a far greater rise in the number of households. Elderly people living longer, marriage and children happening later, rise in single parent families, has all meant we need even more houses than population growth alone would mean.
And nonconformistradical – the answer to problems with the allocation of a national target is not to remove the target, but to fix the allocation issues!
@Sandy Smith I do not believe that the population of England and Wales was 18 million 100 years ago – and some quick Googling says 38 million in 1921. However I think you are correct that you do need to think about immigration when looking at housing targets because high immigration levels do put more pressure on housing – something the LibDems sadly seem to have a bit of a blind spot about.
I don’t think there’s anything wrong in principle with building executive homes: If someone buys an executive home to move into, that still frees up another home (wherever they moved from) for someone else to live in. And let’s face it, developers can only make a profit if someone wants to buy the homes they are building – so they are not going to build houses that noone wants! The only issue may be if people are buying second homes or homes that are left empty – but that’s very hard to regulate against.
“the answer to problems with the allocation of a national target is not to remove the target, but to fix the allocation issues!”
Imposed from the centre? I don’t think so. If local communities are not involved in the decision process we’ll just get more and more executive houses built without regard for local housing needs.
Local housing and associated services needs should be at the forefront of the decision process.
@Simon R
I stand corrected. Thanks for posting. I was trying to point out that setting national targets sounds very much like state planning model and if that is they way we must go, then we need to state plan related issues…net immigration being one of the more important.
We are but a few days away from our Autumn Conference and as I feared back in August the discussion around whether or not we have a national target for housebuilding is going to dominate the debate on Monday 25th September.
Such a pity, as there is so much in PP 155 that needs to get out to the voters that will set us apart from the others on the subject of the housing crisis to give our young people in particular hope.
As a Party we believe in decisions being made as close as possible as those most affected. That should not preclude a regional or national view.
A recent survey said that the backlog of homes missing from the UK housing market stands in the region of 4 million. With figures of this magnitude it’s difficult to picture where to start. Setting national annual targets would be a sensible start.
By adopting this approach, it allows us to decide what type of homes need to be built which is what PP155 does by setting a national target for social housing.
My point is you can’t have the one without the other. If we don’t accept this very early on in the debate, we will lose a great opportunity to get all the really good stuff in PP155 across to the voters.
A good piece. National targets are not a magic bullet – there are legitimate questions about how that target influences local development plans, and indeed how local areas are incentivised to take their share – but they are indispensible. What sort of political party would, in the midst of an increasingly desperate housing shortage, decide to dispense with a position on how many homes we need?! Not a sensible one, and not one that would (or should) appeal to the millions of younger people whose futures are being blighted by undersupply of homes. Good to see some high-profile support for national targets, and some push back against entrenched nimbyism in the party.
Setting housebuilding targets that are not within the government’s power to deliver won’t produce affordable housing.Building council housing and subsidising rents can as the evidence from Austria shows Affordable housing – could we learn something from Vienna?
The housing paper highlights reform of the 1961 Land Compensation as a key element in enabling the state to deliver council housing. This needs to be buttressed with the implementation of Land Value Tax to keep Land costs under control as Austria is finding.
“Vienna does not impose rent controls on newly built (post-1950s) private rentals in order not to disincentivise the construction of new housing stock. Legislators recognise the need for more construction across all housing sectors and they do not need to impose rent controls to keep costs low because the private sector cannot charge overly excessive amounts as long as the much-used social housing sector exists to provide an attractive alternative.
However, as land costs rise, there is a concern that the city is not going to be able to construct enough social housing to satisfy demand in the future. This might lead to a negative spiral in which private rents go up, land prices increase, both of which make it more difficult for the municipality to acquire land for the construction of new social housing”.
A housing target is definitely needed as is a sensible method of distributing them in areas that need them the most, including freeing up significant amounts of greenbelt land in areas where house prices are highest to help with the supply.
I understand people saying it’s important that local voices are heard but there needs to be acknowledgement that future occupiers of homes have no say or power in the current system .
Also, for a party that is supposed to stand against vested interests we consistently and vehemently defend the biggest vested interest of all, property ownership.
A national target on its own is not a policy! Yes this is a national problem and yes it is all about distribution – problem sharing between regions and local authorities. But unless we’ve ceased to believe in localism and become socialists dictating from above, we need to understand the drivers of the land and housing markets and fix the glaring market failures.
When you look at the gross inequities in council tax and the power imbalance between landowners and major homebuilders who can corner up 90% of the available land, you must surely see than tax reform and land market reform are the key.
We have said for 120 years we would tax land values and we reaffirmed this 10 years ago. Now we must explain how: bring it from aspirational to practical politics for the 21st century.
Don’t believe a national target is the holy grail. It will just become a stick for the Barratts and the Dukes of Westminster to beat our councils with. And perhaps a one-election vote winner for the victims of this: our children and grandchildren.
Follow the lead that the policy working group has given but also call for more on LVT and scrapping council tax.
A couple of comments on here about restricting immigration as a way of helping to sort the demand for housing. Are they also going to suggest we limit family sizes & stop treating illnesses of old age? A lot of the increased need for housing is down to people like me, living well beyond our three score years & 10. Only 1 of my grand-parents and only my mother were still alive at my current age. And I’m living on my own (apart from the cat) in a 2-bed bungalow designed for a small family. But we need working age immigrants we fill the vacancies in our health & social care areas amongst others. And immigration brings in people who are resourceful & with enterprise which will benefit this country.
I am somewhat amazed that nobody is calling out one of the key problems in this sector which is the corrupt relationship between the major housebuilders and the Tory party!
We will continue to get poor quality homes built in the wrong places that fail to meet the demand for green affordable homes until this scandal is called out for what it is.
Setting a house building target won’t solve any of the problems the author lists and will make some of the problems worse. I suggest the LibDems set a (initial) target of returning the UK population to its mid 1990s level and plan housing etc. accordingly. This would mean the targets will naturally align with the UKs climate change obligations.
Tough decisions will need to be made before 2030, unfortunately, it is going to be a difficult sale, so we can expect lots of election talk about dreams, followed by major U-turns once in office and reality h makes its presence felt.
As I’m sure Rob knows, a national target doesn’t mean a single extra house being built. Unless construction skills shortages and deep-rooted issues about quality and sustainability are addressed, there will be little change.
Which is not to say that a national target shouldn’t be set – it should – but for reasons Tony Vickers in particular has set out, unless fundamental economic issues are tackled, the debate and policy will be ineffective.
Tony Vickers writes “When you look at the gross inequities in council tax and the power imbalance between landowners and major homebuilders who can corner up 90% of the available land, you must surely see than tax reform and land market reform are the key”.
The SNP in Scotland have ducked tax and land market reform LibDem Willie Rennie to hold Holyrood debate on proposed council tax rises
Willie Rennie said the Scottish Government’s initial plans to abolish council tax with a fairer system has been abandoned in favour of increases.
He said: “It’s 16 years since the SNP solemnly promised in their manifesto to abolish and replace council tax.
“But after 16 years of consultations, working groups, of cross-party talks, think tanks and rhetoric, the SNP government have transformed from reformers to defenders of the unfair, discredited council tax.
“Now they are hiking it with the biggest rises ever, in the middle of a cost-of-living crisis.
“These tax hikes must be scrapped. The Government should instead back Scottish Liberal Democrat plans that would deliver the power surge which councils need and end the underfunding of local government once and for all.”
I have visited Pemberly the new build by Anchor Housing. With it’s very pale carpets for wheelchair users and I felt not large enough doorways. Laminated floors were one good invention for black wheels.
The design looks more like holiday let’s than homes. Very close together.
I have had a problem with a neighbour inventing issues like me knocking her down in my wheelchair and other fabricated non truths. Tired of this situation and how impossible it is to resolve.
A colleague of mine had an elderly neighbour who smashed windows in several bungalows.
There needs to be more realistic planning and exceptance of the true face of lack of social care where needed.
Whilst it might seem odd to post an article from Labour List here, it exactly reflects what I heard last year in a piece of work where I spoke to LibDem councils in four different councils. If we want accommodation built that reflects actual needs, affordable, closer to peoples’ work, then relaxing planning and leaving it to the market it the last thing that will work. The ‘market’ just wants to build executive homes on green field sites or luxury apartment blocks in cities. They have the power and money to sit and wait or push councils into submission. And they have the Tories in their pocket.
We need much more power and funding to enable local planning to meet local needs. That especially means affordable decent housing in towns and cities where most of the work is. Built to a decent standard and not the low grade building preferred by developers that makes us the worst in Europe.
That said it’s a complex topic and there is no one simple solution. Changes to council tax, buy to let and second homes to name a couple of other factors also need addressing. But when it comes to building on greenfield, green belt locations, far from either work or transport, the Nimbies have a valid point.
https://labourlist.org/2023/09/labour-must-not-blame-nimbys-for-a-broken-tory-planning-system/
National Housing Targets are needed – AND tax reform as mentioned by Tony Vickers. The Policy Paper actually contains a significant fudge on Housing Targets. It says that local plans …. ‘would be assessed by the Planning Inspectorate, an independent body that would ensure the evidence and justification for housing targets is appropriate for the local area’ . However ‘independent’ the Planning Inspectorate is, it will need a National Framework to steer its decisions – and without national targets and some allocation method decisions will be arbitrary and non-democratic. To pretend such a process is ‘independent’ is disingenuous.
I think we are all familiar with politicians who *say* they want homes to be more affordable, and at the same time we know they don’t really mean it. If they did they’d be doing something about it.
Nimbys of course provide a good excuse as do developers and landowners who might want to hang on a bit longer to get a better price. There are ways to tackle this though. Ultimately, if the State wants land it can simply compulsory purchase it and do whatever it likes afterwards.
The reality, though, is that politicians can’t allow more affordability. This will mean lower prices. The economy has been floated on a sea of private debt for the last 40 years or so. Lower prices will mean the collateral for that debt will be insufficient. We saw what happened in the USA during the 2008 GFC when a collapse in property prices removed the collateral for all sorts of dodgy credit created in the banking system. Supposedly the banking system has been made more resilient since then but I doubt if anyone is going to be that keen to test it out.
Possibly we’ll see the same thing happening again if the BoE does keep raising interest rates and so causing a house price crash. However it will all be put into a very sharp reversal if the wider economy threatens to crash too. We’ll probably see much lower interest rates in the next couple of years but this will be to re-inflate house prices once again.
Seems to me we need social housing. Many people don’t want to look after a house, or don’t know how, or can’t afford it. But they still need housing. It would be entirely reasonable for councils to compulsorily purchase suitable agricultural value land, grant themselves planning permission and build social housing. The rent would fund maintenance and the cost of building; the community gets the whole of the planning gain, as it should. Note that in Auckland NZ the re-zoning for higher density led to a very significant increase in housing units available. See
https://www.afr.com/policy/economy/how-auckland-took-on-the-nimbys-and-won-20230522-p5da9o
Housing consists of land and buildings i.e. a combination of an investment and consumption good. Buildings like most physical assets depreciate and are consumed over time. losing value as they do so. Land does not. However, unlike other financial investments or physical assets, you cannot produce more land. Development land in the places people want to live is scarce, particularly in major cities. To accommodate demand for housing in places that people want to live, this scarce resource has to be equitably shared. By taxing land, those that occupy the most in-demand and therefore valuable land, would contribute a higher proportion of taxes to finance the provision of public services and rental support than those who occupy lower value land.
House prices are driven by two main factors – demand for housing relative to supply in any given location and the availability of credit for house purchases.
As the cost of mortgages increases the availability of borrowers that can service mortgage debt at current inflated prices begins to fall. As the level of demand falls, house prices start to fall to adjust to the lower number of potential buyers in the market.
As with other financial investments their fall in value does not have a direct effect on the income of a homeowner, it is a contraction of accumulated wealth rather than income. Falling house prices do, however, have a direct effect on the availability of credit as lenders tighten their conditions creating a credit squeeze. The credit squeeze means that even at lower prices there are fewer potential buyers that can qualify for a mortgage and stagnation sets in.
Private debt is back to the levels last seen just prior to the financial crisis. Back then interest rates were rapidly lowered to mitigate a housing market crash and prices reflated over the ensuing 5 years. That solution will not work this time with persistent inflation far above the 2% target rate. We will likely need to see debt restructuring coupled with rezoning rather than reflating of the housing market to unsustainable levels this time around.