Fixing our Broken Housing Market: an admission of crisis but no effective solutions

3rd March 2017

Well, at least the government admits the housing market is broken. The problem is that the government’s solutions are that the market should be enabled to fix itself, in the belief that the housing crisis in England will be solved by market forces.

This ideology produced, under Thatcher, right to buy for council homes (depleting council stock from 5 million homes in 1980 to 1.6 million today) and an end to security of tenure and controlled rents in the private rented sector. The market would provide.

We’re living with the results today. 1.24 million households (around 3 – 4 million people) are waiting for social housing. Private rents are at unaffordable levels: Shelter says that half of private renters have struggled to pay rent. Houses are no longer bought to provide a home, but also as an investment (earning the owner £22 per hour during the working week). Buying a house is increasingly unaffordable, particularly for first time buyers. The numbers of people who apply to councils as homeless has increased by more than 50% since 2010. And the single most common cause of homelessness is where a private renter has been evicted by his or her landlord for no specified reason (an end to security of tenure means that landlords don’t need to give reasons for possession). Over 4,000 people in England sleep rough on any given night. Shelter estimated that 124,000 children spent their Christmas in temporary accommodation: in overcrowded, insecure places. This is indeed “broken” or – to be frank – a housing crisis.

The government’s solution? We saw it first in the Housing & Planning Act 2016, not yet brought into force because it is possible that the government is having second thoughts. And we see it again with the Housing White Paper. The government believes that the market will sort out the housing crisis, with a bit of help.

The White Paper’s big fix is to change the planning process. Now, I’m not a planning lawyer. I don’t get the technicalities. But the main point is that this is all about developers being able to get planning permission quicker, and with fewer conditions. The government wants to please everyone (or at least potential Tory voters) by promising to protect the green belt whilst speeding up the process for planning applications. Developers routinely blame the planning process for delays in delivering new house building. That ignores the practice of “land banking”: developers obtaining planning permission and then holding onto the land in the hope that house prices will increase.

Everyone agrees that at least 225,000 – 275,000 new homes need to be built each year to tackle the housing crisis. Is that figure achievable if you rely on private developers? And will those homes be affordable? The government believes that increased supply will tackle house price inflation.  So far, since the early 1990s, that’s turned out not to be true.

What about renting? The White Paper proposes new “family friendly” tenancies in the private rented sector of three years, rather than the current norm of six months or one year. Incidentally, this was Labour Party policy in its 2015 general election manifesto. But the proposal is limited to new build homes. That’s shocking. If it’s good enough for new build, surely it’s good enough for new tenancies granted in older properties? The government has taken the Labour Party’s relatively modest proposal from 2015, and seriously diminished it.

And what about social housing? Which so many people used to regard as a realistic option if they couldn’t afford to buy. Housing association stock will be depleted by “voluntary” right to buy (“voluntary” because housing associations choose to sign up to the scheme). Council housing stock is going to be depleted by the mandatory obligation in the Housing and Planning Act to sell so-called “higher-value” empty council homes (“higher value” is as yet unspecified). The Housing & Planning Act requires councils only to offer fixed-term tenancies – between 2 – 10 years – rather than tenancies for life (subject to good behaviour) so that you can call your council house a “home”. Not only is a secure home for life a good thing for the tenant; it means people are more likely to take care of their properties, look after their neighbours etc.

The government will put regulation of housing associations on a more independent footing. And may, or may not, encourage local authorities to use innovative financial packages to build. But the government is not prepared to invest in a large-scale council (or even housing association) building programme.

Jeremy Corbyn, during his leadership campaign in 2016, promised “We will build a million new homes in five years, with at least half a million council homes, through our public investment strategy. We will end insecurity for private renters by introducing rent controls, secure tenancies and a charter of private tenants’ rights, and increase access to affordable home ownership.”. Ironically, the scale of the housing crisis is such that a promise in 2016 to build a million homes in five years – 200,000 each year – now, in 2017, looks conservative. He will have to revisit the numbers. But the key difference between the Tory government and the Labour Party is that Labour knows that housing – and the security of an affordable, safe and decent roof over your head – is too valuable to be left to arbitrary markets. The public sector – through councils and housing associations –can deliver homes at a genuinely affordable rent and with an expectation that this will be your home for life.