Housing

Housing

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Everyone in the UK should be able to live in affordable and high-quality housing (whether it is privately owned, privately rented, or in the social sector), with a market that operates transparently and where prices, quality and security of tenure are appropriately regulated.

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Fairness and housing

Everyone has a right to affordable, secure and decent housing. Living in poor quality housing exacerbates other inequalities and can lead to a cycle of deprivation and missed opportunities. The state should guarantee that everyone can exercise this right, by providing sufficient amounts of social housing and by regulating the private sector rental market and managing house price affordability.

Homes as commodities

However, the housing market in the UK is under-regulated and over-commoditised. Successive governments have prioritised home ownership at the expense of good quality council and social housing and have failed to regulate private rented accommodation. Housing has become an asset class and a means of accumulating wealth, resulting in rampant speculation and price appreciation to the point where few people can afford to buy a home without access to inherited wealth or mortgage debt, and those who own property have seen their own wealth increase enormously over recent decades, often ‘earning’ more from house price appreciation than from work while others have no such opportunity to watch their capital appreciate.

Land monopoly is not the only monopoly, but it is by far the greatest of monopolies - it is a perpetual monopoly, and it is the mother of all other forms of monopoly. Unearned increments in land are not the only form of unearned or undeserved profit, but they are the principal form of unearned increment, and they are derived from processes which are not merely not beneficial, but positively detrimental to the general public.

Winston Churchill, House of Commons, May 1909

A lack of social housing

For generations, low-cost social housing met the needs of millions of people in Britain, providing affordable, secure and decent accommodation that was often unavailable in the private sector. But the amount of social housing in Britain has shrunk significantly in recent decades and continues to decline today, meaning that it is tightly rationed and cannot play the same role. Councils lack the powers or funding to increase the supply of social housing to the levels needed.

The private rented sector

In the absence of sufficient social housing, and with house prices at unaffordable levels, millions of people have no option but to turn to private rented housing. Here, however, increasing demand for a limited supply of housing stock has pushed rents up and quality down, condemning millions of people to live in insecure, inadequate and unaffordable accommodation, and forcing governments to spend billions every year to pay rent to private landlords through housing benefits.

Learning from other countries

Few countries share our obsession with home ownership (and our resulting stigmatisation of both renting and social housing). For example, in Denmark, many people live in social housing, private rented accommodation, or ‘co-operative housing’ (a half-way house between renting and owning).

What needs to change

While there is a debate about the type of housing most needed in Britain, there is a broad consensus that we need four million more homes urgently, and we estimate that three million of these new homes need to be provided at social rents, given the huge decrease in the amount of social housing.

The state should provide social housing on a much larger scale and make it available on the basis of need to a larger proportion of the population, while those who prefer to rent or buy in the private sector can do so. Providing more social housing will reduce demand for private rented accommodation, thus decreasing rents, which will reduce the amount of public spending needed to fund housing benefits to pay rent to private landlords.

The state should also regulate the private sector more effectively. For example, it should prevent developers from land banking to artificially inflate prices, and improve the quality of private rented accommodation. It should finally ban no-fault evictions and limit rent increases for existing tenancies (linked to RPI inflation).

We are not suggesting that social housing should be allowed to destroy the private sector rented market, and we recognise that the state will not have the resources to build social housing for everyone.

To provide the necessary funding to build large amounts of social housing, we should:

  • Lift council borrowing caps for residential building immediately
  • Scrap ‘help to buy' and other subsidised home ownership schemes, which cost the taxpayer money, push up prices and do nothing for the less well off in society
  • Enable local authorities to acquire land for development at the value determined by existing planning consent and to gain the bulk of the uplift in value derived from changes to those consents, repealing the 1961 Land Compensation Act
  • Sell planning permission to developers rather than giving it away for free
  • Tax unused planned consents or force developers to build, develop or sell within a set number of years

We should also reform council tax with a tax proportional to the property value, regularly updated valuations and the capitalisation of the tax for elderly residents, with the balance paid out of the estate (although this is likely to be revenue neutral).

And we should prevent offshore trusts and companies from buying property or land unless the beneficial owners are disclosed, the funds are proven to have come from legitimate sources and all taxes due have been paid in full.

Unless we act now, we face a future in which a generation of young families will be trapped renting privately for their whole lives, where more and more people will grow old in private rentals, where billions more in welfare costs will be paid to private landlords – and hundreds of thousands more people will be forced into homelessness.

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Housing and fairness

Housing is a fundamental human right. As such, we believe that the state should provide a minimum standard of housing (in terms of quality, affordability and security of tenure) to everyone, while allowing those with more resources to rent or buy in the private sector. While we are not advocating for equal outcomes, we need more than simply equal opportunities to secure decent housing. Everyone should be guaranteed housing that is equal to or better than an acceptable baseline level.

Access to housing that is either provided or funded by the state should be on the basis of need. In an ideal situation, while a fair process would of course be necessary, there should not be a need for positive action to deliver genuine equality of opportunity, since a properly functioning and resourced social housing sector would deliver housing for everyone who requires it. However, in practice some kind of priority criteria would need to be applied to ensure that those in greatest need were able to access social housing ahead of others, as supply and demand are rarely likely to be perfectly matched.

Poor housing is a key driver of inequality of opportunity. It has proven negative impacts on mental and physical health, educational attainment, job prospects and a wide range of other social and economic outcomes. Housing inequality is both a cause and a symptom of a range of broader socio-economic inequalities.

Housing inequalities never exist in isolation but are always connected to other issues. Every aspect of inequality has a housing dimension, with causal chains running in both directions so that they are mutually reinforcing. For example, people living in poor quality housing suffer from worse mental and physical health, which reduces their chances of escaping poverty. The flip side is that investing in housing is investing in society and can rapidly create positive feedback loops.

Beveridge called it the problem of the rent – the cost of housing is the main cost in most people's lives, and you can't reduce it unlike some other bills, so as soon as it is unaffordable it has a knock-on effect on everything else. The cost of housing is a key driver of poverty. In London, poverty rates almost double when housing costs are accounted for (increasing the poverty rate from 16% to 28%).

Housing is a ‘gateway right’: the human right to adequate housing is the foundation on which a set of other rights depend. If you don’t have a fixed address, it is hard to get a job, receive welfare benefits and so on.

Security of tenure and lack of affordability are inter-related problems. People who can't sustain a stable home for financial or other reasons have to make unwanted moves between places that they would rather not live in. The COVID pandemic has exacerbated the situation as affluent people leave the cities for the suburbs or the countryside. Infection and death rates from COVID have been several times higher than average in poor areas characterised by overcrowding and poor-quality housing. The quality of housing and of the broader environment in which they grow up has a proven effect on children’s cognitive and physical development and on their long-term mental health.

Learning from other countries

In Denmark many people live in social housing, which is seen as a public right rather than as part of the welfare system. A large proportion of Danes are owner-occupiers or live in highly regulated private rented accommodation, while many others live in ‘co-operative housing’ (a half-way house between renting and owning, in which people buy a share in the co-op and are entitled to live in one of the apartments in the development, which is a cornerstone of affordable housing and a well-established route into home ownership for the younger generation). However, social housing makes up around 20% of Danish housing stock and is provided by at cost prices by around 700 not-for-profit housing associations, who together own around 8,000 housing estates. Waiting lists are open to everyone aged 15 or over, and most vacant units are assigned on the basis of time on the waiting list and household size, although priority can also be given to specific groups based on locally defined criteria such as families with children, disabled people, refugees, the elderly, students, divorced people, and people who need to move closer to their work. In deprived areas with many unemployed inhabitants, priority can be given to ‘role models’ such as people with a job or students.

Regulation of the private rented sector in the UK is much lighter than in many other countries. For example, in the UK, there is no regulation of rent levels, and rent increases are only regulated for rolling tenancies with no fixed end date. By contrast, in Germany, regulation of extortion in the criminal code limits the free setting of rent levels and rent caps apply in certain areas, so that rent cannot exceed the reference level by more than 10%. In Spain, rent increases cannot exceed the rise in the general price index for a five-year period.

However, the general trend in many European countries is towards more neoliberal housing policies. A recent academic article noted that governments across Europe are ‘withdrawing from large scale intervention in the workings of the housing markets, financial support for housing production is cut to very little or nothing, support for housing consumption is targeted only to those most in need, and housing markets are deregulated’.

The situation today

There is a housing crisis in Britain, and it has its roots in the state of land ownership in this country. Half of all land in England is owned by 25,000 people, with land ownership having changed little for centuries, and the full picture of who owns what is still clouded by a lack of transparency.

The price of housing relative to earnings continues to increase. In England in 2020, full-time employees could typically expect to spend 8 times their annual earnings on purchasing a home, although the median house in London now costs around 11 times the median London salary. On average there were 325,000 housing completions per year between 1950 and 1970, but this fell to just over 180,000 between 1990 and 2019.

The proportion of people in England aged 35-44 in private rentals increased from 9 to 28 per cent between 1997 and 2017. The private rented sector has more than doubled in size over the last 20 years; there are now 11 million people living in it, including 1.5 million families, spending an average of 38% of their income on rent (compared to 31% for social renters and 19% for owner-occupiers). The average private rent has increased by 29% in the decade since 2009/10, compared to an increase of 18% in average earnings. Meanwhile for many people who are not in regular employment - including the million workers on zero-hours contracts, and many elderly people, students and refugees - the lack of a guaranteed income means that private landlords will not rent to them.

8 million people in England live in overcrowded, unaffordable or unsuitable homes. Recent research by Shelter found that 17.5 million people are trapped by the housing emergency, with 14% of respondents saying that they regularly have to cut spending on food or heating to pay their rent or mortgage payments, and 23% living in homes with significant damp, mould or condensation.

Homeless is very difficult to quantify. Crisis estimates that around 200,000 people were experiencing ‘core’ (severe) homelessness in England in 2020. The ‘Everyone In’ scheme that started in the early months of the COVID pandemic moved many people off the street into temporary accommodation, with 95,370 homeless households in temporary accommodation at the end of 2020. The numbers sleeping rough are lower; government figures suggest that 2,688 people were sleeping rough on a single night in autumn 2020 in England, down 37 per cent on the 4,266 people recorded in 2019, but this is much higher than it was in 2010, and the official rough sleeping figures are thought to be a considerable underestimate as they rely on single night counts and estimates by local authorities (Crisis estimates the true number at 10,500). 94% of local authorities expect to see an increase in people made homeless in the coming months after being evicted from the private rented sector, and because of an increase in newly unemployed people made homeless by the pandemic.

Homelessness disproportionately affects ethnic minorities, lone parents, young care leavers, young offenders, LGBT young people, transgender people, people with mental health conditions, women at risk of domestic abuse, ex-services personnel, and those living in material deprivation. People from ethnic minorities are still much more likely to live in overcrowded accommodation compared with white people, and disabled people face a shortage of accessible and adaptable homes and long delays in making existing homes accessible.

An article published this summer argues that racial discrimination has existed in the housing market for over a century, limiting the choices available to Commonwealth immigrants after the second world war, overlooking their needs when clearing slums and prioritising home ownership over the needs of private tenants. From the 1970s to the 1990s, citizenship was made both harder to acquire and a condition for housing. The introduction of right to buy in 1980 and the removal of rent controls and reduction of tenancy protections in 1988, further disadvantaged ethnic minority communities, leading to a situation where many are living in over-priced, poor-quality private rented housing.

Public attitudes to social housing are generally negative; many people who are struggling in overpriced and poor quality private rented accommodation resent those who they perceive to have ‘jumped the queue’ in accessing cheaper social housing. This points to a problem with the policy itself, in that scarce social housing allocations have been focused on the very vulnerable. While there is broad support for the principle that social housing is necessary, most people see it as something that is only for those who are vulnerable, down on their luck, or underserving (‘welfare scroungers’). There is also broad support for more homes being built in the local area (57% in favour and 23% opposed in 2018), although some groups, such as owners, older people, and those living in rural areas, are more likely to oppose homes being built in the local area than others; for those groups, their support would be increased if they saw more local investment in healthcare infrastructure.

How we got here

The government has been promoting owner occupancy for more than 50 years; this had become unaffordable for many people as much as 30 years ago and is now unrealistic for all but those with access to inherited wealth (often derived itself from housing) or able to borrow large sums for mortgages. In the UK today, around five million people own more than one house, while 40-45% of the population will never be able to buy a house. The promotion of home ownership has divided society into those people who can afford to buy a house and see their wealth increase dramatically as a result, and those who cannot and must spend large amounts of their income on rent, without any increase at all in their own wealth.

Macmillan's Land Compensation Act of 1961 caused huge problems by dramatically increasing land values. Before the Act, the post-war new towns were built with land purchased at prices reflecting their use at the time, which was mainly agricultural. The Act changed this so that landlords would be compensated for its potential value if used for something else, which made it prohibitively expensive to build more new towns or any other large-scale housing schemes. A site with planning permission for housing is worth up to 300 times more than agricultural land. And so the new town movement largely fizzled out by 1970. The problem was exacerbated by the fact that planning permission is given away by local authorities, largely for free, which deprives the public sector of income while forcing them to buy back land or housing from developers at hugely inflated prices.

Homelessness and lack of home ownership are both stigmatised in British society; the meritocratic narrative is that those who do not own their own homes are not trying hard enough. The popular narrative that rough sleepers are mostly addicts or mentally ill is misleading, since rough sleepers are a fraction of the huge numbers of homeless people (see above).

Meanwhile, the government has systematically underinvested in social housing, and a few years ago it was aiming to reinvent social housing as an emergency temporary service rather than as long-term provision, although it was forced to abandon this change by the fallout from the Grenfell disaster. According to Shelter, in the 35 years after the end of the Second World War, local authorities and housing associations built 4.4 million social homes, and in 1980 94,140 social homes were built, but by 1983, supply had halved to 44,240 new social homes, and in 2018/19, just 6,287 new social homes were delivered – nowhere near enough for the 1.1 million people on the waiting list. Last year we lost around 17,000 more social homes than we built, and there are about 1.5 million fewer social homes today than there were in 1980.

The narrative that the private sector is more efficient is undermined by the fact that we are spending far more for far less, compared to other countries. Our housing market is not functional or competitive, with the private sector maximising return and minimising expenditure while the state spends huge amounts trying to compensate for market failure. The state has poured huge amounts of housing money down the drain in recent decades after allowing the social housing that it had built at such large scale into the post-war years to become private assets. Annual spending on housing benefit has more than doubled from £9 billion in 1991-92 to £21 billion. The state now spends two-thirds of the defence budget on housing benefit that goes to private landlords, who are able to charge high rents because of the acute shortage of available property to rent that arises from the lack of social housing. In 2018-19, English local authorities spent £939 million on temporary accommodation from private landlords in the absence of good quality public housing, up 48% from the £490 million spent in 2013/14, and by the end of June 2020, there were 98,300 households in temporary accommodation, a rise of 14% in a year.

The COVID pandemic has exacerbated existing structural inequalities, insulating creditors and asset-owners from the worst effects of the pandemic while driving many of the most financially vulnerable deeper into debt, by favouring landlords and homeowners over renters (with disproportionate impacts on people from minority ethnic backgrounds, who are more likely to be renting). The loss of work due to COVID has driven many into debt, with the consequence that social housing tenants were three times as likely to be in housing arrears compared to owners with a mortgage and twice as likely as private renters. The pandemic has also led to many more people receiving state support with their housing costs, especially in London. Meanwhile, house prices have continued to become more unaffordable during the pandemic and are increasing twice as fast in rural areas as in cities as people leave urban areas, and at least 130,000 households in England were made homeless during the first year of the pandemic, despite the government’s ban on evictions. Probably the biggest government housing investment in response to the pandemic has been the stamp duty holiday, which redistributed money to those who can afford to buy their homes, including landlords acquiring buy-to-let houses.

As Nigel de Noronha argues, “The government has demonstrated no evidence of seriously getting to grips with the housing situation in this country, preferring to apply sticking plasters to address perceived issues raised by the stakeholders they listen to rather than considering the international commitments the UK has made to provide adequate housing for all”.

Some interesting examples of private rented sector regulation have emerged in recent years, including local authority selective licensing schemes that require private landlords to pay an annual fee and to submit their properties to legal checks (thus sparing tenants from having to complain about poor conditions and suffer the threat of ‘revenge evictions’). These checks include that the landlord is a ‘fit and proper’ person, gas and electrical safety certificates, written tenancy agreements and the management of anti-social behaviour and repairs. Newham in East London became the first local authority to introduce mandatory licensing for all private landlords (not just those of houses in multiple occupation) in 2012. A national regulatory scheme to protect tenants was proposed by the Brown government following the 2008 Rugg Review, a report into the private rented The government wanted to establish a national register of landlords, regulate letting and managing agent and make written tenancy agreements compulsory, but this was rejected by the coalition government.

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