Home ownership
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.
Land and planning
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
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).
Social housing
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.
Market failures
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.
Impacts of COVID
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.
Adequate housing
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”.
Regulation
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.