Building more affordable homes would not only reduce council housing waiting lists, but would stimulate the economy
Hardly a day seems to pass without yet more column inches being devoted to rising house prices or soaring rents. Yesterday the headlines were in response to new Office for National Statistics figures showing that homeownership among under-35s has almost halved in the last two decades.
The coalition has had five years to implement the policies needed to improve people’s housing prospects, but their lack of action indicates complacency and suggests the scale of the problem simply hasn’t registered.
When the sixth richest country in the world can’t provide something as basic as a home for its citizens, it’s clear something has gone badly wrong.
We are currently building fewer than half the homes this country needs to meet demand. The housing crisis is economics at its simplest: when demand outstrips supply, prices rise, which is exactly what’s happened under the coalition who have presided over the lowest levels of building since the 1920s.
The failure to build has contributed to a widening of the gap between house prices and wages; over the past 12 months average house prices have grown by 7.2 per cent – four times faster than wages. With increasing numbers of first-time-buyers priced out of the market, the homeownership rate has fallen to 64 per cent – a 25-year low.
The chronic shortage of social homes (worsened following a 60 per cent cut in grant funding for new social housing in the coalition’s 2010 comprehensive spending review) combined with first time buyers being locked out of home ownership has led to rapid growth of the unregulated and often expensive private rented sector.
As Ed Miliband has recognised, the private rented sector must be reformed to give tenants greater protection and security. At the moment, landlords only have to give a tenant two months’ notice to evict.
And there is no bigger driver of the Cost of Living Crisis than housing costs. With private tenants now spending 40 per cent of their income on rent, housing should be at the centre of Labour’s cost of living narrative.
The Tories have done nothing on private rented sector reform. In an Opposition Day motion in June they actually voted against extending tenants’ rights and prohibiting excessive rent rises.
So, private tenants continue to suffer from above-inflation rent rises. Meanwhile, the housing benefit bill continues to spiral, despite government attempts to reduce it.
With the election fast approaching, housing presents a golden opportunity for Labour to sharpen their messaging by showing that social justice can be combined with economic efficiency.
Building more affordable homes would not only reduce council housing waiting lists, but would also stimulate the economy. Every £1 of public investment in new housing generates £3.51 of economic output. Investing in new homes is economically sensible as well as socially necessary.
Reforming the private rented sector, including placing an upper ceiling on rent rises, is not only morally right; it would also help to reduce the housing benefit bill. The amount of taxpayers’ money handed to private landlords each year has doubled over the last decade to £9.5bn.
There is also an opportunity here for the party to speak to both security and aspiration. While the Tories have overseen a decline in homeownership that would dismay Lady Thatcher, Labour has spoken of a target for the number of first-time-buyers. This is something we need to hear about more often.
On housing, the choice in May is clear: another five years of inaction and complacency from the Tories, or a reformed private rented sector which gives tenants the protection and security they need.
Matthew Whittley is a recent graduate and Labour Party member and works as a researcher for a Midlands-based housing association. Follow him on Twitter
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16 Responses to “Comment: Housing is an opportunity to combine economic efficiency with social justice”
Leon Wolfeson
Rent controls are part of the answer, but a different part to council house building, which is also needed. As is taxation on empty property and empty brownfield land, etc.
Leon Wolfeson
Thatcherite Ideology, pure and simple. Councils are not allowed to borrow to build – and Labour won’t change that, sadly.
Also, the reality is that forcing people to move away from their communities is very expensive in the mid to long term, as they are then far more dependent on the state, Mid-rise communities with green space, shops, etc. have been shown to be successful…
damon
Leon, I like you. But your arguments don’t engage.
Here’s an example of a London borough I know well. Croydon – population 372.000. In 1951 it was 300.000.
To allow for growth and demand you might presume that that will need to rise by ten per cent.
Fine, but where are you going to build the housing and what affect will that have on the place as it is?
Building around the edges in the south where there are open spaces and green fields would just bring more traffic congestion and transport problems. So major building in the centre in blocks of flats might be the way to do it. But it’s generally not done like that. If you are to increase population densities around London, it should be close to existing centres and transportation hubs. But what we get instead is small developments spread out all over. In a borough where a lot of people own cars, that just increases traffic congestion.
They’d also need some new schools and and infrastructure to go along with a higher population density.
One problem with building high density social housing is that the place can turn into a sink estate.
It happened many times before, which is why low density became more popular.
Guest
So you don’t like my basic views, but “like” me. Right.
The problem with sink estates was we didn’t have a good idea what we were doing. High-rise stinks for long-term communities, you want mid-rise with integral corner shops, etc.
The reality is that your plan of not building houses won’t work, either, it just leads to more overcrowding, rising rents, etc.
damon
I like you because I imagine you’re about 14 – but very earnist.
I’m not against building more housing. I just don’t like the way we do it without proper forward thinking and planning. Just squeezing extra housing units into existing low density suburbs is not a way to do it imo.
They have done some of that in Croydon that I’ve seen, and all that’s happened is that traffic congestion has gone up. Because everyone owns cars as there are only buses in many areas.
So everyone drives to the local supermarkets, and drive their children to school. There are major traffic jams on the roads into central Croydon in the morning rush hours and then the trains from East Croydon station to Victoria are jam packed. Standing room only.
So the idea that you can just raise the population by ten, or even twenty percent without doing a massive redesign of the infrastructure, is daft I think.
But we don’t have that. What we have is little developments that just increase the density with no thinking about the consequences.