The Big Question on… housing

Are the party manifestos addressing the real issues?

The UK has seen some of the highest levels of owner occupation in the world, though rates have declined from 71% in 2003 to around 65% in 2014. But the increase in owner occupation has been accompanied by large falls in local authority house building and decades of under-investment in social housing. Added to this are problems of developers and foreign owners sitting on empty homes and vacant land. In 2014, London’s Evening Standard covered the story of central London’s 740 uninhabited “ghost mansions” – owned by offshore investors and worth up to £3billion. Meanwhile, Department for Communities and Local Government statistics indicate that the numbers sleeping rough in Greater London have increased by 78% between 2010 and 2014, with numbers sleeping rough in England as a whole increasing by 55% over the same period. Government statistics also show that the number of households on local authorities’ waiting lists increased by around 34% between 1997 and 2014.

With the launch of the party manifestos, debates have shifted away from personalities and towards some concrete public policy issues, including what to do about the UK’s housing crisis. The Conservative manifesto has outlined some policy solutions, reflecting two imperatives – one economic, the other political. The first is to provide good quality shelter for everyone and increasing the supply of housing, especially affordable housing, is an essential ingredient for this. The second is more ideological: to increase levels of home ownership to increase householders’ self-reliance and thus reduce potential dependence on the state. The necessity of the first is unarguable; the necessity of the second is a matter for political debate. The Conservatives have addressed both in a two-pronged strategy: extending the right-to-buy to 1.3 million Housing Association tenants, with funds from house sales potentially used to fund new investment in housing. They have also promised to promote garden cities and to build 200,000 new starter homes. Some media commentators have suggested that the Conservative right-to-buy strategy is as much nostalgic as totemic – reflecting a desire to return to what some might perceive to be the golden years of Thatcher’s electoral success when owner occupation rates rose from 57% in 1979 to around 68% in 1997, with over 1 million house sales under the Right to Buy scheme. But other commentators have raised concerns about feasibility. Housing Associations are private non-profit organisations. Any losses they were forced to incur in selling houses at a discount would have to be financed from public funds – and with maximum discounts of £77,000 for England and up to £102,700 in London, this would potentially be a substantial drain on public funds.

So what are the alternative solutions? These are less ambitious and more diffuse. In making private rental more affordable, Labour have promised a cap on private rents and restrictions on letting fees. Correctly they emphasise that fundamental problem is the shortage of supply exacerbated by low levels of public investment in housing, partly reflecting fiscal constraints in the aftermath of the financial crisis, and they have promised to build 200,000 new homes a year by 2020. They emphasise the role that small builders can play in house building. They have also identified some ways in which problems of empty homes and vacant land could be ameliorated – for example by doubling Council tax on homes left empty for more than a year and supporting small builders’ contribution to home building. One concern is that Labour’s record on housing is not unblemished. The Labour-led Southwark Council lost sight of affordable housing goals in its management of the Heygate Estate regeneration in Elephant and Castle – Lend Lease has been able to escape usual quotas for social and affordable housing on new developments, though the social and affordable housing targets have been taken more seriously in the case of the nearby Aylesbury Estate.

Overall, the manifesto promises have either been underwhelming or unfeasible. Ultimately the problem lies in releasing empty homes and vacant land, and financing new house building. In devising more imaginative solutions, more policy-driven research is needed, for example in unraveling the complex interactions of supply and demand in UK housing markets, and assessing the extent to which planning reform can release land and accelerate house building. Also, more research is needed into how house-building can effectively be financed, for example by exploring the potential for capturing the value of land as an innovative financing instrument. Land value capture research can also potentially unravel the related problem of how to finance infrastructure investment, another issue that the main political parties need to think through more deeply and carefully.

Michelle Baddeley (UCL Faculty of the Built Environment)

UCL’s Big Questions sought contributions from academics around UCL to address the ‘big question’ facing the next UK government, and how research can provide an evidence base. It was devised by Clio Heslop (UCL Department of Science, Technology, Engineering and Public Policy) and Olivia Stevenson (UCL Public Policy), with the support of the Communications and Marketing team.

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