It doesn’t have to be this way on housing
England is a rich country that is failing to properly house its people. The root of the problem is that demand for housing massively outstrips supply: we are now building around 100,000 new homes a year – the lowest level for a century – when we need to be building at least twice that number. If we continue at this rate, by 2025 unmet housing demand will be greater than the housing capacity of Birmingham, Liverpool and Newcastle combined.
As a result, home ownership has become an unaffordable aspiration for too many, with house prices having tripled in a decade, while wages were left to stagnate. Unless first-time buyers have access to the ‘bank of mum and dad’, raising the deposit required to buy a home is now a real barrier, compounding inter-generational inequality. Meanwhile, social housing – a scarce resource rationed on the basis solely of need – is being residualised to the point that it houses only the poorest and most vulnerable. So, the ‘squeezed middle’, including a young ‘generation rent’, is being funnelled into a poorly regulated private rented sector that remains a tenure of resort rather than choice.
This has two serious consequences. First, too few people enjoy a secure, decent and affordable home. Second, housing threatens to segregate our society.
It doesn’t have to be this way. In a new IPPR report, Together at Home, we offer an alternative strategy for housing in England, arguing that, done right, housing can be a force for integration in our society.
The security and control that homeownership brings make people more likely to get to know their neighbours and invest in their communities. But opening up sustainable homeownership to a wider range of people can’t happen unless we first build many more new homes. In order to do that, we need to find new sources of finance, reform our sclerotic planning system and shake up our dysfunctional development industry, while maintaining sensible credit control. Our policy prescription covers all these bases.
Not everyone will want, or be able, to own their own home. So we do need a better rental offer too. That means a better balance between the private rented sector, which needs to be more secure, and the social rented sector, which needs to be more flexible. We argue for new family tenancies offering five years security in the private rented sector and fixed-term social tenancies as the norm. We also suggest new ‘something for something’ deals between local authorities and local landlords, codified in mandatory licensing regimes.
There are huge regional variations between housing markets that make a one-size-fits-all approach ineffective. And we will never find a national welfare solution to a local housing problem. So, we should dissolve the division between spending on housing benefits and spending on new homes and then devolve this money, power and responsibility from Whitehall to local authorities through Affordable Housing Grants. Through this radical act of decentralisation, as opposed to the coalition’s half-hearted localism, we can start to shift the balance back away from public spending on subsidising rents towards investing in bricks and mortar.
Over four years we currently spend £95 billion on housing benefit and less than £5 billion on house building. England needs more homes. But there is no spare cash to pay for them. That means we need to do more with the money we’ve got.