There is an ever-deepening housing crisis where demand outstrips the supply of decent and affordable homes. There has been a sharp rise in mortgage rates over the past two years, following 14 consecutive interest rate increases by the Bank of England, and this is putting many more home buyers into arrears and making buying a home ever more unaffordable. Against this background we start a three-part series on housing in the UK today.
Firstly, we examine how we got here. Then we discuss the problems for millions of people unable to buy a home and find themselves scrambling for a roof over their heads in the private rental sector. Finally we examine the key role of social housing and changes within one large Housing Association.
The housing emergency
Unaffordable. Unfit. Unstable. Unfair. Unsafe. These are the hallmarks of a failed housing system that’s denying 17.5 million people the right to a safe home, according to Shelter, the housing charity. This is not just about homelessness but is far more wide-reaching, meaning millions of people live in insecure, unfit accommodation.
The private rental sector is increasingly unaffordable and lacks proper regulation. Above all, there is a deficit of social housing with an estimated 1.2 million households in England who are currently stuck on waiting lists for a social home, a rise of 5% in the last two years. At the same time the number of social homes for rent has decreased in the last decade with a total net loss of 165,000 homes (between 2012/13 and 2021/22), These figures come from the government’s own data.
How did it get to this?
We need to go back to earlier times to see how the impact of housing policy has affected the provision and quality of public housing. The creation of social housing goes back to the late 19th century. A significant development was the 1919 Housing and Town Planning Act when the government embarked on the first comprehensive plan to build social housing. Led by local councils, this was the foundation of a large-scale programme of building that stretched all the way through to the latter half of the 20th century. After the destruction of some of the housing stock in World War 2, and the need to replace slums, governments of every stripe supported the building of affordable and secure council homes.
Large new council estates were built for people who had previously lived in back-to-back terraces. They featured indoor toilets, central heating and gardens. Many were built on greenfield sites away from the urban centres so shops, pubs and clubs, and even churches, were all included in the layout.
Managed decline, demolition, and the profit motive
The disinclination of councils, housing associations and private landlords to invest in their housing stock must be framed in the context of stringent cuts to local authority budgets by successive governments. Recent scandals such as damp and mould in rented properties serve to underline the neglect of which the rental sector has in the past been guilty.
Furthermore, council estates have frequently been characterised as ‘sink estates’: hellscapes riddled with crime and places for only the desperate to live. The stigmatisation of these places and their tenants by politicians and the media has served to stimulate large scale demolition which has been driven more by the profit motive than the need for affordable, secure and safe housing, as Dr Nick Thoburn points out. He argues that wholesale demolition has far reaching negative consequences:
“Demolition brings about social and individual cost, uprooting residents from support networks and jobs, fragmenting communities, and reducing the supply of affordable, safe, and secure housing. Demolition has an environmental impact too”.
The temptation is to raze neighbourhoods to the ground, without meaningful consultation with residents, who are branded all too often as intrinsically problematic. This is not the solution. The ‘social cleansing’ of areas such as the East End has destroyed communities and made way for new developments which are financially way out of reach.
Far better, where possible, to repair, refurbish, and retrofit existing housing for existing residents.
The ‘build ‘em cheap and stack ‘em high’ solution to the housing shortage – tower blocks – proved to be less than ideal as the design and poor construction materials created new problems, with some lethal consequences. LSE professor Patrick Dunleavy has written that the safety standards of high rises were progressively degraded. The Grenfell Tower disaster exposed appalling lapses of fire safety regulations, with new, dangerous cladding materials and systems used as quick fixes:
“Cost-minimising social government departments and social-housing providers again ignored safety experts’ warnings and tenants’ views to screw down refurbishment costs so as to fit within austerity budgets”
Thatcher’s fire sale: right to buy
Undoubtedly, the heavily discounted Right to Buy scheme introduced by Margaret Thatcher was one of her most successful policies – in terms of the number of properties lost to those not able to afford to buy a house. It was one of the biggest acts of privatisation ever undertaken, transferring £40bn in the last 42 years directly to the Treasury and implemented in such a way that the housing couldn’t and wouldn’t be replaced.
The policy had an overtly political motive – designed to attract wealthier, often skilled, working-class, older voters who would vote Conservative. By the mid-1980s, Labour abandoned its opposition to Right to Buy with sales reaching 150 000 a year. The total sales achieved under the Right to Buy in the UK between 1979 and 2015 were over 2.85 million.
While many did benefit from the scheme at the time, their grandchildren have not done so. Significant was the transfer of former right to buy properties into the private rental market. These now make up 40% of all rental properties across England, where mostly younger people have been forced to rent at high rates in a competitive market, without secure tenancies and often in badly maintained accommodation.
In 2010, funding for all social rented homes was cut by 63%. More recently, Rishi Sunak and Michael Gove, the levelling up secretary, claimed that the government would meet its 2019 manifesto pledge to build 300 000 new homes before the next general election. However, many in the sector seriously doubt this.
Decline and fall of affordable housing
A combination of factors – huge property price increases, low levels of housebuilding, ‘landbanking’ by developers, austerity budget cuts, rising rents, the inability of local authorities and housing associations to build sufficient new homes, and the rise of the buy to let market, have all contributed to the housing crisis. The right to buy scheme has been at the centre of this. Rising interest rates have made home ownership even more unaffordable – more of that in part 2.
It is time to develop innovative solutions which move from letting the market dictate supply. These might include better use of existing assets, innovation and drawing on communities themselves, for example self-build schemes. To do this, housing needs to be viewed as just one component of a broader social policy agenda.
Next: Part 2: Generation Rent