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Article: The urgent challenge of housing

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  • Housing

A “wicked problem” is a phrase favoured by policymakers to describe an issue that is not only complex but highly contested and unpredictable. Try to fix one aspect of it and you might create other problems, not foreseen. New ideas come, new ideas go.

There is no more classic example of a “wicked problem” than housing. Indeed, its very intractability makes it tempting to leave “solutions” to the small army of housing specialists. But their campaigns tend to revolve round single issues, such as opposing particular developments or demanding greater regulation of the private rented sector. And then, as individuals, we are tempted to focus on our own circumstances as owners or renters.

All of which begins to explain how hard it is to create a broad and informed public conversation, even with an issue that matters so much to us all. Yet it is precisely this kind of broad strategy and debate that we desperately need if we are going to have any chance of overcoming the crisis we now face as a nation.

If you think “crisis” seems like an overstatement, here’s a reminder of some key facts. The number of people declared homeless or living in temporary accommodation is rising; an estimated 450,000 families live in overcrowded property in England alone; government research shows that private tenants are, on average, paying £4 in every £10 they take home on rent.

New benefit rules mean that central London is increasingly a no-go zone for below-average income households (unless they are willing to accept overcrowding). New housebuilding starts have increased in recent months to around 150,000 a year, but are still well below the 219,000 achieved by Labour in 2007, let alone the 250,000 a year that most experts think the country needs.

And every week there are further dazzling additions to the statistics. Last week’s big news, courtesy of a study carried out by Inside Housing magazine, from figures released by 91 councils under the Freedom of Information Act, revealed that 40% of homes purchased under the right to buy scheme in England are now rented out, most of them to tenants relying on housing benefit.

A council flat bought under the scheme in London’s Covent Garden has recently sold for £1.2 million; the sellers had paid Westminster council £130,000 in 1990. Making individuals huge riches was not advertised in the original project’s prospectus.

This is the other striking feature of housing policy: desired outcomes are dwarfed by unintended consequences. Every government for the past 30 years has promised to increase home ownership rates, but they have been falling for a decade, particularly among the young. In 2004, nearly 60% of 25- to 34-year-olds were owner-occupiers; now it’s only just over a third.

Few politicians have ever pledged to increase private renting (the public’s least popular form of housing), yet its proportion of housing provision has doubled since 1992. It now stands at almost one in five households. Right to buy, now controversially extended to the housing association sector, was supposed to create a new generation of owner-occupiers. And, of course, there is the huge role housing has played in our unbalanced economy and rising levels of inequality.

So what is to be done? Instead of continuing with a whole series of disconnected policies and battles, we surely need an entirely new strategy. Housing policy has to start again with the basics: from affordability to reducing extreme hardship; from employment mobility to care for the elderly; from environmental sustainability to economic development. What are the goals that most matter to us and what are the major trade-offs? Politicians hate admitting that any policy has a downside but most involved in housing have several, some unavoidable.

There is, for example, a strong case to be made for a land value tax, something that would both be a better way of bringing in revenue than other forms of tax and provide an incentive for landowners to develop their land. Many people, on the left and right and in august bodies such as the Institute for Fiscal Studies and the Organisation for Economic Co-operation and Development, recognise this case, but the political consensus is that it is just too difficult to implement and there are too many losers. If we continue with this defeatist mindset we have no chance.

But a strategy can’t just be for government. As part of a more general change in the way we think about social change, we need to encourage, cajole and shame all the key housing stakeholders, from major developers to homeless charities, into working together on an approach and then being accountable for providing their part of an agreed strategy. There is a major collective action problem which the government should use its democratic legitimacy to break though.

And, of course, we as citizens also have to enable change. We can point to the manifold failings of our leaders, but many of the underlying causes of our current position lie in our own decisions and aspirations.

Changes in family formation have been crucial. Indeed, on one level, there is actually no absolute shortage of housing in Britain. It is estimated there are now more than 25 million unoccupied bedrooms in British homes. Under-occupation has grown by 50% in the last decade. This is mainly because older people are staying in the family home rather than downsizing to what would generally be more appropriate accommodation.

As long as the incentives are to hoard surplus property rather than dispose of it, a problem George Osborne’s recent inheritance tax reforms will make worse, the obscene coincidence of massive housing shortage and massive under-occupation will continue.

Solving the housing crisis might mean the public, particularly those who have done well, adjusting their aspirations. The measure we must set for our housing in not whether it makes us rich but whether it enables us to live well.

In the face of a tide of depressing statistics and failed initiatives, it may seem hard to say anything positive about housing in Britain. The good news, however, is that at last the issue is near the top of the political agenda. Every major party put great emphasis on housing in their recent election manifestos and in the jousting for London mayoral selection, housing is the main talking point. This momentum mustn’t be squandered on one-off initiatives and empty promises.

The problems of housing affect most of us. The solutions need to involve all of us, too.

This article first appeared in The Observer on Sunday 16 August 2015.

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  • I now see from the RIBAJ that Matthew Taylor is already backing exactly this in the MacEwen Award shortlist. It must succeed,

  • Assuming the bottlenecks of land release and planning can be overcome the sheer cost and time-consuming effort in continuing to produce traditional housing are impediments to a solution. Richard Rogers' scheme for the London Borough of Merton produced 36 factory-made units for the homeless at a cost of £45,000 each, a mere fraction of the traditional equivalent. Factory production can be as short as one week per unit plus an equivalent time for erection on site. Why are we so set on the ancient method of cementing together tiny units and indulging in laborious wet trades? We must modernise.

  • There are always pockets of housing revolution and an army of people who would self build, low cost, low energy homes, but getting permission is really tough and land is now snapped up no matter how small to build empty "life style" apartments.
    There is absolutely a need to adjust aspiration from profit via home ownerhsip to life style and living. What won't be avoided is the revolution this problem will course and what a generation of employed, professional and frustrated under 35's will demand politically.
    Also let's be honest about this  in the end somebody will have to pay the bill to build enough homes.

  • "And, of course, there is the huge role housing has played in our unbalanced economy and rising levels of inequality" - James Meek writes about this in "Private Island" - how the right to buy policies of the 80s were not only privatisation on the cheap (taxpayers lose #1) but also resulted years down the line in the explosion in housing benefits as market rents increased and the state has to make up the difference between what can be afforded and rent (taxpayers lose #2). 

    Interestingly those who lost out the most (those who couldn't buy their council house and cash in) are the ones now being demonized as benefit scroungers. 

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