“The poorest man may in his cottage bid defiance to all the forces of the crown. It may be frail – its roof may shake – the wind may blow through it – the storm may enter – the rain may enter – but the King of England cannot enter.”
So said William Pitt in 1763. Pitt, let’s recall, was a British Prime Minister. I’m not sure that any of the candidates lining up for next week’s beauty contest could muster the same sort of elegant prose. And their promises on housing aren’t much to shout about, either.
There are many problems facing the British economy in the years to come, but perhaps none is as serious as the housing crisis. James Meek published a brilliant essay in the London Review of Books at the start of 2014 (available here) in which he posed a rhetorical question: ‘Where will we live?’ Meek pointed out the essential problem for the UK’s housing: “Supply and demand have floated free of each other, and not only in the category of social housing…There aren’t enough homes in London, in the South-East, in Britain. The shortage gets worse. Each year, population growth and the shrinking of average household size adds a quarter of a million households to the 26 million we have now. The number of new homes being built is barely above a hundred thousand.”
The 2014 Lyons Housing Review calculated that the 137,000 average annual new residences in England represent less than 50% of the number needed to keep up with current population growth. According to the Office for National Statistics, just 120,000 new homes were built in the UK in 2013-2014. This compares with the post-1945 low of 135,000 in 2013, and a high of 219,000 in 2007. Fewer homes, greater demand – there really is only one direction for prices to head. And higher prices means that ever-fewer people can afford to buy, or even rent, as rents move in lockstep.
Just how unaffordable is a home for the average earner in the UK today? The housing charity Shelter has looked at two-bedroom homes listed for sale on a property website. Taking the average working family income of £30,748 as a benchmark, the charity calculated what mortgages would be affordable, and discovered that in London there less than 50 suitable homes, which is just 0.1% of the potentially suitable homes advertised in London. Elsewhere in Britain just 17% of properties were affordable for a typical working family. In the south east of England, 3.9% of suitable homes were deemed affordable.
We have a crisis.
Given that 80% of those surveyed in a recent Mori poll thought that Britain faces a housing ‘crisis’ it’s not surprising that all the big parties vying for our votes next Thursday have made some very eye-catching promises.
The Liberal Democrats have promised to increase housebuilding to 300,000 units a year; less-ambitious Labour has said it would get 200,000 homes built a year by 2020; and the even less-ambitious Conservatives have pledged 200,000 new homes for first-time buyers and a boost to ‘Right to Buy’ schemes, giving more than a million families the opportunity to buy their housing association homes at a discount. The Green Party promises to build 500,000 social rented homes by 2020 – i.e. just 100,000 a year over the next five years.
These promises are, unfortunately, just so much eyewash, if the estate agent Knight Frank is right; it published a survey of British housebuilders on 27 April which concluded that 67% of them believe that the maximum number of new homes that can be delivered annually is 180,000. Only 9% said that it would be possible to build more than 200,000 a year. The Financial Times quoted Jon Di-Stefano, chief executive of Telford Homes, an Aim-quoted London-focused housebuilder, as saying: “It’s been good fun watching the politicians come out with these housing figures as none of them can explicitly lay out how exactly they are going to hit their targets.” The brutal truth is – none of the political parties have produced any detailed plans for reversing the trend of supply lagging demand.
We need bold and decisive action
It’s depressing to note that the Lyons Review was commissioned by the last Labour government, but appeared during the Conservative-Liberal Democrat administration and thus appears to have fallen between two stools, ignored and gathering dust. Yet it makes 38 extremely sensible and practical recommendations which, if implemented, would go far towards solving our national housing crisis. A skills shortage in the building industry; background political uncertainty deterring builders from producing more units; local planning delays and blockages; even the lack of a dedicated housing minister with clout in government – all these prevent us from meeting the relentless demand for now affordable homes. Housing rules and regulations are a nightmare of tangled complications. For example, the little-known new community infrastructure levy (CIL), implemented by the government this month, is deterring housebuilding. The new system means that in most cases councils will have to rely on using the CIL, which is charged per square metre of floor space, to raise money from developers to fund local infrastructure projects, instead of the section 106 planning agreement, which often is negotiated with developers on a case-by-case basis.
Whatever shade of government we wake up with on 8 May, someone in it needs to take this sector by the scruff of the neck; they could do worse than sitting down with a copy of the Lyons Review.