Housing: Where's the Plan?

Kate Barker

• Publisher: London Publishing Partnership
• Year: 2014
• eBook ISBN: 9781907994401
• Edition: 1
• Topic: Sciences sociales
• Subtopic: Urbanisme et développement urbain

Housing is a fundamental necessity, and yet it is generally acknowledged that we have a'housing crisis' in the UK. The housing market has worked well for many people (who haveenjoyed the steeply rising values of their homes), which is why change, especially new building, is resisted. But for increasing numbers it now works less well, as home ownership is out of reach.Government finds it easier to introduce short-term policies that are not really effective, meaningthat the long-term issues are never really resolved. Reforms are urgently needed.There are many national policy aims, including decent homes for all, protection of the greenbelt, better design of buildings and places, avoidance of price volatility, and intergenerationalfairness. We also have an existing housing stock that is wrongly located, and some of thehousing we do have is of poor quality. With so many conflicting views, strong local feelingsand a balance to be struck between growth and conservation, what housing market outcomesmight be regarded as a success for policymakers? This book dispels some common myths, andprovides answers in the form of policy recommendations.

Chapter 1

What outcomes do we want?

Since the financial crisis of 2007–9, discussion of a ‘housing crisis’ has been growing and a range of policy responses have been put forward. For example, the mortgage guarantee scheme introduced in late 2013 as the second part of ‘Help to Buy’ was intended to help kick-start sluggish housing transactions, while the so-called bedroom tax introduced in April 2013 reduced housing benefit for those with spare bedrooms in an effort to cut the growing housing benefit bill. By mid 2014, the primary concern was the overheating market in London and its hinterland. But these policy responses and debates don’t effectively tackle the big underlying issues that have emerged over recent decades, including a widening gulf in wealth between those in owner-occupation and those out of it, and the resulting concerns about inequality between generations.

Governments are rarely precise in how they measure their success with regard to the housing market. In 2007, the ­Labour government summed up its aspirations as follows:

We want everyone to have access to a decent home at a price they can afford, in a place where they want to live and work.2

It would be possible to measure the success of the first part of this goal, but the second part may not even be feasible.

The housing goals of the 2010 coalition government, as stated on the website of the Department for Communities and Local Government, have varied. The 2013 version included ‘helping more people to buy a home’, which might imply that one criterion for success would be a higher rate of ­owner-occupation. This has been an implicit or explicit policy goal for governments of all persuasions since the 1970s. But many other goals are pursued by governments, including managing house price inflation if it signals an unsustainable boom, or not building on green belt or environmentally sensitive land. Achieving success in terms of any of these aims requires (among other things) some myth busting.

Is more home ownership desirable?

Long-term policy support for home ownership has been quite successful. The share of owner-occupation in England rose pretty steadily between 1961, when it stood at 44%, and 1991, when it reached 68%. That level changed little until the financial crisis. So, while in 2001 the share of owner-­occupied households reached 70%, after 2007 that share fell, to 64% by 2012. Table 1.1 indicates that the rise in owner-­occupation in the 1960s and 1970s reflected a move out of the private rented sector, whereas in the 1980s and 1990s it was the share of social housing that fell. The post-crisis fall in ­owner-occupation has been offset by a move back into the private rented sector: its share has risen from around 10% in the early 2000s to over 18% in 2012.

Table 1.1. Changes in share of household tenure (England).

	Owner-occupied	Social rent	Private rent
1961	43.9	24.5	31.6
1971	52.4	28.3	19.3
1981	58.4	30.5	11.1
1991	67.6	23.0	09.4
2001	69.7	20.2	10.1
2007	68.0	17.7	14.3
2012	64.2	17.3	18.5

Source: Department of Communities and Local Government.

Myth 1The UK has an unusually high rate of owner-occupation

In 2012, among other EU countries, only Germany (53%) and Austria (57%) had an appreciably lower rate of owner-­occupation than the UK, according to Eurostat figures. In both Italy and Spain the rate is around 75%. However, the proportion of owner-occupiers in the UK who have a mortgage on their property is comparatively high and we still have a somewhat above-average proportion of households in social rented housing. The share of the private rented sector is a little lower than the EU average (notably, ­Germany and the Netherlands have bigger private rented sector shares).

It is argued that a high level of home ownership leads to better care of the housing stock, and more commitment by households3 to their community. While this might be true, homeowners also tend to be better off and better educated, which might contribute to these behavioural ­effects. There is not enough evidence to disparage tenants’ public spiritedness. But housing tenure can have social consequence. In the US context, Anne Shlay has commented that home ownership is

not simply an indicator of social inequality; it is a causal mechanism underlying inequality. Also important is housing tenure’s role as a basis for solidifying divisions and antipathies among different social groups.4

There are also economic arguments against too high a rate of home ownership.5 The most important is that a high rate of home ownership tends to reduce labour mobility, and so makes it more difficult for adjustment to take place following economic shocks, such as a recession. Young people may find it harder to leave home to look for work if there is a thin or expensive rental market. The scale of these effects is uncertain, however, and it is obviously not solely home ownership that makes people reluctant to move but also attachment to an area or family ties.

Another important consideration is that a high rate of owner-occupation increases opposition to new residential building, because this is perceived to reduce the value of existing homes. For many households, the home is the largest single investment, so it is not surprising that new development proposals arouse strong emotions.

If neither social nor economic arguments for a high rate of home ownership are compelling, why does this tenure so often receive special treatment? The obvious answer is that in the UK i...

Table of contents

• CoverImage
• Barker-Title-Page
• Barker-Copyright-Page
• Barker-Preface
• Chapter-1
• Chapter-2
• Chapter-3
• Chapter-4
• Chapter-5
• Chapter-6
• Chapter-7
• Chapter-8
• Barker-Endnotes