Housing: a new common sense?

Last week Labour launched Housing for the Many, outlining the party’s plans to fix the UK’s broken housing system.

In recent years, a succession of green and white papers, and legislation, have attempted this. As the housing crisis has deepened – homelessness up by 50% since 2010, 1.2 million families waiting for social housing, rents driving families into poverty – and with the Grenfell tragedy still vivid, fixing Britain’s housing problem has become an imperative for our political class.

However, as our research at NEF has shown, the UK’s land and housing markets are so fundamentally broken that the system of housing production and trade needs a complete reboot if we are to begin to address the crisis. Piecemeal policy will not fix the problems, but so far piecemeal policy is what we have come to expect: a few billion for affordable housing here, another massive subsidy to private housebuilders there.

The policies in Labour’s Green Paper are anything but piecemeal. While a lot of detail is missing, Labour’s report contains a number of changes which could make a big difference to the millions of people in inadequate, unaffordable and insecure housing.

Drawing on our research, Labour identifies that the present policy of aggressively selling off publicly-owned land to stimulate housing supply is making the crisis worse. As we have shown, the policy is 12 years behind schedule, is delivering only 20% affordable housing nationally, and 6% social rental homes. Labour has committed to our recommendation to end this ​‘fire sale’ of public land to the highest bidder, and ensure that the levels of affordable housing on public land are ​‘appropriate’.

Piecemeal policy will not fix the problems, but so far piecemeal policy is what we have come to expect

Beyond this, there is much else to welcome, in terms of boosting housing supply and ensuring that the homes we build are the ones we need. The rules that govern the definition of ​‘affordable’ homes will be rewritten to ensure that rents are linked to local incomes, and not what the market requires. Labour also proposes a number of policies to stem the loss of social housing which has taken place over the last four decades, not least by suspending the right-to-buy regime, which has driven the net loss of over one million social homes since 1980. And combined with greater borrowing powers for councils to enable them to build again, an increase in grant funding, and an end to a viability system which helps developers evade affordable housing supply – all of which NEF has called for in the past – this makes Labour confident to promise a million new affordable homes in a decade.

But, while the policies proposed today are important, what is really noticeable is the change of tone.

Certain articles of faith have come to dominate housing policy in recent decades, and Labour’s announcement today suggest that this tired, flagging ​‘common sense’ might be at risk.

The main housing policy objective of all recent Governments, and all recent housing ministers, has been simple: boost supply. The logic goes: if more homes are produced, then prices will drop, as supply comes to match demand. But the massive amounts of credit available for mortgages, the reliance on private developers to deliver the vast majority of these homes, and the incentives which the current system gives to landowners and developers means that this equilibrium position is unattainable.

Even if supply did match house-building targets, the reduction in price would not be anywhere near enough to stem the housing affordability crisis.

London, which has perhaps the country’s most acute shortage of affordable homes, actually has an oversupply of ​‘luxury’ homes because of this broken system – developers will build the most profitable products and then drip-feed them into the market, ignoring the nature and scale of community need. And the Government’s own figures show that even if supply did match house-building targets, the reduction in price would not be anywhere near enough to stem the housing affordability crisis.

In their report, Labour reject these current assumptions, acknowledging that ​“what new homes we build, and who they’re for, matter as much as how many.” It’s not just about supply, but the right kind of supply. Development must be guided by what communities actually need – genuinely affordable homes, mostly.

There is also an important shift away from viewing social housing as purely an ​‘ambulance service’ – a safety net for those on the lowest incomes most radically excluded from the housing market. One of the key figures in the history of social housing, Aneurin Bevan, envisioned the tenure to be a genuinely mixed offer, as a genuine alternative to the free market, in which ​“the doctor, the grocer, the butcher and the farm labourer all live in the same street.” While this was partially achieved in the postwar years, in recent decades, the vast gap between demand for social housing and available homes has meant that new tenancies have only been accessible to the most socially excluded in society.

So, this is a housing policy programme which would really mark a change in direction. The big question now is: how will the Government respond? We have heard repeated commitments to address the housing crisis but so far the rhetoric has not been matched by action. Will Labour’s announcement spur them into reality? We’ll wait and see.

Development must be guided by what communities actually need – genuinely affordable homes, mostly.

In the meantime, it’s important to reflect on the major hurdles to overcome in delivering this scale of policy. Austerity and decades of the demunicipalisation of housing supply means that many councils will rapidly need to regain capacity which they have lost, and be restaffed and reskilled in key departments. Initiatives such as Public Practice, which seeks to bring talented planning experts and architects into local government, could signal the way forward. Identifying a land supply pipeline will also be challenging, although policies to deflate our financialised land market would help. And finally, skills and materials in the construction industry will need to be restocked and replenished, especially with the looming question mark of Brexit.

For too long the housing crisis has seemed politically intractable. A social policy disaster decades in the making, it will not be simply undone. The present housing system is clearly not up to scratch, and radical change is required – but politicians have shied away from the level of ambition needed. Labour’s green paper finally illustrates some of that ambition. Hopefully the Government and other parties will follow suit.