Analysis: Empty homes and empty promises: Britain’s housing scandal

[Tony Gosling]

July 2015» Article
Empty homes and empty promises: Britain’s housing scandal
Houses should be homes first and not just investments
By Joe Turnbull
http://www.contributoria.com/issue/2015-07/5551cea1853daab15a00018f/
http://www.911forum.org.uk/board/viewtopic.php?p=171428#171428

Britain is in the midst of a housing crisis more 
than 30 years in the making. When the Thatcher 
government gave council tenants the option to buy 
their homes via the Right to Buy scheme, it also 
prohibited councils from reinvesting the funds in 
more homes. The state was gradually replaced by 
the private sector as the primary builder of 
properties. So followed decades of rising demand 
and falling supply, which has resulted in today’s 
situation of booming house prices, unaffordable 
rents and surging levels of homelessness. The 
current Tory government needs to shift its focus 
away from propping up house prices and protecting 
investments to building more affordable housing.

Is demand simply out of hand?

Since the introduction of Right to Buy in 1980, 
the UK population has grown year on year; it is 
now 12% larger. That’s 8 million more people in 
need of homes. But even this significant increase 
in demand doesn’t tell the full picture. In 
addition to the growing domestic population, the 
UK housing market is increasingly flooded with 
foreign investors – at least 2 million of whom 
own property in Britain. Recent years have seen a 
huge influx of capital from overseas being poured 
into the property market, especially in London. 
In the capital, three-quarters of all new builds 
are bought by foreign investors, as are half of 
all properties worth more than £1 million, with 
the average asking price in London currently £981,182.

While demand in the housing market is increasing, 
the makeup of that demand is also changing. 
First-time buyers are facing stiffer competition 
from landlords, as the buy-to-let market has 
increased threefold since 2001. Investors are 
making money hand over fist, with profits 
totalling a staggering £112 billion last year, up 
more than £5 billion on the year before, largely 
at the expense of private renters and would-be 
first-time buyers. Between January 2014 and 
January 2015, the number of first-time mortgages 
awarded was down 14% year on year, while in the 
same period buy-to-let mortgages were up by the same percentage.

The Help to Buy scheme was the major housing 
policy of the last parliament. The scheme 
essentially sees the state underwrite part of the 
mortgage debt for first-time buyers, meaning a 
lower deposit is needed. It has come under 
particular scrutiny recently, with Capital 
Economics, a leading independent research company 
describing it as having had a “fleeting impact” 
that has served only a “lucky few”. The scheme 
has driven up demand and thus contributed to 
spiralling house prices. The income needed to buy 
a first-time home is now 12% higher than it was 
when the scheme started, compared to only a 1.5% increase in average earnings.

Or is supply just running dry?

Just as demand for housing has been on the up for 
decades, inversely supply has completely tailed 
off. In 1970 more than 350,000 homes were built. 
Last year that figure was just 141,000. In 2004, 
Kate Barker’s Review of Housing Supply suggested 
that 240,000 homes would need to be built a year 
to ensure enough affordable homes to meet demand. 
Since then, that target has never been met. The 
current output is now 42% below that suggested 
minimum. The Tories’ 2015 manifesto promised 
200,000 “starter homes” – reserved for first-time 
buyers under 40 and sold at 20% below the market 
price – over the course of the entire parliament. 
It did not contain a pledge on the total number of homes to be built annually.

While the government is neglecting building 
social houses, it is still spending vast amounts 
on subsidising housing - the amount spent on 
housing benefit is set to reach £25 billion a year by 2017.

So what has happened? Since the introduction of 
Right to Buy the state has stepped away from 
housebuilding and left the construction of social 
housing to not-for-profit housing associations. 
But housing associations only managed to build 
21,600 new homes in 2013 compared to 1.7 million 
people who are on waiting lists for social 
housing. Anyone fancy a house share with 78 other 
applicants and their families? Thought not. 
Between 2010 and 2015, the amount councils have 
been given to spend on housing measures was cut 
by 34%, and further cuts look likely in the course of the next parliament.

But while the government is neglecting building 
social houses, it is still spending vast amounts 
on subsidising housing, just perhaps in the wrong 
areas. The amount spent on housing benefit is set 
to reach £25 billion a year by 2017. A 
significant amount of this money is simply lining 
the pockets of private landlords and helping keep 
rents inflated. A further £1.4 billion a year is 
spent on home ownership subsidies such as Help to 
Buy. It is estimated that the money spent on both 
these areas between 2010-2014 (£115 billion) 
would be enough to build some 6.8 million 
state-backed homes at current rates of subsidy, 
which would be enough to solve the housing 
shortage overnight, although rent and house 
prices – and therefore landlords – would probably take a drastic hit.

As the state has stepped back, the private sector 
has failed to step up. The drastic fall in the 
number of state-built homes since the 1970s 
simply hasn’t been sufficiently offset by the 
number of privately built homes. Since the 
recession, the building of private sector homes 
has been concentrated in fewer hands, with lots 
of small and medium-sized firms going under. 
Larger developers are reluctant to increase the 
numbers of homes they build, as Toby Lloyd of 
housing charity Shelter deftly puts it: 
“Housebuilders are profit-making developers, 
that’s their job. Why would they build more homes to sell them more cheaply?”

Making better use of what we have

It’s patently obvious that more homes need to be 
built consistently over a number of years to try 
and alleviate the shortage of decent and 
affordable homes. But there’s also a strong case 
to be made for using the properties that already 
exist but are sitting dormant. According to the 
Empty Homes Agency, there are more than 600,000 
empty residential properties in England, 200,000 
of which have been empty for six months or more. 
Based on statutory homeless figures, that’s 
nearly enough to provide each homeless person with two properties.

Mark Hemingway, Chair of the Empty Homes Agency, 
told me: “Properties that lie empty can blight 
neighbourhoods, represent a waste of our housing 
stock and mean that we are underutilising 
brownfield land that could readily provide much-needed homes for people.”

Charities like Habitat for Humanity Homes already 
do work in this area. They have a scheme that 
renovates disused properties on behalf of the 
landlord, before renting them out via housing 
associations at affordable rents. They have 
completed dozens of such homes, but what is 
needed is a more widespread approach that can 
bring whole derelict streets en masse back into use.

In addition to more traditional derelict 
properties, there is a growing trend of 
“buy-to-leave” investors who buy homes – 
especially new-builds – simply as assets that 
accrue value and therefore it’s easier to leave 
them empty. Quantitative statistics on this are 
notoriously hard to come by, but there is much 
anecdotal evidence of it. In one new-build tower 
block off Old Street, London, only one-third of 
the addresses were registered for both council 
tax and voting – a clear indicator of occupancy. 
If the limited supply that is created is being 
gobbled up by investors instead of being used as 
homes, this represents a serious problem. It 
seems high time some law to prevent this, or at 
least a viable tax to dissuade it, is implemented.

Building a better future

There is much at stake in tackling the crisis 
caused by Britain’s grossly unbalanced housing 
market. On the one hand developers, investors and 
buy-to-let landlords are reaping astronomical 
profits. Since 1996, property in the UK has 
performed considerably better than any other 
asset, with a return on investment as high as 
1,400% over that period. At the sharp end of the 
scale are those forced to stay in temporary 
accommodation, live in caravans or even sleep 
rough – all of which have risen dramatically over 
the last four years. And then there are those in 
between, potential first-time buyers priced out 
and families being hit with ever-increasing rents 
on the private rental market.

The money spent on Help to Buy and other 
demand-side schemes would be better invested on 
increasing the supply of housing, especially by 
building affordable homes for tenants that were 
ring-fenced from investors – or, crazy idea as it 
might be – social housing. The current Tory plan 
to extend the Right to Buy scheme to housing 
association tenants is nonsensical, as it will 
only benefit those who don’t need help – tenants 
who already have both secure and affordable 
homes. Perhaps the most fundamental shift 
required is to stop viewing houses are purely 
investments for the rich; they should be homes for the rest first and foremost.

Image courtesy of Craig Rodway via Flickr, used under CC Licence.
About the writer

Joe Turnbull is a culture critic and political 
commentator who has written for the likes of the 
Guardian, Frieze, House Magazine, Apollo 
Magazine, a-n News, thisistomorrow and 
Garageland. He is also the Politics Editor for 
the Inky Needles publishing group, as well as 
Publications Editor for Art Map London. Since 
graduating with a first class degree in Politics 
and Modern History from the University of 
Manchester, Joe has been working freelance in the 
realms of publishing and journalism. Joe’s 
writing often explores the lines of intersect 
between politics and culture, looking not just at 
overtly political art, but at the politics of 
cultural production and reception. He is also 
interested in geopolitics and counter-culture.

Go to writer’s profile page
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