Analysis: Empty homes and empty promises: Britains housing scandal
tony at cultureshop.org.uk
Tue Nov 24 13:45:57 GMT 2015
July 2015» Article
Empty homes and empty promises: Britains housing scandal
Houses should be homes first and not just investments
By Joe Turnbull
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 todays
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. Thats 8 million more people in
need of homes. But even this significant increase
in demand doesnt 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 Barkers 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 hasnt 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,
thats their job. Why would they build more homes to sell them more cheaply?
Making better use of what we have
Its 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 theres 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, thats
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 its 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 Britains 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 dont 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. Joes
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 writers profile page
+44 (0)7786 952037
Twitter: @TonyGosling http://twitter.com/tonygosling
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