IF supporter Tim Lund argues that London needs some real focus on housing to solve its housing crisis
Housing has to be the most important problem facing London – so much so that a recent Progress Campaign for a Labour Majority event on winning in London was described by Labour Uncut as feeling more like a housing policy seminar. And when one of those panellists, Dianne Abbott, came to speak at a public meeting organised by my local Labour Party, her title was “How Can we Solve the London Housing Crisis?” But the discussion then, reflecting the London-wide and national comment, failed to focus on …
What actually matters
…which is the supply of housing.* People want to live in London, especially young people, and they just can’t find the space they want. Maybe they can squeeze in somewhere, sofa surfing, stretch themselves financially to buy a place with a friend or partner, or choose to pay silly rents, but finding somewhere to live in such cases comes at the cost of paying half their salary to live here, when their parents would have paid more like a quarter.
London is a global city, enjoying a new type of growth which comes from people – especially the economically active – wanting to live and work in close proximity. The buzz word is “agglomeration”, and it happens in other global cities, which do not have the same peculiarities as we have in London. All are faced with the challenge of accommodating many more people – and with the wealth of such cities, it should be possible. Instead, our London politicians are probably more interested in…
Ways to evade the issue
I am frustrated by how politicians – and most ordinary people, I have to admit – allow their focus to shift from this main point or, worse, look for solutions which try to put people off living here. That’s also the UKIP, anti-immigration response.
But politicians of all parties are happy to go along with the interests of local property owners – who want continuously rising prices – and older social housing tenants who benefit from rents rather less than the 80% of market rents which social housing providers can charge new tenants. And for choice, both these groups are likely to feel they like how things are, and to not especially want newcomers. So their politicians resist any worthwhile expansion of the housing supply.
One day a time may come when a younger generation becomes more influential in setting local housing policy, and campaign for an increase in housing supply. Then we might finally make some real progress, but in the meantime …
On the Left, the typical evasion is to think only about social housing. We need more social housing, and local councils should have more freedom to build it; of all involved, local councils are best positioned to help increase overall supply. But most people don’t want to live in social housing: tellingly, at the public meeting I attended, there was significant dissatisfaction with the performance of both Housing Associations and local authority housing management.
So an expansion in the supply of private housing also has to be planned for. And just as I am agnostic about social housing versus private, I’m also agnostic about which is better out of the owner-occupied versus the private rented sector (PRS). But this is not popular, and politicians from both Left and Right can evade the issue by making a point of opposing the expansion of supply where expansion is most needed. They would do better for future generations – those are the ones without a vote yet – to focus on Shelter’s proposals that tenants should be given longer-term, more stable tenancies.
The typical evasion on the Right is to express concern about high housing costs – the inevitable consequence of inadequate supply – and subsidise demand with policies such as “help to buy”. It does help expand supply a bit, but encourages people into taking on more debt than they should.
Another evasion I have encountered – from the Right, but it didn’t have to be – is to say “we should focus on three- and four-bedroom houses”. It could just as well have been to focus on providing housing any group the policy advocate finds more socially desirable, with a subtext of excluding “the other”. But well-planned housing has a life well in excess of immediate local social needs, so as long as it can be flexible, housing is housing. To restate, it’s supply that matters.
Another evasion on the Left is the suggestion of rent controls, and the proper regulation of rogue landlords. This will be good for the people already with somewhere to live, but will choke off the supply of new dwellings in the PRS. I grew up living in the PRS, and my Dad still lives in the same rent-controlled house. Rent controls have been good for him, but understandably the landowners have not built many more houses to let since rent controls came in.
I support better regulation of the PRS, as argued for in the review of the sector undertaken by Dr Julie Rugg of the York Centre for Housing Policy (The Private Rented Sector: Its Contribution and Potential), which provided the justification for the London Borough of Newham to introduce their landlord registration scheme. But the report was not meant to undermine the expansion of the PRS.
A particularly dependable way to evade the issue is to suggest that any expansion of the housing supply in London is physically impossible or extremely undesirable on planning grounds. This is the cry of the Nimby, which really means “over my dead body”. It chimes well with disapproving comments about how much profit developers make. But new housing developments can be well designed, and encourage communal use of amenities – that is what our current generation of town planners, architects and engineers are trained for. Modern materials and technologies mean that they have far more options than their grandparents, when the last housing supply expansion was seriously planned.
In fact, we need to plan for the “densification of suburbia”, where housing has traditionally been built at very low densities. This should be by allowing generally higher-rise developments, so that people’s actual living space is not cramped. This was the strategy argued for by Prof. Ann Power of the LSE, joint author with Richard Rogers of the book Cities for a Small Country. It is naturally also supported by Campaign for the Protection of Rural England (CPRE).
Can we not make better use of existing housing supply?
We probably could, and there are various policies which could help, but listing some of them highlights the political difficulties. So to suggest they amount to solutions of the London housing crisis is also an evasion – even those I support.
Taxation
Increasing taxation on the value of housing will tend to encourage more efficient use of property, as could more targeted tax changes, so it is included here. It is also an area that can absorb the time and attention of armies of policy wonks.
Most widely discussed is increasing Council Tax bands or introducing a mansion tax, so that owners of houses worth millions pay something approximating their value. In practice, how this works would include forcing retirees on low incomes living in their former family homes to sell up. As reported by Labour Uncut of Tessa Jowell, a widely suggested candidate for London Mayor in 2016, “Jowell warned about the impact of the mansion tax on “asset rich but cash poor” families”. So there’s a clear signal to evade this possible solution.
The Intergenerational Foundation also recently published Why BTL equals “Big Tax Let-off”, highlighting how lightly taxed buy-to-let (BLT) property is, but closing such loopholes will not in itself encourage more supply.
There are also enthusiasts for a Land Value Tax – which sounds like a good idea, but so it has for 135 years!
“Bedroom Tax” & “Bedroom blocking”
The current Government’s attempt to get social housing used more efficiently** – widely described as the “bedroom tax” – is naturally attacked from the Left, while the suggestion that housing was being “hoarded” by older owner-occupiers who take more than they need (see IF’s Hoarding of Housing paper) was equally naturally attacked from the Right. Which just shows how difficult this will be.
A Downsizing Agency?
Such a body has been mooted, to help people such as the “asset rich but cash poor” identified by Tessa Jowell, in homes larger than they need, to downsize. Certainly a good idea, but not one to rely on for a solution to London’s housing crisis
Planning Policy
Planning is widely seen as the problem restricting the expansion of the housing supply, but it is also a problem in making better use of the existing stock. If only an elderly couple could get planning permission to convert their house to two flats, living on the ground floor themselves, and renting out or selling the upper floor, then they would be able to “downsize in situ”, and not face the wrench of moving away from their friends and associations.
*There is an ambiguity here, because supply covers both the primary market (building more homes) and the secondary market (making better use of existing homes). Both need to work better. I think the primary market is more important, but deal with the secondary market under “Can we not make better use of existing housing supply?”
** But only if occupied by non-pensioners!