Agreed. So I guess we should de-regulate our sclerotic planning system immediately? That being a pretty standard way of lowering house prices and allowing new houses to be built.

“courtesy of industrial-scale tabloid bombardment, most people would probably blame immigration and single mothers”.

“Most people” you see, are easily misled by the tabloids. “Most people” don’t have active grey matter, the way that we special insightful humans on the “left” have. “Most people” can’t add 2 and 2 together. “Most people” are easly misled by the tabloids into using erroneous tabloid mathematics, whereby, for instance, if they add 3 millions to 58 millions, they get the tabloid result – 61 millions, instead of what we know is the real total – 58 millions. As a result, they get a faulty tabloid impression that immigration has led to an increase in the number of people on this island. Silly ordinary people. How could that possibly be the case. They can’t be relied on to use their brains appropriately. They need guidance, from, em – us, on the left. That said, there is loads of room up in Scotland to build all future houses.
But first of all, ensure that existing housing is being used optimally. Ban “second homes”. That’ll easily free up a million houses. Won’t please the London chatterati, though.

And Yvette Cooper, an economist educated at Oxford, Harvard and the LSE, was minister for housing 2005-2008.

Trofim – given that immigrants aren’t being given free houses by the bucketload, indeed many don’t qualify for any housing assistance or benefits at all, they are essentially irrelevant to this debate. Unfortunately most people have no idea how the housing system (or immigration system) operates and thus find tabloid articles and myths easy to believe.

Nick – I agree house prices need to come down drastically, and one way of doing that is de-regulating the planning system. However when house prices even fell slightly, it almost bankrupt the entire financial system. So no politician is going to take action that would result in the slashing of prices. The best we can hope for is stagnation in list prices whilst inflation eats away at the real price.

“So I guess we should de-regulate our sclerotic planning system immediately? That being a pretty standard way of lowering house prices and allowing new houses to be built.”

The volume housebuilders are sitting on thousands of planning permissions to build new houses and doing precisely fuck all. Explain that, pillock.

I agree with this post Claude. It seems to be one of those issues which gets surprisingly little attention. Yes , we do need a million more homes in the next five years and then some. Sadly, as has been pointed out in the comments so far, there are truly massive barriers in the way of a comprehensive house building strategy:

Poxy planning laws, grubby developers ‘waiting for the upturn’, hordes and hordes of naysayers, countryside fanatics fearful of the ‘oiks encroaching on their ‘unspoilt beauty’ blah blah, homeowners bitching about the market value of their pile of bricks. It’s only a matter of time before some bright spark declares that “house building causes global warming” or is “bad for wildlife” etc.

There are other issues as well. There’s a general stigma attached to renting rather than owning, summed up in the words of a workmate of mine, “people who don’t own their home have got no self-respect”. There seems to be a widespread idea, probably unique to this country, that people who rent from the council or a landlord are “losers”.

Even when new houses are built they seem more like shoe boxes in which you couldn’t manually oscillate the proverbial feline.

Unfortunately I cannot even conceive of the next Govt. going for a massive house building program. It would upset far too many of their supporters and wealthy backers. Not to mention the Daily Express et al.

Sad to say Claude your post makes great sense but it’s never going to happen. Not in this country.

But without the massive shortage of affordable homes causing artificially high house prices the property price obsessed Daily Mail/Express readers wouldn’t have their house values pushed sky high! Keep up…

The volume housebuilders are sitting on thousands of planning permissions to build new houses and doing precisely fuck all. Explain that, pillock.

Because, pillock, they aren’t currently profitable developments. Have you taken a look at the housing market recently – especially for new builds? Have you also seen what has happened to the volume housebuilders over the last two years – the biggest of them was within weeks of bankruptcy, market value has gone off a cliff. They’re not in a position to spend large sums of money on developments that are unlikely even to be profitable.

An excellent piece, Claude but I fear the fight for sufficient affordable homes has as much chance of being won as the ‘war on terrorism’?

As I have said for some time I think we are struggling to keep up with health, and educational needs and I am not optimistic that these public services are going to improve, at least in the short term – but it looks like the housing sector highlights resource issues even more acutely, and it goes without saying that the lives of millions of UK residents are being be blighted by living in substandard accommodation?

We already have the likes of Daniel Hannan tripping over themselves to hand these problems over the market, and judging by his comments on the NHS his starting point will be that the state has failed to deliver.

@ 5

To expand on what Tim J says above, the issue is where developers have planning permission to build houses.

In a housing boom, sites that would normally be unprofitable to build upon suddenly become attractive to developers, a green field site outside a nondescript midlands town, for example. Once the bubble has burst the developers realise that no one actually wants to buy houses in the locations the developers previously thought they did. If developers hold thousands of planning permissions in these areas, quite clearly no houses will be built.

It’s my guess that developers hold these type of planning permissions, rather than permissions in an around the SE (and other popular areas) where people actually want to live. It would be very interesting to know where exactly developers hold these permissions.

“Yet how many people are aware that there are one million fewer homes available for rent from councils and housing associations than in 1979?”

This fact does not lead to this conclusion.

“Read that again: one million fewer affordable homes than twenty years ago.”

For there is an assumption in there. That only council or housing association homes are “affordable housing”. (And of course it’s 30, not 20 years.)

We’ve had a very large change in the housing market over that time period: the rise (the revival in fact) of the private rental market.

Now it is true that the headline price of those private rentals is higher than the headline price of council or housing association housing. But those on low incomes also get housing benefit if they are renting in the private rental market: making such private rentals just as “affordable” as council and housing association housing.

Yes, of course, I know, there are those who despise the very existence of private landlords, who think buy to let is the very spawn of the devil.

However, it simply is not true that a decline in the number of council and housing association homes is equal and equivalent to a fall in the number of affordable homes, not while we have the existence of housing benefit.

I offer as an example one member of my extended family: after a divorce and the forced sale of the family home she considered the two options available to her. Line up for a council house or go into a private sector rental. The cost to her would have been exactly the same (as a single mother retraining she would have had her council house rent paid or her private sector rent paid) making each form of housing exactly as “affordable” as the other.

Claude has made something of an illogical logical leap there.

(Just to forestall those who will ask why I have not, as a supposed champion of self-relaince, helped her financially I can only say that I have. £ five digit figure so far, since you ask.)

I repeat, as apparently comments containing inconvenient anecdotal information get deleted in this place:

“Trouble is, courtesy of industrial-scale tabloid bombardment, most people would probably blame immigration and single mothers. The reality, however, is different.”

Oh really? Prove it.

I have a friend (He is real) who waited 16 years for a council house in Camden, repeatedly pushed to the bottom of the list in favour of both the two groups you mention.

Nothing to do with Tabloid bombardment and everything to do with observing for yourself what is going on in ones own community.

Thanks to the insane behaviour of the construction industry in tandem with the banks here in Ireland over the past decade, one estimate places the number of houses and apartments lying empty at 400,000. That’s more than one spare residence for every four households. And it’s increasing all the time now that we’re re-entering a phase of net emigration.

Of course, it’s not like all of that property can be described as “affordable”. Nonetheless, the Irish constitution (even post-Lisbon) gives the state plenty of leeway to instruct owners of empty housing stock to cater for those in need of social housing.

Mind you, the downside — should anyone from Britain be considering a move westwards — is that the chances of finding a job over here are currently rather slim (yes, slimmer even than in Britain) and our social welfare system is already close to collapsing.

But you can’t have everything, eh?

One aspect would be to remove VAT on repairs to properties and increase the numb of craftsmen employed by councils. One of the issues is the large number of unoccupied properties in poor condition in the UK. Builing homes in the countryside where there is no work is not a solution to the problem. There are places in the UK where properties are worth very little. Knocking down properties and building new ones does not make too much sense.
What would happen if people were able to work on repairing a property for which they would receive part ownership? Much repair work requires unskilled labour which would be provided by the future occupier and the councils would provide the craftsmen.

The question of house builders sitting on planning permissions is a bit of a red herring. It is AN issue but it isn’t THE issue. Research commissioned by the Government at the height of the boom found that builders had implementable permissions representing about two years’ supply. That might sound like a lot but consider that large housing developments (which constitute the majority of new supply) can take 10-20 years to build out and almost any development, of a handful of houses, takes a year. Two years worth of permissions is not as shocking as it might sound. I’m not saying some builders don’t do it – they do, but consider this: in a situation where it is more profitable for a house builder to speculate in land than it is to build houses, something has already gone horribly wrong.

There are a whole bunch of reasons why the housing market in this country has got so badly out of whack. There is plenty of blame to go around.

Part of the problem is the shifting nature of Council/social housing and the relationship between subsidies aimed at people and those aimed at bricks and mortar.

In the heyday of Council house building, Council homes were not significantly cheaper than those on the open market. Council homes were not intended to be cheap – they were intended to be good. The idea was to drive slum landlords out of the market. After all, if you could have a decent home, properly looked after, from the Council, there would be no need to rent a sub-standard home from an exploitative landlord. In order to get a home you had to prove that you were capable of paying for it – not that you were so poor that you couldn’t afford anything else. Council housing therefore fulfilled a very different role from the one it currently fills (at least for new applicants).

However, for a whole series of reasons, Council rents came to diverge from open market rents. This had a number of effects, it concentrated the poor in the Council stock – making Council housing seem even less attractive than its poor design and worse maintenance would otherwise have done. It also made new Council housing ever more expensive to produce. Unlike in the 50s and 60s, when the rent from a Council property would have covered its cost of construction and left money to spare to pay for the land it was built on, the rental revenue from a new social rented property today will only cover 50-60% of the construction cost. And that is before you allow for the land upon which it is built – which is, itself much more valuable. The changed relationship between rents and incomes and between rents and construction costs is the real reason there is a shortage of social housing.

In my view, the stigma against Council/Social Rated housing isn’t nearly as strong as people think. Do you really imagine middle class people in London would reject a social rented property if they were offered it at a rent of £80/week? Of course not, the reason they don’t apply is because they won’t be allocated a property. They may have prejudices against the people who do get allocated properties but the middle classes are not alone in their unfounded animosities towards those who receive expensive benefits to which they are not themselves entitled. that is another matter entirely and outside the present issue. Anyway, if more middle class people lived in social rented homes, middle class people wouldn’t have the same degree of prejudice against them, would they?

Because social housing is not accessible to anyone who wants it (as it once was, on the basis of a waiting list) but only to those adjudged to need it, (on the basis of a housing register) few applicants are in a position to choose between the social and private sectors (if you can afford the private sector, you won’t get a social rented property). Because the social and private rental market do not overlap in any meaningful way, social rents cannot perform their original role of keeping standards up and rents down in the private sector. And yet, as we have seen, because social housing now requires so much subsidy to provide (try £100,000+ a unit in London) there will always be a shortage of it.

I realise that it is counter-intuitive to argue that the problem of social rented housing is that it is so much cheaper than the private sector. I realise that this may provoke a degree of incredulity but think how much social housing costs the taxpayer and who is the beneficiary of that largesse.

The minimum wage does not cover the cost of renting in the private sector. The average rent of a two bed flat in this country represents about 60% of a full time, post-tax income at the minimum wage. That is to say that the minimum wage can only be as low as it is because of the existence of a housing policy that keeps social housing costs way below the market rate. (the same also applies to the recipients of HB in the private sector). Seen this way, social housing is not a subsidy to householders, but rather a subsidy to employers. Employers can pay low wages because of the existence of a slice of the population who can accept wages far lower than the real cost of living.

The problem is that there will always be more employers who want to buy labour at below its true cost than there will be people who can afford to work at that price. Given the cost of building new social homes this shortage is likely to persist.

Almost everyone is worse off because of this – those in the private sector pay more for their houses (take on more debt) than they would if the social sector was able to ameliorate prices at the bottom end. The many many people who are being offered below cost of living wages but cannot access below market housing are being squeezed impossibly hard, (which is why young people live at home longer, share flats with their friends longer and marry later). Even those who are living in social housing are worse off. If they were paid a wage that reflected real housing costs they could choose how to spend it – either on housing or on something else and they could move. As it is, they are stuck in a property which they may not like with a landlord whom they may also consider to be below par but, if they want to move to a part of the country where there skills are better rewarded, they may see their rent triple – that’s quite a poverty trap.

The problem even exacerbates the North South divide. If firms can access low paid employees who pay similar sub-market rents anywhere in the country, they are insulated from some of the price pressure which might otherwise induce them to locate in Liverpool rather than, say, Oxford.

There are other issues as well of course – the way that right to buy has driven wealth inequality, the way that social housing concentrates social disadvantage and how on earth the current 20-35 generation, who can’t afford to make pension provisions because of the astronomical rents they are paying, will continue to pay those rents after they retire. But I simply wanted to explain why the shortage of social rented housing isn’t as simple as it appears. No government can will it into being in the same way that they did in the 60s, if for no other reason than it isn’t the same thing as it was in the 60s.

Housing is at the root of a huge number of the problems this country faces – inequality, debt, climate change, social cohesion and immigration to name but a few. This Government has ignored the full scale of the problem. Even John Prescott, the issue’s only high profile champion of the last decade didn’t really seem to get it. All in all, government’s failure to grasp the nettle can be seen from the parade of non-entities who have held the job of housing Minister since the mid-eighties.

No, I don’t know how you fix it but we start by being a bit more sophisticated than whining about house builders. That lets everyone else of the hook.

#11 Tim Worstall,
your meanderings make little sense. I stand by what I wrote 100%. In fact, even more.

a) Private sector rentals is not evil. So far, Tim W, you’re the only one who’s said that. Nice “distractor” there.

b) The property value since the 1970s has simply skyrocketed. It is totally different. You cannot seriously suggest that some very selective spare change granted to a few in the private rented sector is going to compensate for both the exponential increase in property prices and the near death and total deterioration of social housing.

I have looked at data between 1970 and 2004. The average house in the UK increased by more than 35 times.

c) Prices are at their highest ratio to incomes ever (read here<for more info).

Remember also than between 2004 and 2007-8 there was a massive hike which isn’t included in the data. Take a look at this chart. It’s nice and simple to take in.

I’m sure you have heard of the growing number of people who’ve been “priced out” of the so-called property market. I know you’re a professional contrarian but even you must be aware of that.

House prices have more than trebled in the last 10 years Salaries have gone up 54% (and the average would be much lower without the massive increases at the top).

In 2003 Average household income in England was = £34,197 Average house price = £115,18.
In 2008 Average income was about £38,302. Average house price =£197,000.

Most people can’t afford to buy and are left with little choice but to rent privately which has been a LOAD of money for a while. I’ve been doing it since the age of 18, I know a thing or two about it, unfortunately. And, see below:

d) “But those on low incomes also get housing benefit if they are renting in the private rental market”
I don’t know if you’ve ever tried to apply for housing benefits in the private rental market. Let me tell you it’s nigh impossible unless you are in a seriously dire state. If granted, the help is also very limited. It’s a totally different kettle of fish from the pre-1979 comprehensive social housing system.

e) You may want to reflect on the repercussions of having public money distorting and propping up the private property market on a large scale (with housing benefits in the private sector);

f) I’m sure we can all agree, left,right and centre, that to have semi-derelict underfunded “last resort” council estates (where only the most desperate are housed) is not good whichever angle you look at it from. From simple notions of living standards to social stigma to deteriorating communal living, and all the rest.

g) You’re an EU expert, Tim. You should know that the UK has amongst the worst ratio mortgage vs earning in Europe. Mortgages handed for 1,235,000 times people’s earnings. Cue effects on social mobility and, above all, massive housing bubbles and domino (or vomino) knock-on effect on the economy.

#15 George V

“In order to get a home you had to prove that you were capable of paying for it – not that you were so poor that you couldn’t afford anything else. Council housing therefore fulfilled a very different role from the one it currently fills (at least for new applicants).”

Spot on.

Tim,

Claude may have made a logical leap too far but, in your response, I think you overstate your own case.

Of course a property doesn’t need to be social rented to be “affordable” but, there are tenures like Homebuy and so on as well. And that is assuming that you overlook the idiocy of the term “affordable” in the first place. The price of properties on the open market is, of course set by what people can afford to pay. That is what prices are.

However, if you you are living in a home you cannot afford without the receipt of benefit, then you are not living in affordable housing.

The market rent is, of course, propped up by the fact that many people do get housing benefit. Rents would certainly be lower overall if HB could not be used to pay rents to private landlords. This is another absurdity of the system we currently have.

“The volume housebuilders are sitting on thousands of planning permissions to build new houses and doing precisely fuck all. Explain that, pillock.”

You may have to explain yourself in a little more detail. If they have attained exclusive licenses to build in certain areas, then that is hardly de-regulation, that is regulation working for the big players in a market (which is a perfectly standard outcome). They could not sit on thousands of planning permissions were it possible for others to start building elsewhere.

GeorgeV: “The market rent is, of course, propped up by the fact that many people do get housing benefit. Rents would certainly be lower overall if HB could not be used to pay rents to private landlords. This is another absurdity of the system we currently have.”

Very true – I’ve seen houses advertised online in some lower-rent parts of the UK where the landlord will actually charge *more* rent if the prospective tenant is on LHA (Local Housing Allowance, which has replaced HB) in order to get receipt of the full LHA. I’m sure this is illegal: but in my experience a lot of private renting is in some way illegal, and not only at the bottom end either.

The policy of not building council housing essentially comes from free market dogma – it’s just unthinkable to any of the main parties to do something so blatently socialist as build Council houses, especially New Labour which remains terrified of being accused of Marxism.

Ironically this policy ends up costing the taxpayer as more, and ‘distorts the market’ more too, as well as ending up with vast problems with insanitary slum rental housing – since they’re just paying private landlords to house people instead through LHA, otherwise they know there would be shanty towns as there were in the 1930s.

As for the idea that the shortage of social housing is caused by immigrants and single mothers: rubbish. It’s true that most of the remaining Council housing goes to people with small children, and that a lot of these are from ethnic minorities because they’re poorer than average. That’s not because these people are being coddled by the PC brigade but because the Council wants to avoid people with small children being homeless, and in London they literally have no housing available (even temporary rooms) to do any more than that.

At the bottom of my garden are the gardens of the houses of a cul-de-sac off the next road over. The block is lined by suburban semi detached houses.
In the last couple of years, a building company had made advanced plans to buy up about ten of the houses at the end of the cul-de-sac, knock them down and in their place build about six blocks of four storey flats and car parking spaces for the cars.
There was serious local opposition. Petitions were signed by many of the homeowners nearby, and people put up notices in their windows saying no to the development.
When the initial plans were turned down by the council, the developer made small changes to the plans and re-submitted them. Again there was the opposition, and again (months later) the revised plans were rejected by the council. As far as I’m aware, again, slightly altered plans have been submitted by the company – which are still basically the same. To cram more people into the space than lived there before, and turn the gardens into flats and hard-standings for cars.

I saw the plans, and it showed one of these blocks being built right up against the boundary of the bottom of my garden. Where at present there are just gardens and trees.

There is a similar development nearby that was completed a couple of years ago, and it’s horrible. The first thing you notice as you walk past are the ”Private Road” signs, and a notice from a clamping company telling you how any unauthorised cars parked there will be clamped and how much it will cost you to get your car released.

Even worse a bit further up the road (lined by semi detached houses) is another new development that is a ”gated community”. All these are homes for the open market, and I don’t know if affordable came into it.

The council estate at the top of my road is surrounded by parkland and woods.
Expanding it would mean building on this land. I wouldn’t like to see that (particularly).
But if it’s really needed, then I suppose that has to happen.

No one gives a fuck what happens on your estate, Damon. Twat.

Bernard, is it just my neighbourhood that no one has a care about – or anyone’s anywhere? If it’s the latter then that sounds a bit authoritarian.

I don’t actually own the place I live in. Does that make it any better?

Fuck knows- not as if I’m a serious commentor anyway, I’m more of a troll really.