Labour has an affordable housing problem, not an immigration one


7:11 pm - June 12th 2011

by Éoin Clarke    


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Labour lost almost half its private renting voters between 1997 to 2010. The largest loss was at the last election dropping from 36% to 25%.

Bearing in mind that 18-35 are the ages people are most likely to rent privately, it should be no surprise that they were also the age categories who deserted in the largest numbers. In fact 46% of Labour’s lost voters where aged 34 or younger, too young to have voted in any General Election before 1997, thus they are first generation Labour voters.

We stopped attracting young private rental voters.

If one examines where the private rental voters deserted to after 2005, the answer is stark.  27% of lost voters deserted to the smaller parties including the BNP & UKIP. This leads some to conclude that immigration mismanagement caused Labour’s downfall.

But this is too simplistic, in fact its more likely that the problem was affordable housing. The evidence for this is that between 1997 and 2010 Labour only lost 22% of its social renting voters and 28% of its home owning voters. This is a much lower rate of leakage than private rental voters.  

The reason the figure was vastly higher for private renters is that rent costs an average of £8300 a year which is double the cost of social housing. Considering that only 27% of private renters receive a penny of Housing Benefit these costs are being met from their own pockets.

To equivocate this problem as an immigration problem is to pander to right wing thinking. 

New Labour’s great shame was that it stopped building affordable rental housing. There is a 1.6 million shortage of social rental housing in the UK since 1979. In the last year of a New Labour government 320 LEA rental houses were built.

This inevitably pushes private rental prices up. Thus whilst the perception admittedly manifests itself that ‘Poles’ are taking up all the good rental properties, in effect this ignores the fact that the state stopped supplying good housing stock for rent.

In the next twenty years, 10 million more will need housed. This is unsustainable.

This is also a gender problem.  Crucially, 56% of lost voters were women, who are twice as likely to leave their parents home before they are 24 years old than men, and thus are exposed to the costs of living quicker than their male counterpart.

Thus the target for Labour, among other things is to win these young people struggling to pay private rental costs to the cause of Labour. It’s not use saying that young people don’t vote, because this data only measured those who actually did vote.

So what is our solution at GEER? We have submitted a 4,000 word costed plan to the Labour Party to build 100,000 homes a year for private rent. The homes would only be eligible to those who do not qualify for social housing.

The rents would be much more affordable than current private rental prices, and controlled not by the state but a non-profit making body- we think Co-Operative Housing. For more details of the plan, please get in touch.

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About the author
Eoin is an occasional contributor. He is a founder of the Labour-Left think-tank and writes regularly at the Green Benches blog.
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Reader comments


How ironic that the ad at the bottom of this page is for findaproperty.com

I think this is about right – though obviously (because it’s a blog post) only a part of the truth.

However, on top of this, I’d say that concern about immigration is often a proxy for concern about housing – which I wrote about during the election:

http://liberalconspiracy.org/2010/04/20/how-the-right-hijacked-immigration-and-how-to-deal-with-it/

People do say that immigration is a problem when you talk to them. But what the above answers is a big bit of why they think immigration is a problem – they have been told that it is to blame for the housing crisis. No one has given any different analysis, and so they have believed it.

Of course, the other half of the problem is that they have been told that immigration is to blame for structural unemployment and for stagnating wages. Again, they have been given no counter arguments, and so they’ve gone along with it.

1 final thing – whilst I agree that there is a housing crisis, and this is part of the problem, private rental is also a good proxy for people who face a number of other circumstances – younger people earn significantly less, proportionally, than our parents did. The ‘flexible labour market’ has made it very hard for people to settle down and build communities/families, etc.

So I think that everything you say is probably right, but it’s only (reaonably enough, given it’s only one blog post) part of the picture.

3. Just Sayin'

This completely misses the point. There isn’t a shortage of houses, there’s rather a glut of greed-driven Buy-To-Let investors sucking up the supply. What is needed is either an outright ban on multiple home ownership (save for not-for-profit housing associations), or failing that, severe tax penalties to discourage the practice.

4. Eoin Clarke

Just Saying,

BTL needs regulation for sure… Landlords made £24bn profit last year.. 20% of their homes had no central heating.. and 1.5million of them are described as decrepit..

So you’re certainly not wrong!

3. Much better that houses should remain on the market and still out of the price range, and thus inaccessible, to those that need the rental accommodation, right? 😎

Far from stiffling this practice, and thus constricting the rental market and driving up prices, the opposite should be encouraged, especially in areas where houses are being left empty and in need of renovation…something that could be provided by landlords in exchange for some kind of benefits to them.

The empty houses situation in the UK is something Labour spectacularly failed to deal with, either through not tackling those councils hording these wasted spaces, or by not establishing the conditions for the market to solve our housing shortage problems for us.

Agreed. But this problem can’t be solved without getting our paranoid obsession with England’s green fields. We have to be clear that the right of the majority to live in decent and affordable housing comes before the desire of some small rural communities to look out over rolling fields.

7. Eoin Clarke

Reuben,

I dont know enough about the Greenfield sites to answer properly, I’ll track down on GEER spokesperson on Environment and get them to respond

We have to be clear that the right of the majority to live in decent and affordable housing comes before the desire of some small rural communities to look out over rolling fields.

And the “right” of future generations to enjoy some vestige of a countryside?

6 – Except that a lot of people who don’t live in rural communities nevertheless have a sentimental attachment to the unspoiled English countryside.

That said Ferdinand Mount suggested in his Mind the Gap that the working classes should be encouraged to move out to the countryside and that the result might not necessarily be the eyesores that some fear.

People in private rented flats didn’t desert Labour because they are spending more money on rent and would prefer to pay more in taxes to subsidise rent in state-provided homes.

They deserted Labour because people are changing their minds about whether a bunch of politicians are the best people to run a trillion pound economy and whether politicians are the best people to designate house building services.

If Labour wants to win back the private renter as a demographic, it needs to understand why they think paying rent to a landlord is better than paying taxes to the state for the same end product – namely a home over their heads.

@9: Have you ever been to Hattersley? What could go wrong?

I see that if you reverse the order of the sentences in my last comment, I’ve answered my own question.

In any case, I’m quite happy paying a 100% premium for the privilege of not having to live on a council estate.

Totally agree that we need more quality homes for those in the middle – no home if a social home, not able or wishing to buy. Housing associations, as providers of affordable housing at scale, would be perfect to build and let these new homes. But we also need more social housing for those who can’t afford private rents. Main thing we need though, which would put off many buy to let landlords, is proper security of tenure for those who rent. If you rent your home, pay your rent and treat the property well your landlord shouldn’t be able to turf you out at a moments notice. Provide more rented homes with decent security of tenure, please!

Dr Clarke, there are hundreds of thousands of properties being left empty and going to waste. Allowing people access to these homes ought to be the top priority.

@5

Much better that houses should remain on the market and still out of the price range, and thus inaccessible, to those that need the rental accommodation, right? 😎

One of the main problems with the more parasitical members of the BTL crowd is how they modify their properties prior to renting. The main demand for homes is for 3-2 bedroom properties, new properties get built to this specification to meet this demand. The BTL’s then buy blocks of em up and convert them to several 1 bedroom or studio properties, which no one, excepting students or economic migrants, really wants to live in. The rent rates for 2-3 bedroom properties then rise or remain high with the shortfall, and the slum landlords rise their poxy butchered property’s rents to match. Then they wonder why they sit empty most of the time. Indeed if it wasn’t for housing benefit they’d be in for a bit of a shock.

It’s only because they own so much and their rents so extortionate and people so desperate that it even becomes a workable business model.

16. Eoin Clarke

Birdie,

Excellent point..

40,000 unfilled homes in the UK with street homelessness of 41000.. what are we waiting for I wonder?

@10 The council housing list backlog disputes your version of events.

Thanks for response.

I take it the 40,000 are those homes already to go? Estimates vary as to the total number of empty properties that are waiting to be put into use:

Telegraph: 1,000,000
Guardian: 500,000

Meanwhile Scottish Councils will be given new powers to increase council tax on Scotland’s 25,000 long term empty homes raising up to £130 million over four years …

Why can’t we do that here in England?

interesting reframe, feeds into the construction industry and is a temporary mop for low skilled labour.

however, this is 2011, and such unsustainabily building fixes are problematic

20. Oliver Hutchings

You’ve hit the nail on the head! Every time I walk past a pleasant looking field or woodland I always think to myself “Yupp, what we need to do here is concrete this place over and build a council estate! And by God if we don’t have enough people for it already then let more people in to fill it!”. It’s the same when I’m waiting in queues or in traffic jams, we just don’t have enough people filling up the roads and shops! As for the pathetic amount of money we spend coping with the strain immigration puts on public services, well it just isn’t enough! I mean, it’s not like we’re in financial crisis. I’ve seen the light! Let’s have no immigration restrictions at all! Thank you liberal conspiracy, I don’t what I’d do without you.

Birdie (14) – bingo!!

Derelict property, be it houses or what used to be shops were one of the visible legacies of Labour’s term in office. That they never did more to encourage the rebuilding and sale of this property is something I never got my head around.

Labour also quite deliberately encouraged the spiralling of house prices to fuel the economic boom of the late 90s/early 2000s so in that sense got what was coming to them.

http://outspokenrabbit.blogspot.com/

Very interesting post, but what is GEER? You use the acronym without saying what it stands for, or giving a link, and I can’t find out through Google because it’s a common surname.

ndv: http://www.labourleft.co.uk/ it’s said in the author’s “about” 😉

24. Matt Wardman

Eoin.

First of all congratulations on putting the work in, but I hope you don’t mind a few questions.

1 – you seem to be trying to do direct addition and subtraction with % figures between elections with different numbers of base voters, eg in 1997 (Lab: 13.5 million voters) and 2010 (Lab: 8.5 million voters), on different turnouts. Why do you think these are comparable in those terms? If you used actual voter figures the differences would be more dramatic, but there’d still be correlation/causation…

2 – You also seem to be assuming that different votes amongst different types of tenure can be addressed by changes in tenure. Were those voters actually lost due to rental policy? You need to show that if you want to turn an economic argument into one you can apply to voting figures. Personally, I think you need another political narrative as to why renters left Labour.

3 – Your stats are completely unreferenced from this post. Not good. Though I did eventually find the Mori link over at GEER.

A couple of major points on your model if I may, which is described in detail here:
http://www.labourleft.co.uk/?p=24

4 – Could you explain how management/maintenance cost of around £2000 per property come into your fully costed model. That is the latest estimate I have seen for cost of managing social rentals, from here:

http://www.communities.gov.uk/publications/housing/managementmaintenancecosts

You give a cost of £100m to “run the coop” at your other post, but seem to put nearly all the rent to repaying borrowing. The cost of managing 1m homes will be around £1-2bn a year. How would it be paid?

This does *not* include financing costs. As a rough comparison, for new private rentals the management/maintenance cost usually runs at 10-20% or so of rent for a new property over the first 25 years.

5 – Why do you make a comparison of a single instance of minimum wage against an ‘average’ (which average?) rent of £687 and conclude that someone’s life would be dire? I’d have thought that in an average house there would either be: a – a family with various benefits, b – LHA or c – more than one minimum wage earner.

Or perhaps it was slightly rhetorical?

I’d like to see some work on the demand side for example looking at ‘green’ reasons why we should move away from benefit systems which encourage people to live apart, and also on damage being done by bad regulation – an example there is landlords who do not put in loft conversions because of the extra regulatory costs which can kick in with 3 floors.

Rgds

25. Matt Wardman

Need an edit button, Sunny – that last comment sounded a little sharper elbowed than I meant :-).

On empty homes, it’s worth noting that of the 726k latest “long term estimate” by the Empty Homes Agency, only 40% are “privately owned”.

http://www.emptyhomes.com/usefulresources/stats/statistics.html

Pareto would suggest to focus on the 60%. No, I don’t know where they are.

Long term empty usually means for more than 6 months, and I can tell you why a good number are empty; that is because the owners know that should a tenant refuse to leave in violation of their agreement, it will take up to 4 months or more to regain possession and they will be themselves homeless in the meantime, which can destroy any incentive for renting out a house while eg you are working abroad.

They also know that if they accept an LHA tenant, many Councils have a policy of instructing tenants asked to leave to break their contracts, then refuse to obey Court Orders for possession until the Bailiffs turn up at the door about 4 months later, under pain of being declared voluntarily homeless, which removes any chance of Council provided accomodation.

Make the system work, rather than punish those who are put off by the fact that it is broken.

“There isn’t a shortage of houses, there’s rather a glut of greed-driven Buy-To-Let investors sucking up the supply.”

You what?

An increase in the number of people offering houses to rent increases rents?

What?

As to the solution: houses are expensive in the UK because planning permission is expensive. Currently ag land can be had in the SE for £8,000 or so a hectare. You can (in fact, you must) put 14 houses on that. So land costs for a house around £600. Ish.

However, that same hectare with planning permission is worth £1.5 million or so. £100,000 per house for the planning permission.

Building costs for a nice three bedder are perhaps £100,000. You can make it much lower than this by using various prefab techniques but I’ve just built a good 2 bedder here in Portugal for £80,000.

So, new houses in the SE *should* cost £100,600 or so. If we didn’t have the restrictions on planning permission of course.

And as to “concreting over the entire countryside” of course we don’t need to do that. The entire built environment of England (for the UK of course it is much lower) is about 10% of land area. This includes all the roads, factories, warehouses, parks and houses. Housing itself is 5% ish. Offer planning permission on antoerh 2, 3% of England and houses will cost what it costs to build houses. £100k or so.

There, affordable housing for all.

27. donpaskini

Hi Eoin,

Interesting as ever. One question:

“So what is our solution at GEER? We have submitted a 4,000 word costed plan to the Labour Party to build 100,000 homes a year for private rent. The homes would only be eligible to those who do not qualify for social housing.”

People who are eligible for social housing are disproportionately likely to be women, from minority ethnic groups, disabled and/or on low incomes. So this exclusion would seem to disproportionately exclude people on grounds of gender and race and increase inequality.

I’m also very uncomfortable with the idea that the priority for affordable new homes should be people on middle incomes in the private rented sector, rather than reducing the absolutely grotesque levels of overcrowding and homelessness which exist.

So this would be fine as one strand of a larger programme which also involved a big programme of building social housing, but not if it is in place of that.

28. Mike Killingworth

[26] Tim, please explain to me why people who are already adequately housed in owner-occupation should support your programme, which will savagely cut the value of their homes. Also, it’s by no means clear to me that the demand is for greenfield sites, as opposed to existing urban areas – the answer may well differ depending on whether we’re looking at, say, a shire county town or a conurbation.

In any case government policy is to replace social housing with private renting (over 2-3 Parliaments); after all, as has already been noticed, it is the private rented sector which houses economic migrants who are the only workers companies wish to hire (because they are not likely to exercise their rights).

“Tim, please explain to me why people who are already adequately housed in owner-occupation should support your programme, which will savagely cut the value of their homes”

They won’t of course.

But the only way to get more affordable housing is to, umm, make housing more affordable.

Whether we build 100,000 new houses as LA owned, as coop owned, on subsidised rents, on market rents, for purchase or whatever, we’ll still be building 100,000 new houses and thus reducing the price of all other houses by whatever that increase in supply will reduce prices by.

And since that’s going to happen anyway, current house prices declining by whatever number of houses we build, why not do it the simple way? Just make it cheaper to build houses rather than taxing everyone to build them expensively?

@26 As I mentioned above, the 3 bedroom property that a buy to let investor purchases may well end up becoming 3 1-bedroom apartments before a tenant even moves in. This obviously benefits the BTLer as they will potentially have 3 times as many tenants paying rent, but it reduces the number of actually desired home sizes further, increasing demand for 3-bed properties and forcing up rents. Given that anyone keen on actually settling down will not want a single bedroom or studio apartment it should come as no surprise that letting agencies fucking hate trying to fill these apartments. It’s like pulling teeth and a bit of a false economy.

31. Matt Wardman

Eoin

A little light dawns, maybe.

You seem (see http://2.bp.blogspot.com/-xbbom4Si6iI/TcBBQ4a7mdI/AAAAAAAABOg/5a86KRCFawM/s1600/pappy.png) to not have allowed £100m a year continuing running costs for each batch of 100k houses built from year 2 onwards.

So in 2015 you allow £100m to run 100k houses, and that is still the same £100m to run 1m houses in 2025.

One more. You also say £750k jobs would be created. How?

I have the HBF (your source) saying in March that:

“New housing creates an estimated 11 net jobs per £1m of construction investment”

Ref: http://www.hbf.co.uk/fileadmin/documents/briefings/HBF_Budget_Submission_2011_-_March_2011.pdf

That makes it just over 100k jobs while £12bn a year is being invested, which at approx £90k each per year looks realistic.

Have I missed something?

Rgds

32. Workman Fred

This will be my last post on this site as I just can’t handle seeing people in the land of make believe anymore!

For example, this
“they have been told that immigration is to blame for structural unemployment and for stagnating wages. Again, they have been given no counter arguments”

It’s NOT what we’ve been told, we can make up our own minds, were not stupid, it’s what we have seen with our own eyes after ALL these years of immigration pandering and what we’ve experienced first hand.

I’m not going to go on because the way I see it is many on here aren’t for the British working class at all and so I hope you get what you deserve, losing many more votes, like you should.
I hope those of you who want to look after all and sundry & not your own never need them to help you one day! You may be in for a big wake up call!

Good bye. I will be taking my short experience on this site with me and I will let as many people I know that they will get NO help from the likes of your kind!
I’m SURE they will return the favour!
Call me what you like! It still won’t win you votes! Your with us or your not!

The figures show a cost of £120k per home which includes materials, labour & planning. I can’t believe this includes the cost of land?

I also don’t understand how at £4,000 p.a. rent the house pays for itself after 17 years?

Agree that the £1,000 running costs are way to low – look at the everages assumed for Council Housing and it is roughly £2k per annum for management and maintenance plus a further £700+ for Major repairs.

34. Matt Wardman

@fungus

The build cost is believable, depending on the location and size of house, and crucially the land price.

@34 In London it is nowhere near the cost – to build a three bedroom costs a minimum of £120k. I can’t believe build cost would vary that much from London to the rest of the country – materials will cost the same and labour wouldn’t vary that much surely?

36. Matt Wardman

@35 Maybe, maybe not – depending on 286 different variables from exact spec to the number being built to state of the market.

It is a reasonable average for estimates, though, and not worth a fight about.

37. Matt Wardman

In response to your detailed point, I’d say that build cost, rates etc do varies vary significantly, and thing such as VAT (and if you get it back), disposal costs, and potentially Section 106 loading and so on (not applied to HAs I think) can make 20-30% difference easily.

Yet in areas of the Midlands you could buy your site *and* build 3 bed semis/townhouses for under £100k on only a couple of units.

I’m happy with £120k as a ballpark..

@37

I have some involvement in a London LA building new housing. s106 is applicable. Building on our own land costs are around £140-150k.

Interesting that you say that in the Midlands £120k is reasonable including land. Does this mean all housing will be built outside the South East?

The land still has to be found and planning permission obtained.

39. blackwillow1

If we want affordable housing we have to be strict about who lives in the properties that get built. Be it LA or private sector investment, the rules need to be changed so that new housing stock is used wisely. Old factory in the city centre, empty for years, ideal for conversion to apartments. By all means do it, but restrict who can actually live there. Single people, couples with no kids, students who share. Make them truly affordable by not charging the tenants for things they do’nt use. They have no kids so, why should they pay for schools and playgrounds in the local area? This would put more cash in their pockets, boosting the local economy. Families need space, living on top of each other is depressing, antagonising and especially bad for kids, of all ages. Instead of building houses with a pokey little patch of a garden and a garage, build a communal underground car park under each development, giving you more space up-top to create a spacious house and garden. OAPs, they like living as part of a community so, rather than putting them in sheltered housing all fenced off from the people living close by, create sheltered communities. Human nature dictates that if you put decent housing in a place that has gone downhill a little, the people who already live there will aspire to something better. If you leave a place neglected for too long, nobody wants to live there. Convert the empty factories, warehouses, abandoned schools and so on, put the singles with no kids in them. Make family size properties available to families, build better communities, with the needs of the people who live there being the main consideration. Ban buy-to-let sharks from operating in designated areas, push them out to the places nobody wants to live in and let them fight it out amongst themselves.

40. Matt Wardman

>The land still has to be found and planning permission obtained.

Correct, and thanks for the conversation :-).


Reactions: Twitter, blogs
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    Labour has an affordable housing problem, not an immigration one | Liberal Conspiracy http://t.co/a5LnXkD via @libcon

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    Labour has an affordable housing problem, not an immigration one http://bit.ly/j0KvGY

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    Labour has an affordable housing problem, not an immigration one | Liberal Conspiracy http://t.co/uAc8cnn via @libcon

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