How do you fix a housing crisis that has its foundations in policy decisions that go back decades? Unsurprisingly, there is not one answer.
The issues of high house prices – illustrated by the large swathes of Great Britain in which key workers are priced out – as well as a lack of affordable rented homes and homelessness will need a wide range of measures to tackle. We asked experts for their ideas.
“The UK’s housing affordability crisis has been building for decades, with younger generations locked out of home ownership and spending long periods of time living in often high-cost, poor-quality private rented accommodation,” says Lindsay Judge, research director at the Resolution Foundation thinktank.
“Sadly, if anything, the pandemic has made housing even less affordable for young people.”
Judge says a fresh approach is needed that includes building more homes in high-demand areas of the UK, such as the major cities.
The National Housing Federation, which represents housing associations across England, suggests new skills and methods of construction could help in future. “This includes building homes in factories out of materials such as timber frames, and then assembling them on site over only a few days,” the NHF says. “Such methods enable homes to be built more cheaply, to a higher standard and more quickly.”
The NHF says research from the National Audit Office has suggested that if modern methods of construction are used instead of traditional bricks and mortar, it could be possible to build up to four times as many homes with the same amount of on-site labour.
Improve the private rented sector
Judge describes the private rental sector as the “‘wild west’ of Britain’s housing stock”, and the Resolution Foundation says it should be professionalised. The thinktank suggests policy should be “moving to indefinite tenancies, and creating a tenants’ loans system to tackle the mounting arrears crisis without causing mass evictions”.
The campaign group Generation Rent says private tenancies should be reformed. Dan Wilson Craw, the group’s deputy director, says this will “give renters the certainty that they can live in their home long-term, and can plan their lives – whether or not they have a decent shot at home ownership”.
Many tenancy agreements last six months, or a year, and after that households can be asked to move on. This makes it difficult for people to put down roots and for families to plan for schooling, and generally means an extra cost for renters who have to arrange a move.
“Growing numbers of renters are reaching their 40s having been unable to save enough for a deposit, with little prospect of a bank lending a mortgage if it won’t be paid off until retirement age,” says Wilson Craw. “They therefore face renting in insecure tenancies for the rest of their lives, and no proposed home ownership initiatives will overcome this.”
There are also problems around rental deposits, with tenants asked to find a downpayment before they have money back from their existing landlords. The National Residential Landlords Association says as part of the forthcoming renters’ reform bill “the government should develop either a financial bridging facility or a deposit builder Isa to make it easier for tenants to move home without needing to find money for a fresh deposit each time”.
The NRLA is also calling for tenants to get more help to use existing rules that allow them to challenge rent increases they believe to be unfair in tribunals.
Overhaul property taxes and mortgages
Despite changes in recent years to rein-in buy-to-let through tax changes, Generation Rent says the system still encourages speculation in property, to the detriment of aspiring owner-occupiers.
“Landlords can get interest-only mortgages, which puts them at an advantage over owner-occupiers,” says Wilson Craw. “Council tax bears little relation to a property’s value, so a wealthy household can pay the same tax on a home with three spare bedrooms as a family of four crammed into a two-bedroom flat. These policies incentivise investors to put as much money into property as they can get their hands on, pushing up prices.”
Help struggling renters
“The economic fallout from the pandemic has left millions of families worried about paying rent,” says Darren Baxter, housing policy and partnerships manager at the Joseph Rowntree Foundation thinktank. “The government should immediately introduce a targeted package of grants to support renters in arrears, ensuring that they can stay in their homes.”
In March 2020 the Local Housing Allowance (LHA) was increased to cover the bottom 30% of rents, but from April this year it will be frozen again in cash terms, meaning the gap between rental costs and support available will start to widen again. The Joseph Rowntree Foundation wants the government to reverse its decision to freeze LHA so that it is recoupled to the real cost of renting.
The NRLA says housing support in the benefits system needs to reflect the average cost of renting in any given area.
Sort out pay
High housing costs is one part of the equation, but the other is pay. In recent years wage increases have lagged behind house price rises. Many of the key workers the Guardian has included in its analysis have jobs in the public sector jobs, where pay rises have been frozen for years.
Baxter says: “Many key workers are employed in sectors with higher levels of insecurity, low levels of pay and few opportunities to progress, such as care workers and delivery drivers.
“Alongside increasing the supply of genuinely affordable housing and better support for renters on low incomes, we need to see the social security system strengthened, employment rights improved and continued commitment to increase the national living wage.”
And of course, build more affordable housing
Everyone we asked agrees that more affordable housing is needed. Currently, about half is provided by developers through section 106 agreements on new private estates and blocks. The Joseph Rowntree Foundation says plans to replace that system with a national infrastructure levy, the details of which are unclear, need to ensure that there is not even less social housing built in future.
Several of the groups which responded to us cited research for the National Housing Federation and Crisis that was carried out by Heriot-Watt University. The research says 145,000 affordable homes should be built annually for the next five years, of which 90,000 a year should be for social rent. This is the lowest-cost housing that councils and housing associations provide, with rents tied to local incomes. In recent times fewer than 7,000 new homes a year have been created in this category in England.
“The bottom line is, you cannot solve affordability without genuinely affordable homes,” says the housing charity Shelter. “That means we need to address the chronic shortage of social homes in this country. This shortage is at the heart our housing emergency.”
Shelter points out that building social housing will be an investment, as it will cut the housing benefits being paid to private landlords.
The Joseph Rowntree Foundation, says the rules around the right to buy should be changed, so that councils get to keep all of the money raised from sales. “The proportion that can be reinvested to build more social housing should also be increased,” Baxter says.