Neoliberal Housing Policy

An International Perspective

Keith Jacobs

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429758256
• Edition: 1
• Topic: Architecture
• Subtopic: Urban Planning & Landscaping

Neoliberal Housing Policy considers some of the most significant housing issues facing the West today, including the increasing commodification of housing; the political economy surrounding homeownership; the role of public housing; the problem of homelessness; the ways that housing accentuates social and economic inequality; and how suburban housing has transformed city life. The empirical focus of the book draws mainly from the US, UK and Australia, with examples to illustrate some of the most important features and trajectories of late capitalism, including the commodification of welfare provision and financialisation, while the examples from other nations serve to highlight the influence of housing policy on more regional- and place-specific processes.

The book shows that developments in housing provision are being shaped by global financial markets and the circuits of capital that transcend the borders of nation states. Whilst considerable differences within nation states exist, many government interventions to improve housing often fall short. Adopting a structuralist approach, the book provides a critical account of the way housing policy accentuates social and economic inequalities and identifies some of the significant convergences in policy across nations states, ultimately offering an explanation as to why so many 'inequalities' endure. It will be useful for anyone in professional housing management/social housing programmes as well as planning, sociology (social policy), human geography, urban studies and housing studies programmes.

1Introduction

A report published by UN Habitat in 2016 estimated that there are 881 million households residing in the world’s cities who endure chronic housing-related problems, yet politicians seem unwilling to implement the necessary reforms to improve their plight (UN Habitat 2016). We can contrast policy in the current era with the 1950s when political parties in many nation states were more willing to address housing shortages by direct intervention. Consider, for example, the UK and the Conservative Party’s 1951 election manifesto that stated ‘housing is the first of the social services. It is also one of the keys to increased productivity. Work, family life, health and education are all undermined by crowded houses. Therefore, a Conservative and Unionist Government will give housing a priority second only to national defence. Our target remains 300,000 [homes] a year’ (Conservative Party 1951).

The UK Conservative Party manifesto was not just an aspirational statement of intent; the ambitious annual target for building new council homes was achieved by 1953. For the next twenty or so years, there was broad consensus across the UK political divide for both council housing and homeownership, at the expense of private renting. This consensus broke down amid the oil-shock stagflation and social unrest of the late 1970s and there was a political re-orientation to encourage far greater numbers of households to become homeowners even if this required incurring large debts. Whilst tenure transfers and working-class home ownership were not new phenomena, it was, in this period, that the ideology promoting homeownership intensified (Harloe 1995; Ronald 2008). Families and individuals were told to borrow and save so that they could eventually own their home.

The current UK government commits significant resources to boost owner-occupied housing to maintain the high value of property and only a small proportion on social housing. Data provided by the UK Chartered Institute of Housing (2016) in 2015/2016 showed that only £2 billion of the £45 billion ‘guaranteed’ for spending by the government on housing between 2016 and 2020 was assigned for below market price rental housing (just 4% of the total).

Why has this political re-orientation occurred and what are its societal consequences? One of the arguments set out in this book is that housing problems have intensified because predominantly affluent groups benefit from the status quo. Many established homeowners, banks and finance-related industries have an interest in seeing the cost of property increase, regardless of the long-term consequences. So, to see the current crisis as a temporary phenomenon or failure of policymaking is to overlook the reasons why the status quo persists and why the commercial sector has been so reluctant to build sufficient good quality homes at a price that is affordable for low-income households.

Housing policy can be viewed as successful insofar as it has delivered profit-making opportunities. It is helpful, at this juncture, to cite the observation of the US geographer Mike Davis who argued that ‘the idea of an interventionist state strongly committed to social housing and job development seems either a hallucination or a bad joke, because governments long ago abdicated any serious effort to combat slums and redress urban marginality’ (2006: 62). Davis was referring, in particular, to impoverished nations, but his depiction is perhaps valid for governments in more wealthy regions as well.

Conservative and centre-left governments have, as I have noted from the 1970s, sought to disengage from supply-side solutions. In many developed economies, governments have continued to support private ownership in the form of subsidies or tax exemptions for homeowners and landlords. Yet, young households who have taken out large loans to buy in the most expensive locations may be exposed to an increased level of financial risk. As Haffner et al. (2017: 170) observe, for this new cohort, homeownership has become ‘a precarious border in which households juggle their savings, spending and debt in order to attain or retain a foot on the housing ladder’. As more young people move to major urban locations, labour and housing markets will become more competitive, so this new cohort is likely to increase in size. There is now an overlap with many households struggling in the private market as ‘most marginal home buyers have little to differentiate themselves from renting, except that they hold a small stake in their property (including a material interest in its future price)’ (Haffner et al. 2017: 75).

The high cost of accommodation has made it especially difficult for those young people living in their parental home who wish to move out. In other housing-related areas, too, governments have fallen short; in many large cities, for instance, people living in outer suburbs are often disadvantaged because of inadequate or expensive transport links. Increasingly, roads are congested and basic municipal service provision often lags behind new development. As a consequence, in many large conurbations, residential neighbourhoods are becoming increasingly divided, with some of the well-off choosing to live in the resource-rich inner suburbs and thus leaving those on low incomes to reside in more remote areas further away from service and employment hubs.¹

The more acute housing problems are most evident in the poorest nations in the world, but even in rich nations such as the UK and the US, problems are rife. The extent of these problems in the UK housing market is revealed at certain key points, most recently the Global Financial Crisis (GFC) of 2007–2008. In cities such as London, homeownership within inner localities is largely limited to new entrants on very high incomes or those whose parents or grandparents can provide financial support. The socio-spatial consequences of the division between the rich and the poor are evident in most major cities of the world. Whilst impoverished inner urban neighbourhoods persist, particularly in the US,² many city neighbourhoods in the UK have become enclaves of wealth and privilege, whereas increased poverty and the impenetrability of the housing market have seen the more distant neighbourhoods become home to the impoverished and excluded (Desmond 2016). In London, for example, it was reported in the Financial Times that house prices in 2013 increased by over 10%, while average monthly rents in the private sector rose 3% from the previous year to £1,233 per month (Hammond 2013). Additionally, the number of people sleeping rough in England increased by 16% in 2016 (see Figure 1). The property market in London is seen as a safe haven by many foreign institutional investors who are buying new homes as a form of investment. The Financial Times (Hammond 2013) also reported that overseas buyers purchased some 70% of all newly built property in central London in 2013. London may be an atypical example because of its status as a global financial centre, but the market there reveals in stark relief many problematic aspects of the housing system that are not so easily discernible elsewhere (Watt and Minton 2016).

Figure 1Homeless man in London

Source: Allan Warren (GNU Free Documentation License)

Housing

Housing is integral to our well-being, yet we tend to take it for granted until something goes wrong or it fails to meet our basic requirements. For many individuals, residing in inadequate housing is a symptom of poverty. Yet for the affluent, a home provides not only a place of shelter but also a base from which to generate additional wealth (Smith 2008). Today, housing performs a role in reinforcing societal inequalities but, for a sustained period after the end of the Second World War, governments in northern Europe recognised its potential to bridge the gap between rich and poor. Though a dysfunctional housing system impedes economic productivity and accentuates social divisions, most Anglophone nations, particularly from the early 1980s,³ have been reluctant to commit sufficient tax revenue for investment in low-cost housing schemes.⁴ This reluctance can be traced, in part, to an aversion to welfare expenditure and an expectation from homeowners that the value of their property should increase over time. The perceived electoral power of property owners serves as a brake on governments who might consider implementing the measures required to address the housing shortfall and the suffering that it accentuates.

The questions that have motivated my investigation for this book are: first, why, despite considerable technological advances in construction and earlier periods of investment, are so many people still living in such poor conditions?⁵ And, second, why have relatively wealthy nations struggled to provide adequate housing for their entire populations? As I discuss, while government interventions have been beneficial for many well-off households, they have also failed many of the poorest. Indeed, millions of people are affected by housing problems, and yet we are still accustomed to accepting that their plight is of less importance than a buoyant housing market that remains profitable. If we reflect on the preceding seventy years or so, we can observe both continuities and dramatic changes. There is continuity in the housing choices we make. For much of the contemporary period, many of us residing in Anglophone nations have felt more at ease residing in traditional ...

Table of contents

• Cover
• Half Title
• Series Information
• Title Page
• Copyright Page
• Contents
• Figures
• Tables
• Boxes
• Preface
• 1 Introduction
• 2 The Enactment of Housing Policy: The Example of the United States
• 3 A Dream that Turned into a Nightmare?: Homeownership Policies and Their Implications
• 4 The Demise of Public Housing?
• 5 Homelessness
• 6 Housing and the City
• 7 Waking Up from the Dream? The Example of Suburban Development
• 8 Housing Futures
• 9 Conclusion
• Index