Housing in the United Kingdom

Whose Crisis?

Brian Lund

• Publisher: Palgrave Macmillan
• Year: 2019
• ISBN:
  9783030041281
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

In this book, Brian Lund builds on contemporary housing crisis narratives, which tend to focus on the growth of a younger 'generation rent, ' to include the differential effects of class, age, gender, ethnicity and place, across the United Kingdom. Current differences reflect long-established cleavages in UK society, and help to explain why housing crises persist. Placing the UK crises in their global contexts, Lund provides a critical examination of proposed solutions according to their impacts on different pathways through the housing system. As the first detailed analysis of the multifaceted origins, impact and potential solutions of the housing crisis, this book will be of vital interest to policy practitioners, professionals and academics across a wide range of areas, including housing studies, urban studies, geography, social policy, sociology, planning and politics.

© The Author(s) 2019

Brian LundHousing in the United Kingdomhttps://doi.org/10.1007/978-3-030-04128-1_1

Begin Abstract

1. The Housing Crisis

Brian Lund¹

(1)

Manchester Metropolitan University, Manchester, UK

Brian Lund

Email: [email protected]

End Abstract

The media, think tanks, political debate and academia are replete with ‘housing crisis’ accounts. Press headlines proclaim ‘UK facing its biggest housing shortfall on record’ (Independent 2018) and ‘The Tories are failing to fix Britain’s housing crisis’ (Sun 2018). ‘Think tanks’ declare that a ‘Capitalist revolution in housebuilding is necessary’ (Adam Smith Institute 2018) and analyse issues such as ‘How the broken land market drives our housing crisis’ (New Economics Foundation 2018) and ‘The future fiscal cost of ‘Generation Rent ’’ (Resolution Foundation 2018). Academics offer ‘Radical Solutions to the UK Housing Crisis ’ (Bowie 2017) and Dorling (2014) has proclaimed a ‘Great Housing Disaster’. An examination of housing crisis references by MPs revealed a ninefold increase between 2006 and 2015 (Hudson 2015). Prime Minister, Theresa May , backed the crisis account declaring ‘Our broken housing market is one of the greatest barriers to progress in Britain today’ (May 2017).

Fatalism has accompanied these narratives. Pundits claim that housing is now the ‘classic wicked problem ’; deeply entrenched, complex and unpredictable (Taylor 2015). Resignation to events seems to have permeated the top civil service. Appearing before the Select Committee on Public Accounts, the Permanent Secretary to the Ministry of Housing, Communities and Local Government (MHCLG), when asked if she agreed that housing crisis will ever be resolved, replied:

It will continue as it has done for decades. I agree, and that will show itself primarily in affordability and, in some places, in homelessness . I am simply being honest with you. (Dawes 2017)

Politicians stress that the housing problem is deeply embedded. Sajid Javid , when Secretary of State for Housing, Communities and Local Government, said ‘for decades the pace of house building has been sluggish at best’ (Javid 2017a) and Chancellor of the Exchequer, Phillip Hammond , asserting ‘there is no magic bullet’ to rectify the housing problem (Hammond, quoted in Daily Mail 2017).

Crisis stories usually spotlight the post-2004 homeownership decline as the emergency hallmark with boosting new house construction the favoured remedy. Yet, the current crisis has deep-seated roots, located in long-established cleavages in UK society based on class , age , gender , ethnicity and place . There are diverse housing crises and overcoming them requires more than a step change in housing supply.

Until 2016, the electorate seems to have accepted the ‘wicked problem ’ story, tolerating high prices, lower space standards, exorbitant rents , declining homeownership and homelessness , as if resigned to the idea that there was no alternative to the inevitable outcomes generated by market forces. Crisis victims must wait patiently until the market solved the problem. However, as the housing situation deteriorated, its generational dimension became more pronounced and the class , gender , ethnicity and place cleavages embedded in the crisis intensified. The 2016 European Union referendum and the 2017 General Election demonstrated a changing public mood. In Greek, crisis—κρίσιc—means both a ‘turning point’ and a ‘judgement’. The electorate delivered a verdict on Conservative Party housing policies: the housing crisis had become a political crisis.

Homeownership

The press focuses on homeownership decline as the main housing crisis dimension. The Daily Mirror (2016) stated that the ‘UK housing crisis was now a ‘‘national emergency’’ as number of homeowners plummets to a 30-year low’ and the Daily Mail (2018) announced ‘The end of the home-owning dream’. The homeownership rate in England fell from 68.7% in 2004 to 65.2% in 2010. This trend persuaded post-2010 Conservative-led governments to introduce measures to try to stimulate owner-occupation such as Help to Buy loans, a 3% extra Land Stamp Duty Tax levy on second homes and a reduction in tax concessions for private landlords . Nonetheless, the owner-occupier proportion in England continued to decline, reaching 62.6% in 2016/2017 (MHCLG 2018a).

In a new attempt to boost owner-occupation , Teresa May’s government exempted homes costing less than £300,000 from Land Stamp Duty Tax (LSDT) if bought by first-time buyers , thereby giving them a further advantage over private landlords in the housing market . This measure, combined with the long-term impact of earlier initiatives, may increase the homeowner rate but, as Corlett and Judge (2017, p. 6) claim: ‘Even in a best-case scenario millennials will not achieve the same homeownership levels the baby boomers enjoy’. Indeed, some commentators allege that homeownership is now a ‘fetish’ or a ‘cult’ (Posen 2013). It is an idealistic aspiration and ‘generation rent ’ must be satisfied with renting. The Guardian (2016) announced ‘Home ownership is unrealistic’ and Sean O’Grady (2016), writing in the Independent , declared, ‘Newsflash, young people : owning your own home isn’t a human right — your sense of entitlement won’t solve this’. In the New Statesman , Julia Rampen (2016) said ‘The property-owning democracy is dead, so build one for renters instead’.

The overall owner-occupation figure masks marked changes in homeownership rates according to age , with owner-occupation increasing in retired households but falling amongst working households (see Fig. 1.1).

Fig. 1.1

Homeowner proportion by age : England 2003/2004 and 2015/2016

(Sources Department for Communities and Local Government [DCLG] [2017a]; Office for National Statistics [ONS] [2003])

One reason for the homeownership decline amongst younger people has been the increase in house prices relative to incomes. Cribb et al. (2018a) plotted the average UK house price and the average net income growth for those aged 25–34, revealing that between 1995/1996 and 2015/2016 net income grew by 21% whereas house prices increased by 156%. They state:

…in 2015–16 almost 90% of 25-to 34-year-olds faced average regional house prices of at least four times their income, compared with less than half twenty years earlier. At the same time, 38% faced a house-price-to-income ratio of over 10, compared with just 9% twenty years ago. (Cribb et al. 2018a, p. 1)

The house price hike pushed mortgage payments as a proportion of first-time buyers ’ mean take-home pay from 19.0% in 1996 to 33% in 2017, ranging from 20.5% in the North to 64.9% in London (Nationwide 2018), despite the reductions in mortgage interest rates after 2009. Raising a deposit became a significant homeownership barrier. In response to 2000s credit boom, alleged to be responsible for the post-2008 recession, the deposit necessary to become a homeowner increased. In 2006, the average first-time buyer deposit across the UK was £15,168, but, in 2017, it was £33,899. In London, the average...

Table of contents

• Cover
• Front Matter
• 1. The Housing Crisis
• 2. The Slow-Burning Fuses
• 3. Housing Crises
• 4. Location, Location, Location
• 5. Future Housing Requirements
• 6. Making Better Use of the Existing Housing Stock
• 7. Increasing New House Supply
• 8. Conclusion: The Politics of Change
• Back Matter