British housing stock in crisis

WITH four boom and bust cycles over the past 40 years, a growing population, particularly in London, and the state withdrawing almost altogether from building social housing — the sector is in crisis in Britain.

Over the past 20 years, the numbers owning their own homes has dropped significantly to 64%, rental social housing has dropped from 30% to 18% of the housing stock and the number renting from private landlords has doubled.

According to the Joseph Rowntree Foundation’s research, young people and especially those with young families on low incomes or who need support, are particularly badly affected. Over the next five years, the number of house owners under 30 will halve, meaning an extra 1.5m will be competing for private rentals.

The high rents and housing costs are pushing an increasing number of people into poverty, with private renters living in poverty doubling over the past 10 years, they found.

From a huge housebuilding programme that abolished slums and damaged housing after the Second World War, the Thatcher government began moving to take the state out of providing accommodation. There was a massive sell-off of council housing, with the best moving to private hands, leaving the local authority responsible, with cuts in their budgets, for the worst and with tenants who could not afford to buy.

They were prevented from borrowing because this would have gone on to the government’s debt, so housing associations were encouraged to take over. Being non-profit, their debt did not go on the state’s books, and councils were allowed to sell their stock to them with the government absorbing any debt on the property.

Some councils disposed of all their housing and associations grew from having just 13% of social housing to having 54% in two decades. New housing is financed by government grants of between a third and a half of the total cost, with the rest coming from bank loans or money raised on the capital markets.

For-profit housing associations have been allowed since 2008 but, in 2010, housing grants were cut by two thirds, forcing them to borrow more, which meant higher rents. This increases the cost to the state, as up to three quarters of housing association homes are social housing, with tenants dependent on housing benefit to pay the rent.

The state regulates the rent size for the housing associations and has recently pegged social housing rents at 80% of the market. This is pushing rents, especially in central locations, out of the league of associations providing social housing.

The ‘bedroom tax’ that insists on single people being forced out of their homes irrespective of their age or the years they spent in the property, is creating a huge problems, moving often elderly people out of their communities.

The government’s ‘Help to Buy’ scheme which guarantees mortgages, and qualifies buyers at just a 5% deposit, rarely helps those most in need to hold onto their homes and the cheap loans are criticised for feeding price rises.

A new law to have councils rezone sufficient land to meet housing demand needs over the next six years has failed to encourage developers to build enough to meet demand — an estimated 300,000 a year.

The result is an increasing reliance on private landlords. James Meek, author of Private Island, which deals with privatisation, says the result is that “they now spend 20 times as much on rent as housing”.

UK

> Population: 64m.

> Social housing: 18%

> Population at risk of poverty: 22%

> General government spending for housing and community amenities as % of GDP: 5%