By Colin Wiles, housing consultant.

At such a time it seems rather irrelevant to write about anything other than coronavirus, but last week the UK Housing Review was published by the Chartered Institute of Housing and it’s a reminder that our housing problems will endure long after this crisis has passed.

It’s a dense publication: almost 300 pages packed with commentary, graphs, and statistics, including some useful comparisons with our European neighbours. The opening chapter on housing supply dissects our abject failure to build enough homes over the past 40 years.

There’s now a need for 340,000 a year in England, yet the last time we exceeded 300,000 a year was in the sixties, with the average in the nineties being around the 150,000 mark, falling to 135,000 in the 2010s. So, a big deficit is building up. Readers of this blog will be familiar with our failure to build enough social housing, but the review also highlights problems with the planning system and the housebuilding industry.

A majority of local authorities don’t have an up to date local plan, and the cuts in staffing in planning departments, particularly in strategic planning, have led to problems in supply and the quality of the homes being built.

I sit on my town council’s planning committee and find that applications are rarely given sufficient scrutiny, and our recommendations are frequently ignored by councillors on the district council who have no knowledge of the local area.

But reform of the planning system on its own isn’t a magic bullet, the review says. The review quotes Sir Bob Kerslake: “…however slick, effective and effective you make the planning system you will not double supply through that route. That is for the birds…”. Part of the
answer, of course, is reform of the housebuilding industry and investment in genuine social housing.

The review critiques housebuilders – a sector that has “all the characteristics of an oligopoly” according to a House of Lords committee. In the 1930s the ten largest housebuilders had a market share of 6-7%, rising to 17-18% in the 80s – but by the early 2000s this had increased
to more than 40%. The top four now account for more than one third of all starts. The Lyons review concluded that mergers led to fewer homes being built as big builders seek to maximise their profits.

Meanwhile, smaller builders have been pushed aside. After this crisis is over, we really need to carry out an urgent review of the housebuilding industry in order to break up the big builders, encourage smaller ones, and increase the degree of competition.

The review has a chapter on homelessness, housing needs, and lettings, with charts showing the relentless rise in rough sleeping, homelessness, and the use of temporary accommodation by local authorities. Bed and breakfast use by local authorities increased from around 2,000 in 2009 to 7,000 by 2019, with the total of temporary accommodation “homes” in 2019 being over 80,000. A national scandal that must be addressed post-crisis.

The recent decision to use hotels for rough sleepers shows that governments can act decisively when they have the will. One of the big scandals revealed by the review is the stupidity of propping up the big housebuilders through Help to Buy.

Only around 25% of the housing budget in England has been devoted to affordable housing, with much of the remaining 75% fuelling house price increases by pumping money into the demand side.

Yet it doesn’t have to be this way. In Scotland around 85% has gone to affordable housing, and 74% in Wales. England has also lost a far higher proportion of its social homes to Right to Buy (RTB), with a big spike in sales after RTB was reinvigorated by the Cameron government in 2012. Since April 2012 around 181,000 homes have been lost in England to RTB, with numbers in Wales being negligible
and only around 2,000 a year in Scotland. Again, political choices made by the devolved governments can make a big impact.

The review concludes that councils and housing associations have a big role to play in building new homes, but the lesson from Scotland is that “grant is likely to be needed to facilitate development at scale”. I prefer to call it investment rather than grant or subsidy, because that puts investment in social housing on a par with infrastructure – a public good that pays for itself over time.

The chapter on European comparisons is interesting and there’s a particular focus on the UK as compared to the German and Swedish models.

Rent controls in Germany and limits on mortgage availability have led to a blurring between private and social renting, and the combination of quality, security, and certainty over future rents has made the rental sector competitive with homeownership. How different to the UK system where there’s often a stark social and class divide between owners and renters.

Mortgage debt in the UK accounts for around 66% of GDP, compared to just over 40% in Germany. So, German people aren’t loaded with debt and have more cash to spend on things like investments, cars, and holidays – all things that benefit the wider economy. Unlike us,
they haven’t allowed the housing tail to wag the economy’s dog. We still have a lot to learn from our European neighbours.

There’s much in this review to keep any housing geek busy for at least the next few weeks of lockdown. But, in a wider sense, the facts and figures here are useful ammunition in the battles that we will face once the lockdown is over.

Above all, this crisis has shown that it’s government alone that has the power and the resources to deal with a national emergency. Reliance upon the private sector will never be enough in the years to come, and the housing crisis must be tackled with the same levels of government resources and effort.