Housing: six things that could be done

As Tim Leunig pointed out last week, housing plays an important role in most people’s concept of social mobility, a point highlighted in Stephen Gilbert’s piece over the summer recounting his own personal circumstances:

Last year I was probably the only MP to be elected while still living with my parents. Of course, I’d moved out of home and, like many others, had to move back again. It’s a symptom of the fact that housing policy in the UK is in crisis. We have millions of people languishing on social housing waiting lists, first-time-buyers priced out of the market and in private rented sector tenants facing increased rents with decreased security of tenure and standards.

But what are the options when it comes to the supply of and demand for housing?

1.Increase the housing supply: free up the spare bedrooms

The Intergenerational Foundation has pointed out that more than half of the over-65s live in homes with at least two spare bedrooms and overall more than a third of the housing stock has at least two spare bedrooms. Their solution is to suggest tax incentives to encourage people to move to smaller properties so that the overall supply of bedrooms is better used. A different but complimentary approach could be to increase the financial incentives to take in lodgers.

Either way, some people may object that having worked all their lives to make a home for themselves, they should not have to move or take in a stranger, which is why politically it is only carrots (such as tax incentives) rather than sticks (such as restricting the single person Council Tax discount if there are spare bedrooms) that are likely to be a runner. (However, the proposals to let councils to reduce or remove the Council Tax discounts on second homes could reduce their number and so see more intensive use of the housing stock via this route.)

In the social housing sector, the government is taking some moves on the equivalent issue, by – for example – making home-swapping easier.

2. Embrace families living together

One of the causes of increased demand for housing is the average size of households falling as the tendency of families across generations to live together has fallen. For the family members wanting to move out and get a place of their own, it would not be a popular thing to say, but one option is for politicians to decide that having more members of families having to live together is not necessarily a bad thing – and even can bring some benefits, such as in the case of older people. Don’t expect any party to headline this policy at a press conference any time soon though.

3. Reduce population growth

The other part of increased demand is increased population. The question of whether government should or indeed can significantly influence net migration numbers is often picked over. Less talked about is the degree to which services such as social security and health should or should not encourage families to keep below a certain birth rate figure. It is worth noting though this written question with David Laws has asked:

To ask the Chancellor of the Exchequer what cost savings would accrue to the Exchequer from restricting (a) child benefit and (b) child tax credit to three children only for children born after 1 January 2012 in each year from 2012-13 to 2020-21; and if he will make a statement.

4. Build more council homes / social housing

The number of council houses has taken two huge hits in the last thirty years: first the introduction by Margaret Thatcher of right to buy, and then the collapse under Labour in the building of new council houses. In 2010, there were only two new council houses built per Parliamentary constituency on average. Ask almost any MP about the housing casework they get at their surgeries and you will see how strikingly low that number is.

The current government set out plans last autumn to build 150,000 new social homes over the next four years, which will see the first net increase in the social housing stock for thirty years. That is a very welcome break from recent history but still leaves plenty of suggestions being made about how to fund more construction, such as the IPPR’s recent suggestion that council pension funds could be encouraged to invest more in social housing developments or the possible expansion of the Green Investment Bank’s role into providing more green housing.

5. Make it easier to build new housing

Most of the debate on this centres around the planning rules, but there is another, lesser talked about option. Even in areas of high housing demand and high property prices such as large parts of London, there are patches of semi-derelict land left that way for years and where building on it would make the site considerably nicer.

A long-standing Liberal Democrat policy has been to alter the perverse incentive in the VAT system, whereby building a new home gets less taxed than renovating an existing one.

Moreover, any form of tax on land values would strongly encourage getting land back into use as quickly as possible. Incentives could also be provided via financial support to land owners who cannot afford to (re)develop land.

But this is all also partly an issue of tracing land ownership, which can be remarkably complicated. I’m many months into an attempt to track down the owner of a patch of land near me, not because I want to build on it but in order to find out who is legally responsible for the dumped rubbish on it. The principle is however the same: tracking down owners can be hard and often there is only limited incentive for anyone to put that effort in. As a result, land continues to stand unused.

The government’s New Homes Bonus goes some way towards tacking that by providing councils with a stronger financial incentive to get empty homes brought back into use and new homes to be built.

At some point this merges over into…

6. Require landowners to use, let or sell property

Around 350,000 homes in the UK have been empty for more than six months. Given the IPPR’s prediction of a housing shortfall in England of 750,000 homes by 2025, getting a realistic proportion of those homes into use would not solve all the problems but could be a very major contributor.

So far the legal power to force land to be brought back into use are fair limited, with only 60 orders having been issued by local councils under the scheme brought in by Labour to let them force empty properties back into use.

What is your views on these options: which appeal the most or the least?