Part I: Britain's Housing Crisis
[The British Government Department for Communities and Local Government defines ‘affordable housing’: ‘...as additional housing units (or bed spaces) provided to specified eligible households whose needs are not met by the market.’ ]
The lack of affordable and available housing continues throughout Britain as the population increases and businesses expand. Large urban areas such as Birmingham and London and smaller towns including Cambridge and Oxford have experienced economic growth and as a result an ever increasing demand for residential housing.
The problem of affordable housing is not a new or recent problem with local planning councils and the British government having addressed the issue with new schemes to help provide the relief that so many communities need. What is interesting about this situation is that it is not only residential housing in short supply but other property sectors in need of new investments are in healthcare facilities and student accommodations for universities.
A historical review by building merchants Hitchcock & King examines the causes of a lack of affordable housing in London but the situation over the years could be found in other cities such as Birmingham and Liverpool.
The population in London was at almost 1 million in 1801 and saw steady increases from the 19th century to the beginning of the 20th century and by 1931 the average household was occupied by four people. By the time World War !! began in 1939 the local population in London had risen to 8.6 million residents but the average number of people in residences had begun declining.
With the war ending the local population would decrease continuously until the 1980’s as a result of post-war deindustrialization and movement outside the city to the suburbs and other cities.
In the 1990’s the population the London grew to 440,000 residents with an average home consisting of 2.38 people.
By the 2000’s London began to have faster growth of new residents and by 2011 the number households was at 3.3 million. Average household size increased to 2.48 people.
Between 2001 and 2012 the population of London continued to dramatically increase and not just in the city but Outer London as well.
The result meant that by 2012 the London population had an additional 930,000 city dwellers increasing the total population to 8.3 million the most residents ever recorded at the time. Because the increase in average household size went beyond what had been expected thus causing a lack of residential home supply that could not cope with the demand.
In a white paper published in February 2017 by the Economist reports that the 2015 median home price for England and Wales was almost at nine times median earnings. The report states:
‘Young people are bearing much of the burden: in the past 25 years the rate of home-ownership has fallen by 30 percentage points among 25- to 34-year-olds. Small wonder that Sajid Javid, the communities secretary, on February 7th boldly declared that the housing market was “broken”. Presenting a long-awaited white paper, Mr Javid presented a few sensible policies to boost housing supply. Yet the plans fall well short of what is needed.’
Previous government schemes to ease the lack of housing stock attempted to provide 250,000 new homes per year which was expected to help keep home prices from rising but not since the years of 1979 and 1980 were that many houses actually completed.
The Times reported recently for the year 2017 that 217,000 new homes were built in Britain but this number was 83,000 less of the 300,000 the government says is needed per year.
One issue the white paper reported was in regards to ‘land banking’ with developers buying lots for development and then waiting for consent prices to increase. Not surprising builders deny this is happening with the white paper saying:
‘The white paper in effect proposes a “use it or lose it” rule: councils will be able to compulsorily purchase land if developers are failing to build. Extra support will go to help smaller housebuilders challenge the local monopolies sometimes held by big firms.’
Other suggestions currently considered by local planning authorities are opening land set aside as Green Belts to developers. The Green Belt land was originally designed to help control growth in certain areas and to keep land open for other uses. The initiative began in 1947 but is considered to be outdated with the land needed for local development.
For the buy-to-let sector The Times reports:
‘A fifth of England’s population lives in accommodation owned by a private landlord, double what it was in 2000. Rents went up 15 per cent between 2011 and 2017 and the average couple in the private sector spends half their salary on rent.’
As for social housing :
‘In the 1960s, the supply of new homes hit a post-war peak of 400,000 a year, but this tailed off in the 1970s and 1980s. The number of new affordable homes being built slumped to a 24-year low in 2015 of 32,110 before marginally increasing to 41,530 in 2016. The number of social rented homes fell more than 2 per cent between 2012 and 2015 — a loss of 95,755 dwellings.’
Over the past few years initiatives have been introduced by the government to help increase the development for residential property and assist buyers.
First, the 2013 Help to Buy equity plan offering five year interest-free loans on new-build homes. This has helped in the purchasing 144,826 but the Times reports that this plan may allowed home developers to inflate purchase prices. Additional steps include the chancellor abolishing the stamp duty last November on the first £300,000 of a home worth £500,000 for the first time borrower.
Government funding of £9.1 billion until 2021 to be provided to housing associations and not for profit developers for the Affordable Homes Programme. Its expected this will help build nearly 25,000 homes.
These new initiatives will certainly aid in developing the much needed homes but will this be enough to meet the long term housing shortage issue and what will be the reaction by advocacy groups when it comes to residential planning?
Next in Part II : Pending Legislation in the House of Commons and London Mayor Sadiq Khan and his 2016-2021 Home for Londoners Programme.