What’s to be Done About Housing?
HUGH SULLIVAN
The economics of the housing crisis in Hastings are easy to summarise: too much demand, not enough supply. The result: a rise in house prices, currently curtailed by the increase in interest rates, but set to continue upwards if these rates are not maintained; a huge rise in rent levels, still going up; and a huge increase in the number of people who can’t afford them and are forced to present themselves as homeless to the council.
It’s a relatively new problem for Hastings. The town has experienced higher comparative house price inflation over the last ten years than any other English local authority area, according to Chris Hancock, Head of Housing at Hastings Borough Council. But that was from a very low base. Up to four years ago the town was still accommodating homeless public sector tenants as spillovers from other local authority areas in the south-east which were under greater pressure.
In March 2019 there were 146 households in temporary accommodation in the borough; by September this year, that number had risen to 525.
At the same time there’s been no increase in the overall residential population. On the contrary, according to figures issued by the ONS (the Office of National Statistics), the population of the borough has decreased by between 300 and 400 in each of the last four years, making a net aggregate reduction between 2018 and 2022 of 1,341.
HOUSEHOLD MULTIPLICATION
So why the increase in demand? There’s a reduction in the size of average households, so the overall fall in population masks a rise in units of separate demand. Family breakdowns also multiply household numbers, often making two units where there used to be one. Then there’s the shift in working patterns which has increased the ability of white collar workers, whether employed or self-employed, to work longer hours at home or at any rate out of office. DFLs (down from Londoners), typically in the creative sector, can enjoy the amenities of a coastal town while retaining their spending power fuelled by London-size earnings.
On the other hand, local incomes have not kept pace. More particularly for the high proportion of people who are unemployed, underemployed or retired, benefit levels have trailed far behind.
The rise in Local Housing Allowances – the amounts of benefit geared to rent subsidy – announced by the Chancellor of Exchequer, Jeremy Hunt, in his Autumn Statement last November should assist claimants considerably. The LHA level will be restored, he said, “to the 30th percentile of local market rents”. That means that, from this April onwards, the housing element of universal credit should be raised to cover the full rent charged for three out of ten units offered for private rental.
However, the supply side remains highly problematic. Hastings has a high proportion of homes in the private rented sector (29% compared to a Southeast England average of 19%) – a legacy of its history as a tourist destination. Much of this housing stock is in older properties with many flats in converted Victorian buildings. The costs of maintaining standards and achieving regulatory compliance are pushing landlords either to remove themselves from the market, raise rents or move to different business models.
AIRBNB
One of those models is of course AirBnB. At the beginning of September there were 923 active rentals across Hastings and Bexhill (the large majority within the borough of Hastings), most of them two-bedroom properties. Hancock is reluctant to point the finger at this factor in the market: it is council policy to encourage tourism, and the low number of hotel and other visitor lodgings in Hastings and St Leonards is frequently compared unfavourably with Eastbourne and other south coast towns. But it’s clear that a significant proportion of property is shifting to shorter term rentals that bring potentially higher returns with reduced tax liabilities.
Another factor influencing rental patterns is the longstanding proposal, adopted in theory by all the mainstream political parties, to abolish no-fault evictions under section 21 of the Housing Act 1988. The Conservative government, under successive prime ministers, has dangled this legislative change before parliament only to withdraw it. Labour have accused them of being bought off by landlord interests. But such a change in property rights could hardly be enforced retrospectively. The likely result of introducing the measure for future tenancies would be to provoke a wholesale exit from the sector of a significant proportion of landlords: that’s not going to help the supply shortage.
No wonder, then, that more radical solutions are looked for. Grace Lally puts the case for Housing Rebellion below. HIP aims to publish further viewpoints in the coming weeks.
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