Why we Have a Housing Crisis
KENT BARKER
Less than 50 years ago, a third of all homes in Britain were owned and rented by local councils – about 6.5 million of them. Today councils own only around 2 million. Even considering those run by Housing Associations, we have still lost more than 2 million social homes during a time when the population has risen by 12 million people.
And the reason why so many fewer people live in social housing today? Margaret Thatcher’s ‘Right to Buy’ policy of 1980. Two million people bought their council house or flat with discounts of up to 70%. Worse still, councils were prohibited from using the money to build new council accommodation and were forced to hand the remainder of their stock to Housing Associations or ‘Arms Length Management Organisations’.
Then further Tory legislation in 1988 abolished controlled rents and rent tribunals in the private sector and introduced Assured Shorthold Tenancies, providing less security for tenants. This gave a major boost to landlords who, in addition, could now be paid housing benefit directly. The private rental sector increased from 14% of all homes in Britain to 20%. In 1996 John Major’s government introduced the right for tenants to acquire their Housing Association properties, further reducing the availability of rented social housing.
Buy-to-Let mortgages temporarily eased the shortage of private rental accommodation, but another Conservative government in 2015 cut tax relief on mortgages for property investors, dramatically reducing incentives for private landlords to enter the market.
Meanwhile the overall level of house construction has declined. In 1980 a quarter of a million were built. In 2014 it was down 44% to 140,000; it has only recently risen but was still fewer than 190,000 last year.
It is what some have dubbed a ‘perfect storm’. The social housing sector is decimated while private landlords are disincentivised. The number of new-builds are reduced as the growing population grows. Rent controls are removed allowing the market free reign. As the supply diminishes, simple economics dictates rents will rise.
Is there a solution? Many housing experts argue, first, give local authorities the resources – and the obligation – to return the provision of social ‘council’ housing for anyone who wants it and abolish the right to buy. Second, reform the 1988 Housing Act to create secure long-term private tenancies and re-establish rent controls and tribunals. And third, alongside the second, reintroduce mortgage interest tax relief for rental properties.
Finally, of course, we HAVE to build more homes – but not estates of expensive executive houses. What people need to get onto the property ladder are cheap and cheerful starter homes and flats.
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