Economy 27 June 2012 Rich homeowners, poor renters, and so they shall stay Government policy is on a collision course with itself. Print HTML The reason for Britain's chronic housing problem is that the rent is too damn high. Not just the rent, of course. House prices are too damn high as well, and that leads to the housing benefit bill being too damn high and even the cost of commuting being too damn high. We know how to reduce rent and house prices, as well. It doesn't take instituting rent controls (a very dangerous proposal, which has the potential to do more damage to the nation's housing stock than the sell-off of council houses ever did), nor does it take changing the legal background to renting to allow tenants to "lock in" to lower rates with long-term contracts. It's a very simple case of supply and demand. The rent is too damn high because supply is too damn low. The solution to our housing problem is as simple as sprinkling abodes liberally across the nation. The problem is that no one with the power to do so actually wants to reduce the cost of housing. For the 66 per cent of the country who own their own homes, such a policy would be disastrous. The expectation, barely dampened by the recession, that house prices will rise forever, has led to too many gambling their financial survival that there will never be a slump. As long as houses are seen as a safe asset, rather than a potentially-risky investment, then government policy will always have to be to support that view. Consider what happened when three 100m-high towers, which included 4,500 homes, were considered for White City in West London: Nicki Grinling, 43, who lives in the St Quintin Estate in North Kensington, said locals were furious at the "underhand way" the plans had been handled: "We've always had fantastic vistas to the west, we see the beautiful sunsets and get lots of light. None of the buildings are higher than two storeys. It has always been the charm of this area, you don't feel like you're in central London." It may well be the case that building those – comparatively small – towers would have "spoilt the character of the area" (and cast shadows over the Camerons' West Kensington house, to boot). And although Grinling doesn't say so explicitly, the character of complaints like this always carries a financial subtext – house prices will be depressed if the building goes ahead. This is obviously an issue of intergenerational fairness. 49.5 per cent of owner-occupiers are aged 55 and up, while 56 per cent of renters – in the social and private sector – are below 35. When action is made to protect house prices, the former benefit at the expense of the latter. But it's also one of equality more generally. The regions where planning permission is easiest to get are the North East and North West, where planning permission is granted in 94 and 90 per cent of cases; in London and the South East, it is granted in just 80 and 84 per cent of cases, respectively. The richer an area is, the harder it is to build something new and affordable in it, and so the more wealth is entrenched in those areas. The planning reforms introduced by the coalition, in the form of the National Planning Policy Framework, includes a presumption in favour of development - this is a good idea, but doesn't come anywhere near resolving these fundamental contradictions. It's not just that wealth becomes concentrated because younger, poorer people can't move in to the area. The raft of permissions required to build new houses serve many aims, from environmental to community cohesion, but the interests of the propertied are always addressed above those of the dispossessed: You can object if a change of use or new development will overlook your property, overshadow your property or cause additional noise. "I was here first" is a fundamental tenet of how we deal with development in this country. So public policy becomes a case of trying to help those who can't buy into the system do so, without harming those already in it. These two aims are irreconcilable. It is hard to buy a house because supply is constrained, but increasing supply will drop prices. Old housing policy laid the contradiction clear. Building council houses can not be seen as anything but increasing supply, and consequently depressing prices. But current policy hides the conflict. By shifting housing expenditure from house building to paying the rents of social tenants, the government is able to pretend it will all come out in the wash. And when the constant drive to increase the value of property pays off – as it always would – in soaring housing benefit, the government can cap that, too. And then lower the cap. And scrap housing benefit entirely for under-25s. Something's got to give. Two government policies are aimed head-on. Their collision may be happening in slow motion, but that's no mercy to those caught in the middle. › How Osborne humiliated Tory minister Chloe Smith Sold! And probably entrenching generational divides. Photograph: Getty Images Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter. From only £1 a week Subscribe More Related articles The free market? 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