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13 April 2024updated 15 Apr 2024 1:58pm

The housing crisis is inescapable

It's one of the UK’s biggest policy problems, with knock-on effects on everything from productivity to pensions and the demographic time bomb.

By Jonn Elledge

The point at which political obsessives are growing tired of hearing the same bloody message again is also roughly the point at which the first normal people actually start to notice it. This is a helpful thing to remember when you’re wondering why, say, Sadiq Khan is cracking a joke about his dad being a bus driver for roughly the three-millionth time. But it’s also a useful justification for any columnist conscious that they’re about to saddle up one of their hobby horses, yet a-bleedin’-gain.

So, yes. I’m about to talk about housing. Because the shortage, quality and cost of it remains one of our biggest domestic policy problems, with knock-on effects on everything from the productivity puzzle to pension provision to the demographic time bomb. And yet somehow, the merest glance at local Facebook groups or the continuing popularity of comment pieces of the form “young people don’t know they’re born” will suggest, some people still haven’t got the message.

Recent weeks have seen the Resolution Foundation think tank produce two different reports showing quite what a dreadful state the British housing market is in. On 8 April it published “Through the roof”, a report on the state of the renting market whose title, you get the impression, somebody was very pleased with indeed. Private sector rents, it found, have climbed by 15 per cent in the last two years, and are currently rising at the fastest rate on record. Partly this is a sort of catch-up effect following the pandemic; partly it’s a result of inflation, with earnings growth being immediately sucked up into higher prices. It is not, the report also finds, a result of any exodus by landlords, suggesting it’s not true that we can never do anything that upsets them even slightly for fear it might hurt renters too.  

Once upon a time, of course, all this would have been a minor issue, something that hit a small number of generally younger people, and even then mostly temporarily. Today, though, a sizeable and growing share of the population is not only in the private rental sector, but likely to remain so: nearly a third of below average income families headed by someone aged 30-49 are now renters, triple the number in the 1990s. “With many more families in the UK now renting, and renting for longer,” the Resolution Foundation report concludes, “the rising cost of doing so poses a significant challenge to living standards.”

Don’t imagine, mind, that it’s only renters who face such challenges. A few weeks ago now, the same think tank published a somehow even more depressing report (“Housing outlook”; less effort on that title, I feel), which showed that the British people face, essentially, the worst deal on homes anywhere in the developed world. As a nation, we spend more on housing than any other OECD country except Finland; adjust for quality, size and proximity to jobs, and we’re the bottom of the pile. In all, it concluded, the average person in England gets less floor space on average than the average person squeezing into the famously tiny apartments of New York City, and we pay 49 per cent more than you’d expect based the cost of other goods, simply to avoid the need to sleep outside. The only other housing markets that get within 20 points of that figure are Ireland (40 per cent) and Luxembourg (35 per cent). We’re not just the worst. We’re the worst by far.

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This, of course, goes a long way to explain our poor economic growth, low birth rate, general level of misery and plenty of other things, too. There’s no single policy that would fix this, and there are political barriers aplenty, but nonetheless we do know what levers to pull: better regulation of landlords and freeholders; build a lot more homes in the places people actually want to live. This is not an insoluble problem.

And there is, though I hesitate to say it, hope. Politicians of all parties have been implicated in the decades of missteps that have brought us to this point: this is not irrational, as higher house prices and lower building rates have been what a critical mass of the British electorate want, and the losers have been less likely to either remain in any given constituency or to vote. But one of the consequences of both the Tories’ failure to address these problems, and their shameless pandering to those who benefit from the status quo, is that Labour’s voter coalition will be far younger, poor and less securely housed than the one that elected it in 1997. A new government will have political space to be radical. 

Starmer and Reeves’s repeated promise of planning reform, at a time when they’re doing their damnedest not to look radical on anything, suggests that they’ve noticed this. (They may also have noticed that this is something they can do that won’t require up-front spending.) They’ve promised a renters’ charter, more ambitious than the reforms this landlord-infested government has been failing to push through for years, too.

On the other hand, though, on 11 April the party dropped its commitment to drive through leasehold reform within its first 100 days (though it claims it still wants to do it). It may also face temptations in office to focus on the needs of swing voters, lobbyists or donors. Just because political space exists, that doesn’t mean a government will use it.  

Which is why, of course, that you can expect those who care about such things to keep up the pressure. If you find yourself reading yet another column about housing in the next few months, remember why. 

[See also: How Britain legalised crime]

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