That there is a housing crisis in the United Kingdom is a point of consensus, rare among our political parties. Whether left or right, moderate or radical, plenty are willing to agree that there is a shortage of housing to satisfy the obvious and rising demand from an ambitious as well as ageing population. Here, David Orr, the chief executive of the National Housing Federation, offers his thoughts on the nation’s predicament.
Is there really a UK housing crisis?
You’d have to have your head in the sand to think otherwise. For all the talk of postwar recovery and property-owning democracy, the fact is that the fortunes of the housing market have been funnelled to only a small portion of our society.
The average UK house price has risen and risen again; many millennials have now resigned themselves to never owning a home. It takes 22 years, on average, to save a deposit for a home.
Practically every part of society is affected – even baby boomers, who see just how hard it is for their children to get a foot on the ladder. Around half of first-time buyers need parental financial support. The crisis is no longer just the preserve of those on low incomes in poor-quality rented accommodation. It is everyone’s crisis now.
Is the answer as simple as “build more homes”?
Yes, it is. We have taken something that is simple and straightforward and made it complex and difficult. For 30 years or more we have failed to build the number of new homes we need. Governments of all colours have had tenure policies and new products and favourite schemes and initiatives galore. The net effect of all that? We still have a housing crisis.
And we bear collective responsibility – our government, housing associations, local government, the private sector, everyone. So yes, we need to build more homes, but to do that effectively will require greater collaboration, innovation and vision. The housing industry itself has been pretty poor with its R&D.
In the past, other technologies – TVs, for example – were big and clunky. Over time, they became sleeker and more lightweight. So why has our approach to building houses remained so static? The idea of mass production (and this applies to housing) often elicits images of prefabrication, standardisation and therefore a lack of identity. Then you get a stigma attached to it and people are put off living in “prefabs”, and immediately the house you’re building is a hard sell. Housing associations, though, have some brilliant projects under way, producing quite beautiful factory-built homes.
What is the role of government in addressing the crisis?
If you’re going to build new homes on a significant scale, the key things you’re going to need are: land, money, materials and people to build them. All of these things are easier to deliver if there is a strong, clear political steer towards them.
I’d say that land supply is the dominant issue here. It’s the one area where government action is critical, and the housing white paper will need to address this. The best thing the government can do is set a course that is strategic and long-term. If a housing association goes to the capital market to borrow money, it’s going to incur a 30-year debt, so decisions that are made now are going to have an impact that will span generations.
Has land-related legislation helped or hindered the rate of UK building?
Planning can be complicated and drawn out, but I don’t think that planning consent is the principal reason for the current crisis. As a country, we need to get our head around land supply. There’s a lot of public land which could be used for building homes, but isn’t. Government departments will stall or insist on selling it to the highest bidder, which fails to recognise the urgency of our situation.
We need a grown-up debate about where new homes will be built. Consider that when you fly over Britain, you can see by the lights where the population centres are. Most of the country, as it stands, is dark. We are not overdeveloped. There’s a narrative about that which is just nonsense; and I think the public is much further ahead on this than is commonly recognised.
What are the roles of housing associations in finding a solution?
Ultimately, the private sector will do what it is legally obliged to do – it will build exactly the number of homes needed to maximise shareholder value. We should bank that, then ask: “Where will the rest of the new homes come from?” The only realistic answer now is: “Housing associations, which have an ambition to build homes for everyone at scale.” Housing associations exist to ensure everyone in the country can live in a quality home that they can afford. These will include homes for social and affordable rents, specialist homes for older people, homes for sale on the open market, and schemes such as shared ownership and rent-to-buy.
Our model is flexible and resilient. We don’t syphon profits out of the business to pay shareholders. We reinvest our profits in building new homes and delivering on our social purpose. The big private builders raise funds, build, sell, take profit and leave. That’s fine but it limits what they can do. Housing associations raise funds, build, make profit, reinvest, build more and stay. We don’t just build homes, we build communities. This is our unique contribution to ending the current crisis. We’re in it for the long term.
About the National Housing Federation
The National Housing Federation is the voice of affordable housing in England. Housing associations are united by a single purpose: to ensure everyone in the country can live in a quality home that he or she can afford.
For over a hundred years we have delivered on this front, whether that’s building low-cost homes for Victorian workers or helping young families get on the housing ladder today. We meet shifting housing needs by building more homes, by providing extra support when it’s needed and by innovating to tackle the challenges people face.
In changing times, we deliver where the private sector won’t and the public sector can’t. We generate income, which doesn’t go to shareholders, so we can reinvest all our profits in homes and communities.
If you share our sense of purpose, we want to work with you. If you want to end the housing crisis, you need to work with us.