The 2020s seem to be the era of housing misery (at least for the two thirds of us who don’t own their homes outright). Mortgage costs are rising, as are rents for private tenants and in social housing – so why is there a shortage of affordable housing?
Margaret Thatcher set a paradigm for housing that every government since has largely stuck with, despite the evidence that it is harming the UK socially and holding it back economically. Let’s journey back to 1979. One in three people lived in council housing, private rents were regulated, tenancies were secure and mortgages were affordable to those who wanted them. Then the Thatcher government’s Right to Buy privatised a swath of council housing, followed by restrictions on councils being able to build more housing to replace them. Then, in 1988, rent controls and security for renters were ended.
In the new commercialised world of housing in the Nineties, buy-to-let mortgages enabled more people to become landlords, and many of them bought up former council homes and rented them out at higher rents and at lower quality. Social housing was left to housing associations, quasi-charitable organisations that were meant to be closer to communities and their needs. However, housing associations struggled to build the numbers of dwellings that were required. Without social housing, people in housing need were increasingly placed in private rented accommodation with housing benefit meeting the rents set by commercial landlords.
The Blair governments, keen to support the aspirations of home ownership and deeply suspicious of local government, accelerated this process. New Labour largely kept Conservative housing policies in place, encouraged councils to transfer their housing stock to housing associations, but invested money in building more homes (still not enough) and bringing social housing up to a “decent” standard. By the end of the Labour government, however, the proportion of people living in social housing was 10 percentage points lower than in 1997.
David Cameron’s coalition cut budgets for social housing proportionally more than others, as well as cutting benefits and forcing an increasing number of people into sub-standard private rented and temporary housing. On the planning side, coalition and Conservative governments were keen to scrap Labour’s house-building targets and give more power to local communities, which led to many housing developments being delayed or never built. Their other major contribution, Help to Buy, dumped more money into the demand side of housing in the hope it would encourage more house-building. Instead it raised the price of homes further.
The future is fairly bleak. Policies such as scrapping no-fault evictions or reducing interest rates will help in the short term, but the latter could serve to maintain high levels of demand on the housing market even if it eases the immediate pressure on mortgage-holders. But without a long-term, coherent vision for housing, alongside sustained funding and infrastructure to support it, there is no end to the dearth of affordable homes in sight.
This article was originally published on 7 August 2023.