The housing market in Britain is a mess. Rising prices are making housing increasingly unaffordable. For years we have built too few homes where people want to live.
Successive governments have failed to tackle the problem. Prices rose faster under the last Labour government than at any time in history, and this was portrayed as a good thing, lifting the economy. The Coalition boosted demand through Help-to-Buy, for similar reasons. Future generations will have to pay for it and the impact on their lives will be far greater than the public sector debt from bailing out the banks and dealing with the economic consequences when the housing bubble burst. Social housing has steadily declined since the eighties under all governments. There is no political consensus on what is to be done.
Do other countries do any better, and why have Spain and Ireland done so much worse?
This book examines the housing policies of ten European countries, looking at their planning regimes, the way they fund and manage social housing, and regulate their private rental sectors. It comes to some controversial conclusions that are clearly explained by comparing the housing policies of different countries.
The affordability problem can only be solved by levelling the playing field between renting and buying. Taxation subsidises home-ownership and penalises the rental sector. The taxes may be levied on landlords but all have to be paid out of rents. This makes home-ownership highly profitable and renting much more costly, leading to a scramble to get onto the housing ladder so as to benefit from the speculative gains from rising house prices. It does not have to be like that. Market rents are much lower in countries with less of a bias against renting, and often less than we charge on social housing.
The gap between social housing and private renting is wider in the UK than almost anywhere else in Europe. Only Ireland has a bigger difference between private sector and social housing rents. Our social housing offers long-term tenancies at affordable rents but cannot possibly meet the needs of more than a lucky few. No other country gives so little security to private sector tenants, and most give them much more control over the maintenance of their homes.
We must build far more housing, but that will take a generation to have any significant impact on affordability. Can anyone seriously believe the government will now find the money to invest in expanding the social housing sector when it has not managed to do so for the last thirty years during which its share of the stock dropped from 31% to 17%? Social housing can make a very significant contribution but will not solve the affordability problem. That has to be solved by more even-handed taxation of home-ownership and renting. The private rented sector must be encouraged to develop a much better quality product to meet the needs of increasing numbers of families for whom home-ownership can only be a distant dream. Social housing should work with the private rental sector to lead the way.
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