1. Governance
February 11, 2015

A Conservative solution to London's housing crisis: get councils building again

By Richard Holloway

I rent. I wish I could buy. But In London I feel as though I am more likely to win the lottery than buy a mouse hutch in Westminster, and I don’t even play the lottery.

I also believe in the power of the market: it’s one of the most powerful tools humanity has, and has lifted us to a position where the average person in Britain enjoys a better standard of life – in life expectancy, entertainment and nourishment – than a Roman emperor. In relative terms, we all live like kings.

However, the market can be misdirected and distorted, as it has become in housing. No properly functioning free market would allow the astonishing increase in London house prices to have little to no effect on the supply.

The issue is simply that, for the past 30 years, we have not built enough homes. There were two major house building spikes in the 20th century, one in the 1920s and 30s, another in the 1960s and 70s. Both saw local authorities and housing associations build homes on a grand scale; Labour and Conservative politicians competed to promise more homes than their rivals.

Things have changed a bit since then. Between an antiquated planning system, and a private building sector that builds at just the right amount to keep prices rising, we have built fewer and fewer homes over the last 30 years – especially few during the Labour boom years.

Playing interference

None of the left’s proposed solutions are up to much now, either. Daily the calls go up from those who misunderstand markets and politics to fix the London housing crisis. Cap rents! Licence landlords! Ban foreign buyers!

But capping rents will gut the private rented sector, causing many landlords to leave it entirely, selling up and putting Generation Rent in a pickle. Licensing landlords sounds great, until you realise that the licence fee will just be passed onto the tenant, increasing costs even further.

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What we need for bad landlords isn’t a licensing system, it’s an Uber: a way for landlords to rate tenants and tenants to rate landlords. Don’t increase the costs via local government, let the internet disrupt the market.

Banning foreign buyers sounds great – right until you realise that they account for millions of pounds of tax revenues for the UK economy. Even the costs for non-UK residents are about to rise. In December 2013 George Osbourne announced that Capital Gains Tax would be charged for non-UK residents, bringing us into line with the US, France, Spain and Switzerland.

None of these solutions is an adequate response to the problems we’re facing. The real solution is simple. We need to build more homes.    

Bring back council housing

There is space outside London; there is space inside London, too. It has one of the lowest skylines, and is one of the least densely populated major cities, in the world. If we want London to continue its global success we will have to build higher and wider. Outside London just 12 per cent of England is classified as built on. More land is taken up with golf courses than houses in Surrey. 

So how do we do this? Where there is planning permission on empty land for homes that has not been developed, we should empower councils to quickly build prefabricated housing. Pre-fabs have come a long way since the 60s; and if developers won’t build then others, including councils, should be emboldened to.

We should also give councils more flexibility to borrow from their Housing Revenue Account fund to build more council houses. If increased borrowing goes toward building new homes then all can benefit.

Some on the right of my party cannot move on from Thatcher’s Right to Buy. What they don’t want to face up to is that, to be able to sell those social homes to the upwardly mobile poor, they had to be built in the first place. There was a time when councils and housing associations built vast numbers of properties. They should start to do so again, but this time offering a wider mix of properties in a more pluralistic model of house building.

The work on intermediate rents in Westminster is one example of this – but national and local politicians of all stripes must rediscover the ambition of their predecessors and get building as the economy gathers pace.

That doesn’t mean a return to the old model of social housing. The “council homes for life” policy resulted in aberrations like the late Bob Crow who lived in a council house while taking a salary of nearly £100,000. (One wonders how many other lifetime council tenants could well afford to pay their way and yet stay put, preventing poor families from getting the homes they need.)

These new homes should instead be for there who have nowhere else to go. They should be on limited tenancies, so that as people’s needs change and they start to hold down regular work, they can move into the private rental sector – which, with more homes available, would face greater competition and a subsequent reduction in rents.

All quiet on the housing front

The explanation for national politicians’ lack of ambition in this area is obvious: it all comes down to votes. Many baby boomers have pensions tied up in property – and they vote, in vast numbers. Generation Rent do not – yet.

But there is hope. If this election is about the economy, then the next will be about housing. When Generation Rent start to have children while still renting, or living with their parents, they will start to vote.

A recent Shelter report showed softening attitudes to local house building, with people more likely to support new homes nearby. Perhaps NIMBYs are finally joining the dots, connecting their opposition to more homes with the adult offspring still living in their spare room.

Only when the population as a whole accepts the need to build will the next generation get the same opportunities its parents enjoyed. Until then, a few people’s view of St Paul’s will continue to be more important than a home for their children to live in.

Richard Holloway is a Westminster City Councillor and an internal business communications manager in the telecoms industry. He sits on the board of City West Homes and was for over 8 years an employee in the John Lewis Partnership. He is 30 years old, lives in a private rented flat in Pimlico and tweets as @rrwholloway.


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