The UK is in the grips of an urgent housing crisis. New home building has ground to a halt. Council housing is in scarce supply, with remaining stock in danger of being sold off at cut prices. High house prices and the giant deposits that go with them have made home ownership a distant, barely attainable dream to most young people. Instead of being able to save for a mortgage, more and more people are spending significant and unsustainable proportions of their salaries on private rent.
It is time for politicians to prioritise housing. In order to address its housing crisis, the UK needs to build more homes and better regulate the private rental sector.
Building New Homes
The private sector alone cannot be relied on to build the new homes the UK so desperately needs. Instead of addressing the problem directly through building more homes on brownfield sites the coalition government continues merely tinker with the planning system and threaten to build on the country’s greenbelt.
Where the government has failed, Labour councils are leading the way. Southwark, Camden, Islington and Hackney councils will deliver a significant number of new homes. Thanks to these Labour Councils, London will get its first new council housing in around two decades. In Manchester the Labour-run council has announced a groundbreaking deal with the Greater Manchester Pension Fund to deliver more than 200 new affordable homes in the city.
This is very welcome news, but local councils alone cannot solve the growing housing crisis in Britain. The next Labour government needs to put housing at the top of the agenda with a bold set of policies which will create the new homes, and jobs, that we so desperately need.
Regulating the private rental sector
Failure to address the growing housing crisis has led to an explosion in the welfare bill because of higher rents caused by a shortage of homes. Rather than being spent on new homes, government cash has poured into the pockets of private landlords.
Many people dream of owning their own home, but sadly they feel that it is just that, a dream. Both house prices and private rents are sky high. The credit crunch has made mortgages are harder to come buy, with banks requiring substantial deposits. Would-be first time buyers are forced to rent privately while they try to save. A combination of high rent, low interest rates and a general squeeze on living standards, makes it more and more difficult for people to save the money required for a 20% or even 10% deposit.
In 2001, just 10.1% of English households rented from private landlords. Today over 20% of households in the UK rent their home from a private landlord. As the number of private renters increases, so too does the need to regulate the private rental sector. High rents are fueled by high demand, short-term contracts and sadly often by unscrupulous landlords and letting agents.
From landlords who fail to adequately maintain their property, to letting agents charging rip-off fees and encouraging inflation-busting annual rent increases, renting private is all too often a frustrating experience.
In order to address this, many local authorities are turning to Social Letting Agents. Social Letting Agents are not-for-profit organisations that aim to connect good tenants with good landlords. Both landlords and tenants can feel ripped off by commercial letting agent fees. Social Letting Agents can also encourage good practice like longer term contracts and less frequent, more reasonable rent increases.
It is important to note that New York, France, Spain and Germany all have sensible, modern forms of regulating private rents. This includes limits on how much a landlord can increase rent by each year.
Time to prioritise housing
The coalition government are failing on housing. Likewise, housing was perhaps the biggest failure of the last Labour government. The New Labour housing agenda was one that focussed almost exclusively own home ownership at the expensive of the growing problems in other sectors of the housing market. So long as middle England’s already over-inflated house prices kept going up, the reasoning went, the government was doing its job. A revolving door at the Department for Communities and Local Government (and its predecessor departments) with a different housing minister almost every year only added to the sense that housing was not a priority.
Labour has realised that it is time to prioritise housing. Ed Balls’ call for the government to use the revenue raised from selling the 4G phone licenses to build 100,000 new affordable homes is an indication that housing is finally moving back up the Labour Party’s agenda. MPs like Jack Dromey are attacking the rental system for failing families. The is a growing recognition that “Right to buy” has eaten itself and while the building more houses will dramatically improve the situation, more needs to be done for people who are renting right now.