We’ll never solve the housing crisis if we continue to blame it on house-builders and migrants

 
Jonathan Manns
Modular Housing Units Used For Homeless Shelters On L.A.'s Skid Row
We need to make greater use of modular construction techniques to make a dent in house price growth (Source: Getty)

England's housing disaster is well-publicised. Construction has not kept pace with demographic change and successive governments have failed to address the consequences.


The hotly-anticipated housing White Paper, out today, will sound an attempt to address this and some backlash against its proposals seems inevitable. It’s commonplace for us to blame greedy house-builders or uncontrolled immigration, but these are unhelpful distractions from the task at hand.

It’s true that the volume house-builder’s model is geared towards phased construction of new properties for sale over time, but the development industry is much wider than these few firms. For the majority, profit levels are set by the market, determined by what funders consider an acceptable return in an investment and financial risk management context. Competition keeps this under control.

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It’s also true that net migration has been an important component of population growth over the past three decades, albeit fairly evenly balanced with natural change arising largely from improved life expectancy. Importantly, even if there were no net additional migration, projected population growth would take at least three decades to level off. Our population will continue to rise.


The housing crisis can’t be solved by the private sector in isolation and it’s not going away. It will worsen over the coming generation if unaddressed. The only rational and effective response to this is to ask bigger questions about how and why we are housed, rather than falling back on established prejudices which fail to confront the issues. This is easier said than done in an age of identity politics and fake news.

Some commentators are already arguing for radical changes which may freeze or reverse long-term house price growth. This includes ideas such as replacing stamp duty on residential property purchases with capital gains tax on disposal, or increased inheritance tax on property transferred after death. This would see us acting to fail rather than failing to act, as such reforms would be socially and politically tough to swallow.

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The housing White Paper must target changes that can be enacted quickly with a modicum of popularity. The first step is to seek, in so far as is possible, to increase delivery and avoid inflating house prices. Easy wins would be measures to support smaller builders, to encourage modular construction techniques, and to give greater freedoms to extend existing homes vertically. Stopping the Help to Buy initiative and other forms of subsidy for private ownership would slow price inflation.

Beyond these, the government should seek to widen debate about fundamental issues relating to the housing market. A discussion about the Greenbelt is long overdue in areas which have already looked under the rug for new housing sites, particularly in London and the wider South East of England. So too should we recognise housing as a public good, requiring the public sector to take a more proactive role in the development of new homes, in partnership or otherwise. It has a land ownership and funding position which the private sector can’t compete with.

We’ve exhausted the feebler and less effective options. Let’s see some meaningful action.

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