The private sector will never build enough homes

It is universally acknowledged that the UK has a housing crisis. But the whole trajectory of Conservative thinking on housing and planning is towards home ownership and away from “affordable” housing built by councils and housing associations.

The government’s current housing plans propose spending £42.7bn on a raft of home ownership initiatives and only £2bn on social and affordable homes. This balance should be reversed – it is time to invest in social housing.

Pumping in money to increase demand without addressing structural supply issues is foolhardy. It simply pushes up prices and makes buying an ever more distant prospect for millions. Is it any surprise that home ownership is at its lowest level for 30 years?

Despite the urgent need for affordable new homes, most local authorities do not have an up-to-date local plan for new homes, the house-building industry is a semi-cartel and the government continues in its misguided refusal to reconsider even limited development on the green belt, which could help ease constraints in some of the most unaffordable cities in the country, such as Oxford, London and Cambridge.

History shows that the private sector on its own has never and will never build enough homes. A report by the SHOUT campaign for social housing in June 2015 called for 100,000 social rented homes a year to top up private sector building. This would boost the economy and help support the housebuilding industry. Paradoxically, it would also boost home ownership.

The unregulated private rented sector has grown by almost two million homes over the past decade, yet its tenants are the least satisfied. Building 100,000 social rented homes a year would force private landlords to sell lower-quality homes – properties that would start to come onto the market and push prices down for first time buyers.

At the moment, the government wastes £25bn a year on housing benefit, propping up high private rents. It could save almost £1tn in little more than a generation by supporting the building of more social rented homes, where housing benefit would be lower. These savings would be even greater, given that the cost of government borrowing is at its lowest rate ever.

Housing minister Gavin Barwell and his colleagues in the Treasury should take heed of the growing number of voices supporting this approach.

(This piece first appeared in The Guardian on 21st September 2016)

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