The National Economics Forum held a meeting on the UK Housing crisis on January 25th 2022. The discussion was led by Brilant Krasniki and chaired by Mark Conway.
The housing crisis has become much worse in the last 40 years: the years of Thatcher, Blair and the present 12 years of Tory office. Millions have been priced out of buying a home as wages remain stagnant and house prices rocket.
We are short of one and a half million homes and estimates say we need to build 300,000 a year to catch up.
Due to right to buy, over half a million council houses have been sold and now many are in the hands of property companies as lets. In 2019 29,000 council houses were sold and only 7,000 built. During this period the population increased by 6 million, mostly due to the balance of migration.
With Right to Buy there is little incentive for councils to build homes.
Over 11 million people live in 4 million privately rented homes. These tenants are on short term contracts of 6 or 12 months. These contracts can be terminated at any time by the landlord. The termination of such contracts are the key cause of homelessness.
The Building Industry
The building industry is dominated by 8 building companies. Barratt, Persimmon, Taylor/Wimpey, Bellway etc. It should come as no surprise to NEF colleagues that the top shareholders of Barratt, for instance, are the US mutual funds: Capital, Fidelity, Vanguard and the ever present Blackrock. The UK building industry is very much part of the financialisation process whereby capital is increasingly concentrated into the hands of the US finance sector and to a much lesser extent into the UK finance sector.
It should come as no surprise either, it is only to these richest building companies that the banks lend money for building projects. Small and medium firms are excluded.
One of the ways these companies manage to push up their profits to 300% is to restrict the number of houses they build on land they have bought up. There are 380,000 “phantom houses” – houses with building permission that have not been built. (Shelter)
Most, possibly all, of the new build houses are poorly built suffering from many defects that take a great deal of time to rectify, if ever. They are small, crowded together and with no gardens.
Most are tacked on to existing villages with no extra infrastructure or social provision. They cause increased traffic problems and pollution as the owners have to use cars to access facilities.
It was felt that new-builds should be done complete with infrastructure as proper community projects rather than village add-ons.
These Building Companies account for one third of Tory Party donations. They lobby against any changes in the law.
A factor in driving up house prices are the “Land Promoters” who spend years buying up agricultural land and obtaining building permission. Their methods are well known. They can buy up land at £10k per acre and sell it at £1 million per acre, in the process destroying our countryside and ruining villages.
Another factor in slowing down building are the planning processes. And under the 1961 land compensation Act, landowners can claim up to 100 times the value of agricultural land if it is earmarked for building.
Just how much house prices are caused by net-immigration is unknown but government figures claim it is 20%. In 25 years, the years of mass immigration, the price of housing has increased by 350%.
Hundreds of thousands of houses in both the private and public sector remain unoccupied. Requisition and refurbishment of these properties would go a very long way to solving the housing crisis.
It has been proved in Leicester, that it is possible to convert city centre commercial properties into housing, thus re-vitalising cities.
London and now increasing other parts of the country has the problem of foreign ownership. Billions are being used to buy housing and commercial property by the USA, China, Lebanon and Gulf countries.
Cornwall, Wales and other coastal areas have a real problem of holiday homes decreasing the homes available to local people.
In South Tyneside two to three thousand council houses lay empty as the councils claim it is too expensive to re-furbish them. Councils have to abide by higher standards than the private or Charity sector.
It is clear that house building in this country is not for the fulfilling of the needs of the population but of the building companies and land speculators.
The New Economics Forum intends to continue discussion on this problem and launch a campaign on it later in the year.