To tackle the housing crisis, ministers must end their dependence on the big builders

Part of the problem. Image: Getty.

The housing market is in desperate need of reform. As both the government and the opposition have rightly acknowledged, Britain needs to build more, better quality homes. The political will is clear to see – but in order to address the supply shortage, politicians must take on the handful of big developers which dominate the market.

Currently, there are a very small number ‘volume builders’, such as Barratt, Taylor Wimpey and Persimmon, which the government relies on to deliver the bulk of new homes in England. These companies are typically financed by private equity, which essentially means money is only raised for developments on the promise of very good returns to investors; these have averaged out at around 20 per cent of late.

While this model works well in stable economic times, it naturally faces two problems. First and fundamentally, it is very sensitive to cyclical changes in the economy. Any uncertainty in the political and economic outlook can hit firms’ share prices and reduce investment, and thus cut output sharply. Immediately after the EU referendum result, for example, the share price of the three largest housebuilders plummeted 40 per cent. 

Analysis by Homes for the North, the alliance of the biggest housing associations in the North of England, reveals that in every recession the UK has seen an immediate lost of investment in volume building, and by extension, a sudden drop in housing numbers. In the recession of 2008-10, for example, output by the volume builders fell a staggering 59 per cent.  

The second problem is that these operators tend to focus on relatively high-value properties in desirable areas, in order to get the quick-buck returns investors want. There is a real lack of building in less well-off areas, even where demand is high. This quite simply damages the government’s plans to boost construction and growth across the country, especially in regions outside London, where it is needed most. 

The present economic and political outlook creates real challenges on these fronts. Not only do we have the political instability inherent in a hung parliament, but we are entering uncharted political territory in terms of Brexit, which has, in the eyes of many commentators, heightened the risk outlook. The Office of Budgetary Responsibility’s latest Fiscal Risk Report, published in July, predicts the risk of recession to now be as high as 50 per cent.


Faced with this, it is essential that the government implements a countercyclical strategy to ensure housing numbers are not negatively impacted by any future downturn.

Housing associations can play a vital role in this new approach, as the sector is remarkably resilient to economic cycles. When the volume builders’ numbers fell 59 per cent in the last recession, housing association output fell only 3 per cent. The reason is a different business model based not on equity and the need for quick returns, but a debt-financed, longer-term approach to building homes where they are needed. This model delivers consistently, reliably, and crucially, counter-cyclically. 

The 19 member organisations of Homes for the North, for example, already expect to deliver nearly 15,000 new homes over the next 3 years. But that figure – and the building plans of other housing associations – could expand radically if the policy framework was right.  

One of the biggest issues reflects the fact that housing associations are not regular market developers, and are bound by quite strict regulations, including what rents they charge. Government says it will review the situation in 2020 – but this is too late and uncertain. The most efficient housing associations must be allowed to strike flexible rent agreements now in order to raise finance for building new homes.

Then there are other measures that could help bring the sector into the market, such as using some of the £3bn Home Building Fund to address market failure in regions outside the South East, where housing is desperately needed, but developers shun because high returns on equity are not available. We should also have regional build targets, not just a national one, which will focus the minds of metro mayors and other decision-makers on the job of encouraging a diversity of developers to meet those targets. 

If politicians shy away from this, recent history suggests the target to see 1.5m new homes built by 2022 will fall seriously short. That means older people struggle to downsize. First time buyers will not get a foot on the property ladder. Not enough private rented accommodation will come onto the market to meet increasing demand. The consequences are worrying indeed.

Mark Henderson is chair of Homes for the North.

Want more of this stuff? Follow CityMetric on Twitter or Facebook

 
 
 
 

In South Africa's cities, evictions are happening despite a national ban

An aerial view shows a destroyed house in Lawley, south of Johannesburg, on April 20, 2020. The city has been demolishing informal structures on vacant land despite a moratorium on evictions. (Marco Longari/AFP via Getty Images)

On the morning of 15 July, a South African High Court judge ruled that the city of Cape Town’s Anti-Land Invasion Unit had illegally evicted a man when it destroyed the shack where he was living.

That afternoon, the Anti-Land Invasion Unit was out again, removing shacks in another informal settlement.

Evictions were banned in South Africa for nine weeks, after the national government placed the country under a strict Covid-19 lockdown in late March. At present, eviction orders are automatically suspended until the country moves to a lower “alert level” and can only be carried out with a special order from a judge.

Yet major cities including Cape Town, Johannesburg and eThekwini (created through the merger of Durban with several surrounding communities), have continued to use municipal law enforcement agencies and private security companies to remove people from informal housing. In many cases those operations have been conducted without a court order – something required under regular South African law.

Around 900 people were evicted from three informal settlements in eThekwini during the eviction ban, according to the Church Land Programme, a local NGO. Its director, Graham Philpott, says it’s also aware of evictions in other informal settlements.

While evictions aren’t a “new experience” in these communities, the NGO released a report on lockdown evictions because they were “so explicitly illegal”. “There was a moratorium in place,” Philpott says, “and the local municipality acted quite flagrantly against it. There’s no confusion, there’s no doubt whatsoever, it is illegal. But it is part of a trend where the eThekwini municipality has acted illegally in evicting the poor from informal settlements.”

Evictions also took place in Cape Town and Johannesburg during so-called “hard lockdown” according to local activists. In eThekwini and other municipalities, the evictions have continued despite restrictions. In Cape Town, authorities pulled a naked man, Bulelani Qholani, from his shack. That incident, which was captured on video, drew condemnation from the national government and four members of the Anti-Land Invasion unit were suspended. 


The cities say they’re fighting “land invasions” – illegal occupations without permission from the land owner.

“Land invasions derail housing and service projects, lead to the pollution of waterways, severely prejudice deserving housing beneficiaries and cause property owners to lose their investments over night,” Cape Town’s executive mayor, Dan Plato said in a statement. (Plato has also claimed that Qholani did not live in the shack he was pulled from and that he disrobed when municipal authorities arrived.)

South African municipalities often claim that the shacks they destroy are unoccupied. 

If they were occupied, says Msawakhe Mayisela, a spokesman for the eThekwini municipality, the city would get a court order before conducting an eviction. “Everything we’re doing is within the ambit of the law,” Mayisela says. But “rogue elements” are taking advantage of Covid-19, he added.

“We fully understand that people are desperately in need of land, but the number of people that are flocking to the cities is too much, the city won’t be able to provide housing or accommodation for everyone overnight,” he says. 

While eThekwini claims to be a caring city, local activists say the evictions show otherwise.

In one case, 29 women were evicted from shacks during the hard lockdown. With nowhere to go, they slept in an open field and were arrested by the South African Police Service for violating the lockdown, Philpott says.

“These evictions are dehumanizing people whose dignity is already compromised in many ways,” says S’bu Zikode, the president of Abahlali baseMjondolo, a community organization whose Zulu name translates to “the people of the shacks”. 

“It has reminded us that we are the people that do not count in our society.”

Municipal law enforcement and private security contractors hired by cities regularly fire rubber bullets, or even live ammunition, at residents during evictions. Some 18 Abahlali baseMjondolo activists have been killed since the organization was founded in 2005, Zikode says, most by the eThekwini Land Invasion Unit and Metro Police.

(Mayisela says that if city employees have broken the law, Abahlali baseMjondolo can file a complaint with the police. “There is no conclusive evidence to the effect that our members have killed them,”  he says.)

Other Abahlali baseMjondolo activists have been killed by what Zikode calls “izinkabi,” hitmen hired by politicians. Two eThekwini city councillors were sentenced to life in prison 2016 after they organized the killing of Thuli Ndlovu, an Abahlali baseMjondolo organizer. A member of the Land Invasion Unit who is currently facing a charge of attempted murder after severely injuring a person during an eviction remains on the job, Zikode says.

South Africa’s 1996 constitution is intended to protect the public from arbitrary state violence and guarantees a right to housing, as well as due process in evictions. But for Zikode, the South African constitution is a “beautiful document on a shelf”.

“For the working class and the poor, it’s still difficult to have access to court. You’ve got to have money to get to court,” he says. 

The actions by municipal law enforcement are breaking down social trust, says Buhle Booi, a member of the Khayelitsha Community Action Network, a community group in the largest township in Cape Town.

“There’s a lack of police resources and those very few police resources that they have, they use to destroy people’s homes, to destroy people’s peace, rather than fighting crime, real criminal elements that we see in our society,” Booi says.

For him, it’s a continuation of the practices of the colonial and apartheid governments, pushing poor people, most of whom are Black, to the periphery of cities.

Around one-fifth of South Africa’s urban population live in shacks or informal dwellings, according to a 2018 report by SERI. Many more live in substandard housing. City governments maintain that the shacks destroyed during anti-land invasion operations are unfinished and unoccupied. But Edward Molopi, a research and advocacy officer at SERI, says that this claim is an attempt to escape their legal obligations to get a court order and to find alternative accommodation for affected people. 

The roots of the current eviction crisis go back to apartheid, which barred non-white people from living in cities. Between the 1940s and 1970s, tens of thousands of people were forcibly relocated from neighbourhoods like Johannesburg’s Sophiatown and Cape Town’s District Six to remote townships.

In the 26 years following the end of apartheid, deepening economic inequality and rampant unemployment have limited access to formal housing for millions of South Africans. Government housing programs have mostly focused on building small stand-alone homes, often on the peripheries of cities far from jobs and amenities.

While these well-intentioned projects have built millions of homes, they’ve failed to keep up with demand, says Marie Huchzermeyer, a professor at the Centre for Urbanism & Built Environment Studies at the University of the Witwatersrand in Johannesburg. Government-funded housing projects “will never on it’s own be enough,” she says. “It has to be accompanied by land release.”

Government policies call for the “upgrading” of informal settlements and the formalization of residents’ occupation. But “there are still very, very, very few projects” of that nature in South Africa, Huchzermeyer says. “Even if it’s an informal settlement that’s been around for 20 years, there still seems to be a political wish to punish people for having done that.” The government wants people to go through the formal process of being given a house, she says – and for them to be thankful to the government for providing it.

At the municipal level, change will require “real leadership around informal settlement upgrading and around ensuring that land is available for people to occupy,” she says. 

Despite the end of enforced racial segregation, spacial apartheid remains a factor in South Africa. There are few mixed-income neighbourhoods. Those who can afford to often live behind walls in sprawling low-density suburbs, while the poor live in overcrowded slums and apartment buildings.

The creation of the apartheid city “didn't happen by chance,” says Amira Osman, a professor of architecture at the Tshwane University of Technology. “It was a deliberate, structured approach to the design of the city. We need a deliberate, structured approach that will undo that.”

Since last fall, Johannesburg’s Inclusionary Housing Policy has required developments of 20 or more units to set aside 30% of those units for low-income housing.

The policy, which faced significant opposition from private developers, won’t lead to dramatic change, says Sarah Charlton, a professor at the Centre for Urbanism and Built Environment Studies, but it is “an important and significant step.”

Zikode isn’t optimistic that change will come for shack dwellers, however.

“People in the high positions of authority pretend that everything is normal,” he says. “They pretend that everyone is treated justly, they pretend that everyone has homes with running water, that everyone has a piece of land – and hide the truth and the lies of our democracy.”

Jacob Serebrin is a freelance journalist currently based in Johannesburg. Follow him on Twitter.