The rise in vacant properties exposes the housing shortage myth

Empty homes in Accrington, Lancashire. Image: Getty.

Figures from the Ministry of Housing, Communities and Local Government released on Monday poured cold water on the widespread misconception that Britain’s housing crisis results from a lack of houses.

Official stats revealed that the number of long-term vacant properties in England rose by 5.3 per cent in the 12 months to October, to a total of 216,186.

In London, where housing supply is scarce, the growth of empty homes was double the national rate, increasing 11 per cent to 22,481.

This complements other evidence showing that housing stock levels have consistently risen at a higher rate than population growth, even in the past couple of decades – even in London.

Source: Positive Money (using ONS and MHCLG data).

According to the economic laws of supply and demand, this means we should be seeing an increase in housing affordability, rather than the rocketing prices that characterise millennials’ existence.

So why are homes so unaffordable?

We can’t think about the housing crisis in simple economic terms, where too many people are chasing too few homes. To understand the housing crisis, you’ve got to look at it as a broader political and economic problem – with finance and ownership both playing key roles.

Source: Positive Money (using Nationwide housing survey and Bank of England data).

In Britain’s financialised economy, homes are treated as a speculative asset, rather than simply as places to live.

In an era of low business profitability for advanced economies like the UK, housing is often the easiest and safest bet for those looking to expand their wealth, as property prices seem almost guaranteed to rise at a higher pace than interest rates, which have remained historically low throughout the past decade.

Correspondingly, banks love lending money against houses. Both in the decades leading up to and following the crash, around half of bank lending flowed into property.

Ultimately, houses are worth however much banks are willing to lend. Banks, which create new money simply by lending, are essentially unconstrained in the amount of money they can conjure to bid up property prices.

The nature (or lack) of regulation favours those who already own property, making it easier for buy-to-let landlords or wealthy speculators to snap up homes, keeping these empty as assets rather than places for people to live.


First time buyers, who are usually limited to borrowing only four or five times their annual income, are outbid by those who already own homes, who can leverage them as collateral and perhaps also use their rental income to borrow much higher amounts.

Both banks and homeowners are reliant on ever-rising house prices, otherwise they risk going into negative equity and becoming insolvent, with devastating consequences for the economy.

In the absence of productive investment, this housing bubble is driving the UK economy. To prevent it bursting, politicians create artificial scarcity. This means the state protecting the rights of existing property owners and speculators hoarding housing stock, a reality that is reflected in policies like anti-squatting laws that have made occupying empty properties more difficult.

Property developers love the dominant housing shortage story as it means councils will often let them build luxury developments, in the misguided hope that simply building more homes – any homes – will ease the crisis.

The “shortage” rhetoric also lets the property-owning class off the hook, instead allowing politicians and property owners to reiterate the toxic “Britain is full” myth, blaming immigrants instead of speculators.

So if we want to combat the housing crisis, what story should we tell? The common sense maxim that no one should own more than one home until everyone owns a home would be a good place to start.

 
 
 
 

Community-powered policies should be at the top of Westminster’s to do list

A generic election picture. Image: Getty.

Over the past five decades, political and economic power has become increasingly concentrated in the UK’s capital. Communities feel ignored or alienated by a politics that feels distant and unrepresentative of their daily experiences.

Since the EU referendum result it has become something of a cliché to talk about how to respond to the sense of powerlessness felt by too many people. The foundations of our economy have been shifted by Brexit, technology and deindustrialisation – and these have shone a light on a growing divergence in views and values across geographies and generations. They are both a symptom and cause of the breakdown of the ties that traditionally brought people together.

As the country goes through seismic changes in its outlook, politics and economy, it is clear that a new way of doing politics is needed. Empowering people to take control over the things that affect their daily lives cannot be done from the top down.

Last week, the Co-operative Party launched our policy platform for the General Election – the ideas and priorities we hope to see at the top of the next Parliament’s to do list. We have been the voice for co-operative values and principles in the places where decisions are made and laws are made. As co-operators, we believe that the principles that lie behind successful co‑operatives – democratic control by customers and workers, and a fair share of the wealth we create together – ought to extend to the wider economy and our society. As Labour’s sister party, we campaign for a government that puts these shared values into practice.

Our policy platform has community power at its heart, because the co-operative movement, founded on shop floors and factory production lines, knows that power should flow from the bottom up. Today, this principle holds strong – decisions are best made by the people impacted the most by them, and services work best when the service users have a voice. Our policy platform is clear: this means shifting power from Whitehall to local government, but it also means looking beyond the town hall. Co-operative approaches are about placing power directly in the hands of people and communities.


There are many great examples of Co-operative councillors and local communities taking the lead on this. Co-operative councils like Oldham and Plymouth have pioneered new working relationships with residents, underpinned by a genuine commitment to working with communities rather than merely doing things to them.

Building a fairer future is, by definition, a bottom-up endeavour. Oldham, Plymouth and examples like the Elephant Project in Greater Manchester, where people with experience of disadvantage are involved in decision-making, or buses in Witney run by Co-operative councillors and the local community – are the building blocks of creating a better politics and a fairer economy.

This thread runs through our work over the last few years on community wealth building too – keeping wealth circulating in local economies through growing the local co-operative sector. Worker-owned businesses thriving at the expense of global corporate giants and private outsourcers. Assets owned by communities – from pubs to post offices to rooftop solar panels.

And it runs through our work in Westminster too – with Co-operative MPs and peers calling for parents, not private business, to own and run nurseries; for the stewards of our countryside to be farmers rather than big landowners; and for workers to have a stake in their workplaces and a share of the profit.

Far from being ignored, as suggested in last week’s article on community power, our work has never been more relevant and our co-operative voice is louder than ever.

Anna Birley is policy offer at the Co-operative party.