Yes, Britain does have a housing crisis – and building more will fix it

Could put more houses there, lads. Image: Getty.

Most people accept that Britain is in the middle of a housing crisis. Measured by the diminutive size of our homes or the inflated size of our rents relative to other countries, it’s clear that we’re doing something seriously wrong. Most spectacularly, although less robustly, the ratio of house prices to incomes has reached an incredible 14.2 in London, according to Hometrack.

Meanwhile, a small group take the contrarian view that, actually, there is no housing crisis and, if there is, building more homes won’t solve it. The most notable is Ian Mulheirn of Capital Economics, who recently explained his thoughts in a CapX blog.

He makes two good points and one that’s worthwhile, but ultimately irrelevant. The two good points are, firstly, that there is no UK-wide housing crisis. There are plenty of towns where rents and house prices are affordable for people on average incomes. Flattish national rents over the last ten years mean that London’s higher rents must be balanced by falling rents elsewhere.

The second good point is that house prices measure more than just the cost of consuming housing. They are also affected by expectations of the future and prices of other assets and, indeed, money itself, in the form of interest rates. Better to look at rents, which only measure the price of housing consumption during a fixed period.

His worthwhile yet irrelevant point is that household growth has been slower than official projections, upon which the central plans for housing supply have been made. These projections were made by assuming that the fall in average household size in the years to 2001 would continue; in fact, it flattened out. So household numbers only rose in line with population, instead of faster.

But this point is ultimately irrelevant, for two reasons. First, part of the reason why households have stopped shrinking is because of housing shortages. Adults are living with parents for longer and sharing more frequently rather than living alone, because high prices are prompting people to economise on housing consumption.

Secondly, prices and rents offer a far more sophisticated guide to the demand for housing (and its relative shortage of supply) than comparing crude official statistics on the number of housing units and households.

The main problem is that we have too little housing in the economically dynamic places where jobs are available. The fact that housing is cheap in places hundreds of miles from where the majority of job vacancies are based is of little relevance. The fact that councils in depressed areas welcome housing developments, because of the construction jobs they provide and the prospect of regeneration, makes similarly little difference.


Crudely put, we have a marked shortage of homes in London, particularly inner and west London, where job vacancies are most common and highly paid.

Ian points to low rental yields as evidence of a lack of a problem with supply and demand for housing in London. This is true, but the yield is the wrong measure for the question he has in mind. The price of a residential property includes the value of the artificial scarcity of land imposed by restrictions.

A better measure would be to adjust the rental incomes by the additional rent possible if commercial considerations were the only limit on a developer, instead of planning restrictions. Potential yields are enormous. It’s not for nothing that developers try so hard to get permission for extra storeys on their buildings, accused of skull-duggery by the NIMBY groups who oppose them.

And these substantial potential yields indicate that there is indeed a major problem with supply and demand for places to live. Rents in London are the highest in the world (or near enough, depending on your index). They wouldn’t be for long, if developers and landowners were allowed to respond to those enormous potential profits by supplying the homes that high rents indicate we need.

More housing where it’s needed would provide much wider benefits, too, than just cheaper housing for those already living in housing unaffordability hotspots. More of us would be able to move to where the jobs are, not just in London but also other cities like Oxford, Cambridge, Bristol and York.

That would reduce demand and therefore housing costs in the places where people move from, but it would also improve labour markets, removing a block on people shifting their labour into more highly-valued (and highly-paid) uses.

And the knock-on effects on commercial property would further improve productivity. Drawing on work by economists Chang-Tai Hsieh and Enrico Moretti, the pro-housing group London YIMBY has suggested that allowing enough homes to be built where they’re needed could increase national income by 30 per cent.

Yes, we do have a housing crisis. Letting homes be built where they’re needed will fix it. And doing so might also offer at least a partial answer to our "productivity puzzle", too.

Whether or not today’s housing white paper will do enough to tackle the NIMBYism that is at the heart of the crisis is another matter entirely.

Rory Meakin is research fellow at The Taxpayers Alliance.

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Jane Jacobs and Le Corbusier would agree on one thing: we need more social housing

Unite d’Habitation, Marseille. Image: Iantomferry/Wikimedia Commons.

Much has been written in CityMetric and beyond about the urban planning debates of the 1950s and ‘60s, that came to be characterised as a battle between master-planning and preservation. One side of the debate was personified by the father of modernist architecture, Le Corbusier, whilst the counter-argument was advanced by writer and journalist Jane Jacobs.

But when it comes to London’s housing crisis, aren’t there a few things that these two would actually agree on?

Jane Jacobs’ writing about the organic nature of self-organising communities, demonstrated, in her words, by the “intricate sidewalk ballet” of inner city neighbourhoods, should be required reading for anyone interested in how cities function. But today, Jacobs is increasingly invoked in attempts to oppose new developments of any kind. Her role in conceiving Manhattan’s West Village Houses, a low cost rented housing scheme built through New York State’s Mitchell-Lama Program, is unfortunately much less well known. It’s been suggested that if Jacobs were around today, she’d be working with New York’s housing activists. When her seminal work The Death and Life of Great American Cities was written, there were almost 2 million rent-controlled or rent-stabilised apartments in New York City; nowadays, there are fewer than half that number.

Le Corbusier, on the other hand, is too often blamed for drab high-rise blocks. But regardless of how well his followers across Europe interpreted his ideas, Le Corbusier’s vision for cities was about high quality residential blocks that also contained shops and leisure amenities and were surrounded by parkland – the original mixed use development if you like. His most famous building, Marseille’s Unite d’Habitation, consisted of 337 apartments with views of the mountains and the sea together with shops, a restaurant and a nursery school. The building was originally intended to be public housing, but the French government eventually sold off the flats to recoup costs. Alton West Estate in Roehampton and Park Hill in Sheffield are just some of the examples of Le Corbusier’s influence on the design of post-war council housing here in the UK.

Building homes for a serious business in post-war Britain. Under Attlee’s 1945 Labour Government, 700,000 new council homes were completed. In 1952, the largest architectural practice in the World was at London County Council, with 1,577 staff including 350 professional architects and trainees. These were the days of consensus, and very quickly Tory governments were actually competing with Labour governments about who could built the most council homes.

Some of the council homes built post-war have stood the test of time better than others. But what’s not in doubt is that building council homes on such a scale immeasurably changed the lives of so many families in desperate need of a decent, secure and affordable home. And so many of the post-war modernist high-rise blocks so despised by Jacobs quickly took on the organic self-organising traits that she held in such high regard and have become some of the most enduring and closely-knit communities in London.

Fast forward to 2019 and Right To Buy continues to decimate council housing stock, but perversely home ownership seems more out of reach than ever for so many. An entire generation is being forced to embrace long term private ting in a country that has some weakest protections for private tenants in Europe. Meanwhile, government spending on building new homes fell from £11.4bn in 2009 to just £5.3bn in 2015 – from 0.7 per cent to 0.2 per cent of GDP – and since then, the housing minister’s desk has been occupied by no fewer than six people.


So what would a comprehensive drive for new council and social housing on the scale of the 1945 government’s efforts look like in 2019?

Lubetkin, the architect responsible for Islington’s Spa Green Estate and Bevin Court, summed up the spirit of post-war council home building with his maxim that “nothing is too good for ordinary people”. It’s a vision that we’re trying to recreate through our own council home building programme in Islington.

One of the best opportunities for small council home building schemes is to expand upon existing communities. The vast majority of Islington’s new council housing takes the form of infill, construction on existing estates; in unloved spaces, in old garages, and in old undercrofts. These projects often involve landscaping and new amenities to enhance rather than reinvent local communities. We have built community centres and even rebuilt a library as part of council housing schemes. One Tenants’ and Residents’ Association had an idea for a new specialist over 55s block for the older residents of the estate who wanted to stay in their community.

But there’s a place for large-scale place making as well. When the Ministry of Justice closed Holloway Prison and announced that the site would be sold, Islington Council published a Supplementary Planning Document (SPD) on the site. We had one aim – to send a clear signal to the market that anyone who was looking at buying the site needed to be aware of their planning obligations. Most importantly, any development on the site needed to include at least 50 per cent genuinely affordable homes. The speculation around the site came to an end on 8 March this year when Peabody Housing Association announced that it had bought it. It has committed to going well above and beyond our planning requirements, by making 600 out of a total 1000 homes genuinely affordable homes, including 420 homes for social rent. We need to see more detail on what they are proposing but this is potentially brilliant for the borough. A local grassroots group, Community Plan for Holloway, have been instrumental in ensuring that the community’s voice is heard since the site was sold.

To recreate the scale of the massive post-war council home building programmes would require a Jane Jacobs inspired level of community activism combined with the architectural idealism of Le Corbusier. But it would also need the political will from central government to help local authorities get council housing built. And that, sadly, feels as far away as ever.

Diarmaid Ward is a Labour councillor and the executive member for housing & development at the London Borough of Islington.