Saturday, February 14, 2015

The Housing Issue

“People think immigration and the health service are the big issues – but actually, if you want to reduce people's perception of the impact of immigration, you have to deal with housing,” explained David Orr, chief executive of the National Housing Federation (NHF) umbrella group of social housing bodies. “…It's all part of the same narrative. “Britain's small, we're overcrowded, there's no land, we haven't got any space. It's rubbish.”

High housing costs are at the root of just about everything. They swallow up household budgets. A generation ago, the deposit typically required to buy your first home was, in today’s money, about £3,000; now, it’s 10 times that. The average household income among first time buyers today is £34,000. The median household income is only £32,000. In other words, Orr says, “We have precluded more than half the population from becoming new owner occupiers.” One might think that a government would look at this situation and conclude that housing costs were too high. One would be wrong. Instead, all talk is of clamping down on an over-generous benefits system.

Fewer owners means more renters, and in booming cities like London, rents, too, are through the roof. Salaries, unfortunately, aren’t. “The government quite often says that housing benefit is out of control, and they're right. It is. The public narrative is that it’s out of control because of scroungers and feckless people screwing the state.” Actually, though, the amount of housing benefit being paid to people who are unemployed has remained pretty much constant over the last five years. The real increase has been in benefits for people who are in work. “There are people who are on above median incomes who are eligible for housing benefit. We've created an environment where work doesn't actually take you out of poverty.”

Most authorities think we need at least 250,000 new homes a year to keep up with demographic change. 
“It’s no good expecting the industry to step up, Orr argues: the major developers consistently say they're most comfortable building around 130-140,000 a year. “It doesn't matter how many kicks up the backside they get, their economic success is predicated on collectively building that many houses. So if you want to get to 250,000, don't ask them.” 

Orr also pointed out. “There is no shortage of land. None, zero, anywhere. There is a significant problem of rationing of land – through the planning system, the green belt, NIMBYism and so on – but that's all just noise. There is more land in Surrey set aside for golf courses than there is for human population. We don't have a shortage of land at all.”



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