There is a new appetite for unconventional ideas to deal with the effects of the housing shortage. We must not repeat the mistakes of Help to Buy, but take a strategic, thought through approach
There is something afoot in housing policy – a subtle, but unmistakable intellectual shift.
Everyone knows that the root cause of the UK’s housing problems is a lack of supply, resulting from an outdated, broken planning system. However, even as housing supply is characterised by extreme inelasticity, debate over the years about how to respond to the effects of the housing shortage has rarely strayed from the pretence that market forces are in operation.
It is almost as if commentators have responded to the lack of a functioning market in housing supply by adopting a hands-off, leave-it-to-the-market position to the rest of housing policy.
But this now seems to be changing. In part, this is because the effects of the housing shortage are becoming ever more difficult to ignore in light of declining real incomes.
With recent polling by YouGov and Shelter finding that that two-thirds of Brits do not want house prices to rise further, another key factor is politicians becoming unshackled from notions that rising house prices are a ‘good thing’. MPs now have a new freedom to highlight problems and float radical interventions.
Policy analysts are also starting to wake up to the wider effects of the housing shortage; in particular, the fiscal consequences of a generation who reach retirement as private renters and rely on taxpayer-funded Housing Benefit throughout their old age.
The result of all this is a marked new appetite for unconventional ideas to deal with the effects of the housing shortage for households and the economy.
To give an example: the Royal Institution of Chartered Surveyors (not known for their radicalism) recently proposed a ‘cap’ on house price increases through regulating mortgage lending and anchoring expectations around house price growth.
For another example, consider the positive response to the Strategic Society Centre’s proposal in the summer for a moratorium on new-build homes being sold into the private rented sector, in order to improve rates of owner-occupation. This would represent a direct intervention in the new homes market, but was greeted in most quarters as a ‘no-brainer’.
So, as the pretence is abandoned that housing supply is determined through a market, we all have more freedom to consider policies that do not leave it to market forces to allocate housing and determine outcomes for households.
To mark this change, the centre has organised a public debate on ‘special measures’ for housing policy: radical ideas for public policy to counteract the effects of the housing shortage.
Why is it important to have such a debate?
As the political parties compete to be seen to be getting to grips with the housing crisis, we need to ensure society takes a strategic approach to dealing with the effects of the housing shortage.
In this sense, ‘Help to Buy’ offers a very recent, salutary lesson of how radical housing policies can emerge out of nowhere, with apparently negligible strategic insight and – unsurprisingly – be subject to attacks from all quarters, leaving policy development chaotic and uncoordinated.
But housing policy is far too important to proceed in this way. Good policy development comes out of shared understanding of the problems to be addressed, the outcomes society is aiming for and the pros and cons of different options.
The build-up to the next election could therefore be a vintage period for housing policy in which UK politicians forge consensus around the radical reforms needed, and set out a strategic plan for the rest of the decade. Or it could turn into an unholy mess of eye-catching ideas, which then have to be unwound and quietly discarded.
As the political imperative to respond to the effects of the housing shortage reach fever-pitch, it will be a true test of the UK’s capacity to respond to its strategic challenges.
James Lloyd is director of the Strategic Society Centre. You can register for the centre’s ‘Special Measures’ event here
