A bold housing strategy means tackling more than building

The UK’s housing crisis is reaching a critical point. Rents are soaring, whilst homeownership remains out of reach for many after years of house price increases outpacing wage growth. In the late 1990s, the average house price was 3.5 times the average income in England – as of 2023, this had more than doubled to 8.2 times, with prices exceeding 12 times incomes in many areas of London. All of this means that homelessness is skyrocketing – with Britain having by far the highest rate of homelessness in the rich world when you include those in temporary accommodation, which is the largest form of homelessness. Combined with decades of declining social housing stock, demand for social homes now far outstrips supply, and local authorities are being forced to spend record amounts on high-cost, poor-quality temporary accommodation from the private sector, driving them into severe financial difficulty. In 2022/23, £1.8bn was spent by councils on temporary accommodation, over double that spent in 2018/19.

It’s in this context that this month, Positive Money and London Renters Union, a grassroots tenants union representing over 7,000 members, brought together parliamentarians, renters unions and policy experts for a discussion in parliament, Beyond Building: Fixing the UK Housing Crisis.

The discussion reflects a growing awareness that addressing the multiple crises that our housing system not only reflects but is exacerbating – from inequity that runs along racial, class and generational lines, to the climate impact of British homes – requires a fundamental shift away from homes from being treated as assets for accumulating wealth. Positive Money’s Banking on Property report sets out why approaching the crisis as a problem of housing supply alone will likely do little to solve it. Available academic evidence (plus UK Government modelling) also suggests that meeting the house building target of the current government is unlikely to bring house prices to an affordable level. As a problem driven by a toxic combination of the weakening of financial regulation and monetary policy, and wider housing policy choices including tax incentives, The Right To Buy and the deregulation of the private rental market, a housing policy agenda fit for the situation we’re in must address these drivers head-on.

Those at the sharpest end of the housing crisis, including private renters, intuitively understand the need to confront the distribution and price of housing. Yet despite an abundance of evidence and the vocal campaigning of those most impacted by the crisis, policy discussions often remain laser-focussed on how to increase the building of new homes. And despite Rachel Reeves’ welcome announcement that ‘a house should be a home not an asset’, Labour has so far announced little in the way of policies that truly reflect this ambition. Doing so undoubtedly requires a bold and multi-faceted policy programme, and a willingness to challenge the interests of those who benefit from our extractive housing system. But with housing costs making up one of the biggest items of expenditure for any household, there is a strong case that doing so would pay off for a future government.

The discussion brought together a range of voices to discuss the solutions needed, focussing on two key policy areas that, in our view, should form important components of a long-term vision for a more affordable, safer and healthier housing system: local authority acquisitions of privately-rented housing for use as council homes; and proper regulation of the private rented sector to provide security and affordability for tenants. As Beth Stratford, economist and co-founder of the London Renters Union, highlighted, the two ideas dovetail well. Since much of the pushback against regulation of the private rented sector cites concern that it could cause landlords to sell properties, acquisition programmes offer an out for those private landlords who may indeed choose to exit the sector, whilst providing the social housing we urgently need.

‘Buy back’ schemes are gaining momentum as a way to take advantage of the recent softening of house prices to rapidly increase the stock of council homes and support the sustainability of local government finances. As social housing expert and crossbench peer Richard Best reflected upon during the discussion, such programmes are not new – in the 1960s and 70s, tens of thousands of privately rented-properties, often ‘entire streets’ of houses in poor condition, were purchased and renovated by local councils. London’s buy-back schemes are key recent examples, but remain limited in scale in comparison, and do not match the ambition of similar programmes being pursued in cities like Barcelona.

Alex Diner, Senior Researcher at the New Economics Foundation (NEF), presented an analysis of how London’s buy-back scheme would more than pay for itself through both directly reducing council payments to private housing providers, as well as indirect benefits from health and earnings improvements. NEF’s proposed reforms, including establishing a national fund to support acquisitions at scale, could replicate such savings across the country whilst providing much-needed social housing. Similar programmes could be designed to support the acquisition of privately-rented homes for community-led housing, like cooperatives and community land trusts. But as speakers discussed, central to this will be a new government setting a goal to actively shift tenures away from the private rented sector’

Whilst acquisitions could offer a rapid route to expanding social housing stock, it’s unlikely that even the most ambitious agenda could alleviate the urgent situation faced by so many renters. As members of the renter unions in attendance highlighted, in the face of record price increases, insecurity, and poor quality of privately rented housing that disproportionately impacts Black, Asian and ethnic minority communities, rent controls in some form are needed.

As representatives of Living Rent, Scotland’s largest tenants’ union, explained, Scotland’s experience – where a temporary in-tenancy rent freeze has led to landlords’ hiking rents for new tenancies – is something that the rest of the UK can learn from. Policymakers should take solace from the fact that far from being put off by such experiences, major unions like Living Rent and the London Renters Union, which organise thousands at the sharpest end of the housing crisis, are instead mobilising members to call for long-term and well-designed policies to get rents under control.

Perhaps the clearest message that emerged is that many of those involved in developing and campaigning for policy solutions to the housing crisis understand that building new homes, while useful, is not a silver bullet solution. We need a suite of measures, which must include reversing financial deregulation and tax changes that incentivised property speculation, which have been major drivers of house price inflation. But reclaiming privately rented homes, and protecting those in the private rented sector, must be key pillars of a progressive housing agenda.