Observer column: 12 August 2016
Figures from the Office for National Statistics recently showed that housing is becoming increasingly unaffordable. In over half of all areas of the UK, housing costs are more than the recommended 30% maximum of people's wages. Here in Hastings, we're just under the 30% point, with rent on a one-bedroom flat costing around 28% of the average local net salary. But that's changing fast, with private rents and house prices increasing rapidly.
So not only have younger people been priced out of home ownership, they're being priced out of rented accommodation too. And social housing is in such high demand that most people have no chance of even getting on the waiting list. The reasons for this big shortage of housing are partly about population growth, but are also about household size - the average size of a household in the UK has reduced by 30% over the last fifty years. If we still lived in the same sized households as we did in the 1960s, we'd need four and a half million fewer homes. The demand for housing is also not consistent across the country - there is less demand in the north, with the biggest demand, and the highest population densities, down here in the south east.
But the housing market is broken, it can't deliver what people need at a price they can afford. More house building is needed, but that won't solve the problem on its own. If house prices start to fall, developers will simply stop building them. We already have that problem in Hastings, where developers say that profits are 'marginal', so under national planning laws they can argue that they won't make enough money if they include social rented housing in their schemes. Even so, the average house price of a new home in Hastings is beyond the means of most potential first-time buyers.
Councils can intervene here, to some extent. In Hastings, we've brought over 200 empty homes back into use through compulsory purchase proceedings. But this is expensive, because the owners of the homes have to be fully compensated - the council can't deduct the cost of the compulsory purchase fee. Along with around 100 other councils, we're also intending to set up a housing development company, which will build housing initially on council owned development sites. But we could also compulsorily purchase other vacant sites that have been 'land banked' by developers. Some of the houses built by the council will be made available at a fair rent, others will be sold.
But while initiatives such as this help to provide more homes can help, they can't solve the housing crisis overall. Councils should be allowed to intervene in the housing market through cost-neutral CPOs of empty property, and by seizing undeveloped sites, particularly those that have been land banked, and develop them as both social rented homes and houses for sale at a price local people can afford to pay. We need a national house building programme, to provide genuinely affordable housing, on a massive scale. Tinkering with planning law and blaming councils for not granting planning permissions fast enough won't help. Radical new policies are needed, with unprecedented government intervention to fix, or bypass, the broken market. If that doesn't happen, secure housing for future generations will be impossible to achieve.
Council Leader's column