Give local councils the cash to build homes and solve this crisis
IMADE it. At the age of the 37, and after years of living in rented basements and shared houses, I’ve finally managed to clamber onto London’s crazy property ladder. Thanks to decades of spiralling prices, that makes me bang on average — with the typical first-time buyer in our city now well into their late 30s.
Sadly, things are getting worse, not better — and if you want to know just how bad the housing crisis has become, consider these two facts.
First — the cost of a home in England has shot up by 173 per cent since 1997, while wages have risen by just 19 per cent. That means home ownership is increasingly out of reach, and wealth inequality is widening too.
And second — an average young person in London today will have to save for 17 years just to glean enough money to afford a deposit on a house.
No wonder the Institute of Fiscal Studies has found the chances of a young adult owning a home in the UK has more than halved in the past two decades. And it’s no surprise too that more people than ever before are renting — and having to spend more of t heir income on housing costs, because rents have shot up by 50 per cent since the mid-1990s.
It’s all a terrible mess. Now, you ask, isn’t it inevitable housing would be so unaffordable in a major city such as London? The answer is a resounding no. In Singapore, average first-time buyers spend roughly a quarter of their income on mortgage payments, while in Vienna people typically pay 25 per cent of their salary in rent — compared to a whopping 79 per cent of take-home pay in London.
So what are those places doing right? It’s simple — the government is playing a much bigger and more ambitious role in building homes, and the effect is transformative.
Eighty per cent of Singaporeans live in houses built by the state — typically buying them on 99-year leases, with grants provided by the public sector. The upshot is that housing in Singapore is eminently affordable, even though the city’s population has been rising sharply — and homelessness is virtually non-existent.
Meanwhile in Vienna, roughly 60 per cent of the total population lives in social housing — totalling 1.7 million people in more than 200,000 social housing units.
What’s particularly impressive is the commitment to high-quality design and architecture — meaning that government homes are sought after and celebrated, and a deep source of pride for the city.
None of this comes cheap. Vienna spends more than £500 million a year on building, subsidising and renovating public housing — far more per person than we do in the UK. No wonder demand for social housing here is far outstripping supply.
In the UK there are now more than a million families on the waiting list for social housing — and a quarter of them have been stuck waiting for more than five years.
The issue is most stark in London — and if we scrutinise areas such as Newham, we see there were more than 25,000 people on the waiting list last year, but only 588 social homes available. It didn’t used to be like this. In the middle of the 20th century, local councils were building 40 per cent of all new homes — much like you find in other countries.
So while we need planning reform to make it faster and cheaper to construct homes in the UK, the truth is the private sector alone can’t fix the housing crisis. Getting it right will also require an ambitious and confident role for the state in building housing right across the country.
In the words of the chief executive of the Federation of Master Builders: “The only times the UK has built sufficient numbers of homes is when we’ve had a thriving council house-building programme.”
If you want to see the benefits of this kind of approach, you’ve only got to look at Hackney, where mayor Philip Glanville and his team have been pushing a head wi t h new c o unci l housi ng projects such as the Kings Crescent Estate i n Stoke Newington and the rebuilding of the Colville Estate near Hoxton.
What is striking about these projects is that Hackney council is resolutely championing world-class design and using a mix of funding to get projects off the ground.
As the influential architecture critic Rowan Moore put it recently: “By crosssubsidising, talking to residents and valuing good design, the east London borough is investing in some of the best council housing ever built.”
This commitment to excellence matters. In the words of mayor Glanville: “We decided upfront to invest in good architecture — because if you live in social housing, you want to know it’s been built to last.” Quite right too.
Sadly, it’s too hard for councils to do this on a bigger scale, because central government imposes a strict limit on how much local authorities can borrow against their assets and revenues to fund council housing projects.
This is bonkers and needs to change. The good news is that the tide may be beginning to turn, with the Prime Minister recently announcing that this cap on borrowing will be removed. However, that’s ultimately a decision for the Chancellor Philip Hammond — and as a former Treasury civil servant, I know how much finance officials hate the idea of anyone except them being able to rack up government debt. With t he Chancellor due t o deliver hi s annual Budget on October 29, we’ll soon find out whether or not the Government really is committed to this agenda.
If we can cut the red tape stopping councils from building high- quality housing, it won’t just help families on the waiting list for social homes, it’ll make our city a fairer and nicer place to live. And who wouldn’t want that?
The chances of a young adult owning a home in the UK has more than halved in the past two decades
A source of civic pride: the subsidised Alt-Erlaa public housing estate in Vienna