5 big housing lies and why the public doesn't buy the housing crisis

Earlier this month I was honoured to be a guest of the CIH president at his annual dinner. This huge annual event takes place in the Natural History Museum in London. Tables of the great and good of the housing industry were assembled around the Brontosaurus skeleton and under the gaze of Charles Darwin’s statue. This is always a helpful prompt to speakers enabling them to make self-deprecating jokes about how old they are how their views have had to evolve.

This year the speakers were in fiery form. There was a general theme that public and the media were not taking the housing crisis seriously enough. “Wake up and listen to the profession about the country’s housing crisis” We were told. The messages followed the common orthodoxy of our profession. You’ve no doubt heard them too There are record levels of housing need, record levels of homelessness, a record under-supply of housing,  the backlog in supply is increasing every year. The system is creaking at its seems, This is a time bomb set to explode, we must argue passionately for our industry. It was entirely honourable, but to me, strangely unmoving.

Last year I, along with 5 million others read the entertaining economics book Superfreakanomics. In it the authors; Steven Levitt and Stephen Dubner take a deliberately mischievous look at how things really work. They take the cold facts and come up with unorthodox conclusions. One example considers how the law affects prostitution. They argue that the greater the law cracks down, the more profitable and the more widespread prostitution become. The argument works like this. If the police arrest prostitutes they reduce the supply. The remaining prostitutes can therefore raise their price, making it more lucrative attracting more women to become prostitutes. In other words the orthodoxy of how to deal with prostitution is not only incorrect it's counter productive.

Now I don’t for one moment doubt the genuine belief and commitment of people in the housing industry expressed with such zeal by the CIH president and other speakers at the dinner, but I did wonder what Levitt and Dubner might make of it all. In the absence of persuading them to take a look I decided to try myself. I looked up the data and was slightly surprised to see that almost all of the facts and truths expressed by our industry on a daily basis turn out to be … well untrue. Here they are with references:

Truth 1: There is an undersupply of housing: Untrue, in 2008 there were 22,398,000 dwellings and 21,731,000 households in England a surplus of 667,000 dwellings http://www.communities.gov.uk/documents/housing/xls/table-102.xls

Truth 2: There is a growing shortfall in housing; Untrue, the growth in the number of dwellings in the UK has outpaced the growth in households every year since 1971 http://www.statistics.gov.uk/articles/social_trends/st41-housing.pdf

Truth 3: There are 5 million people in housing need waiting for social housing; Untrue, there are 1.76 million households on council housing registers in England which equates to about 5 million people. But these aren’t waiting lists, many of the households that are on them are in housing need, but others are not, anybody can register and some register in several council areas. Housing registers are a measure of demand for social housing. They are not a measure of housing need. www.communities.gov.uk/documents/housing/xls/141488.xls

Truth 4: Homelessness is increasing: Untrue. Last year 40,000 households were accepted as being homeless by local authorities, 25% down on the previous year and a third of the number in 2003/4 www.communities.gov.uk/documents/housing/xls/141488.xls

Truth 5: Social housing is in decline: Untrue- there has not only been an increase in social housing every year, but since 2003/4 the rate of increase has gone up every year. Last year 33,120 new socially rented homes were added to the stock. http://www.communities.gov.uk/documents/housing/xls/1406060.xls

Is this the reason that the country hasn’t woken up to the housing crisis?

This is not to say there isn't a housing crisis. Many people in this country live in completely unsatisfactory housing conditions. The housing system doesn’t work on all sorts of levels for people. I also acknowledge that although the indicators I have discussed show positive progress, it doesn't mean that progress can be sustained into the future with less public money. But surely what this says is that the housing industry is a success, it's making things better for people. Yes there's a lot more that needs to be done, but if we are going to get people at large to see housing as an issue of national importance we need to break out of the cosy consensus and stop pretending things are worse than they really are. What the industry is saying may not just be incorrect, it might also be counter productive. We shouldn't expect people to believe us if what we say isn't true.

Earning money the right way - a suggestion for councils

” We want to make money out of it” ,  “We should have the money not them” , “We can’t afford to make loans”  this was Councillor Mark Howell of South Cambridgeshire District council on the radio this morning. He and I were both guests on the very glamorous  BBC radio Cambridgeshire breakfast show. Howell was there to talk about his council’s plan to get rid of the council tax discount it currently offers to owners of empty homes. An idea I fully support; the discount is a nonsense and does nothing to encourage landlords to make good use of their property. But Howell’s tone was dispiriting; apparently fixated on the money but seemingly uninterested in what the money could help the council achieve. I know councils are in really difficult times now. As a director of a small charity, believe me I know what it’s like to not know where the money is going to come from. But really!  Howell and many others in local government, who I have heard make similar points over the last couple of weeks could do better than this. The purpose of councils lies in what they can do for their communities not how much money they can make.

Empty homes is in fact an area where the government is actually investing more money. £100 million new targeted funding, and rewards for homes returned to use through the New Homes Bonus. Councils need to be thinking about how they can use these funds creatively to really make a difference.

Here are three ideas. Bear in mind that properties returned to use will earn the council between £7,000 and £11,000 in New Homes Bonus rewards over a six year period. In addition the council would also start receiving council tax from the reoccupied property. 

Kent County council operate a loan scheme for owners of empty property. It costs Kent about £2,700 in lost interest and administration for each home returned to use through the scheme.  Other councils from around the country could set up a similar scheme or even ask to join Kent's.

There are homes that are currently not economically viable to bring back to use, even though there are lots of low income people who want to live in them. The council could make a small grant of say £5,000 available to the owner on condition that the property were let to somebody in housing need.

There are 40,000 odd empty council owned houses in England. The council could sell these at discount on condition that the purchaser lived in it as their sole home and renovated it to an agreed condition. 

Of course all three of these ideas cost money, but crucially they all earn more than they cost. The more things like this the council does,  the more it will earn and the more homes will be created for its community. If councils want to make money surely this is a better way to do it.

A question on housing benefit

Having just been asked for the third time this week whether I think changes in housing benefit (HB) will cause a national glut of empty homes, I'm not sure whether this is the most important question to ask, but I feel should tell you what I think. The question is based on an accumulating body of evidence that the planned cap on HB will price people on low incomes who rent their housing from private landlords out of their homes. This graphic from the Chartered Institute of Housing shows that over time they may be pushed out of London, then the South West and in 30 years time whole country will become too expensive for them. This begs a number of questions. But the one I have been asked to answer is: will it cause homes left in the wake to become empty? To which my answer is no…. well, maybe a bit. Here’s why.


The implication to the CIH’s model is that private landlords will turf out tenants on HB rather than drop the rent to a level that they can afford. It also assumes that rents will rise at a uniform 5% a year. The old adage is that all projections are wrong, and I’m quite sure this one will be. My first thought is that the private rental market is just that, a market. Rents are set by what people will pay, sop it’s never going to price itself out of business. In some areas, central London for example, I have little doubt that landlords will be able to find tenants not receiving HB who will pay the same rent. So few will see the need to drop their rents. In other areas landlords will have little choice. I spoke to one landlords from rural Durham recently who told me he could let houses to people on HB at double the rate he could let them on the open market. In neither case do I see much chance of vacancy increasing. In central London tenants will only be forced out if the landlord thinks he can let it somebody for higher rent; so no vacancy. In Durham the landlord is potentially faced with less rent or no rent. Most I would guess would opt for less. So no new vacancy.

However, I did say there might be a bit of extra vacancy. Here’s why: with lots of landlords forced to make decisions and lots of people having to move, there will be plenty of opportunity for cock-ups. Landlords are just people and on the whole people who have lots going on in their lives other than letting houses. An uncomfortable truth about much of the private rented housing let to people on HB is it’s rubbish. HB doesn’t take account of property condition, and so the incentive for a landlord to maintain it is less than if the tenant isn’t on HB. A landlord who moves out HB tenants to let on the open market may find that they are faced with a big refurbishment bill to get it up to scratch. The property is then empty and if the landlord can’t get it sorted out, it stays empty. In an ideal world a landlord foreseeing this problem may drop the rent and keep the HB tenant. But the world of cock-ups doesn’t include many landlords with foresight. In Durham a more serious problem may emerge. If HB is so much higher the market it suggests there isn’t much market. When this happens it isn’t impossible for landlords just to give up. It hasn’t happened for years. Perhaps because HB has artificially propped the market up, but there’s no reason why it could happen again in some areas.

Of course all of this avoids the really big problem here. HB changes will inevitably cause people on low incomes to move because they can no longer afford to pay their rent. The market will adjust to this, there won’t be swaths of vacant properties, but for some people here will be personal tragedies and hardship. Is this a price worth paying?  Now there's a real question.

Sows ears and silk purses

It’s hard to believe it now, but in the 1970s when I grew up the glamour football team to support was Ipswich town. It happened to be my hometown club, but their support spread far and wide. The team was filled with well-mannered, clean-cut role-models like Paul Mariner, George Burley and Mick Mills. But if you were a bit rebellious and liked your footballers cut a bit rough, there was nobody better than Eric Lazenby Gates; a grizzled and aggressive forward who always managed to look a mess but play with astonishing skill. He was the type of man who even if you dressed him in a Saville Row dinner suit would somehow still look like a tramp.

When I was ten my parents paid for me to go on a summer football course, coached by Ipswich Town players. I found myself in a group coached by Gates. His thick Northeast accent proved too impenetrable for most of the boys, but with Geordies in the family I understood it perfectly. So did my parents who asked me to be moved into another group to get away from the torrent of smutty jokes and filthy language that were part of his coaching style.

Eric Gates disappeared back to the North East with a transfer to Sunderland a few years later and for many years I thought nothing more of him. That was until earlier this week when I found myself outside the house he was brought up in, in the ex colliery town of Ferryhill in county Durham.

Ferryhill has the curse that has befallen many so-called regeneration hot spots. Its renaissance has been put-off or petered-out. The plans were ambitious. In 2006 a ten year plan was announced by the council that would have seen 400 hundred ex miners cottages demolished and hundreds of new homes built in their place. The works started with the flattening of a chunk of houses in streets named after the great industrial men of their day Stephenson, Watt and Faraday.  But then nothing, the money ran out and with the 2008 market crash, investment slipped away. Far from regenerating the area, the talk of demolition caused, those that could, to move away. Today Gates’ house stands among many others empty and forlorn overlooking a few acres of wasteland.  There is no plan B for Ferryhill, or indeed the many other similar areas where ambitious renewal plans have stalled or been shelved half way through. As we await the Comprehensive Spending Review, there seems little prospect that help will come from elsewhere, or that budgets will be replenished to enable stalled regeneration plans to start up again. The age of demolition and rebuild is, for now at least, over.    

But all should not be lost. These houses could be homes again. Creative thinking like the approaches used in Salford or Anfield can remodel terraced housing and make it appealing and attractive to people looking for homes. Regenerating an area doesn’t have to mean flattening it and starting again.  The great news for places like Ferryhill is this approach is cheaper and therefore more financially viable than the plans that have been abandoned. Places can reinvent themselves, just like people. Eric Gates today earns his living travelling around the Northeast as an after dinner speaker , dressed no-doubt in a Saville row dinner suit.

What does all this mean for housing?

The housing business is moaning and groaning. The housing press is sounding downbeat too. Why? Apparently our new government hasn’t had much to say on housing. It barely mentioned the subject in the coalition agreement and it has downgraded the housing minister post so the incumbent will no longer attend cabinet. Does this matter? and what do we know about the government’s willingness to do anything about getting empty homes into use? I thought it time to have a look. Firstly lets have a look at the cast:

The Cabinet Minister in charge of local government, communities and housing is Eric Pickles a man who led Bradford Council in the early 1990s and will undoubtedly be an influential member of the government. Tim Williams says that Pickles’ experience is a double-edged sword for a man who will unquestionably wield it to the budget. He knows what he’s doing, but on the other hand may be too familiar with local government, and knows where the bodies are buried. It strikes me that these are both commendations for somebody who is in charge. Either way Pickles doesn’t look like a man to be messed with. When Hazel Blears was given this job a couple of years ago, there was an air of levity amongst commentators with few resisting the temptation to talk about her size. This time nobody has dared mention Mr Pickle’s size!

Grant Shapps has the distinction on being the housing minister who had the longest wait. As he is fond of saying, he shadowed four Labour housing ministers over nearly as many years before finally getting the job himself. So any criticism of inexperience is surely unfounded. He will be tasked with amongst other things replacing the national affordable housing programme, which funds housing associations, and overhauling the planning system.

Finally Liberal Democrat Andrew Stunnell, has been appointed a junior minister, probably with responsibility for housing . This may be a bit of a surprise, although he was Lib Dem housing shadow prior to Sarah Teather. And he is clearly highly regarded enough by his party leader to have formed part of the negotiating team that struck the coalition deal with the Conservatives.

By the way; much as it would have been great for her to be here too, Sarah Teather was appointed an Education Minister.

So will this rather motley crew be willing to do anything about getting empty homes into use. We know what they have said. In opposition Grant Shapps proposed changes to housing association funding to allow them to buy and lease private empty property. He also proposed powers for the public to force public owners of empty properties to get them into use. The Liberal Democrats proposed that empty homes should form a major part of a policy of increasing housing, pledging to get 250,000 empty homes into use.

All very different from the Labour government’s approach, which was to give local authorities powers to force private owners to put their houses in order

What strikes me is that the two coalition parties’ approaches aren’t so very different. They are both about encouraging housing associations to get involved in privately owned empty homes, they are both about incentives rather than coercion, and they both acknowledge that reused empty homes are a cost effective way of creating new housing. The fact that this issue wasn’t in the coalition agreement may in fact be a good sign. It may suggest that it isn’t contentious. If there are differences it is unlikely to be over approach, it’ll be scale. Will there be some minor tweaking to HCA funding, or will the government see this as a significant way of creating more homes?

Perhaps the answer to that lies in the influence of these new ministers. With due respect to Andrew Stunnell, this is likely to be a Conservative rather than Liberal democrat led issue. Although they have made far less play of it Conservative pledges to overhaul the funding system, reduce costs, and create a panning system that encourages rather than forces areas to accept more homes, could create a system that makes it a lot easier to get empty homes into use than build new homes. So perhaps the surprising conclusion is that whilst the housing industry may be moaning If you think that more should be done in getting homes into use there may be a lot to be very optimistic about.

A truely edifying spending cut

Being a property anorak I couldn’t stop myself dragging my family around the Peckham House this weekend. It’s not empty, in fact it was full to bursting with visitors for the London open house weekend. Some of you may remember this remarkable house as one of the stars of the Grand Designs tv series. The extraordinary owners managed to create a house in the most unpromising site imaginable, with planning restrictions that would have lead most to think that there was no chance of being allowed to build anything. But not only did they gain permission, they built a house that is pure joy, for the price of a very ordinary flat.

It is that imaginative thinking and that tenacious determination that we need more of if more homes are going to be created out of empty properties. It is easy to see why it is difficult to return empty homes to use, and easy to see how it would be expensive to try, but with imagination and tenacity almost anything is possible. Today I have ben talking to two great examples of both. Urban Infill’s idea is to fill not just the voids in buildings, but the voids around and above them too. You might think of this as filling the missing teeth in the smile of a streetscape

For sheer tenacity look no further than Phoenix housing cooperative. I’ve written about them before, but their latest project in Bow East London shows how tenacity and hard work can overcome huge financial shortfalls. The four flats that they have asked me to open this Friday had been abandoned buy their owner because they were uneconomic to reuse. But for a sixth of the cost Phoenix have brought them back into use
More imagination and tenacity was called for by the Audit Commission last week. It concluded that councils had become too focussed on building new homes at the expense of reusing old ones. It said that by tackling just 5% of empty homes councils could save a staggering £500billion from their homelessness costs. A rather more edifying public spending cut than some have been suggesting over the last few days