You are viewing 1 of your 1 free articles
A long-term housing strategy could improve living standards across the country
As part of the National Housing Federation and Inside Housing’s #PlanForHousing campaign, Cara Pacitti and Lindsay Judge of the Resolution Foundation thinktank analyse the scale of the government’s challenge
Cara Pacitti is a senior economist, and Lindsay Judge is a research director at the Resolution Foundation
A long-term vision for housing is essential for a new government that wishes to improve living standards in England.
The number of families living in temporary accommodation is at record levels; escalating house prices have pushed too many families out of homeownership and into expensive and poor-quality rental homes; and England’s housing stock faces vast energy-efficiency challenges.
The wide perception that there is a housing crisis has elevated housing policy to the top of the government’s agenda. Its political salience should not be underestimated – heading into the election, nearly a quarter of the population identified housing as one of the top three concerns the country faces.
READ MORE
Looking at affordability, the challenges facing the government are obvious.
House prices are more than eight times the average salary in England, up from around five times in the early 2000s. As a result, youth homeownership rates are low. The share of families headed by someone aged 19-29 years old who own their own home fell from a peak of 28% in 1990 to just 12% in 2021-22 (albeit with a rise in recent years from a low of 8% in 2015-16).
This, along with an erosion of the social housing sector, has left a larger share of the population living in the private rental sector.
“Given the highly discretionary and varied way policy currently operates across local planning authorities, reform of the system is a plausible route to boosting housebuilding”
This is particularly poor value in terms of affordability. Square metre by square metre, private renters pay more than three times as much, on average, as mortgagors for their housing. In addition, renters are much more likely to live in low-quality housing, with one in 10 privately rented homes reported as having damp problems in 2022-23.
In this context, the government’s two-pronged approach of building more homes while also raising standards in the private rented sector is encouraging.
It seems clear from the government’s announcements so far that the planning system (and private developers) have a central role to play in its ambitions to deliver 1.5 million homes over this parliament. Given the highly discretionary and varied way policy currently operates across local planning authorities, reform of the system is a plausible route to boosting housebuilding.
However, the government’s planning reforms (as they are currently) remain relatively modest. There is scope for more radical reform. Relying on planning reform to unleash enough private developer activity to deliver the scale or the tenure mix required to substantially increase the number of affordable homes in this country is optimistic.
Ultimately, the reforms to the planning system that have thus far been announced must be delivered alongside direct public investment in social housing if they are to deliver the expansion in the affordable housing stock that is so badly needed.
Moreover, housing policy has a crucial role to play, not only in boosting homeownership across England, but also in achieving the government’s target of bolstering sluggish economic growth. However, currently, government housing targets are not fully aligned with where economic returns from additional housing would be highest, such as high productivity areas or places with the most potential for growth, like major cities.
“Britain’s housing challenge is huge, not just in terms of reducing high barriers to homeownership, but also in terms of expanding and remediating the country’s old and inefficient housing stock”
Resolution Foundation research suggests that recalibrating housing targets towards areas with the most potential for productivity gains could significantly increase GDP growth. Focusing housebuilding on higher-demand regions could boost GDP by up to 0.14 percentage points per year.
Britain’s housing challenge is huge, not just in terms of reducing high barriers to homeownership, but also in terms of expanding and remediating the country’s old and inefficient housing stock. After all, 11 million private homes (both rented and owner-occupied) had a poor energy-efficiency rating in 2021 (an Energy Performance Certificate rating below Band C).
Housing reform is therefore central to Britain’s net-zero ambitions, too – and the government will need to redouble efforts to modernise our homes through heat pumps and better insulation.
This parliament will need to be one of decisive action, and long-term strategy in housing policy. But the government must not forget the challenges many face in the short term, too. It has made a start on improving security in the private rented sector. But it also needs to help low-income renters facing rising rental costs. Continuing to freeze the Local Housing Allowance in the years ahead could be a major living-standards headwind – and must be reversed.
Lindsay Judge, research director, and Cara Pacitti, senior economist, Resolution Foundation
