For Charlie: A long view on the housing omnicrisis
By Tim Thorlby
8 mins
What does the future hold for this one?
This blog provides a long view on the UK’s rolling housing omni-crisis. We look through the eyes of 8 year old Charlie. How do his housing prospects differ from when his parents were children, a generation ago? It shows the different parts of the housing crisis, how they relate to each other and how we got here. (Next month’s blog looks forward to possible answers; how do we give Charlie a better future?)
Housing in this country is in a mess. Houses cost too much to buy, yet renting is expensive too. Social housing is in short supply, with record waiting lists and overcrowding. Families live for months in B&Bs. We never seem to build enough new houses. And this story never seems to change; it is an ongoing ‘omni-crisis’. What on earth is going on?
This blog looks at the last 40 years and asks how our nation’s housing has changed. How do today’s housing choices compare with those of a generation ago? We will see this through the eyes of an 8 year old child, who I’m calling Charlie. His parents grew up in the 1980s; what’s changed in a generation? Is the future already set?
I declare an interest. I have two young children, one of whom is 8 years old, so this blog is for them.
1 – UK housing omni-crisis: An overview in two charts
Firstly, an overview. The UK has been experiencing a rolling housing omni-crisis for many years. It is a complicated crisis to understand because it has lots of moving parts, all of which interconnect. One blog cannot say everything, but we can get a grip on the big picture. We start with an overview of the main moving parts, viewed from a great height.
(A quick sidenote: The way that housing is managed varies between nations in the UK, so if I tried to explain all the national differences as I go along, this blog would be unreadable, hence I will focus on England. The main storylines here do still apply across the UK – it is a UK wide challenge - but there are important national differences. Apologies to friends from Scotland, Wales and Northern Ireland.)
For those who love a good chart, I have two visuals for you which provide an introduction to this rolling omnishambles.
Chart 1 – Housebuilding since 1923
Chart 1: Housebuilding in England since 1923 (Shelter)
This really is the long view of housing, showing the numbers of new houses built by the private sector and the state since 1923, as well as house prices, so a century of data. Pretty good, produced by Shelter[1].
What can we see in the chart?
Social housing is the poor relation - There has been little new social housing built since the 1980s, by any Government, so that’s 40 years of not much new social housing.
The market isn’t enough - At no point since the Second World War has the private sector ever built more than 200,000 houses per year, and it often builds much less. Housebuilding has only ever got above 200,000 when the Government gets involved and also builds houses – then it has risen to over 300,000 houses per year.
House prices have been rising for a long time - Real houses prices (ie after taking inflation into account) have been going up for a century and have been accelerating since the mid-1990s, albeit with a sizeable blip after the 2008 Financial Crash, but now back to rising again.
For the astute chart ponderer, this one chart alone also raises some interesting questions, which we will explore later:
Why doesn’t government just fund the building of more social housing? Good question, more on this later
Why, if house prices keep going up, doesn’t the housing market respond and build more houses? In a normal market, if demand for a product goes up and its price rises, then providers tend to pile in and sell more. House prices have been going up for a long time and yet the market has never responded with greater house building, it has been more or less flatlining for decades. Why isn’t the housing market working? Have they run out of bricks? Is it the fault of all those evil planners (see next month’s blog; ‘Can we blame the Planners?’) Is it even (whisper it quietly) really a proper market at all?
Chart 2 – England’s Housing Stock
Chart 2: Dwellings in England by tenure, since 1981 (House of Lords Library)
There are currently 24.9 million homes (‘dwellings’) in England[2]. This second chart shows how the mix of tenures has changed over the last 40 years. It shows:
owner occupation as the biggest tenure, rising but then falling…for nearly 20 years. Has homeownership peaked in this country?
how private rented homes have overtaken social and affordable rented homes in a big shift
2 – UK housing omni-crisis: explaining the six crises
That’s a very brief high-level overview of some big trends in housing, but it doesn’t show us everything. I have identified six big interlocking housing crises:
1. Homelessness crisis
2. Social housing crisis
3. Overcrowding crisis
4. Buying and renting affordability crisis
5. Weirdly overlooked waste of taxpayers’ money crisis
6. Housebuilding crisis
This is not a list of everything wrong with housing, that is a much longer list, but these are the big ones. In this section I will briefly unpack each one and show how they relate to each other. Let’s see how young Charlie’s prospects compare with those of a generation ago.
Crisis 1 - Homelessness
When people lose their home, or are at risk of doing so, they can ask their local council to help them to find temporary housing as a last resort, while they seek something more permanent. People do so every day, often through no fault of their own – not being able to keep up with rent, a landlord kicking them out at short notice, domestic abuse, health issues, etc.
The number of households living in temporary housing or B&Bs has trebled in the last 35 years; today it is 109,000 households. This is mainly families, with two thirds of these households including children; some 142,000 children in fact. Nearly 5,000 of these children live in B&Bs, often for months.
So, Charlie is three times more likely to live in temporary housing than his parents were at his age. Why? Because his family have fewer affordable options today than the previous generation due to there being less social homes and also increasingly expensive private rented housing (two connected crises explained below).
Research has shown that the move into temporary accommodation of any kind is seriously disruptive to a child and their schooling. Half of these children need to move school each time[3]. That’s 70,000 children forced to move school each year because their temporary housing is in a different area.
The situation in areas with lots of holiday homes is worse, where the vast majority of households have to be housed in B&Bs. This is a poor substitute for a home, but in some areas it is the only type of accommodation available, as I describe in another blog.
PS - When people think of ‘homelessness’ they often think of rough sleepers. In autumn 2023, this numbered almost 4,000 people in England, so although a significant challenge, it is actually only the smallest, sharpest end of a much bigger homelessness problem, as we have just seen. Rough sleeping was successfully tackled in the 2000s, although, sadly, since 2010, austerity has seen numbers bounce back, more than doubling from 2010 to 2023. A frustrating example of a social problem that was successfully addressed and then allowed to increase again.
Crisis 2 - Social housing waiting lists
Social housing is a home you rent from a council or housing association for a ‘social rent’ or an ‘affordable rent’ – below market rates. Most are now managed by housing associations.
In March 2022, there were 1.2 million households on the waiting list for a social home. Some 40% of these people have been waiting for more than a year, some for much longer. If you are a family with children, your chance of finding a suitable home is smaller so you will wait for longer, often well over a year. If Charlie’s family need a social home then, they are much less likely to find one than his parents would have been able to in the 1980s.
Why? Because since 1980, the number of social homes in England has fallen by 1.4 million homes, as social housing tenants have exercised their ‘Right to Buy’ and these homes have not been replaced at the same rate as they have been lost. On average, 24,000 social homes are lost to the sector each year[4]. The rate of new social housing construction has plummeted since the 1980s.
So, it means that affordable homes ‘off the market’ are in short supply today. This is problematic because, as we will see, the market is not doing too well at providing new private homes either and prices for both buying and renting homes there have been rising significantly.
The national waiting list is similar in size to where it was in the mid-1980s, but they are not really comparable. The waiting list had risen to almost 2 million households by 2012, but the Coalition Government’s Localism Act 2011 allowed local authorities much more freedom in how they managed their waiting lists, so criteria were tightened and hundreds of thousands of people who were previously deemed eligible were simply disqualified from the waiting lists. So, the lists went down to where they are today, not primarily by housing people but by refusing to accept them on the list in the first place, pushing people back into the private rented sector. This is connected therefore, unsurprisingly, with the problem of more people needing temporary housing, overcrowding and rising rents.
Crisis 3 – Overcrowding
Last year, the National Housing Federation issued a report on overcrowding and said this:
One of the strongest indicators that all is not well in our housing system is the level of overcrowding experienced by people in all tenures.
When people cannot afford to rent or buy the housing they want, they often share. This can be a very sensible route to take, but it can also lead to overcrowding, particularly as families grow and are not able to move on. In practice, it means that teenagers and adults are sharing rooms or using living rooms as bedrooms, or even sleeping in the kitchen.
This is a ‘hidden’ housing problem, as these families don’t show up as ‘homeless’ but they are certainly not living in an appropriate home.
The 2021 Census identified that nearly 1 in 20 households in England were ‘overcrowded’ – that is 1.1 million households[5]. It is much more likely in private rented housing and social housing than in owner occupied housing.
(In fact, those fortunate enough to own their own homes are far more likely to be ‘under occupying’ their homes – that is, to have more rooms than they need. Space is highly evenly distributed in the UK.)
Overcrowding also varies wildly between areas, affecting 11% of all homes in Greater London (nearly 400,000), rising to 23% in some areas, like East Ham.
The vast majority of overcrowded homes contain children – over 2 million children in total. The negative impacts of this on mental health, stress, sleeping and even the ability to do things like homework, are well documented[6]. Over 300,000 children don’t even have their own bed at home, they have to share one every night.
So, Charlie has a one in six chance of living in an overcrowded home in England, which is a much higher risk than his parents faced. Since the mid-1990s, overcrowding has increased by c60% in rented accommodation. Overcrowding is a consequence of the connected crises of more expensive private housing and a smaller supply of social housing.
Crisis 4 - Affordability of housing to buy and rent
In the private housing marketplace, where people buy their own home or are tenants in the private rented sector, big changes have taken place in the last 40 years.
One of the main trends of the 20th Century was the rise of home ownership. By 2003, some 71% of all households owned their own home (outright or with a mortgage). But for the last twenty years, this has been declining and is now down to 63%. The reason for this has been the accelerating rise in house prices in the UK – great if you own a home, but not so great if you are trying to buy one.
House prices have been rising throughout the 20th Century, as we saw in our first chart above, and the problem is that this has outstripped people’s ability to buy them – the affordability has declined. So, in the 1980s, an average house cost about 4 times more than the average annual pay packet; today, it is 9 times more.
Schroders Investment reckon that housing hasn’t been this expensive in the UK since 1876[7] when Benjamin Disraeli was Prime Minister. Wow.
Hence, private renting has grown significantly in recent decades as social housing has dwindled and owner occupation has become too expensive for many.
Today, one in five households (nearly 5 million) rent from a private landlord, which is one quarter of all families and nearly half of the under 35 population. Our Charlie is three times more likely than his parents to find himself growing up in a rented house. It is a significant generational shift. Charlie’s prospects for buying his own home one day are also much less than those of his parents. Not for nothing have younger generations taken the label ‘Generation Rent’.
Yet all is not well in the private rented sector. Rents are expensive, and currently rising faster than inflation and there is too much poor quality housing, dodgy landlords, easy evictions and insecurity. There isn’t space here to consider it all, but the private rented sector is also in need of significant reform.
Crisis 5 - Weirdly Overlooked Waste of Taxpayers’ Money
The Government has committed to spend £11.5 billion from 2021-2026 on its Affordable Homes Programme. This should build 162,000 new affordable homes in England. This is the bulk of our national commitment to building new social homes, amounting to £2.3 billion of capital expenditure per year, delivering just over 32,000 homes per year. It’s better than nothing but it’s not a lot.
At the same time, the same Government will spend £15.4 billion per year subsidising Housing Benefit for people living in the private rented sector but who cannot afford to live there. All of this money goes into the pockets of private landlords, good and bad[8].
So, every year the Government spends nearly seven times more subsidising private rented housing (good and bad) than it does building social housing. All of this money is revenue, so its spent and lost. If this £15 billion was spent building new homes, it would deliver over 200,000 new social homes per year, more than enough to make serious inroads into our national housing crisis and reducing the Housing Benefit bill by providing decent homes rather than just expecting people to live with overcrowding or poor housing.
The refusal to invest in building new social homes means that taxpayers’ money is wasted on a grand scale every year. The fact is that it is much cheaper to house people within social housing than in private rented housing.
We also see this problem in how temporary housing is provided – the first crisis we explored, earlier on. Most temporary housing is now in the private sector due to the lack of social homes, so councils have to rent much of this at market rates. The public cost of providing temporary housing now exceeds £1.6 billion per year, roughly double the cost of housing them in social homes. That wasted £800m could have been used to build over 10,000 brand new social homes every year[9].
The way that public funding is spent in relation to housing makes no long-term sense at all.
The very low investment in building new homes means that a huge annual private rent bill is inevitable. It is very poor value for money. Numerous reports and analyses have shown that sustained investment in social housing would pay for itself.
The other way to tackle this situation would be to bring private rents down to more reasonable levels, either by building lots more houses (see below!) or through rent controls, although there is little political appetite for the latter. These are also not easy options.
Children are very good at asking direct questions – they get to the heart of the matter very quickly. “Daddy, why do we do that?” In this case, it is almost impossible to provide a decent answer to the nation’s 8 year olds, as it makes very little sense to me. Could it be that successive governments have been successfully lobbied by the nation’s landlords, who know a good thing when they see it?
Crisis 6 – We don’t build enough new houses
Finally, the sixth crisis. We seem to be bad at building new houses in the UK, and we’ve been bad for a long time. (There is a whole other issue about the rather poor quality of much British housebuilding and place-making, but that is for another time and place).
This is the big issue that politicians like to fasten on. It’s the silver bullet. The golden goose. And there is a handy scapegoat too – “the nation’s Planners!” – let me hear your pantomime ‘booo!’ They are easy to blame for refusing all of those planning permissions. Pah, if it wasn’t for those Pesky Planners!
There is some debate about how many new houses we might need. Why do we need new houses at all, you might wonder?
Well, firstly some houses fall apart and need to be replaced. Secondly, the population of England is rising slowly but surely, so you would think that on average, we need a few more homes. Thirdly, for a long time, households were separating out, as young people wanted their own place to live and more couples were divorcing, so the number of separate households has been increasing faster than the total population. With an increasingly elderly population we also have a growing number of under-occupied homes (e.g. Granny living alone in her three bedroom house) so our housing stock isn’t being particularly ‘efficiently’ used either.
These are complex matters, and much mysterious modelling is done to forecast ‘housing requirements’ in the UK. To cut a long story short, the current Government target is to build 300,000 per year in England. This is an ambitious target, as this has not been achieved since the 1960s (see Chart 1, earlier) when the Beatles were at the top of the Popular Hit Parade.
The National Housing Federation think we need 340,000 per year, including 145,000 affordable homes[10]. I think for our purposes we can perhaps note that these targets are not that far apart, that there seems to be widespread agreement that housebuilding should be a lot higher than it is today and probably 300,000 or more per year and include a mix of housing types. It gives us a good idea of what’s needed.
In 2022/23, England saw just over 230,000 new homes built, and that was a good year. So, we remain some distance away from achieving these aspirational targets, and this feeds back into the various crises we have just looked at.
Summary
Well done for reading this far. Six interlocking housing crises is not exactly bedtime reading, but I hope it has provided an insight into the nature, the scale and the complexity of our housing challenges.
In one generation, the housing options facing millions of people have deteriorated. Charlie faces a much more challenging set of housing choices than his parents.
3 – Charlie, come home
Home.
There are few things in life that are more fundamental to our wellbeing than a safe, secure and decent home. It is about more than just somewhere to shelter from the rain (although that helps), it is also about our security – physical and emotional – as well as a place we can be ourselves.
A good, safe home is about more than bricks and mortar of course. It is about the social relationships within the house and with our neighbours and the local community.
This very social vision of people flourishing through family and home is an ancient and fundamental idea within Christian theology. The end point of the biblical narrative is not wealth or power but everyone finally ‘coming home’[11].
For a child like Charlie to flourish as a human being, he needs a decent roof over his head and a supportive family which is part of the local community; that is what a good home is. If one of these is missing, it undermines the possibility of him being able to ‘come home’
So, a housing system which leaves millions of people living in overcrowded homes, or with rising damp, or homes where the landlord can turf you out in the morning if he chooses, or homes which cost so much we live in debt and stress all of the time and parents work long hours….well, that system is surely failing. It undermines the very possibility of ‘home’ for millions of people.
So housing is not simply an economic matter, nor one of public policy. Housing is primarily a social matter and our collective failings to provide homes for our neighbours is, theologically, a big deal.
4 – To be continued…. (in the next blog)
This blog has unpacked the housing omnicrisis; what is going wrong and why it matters. Next month we will look more closely at what we could do to improve Charlie’s prospects for a safe, decent affordable home.
In particular the next blog will explore why don’t we seem to build enough houses each year. Is there a problem with how our housing markets work? Or can we just blame the Planners? (Cue: pantomime boo! Exit stage left….)
This blog was written by Tim Thorlby. Please sign up for the free monthly email if you’d like to know about future blogs.
Notes
[1] Shelter (2019) Building for our future: a vision for social housing | Available at: https://england.shelter.org.uk/support_us/campaigns/a_vision_for_social_housing
[2] Data and chart drawn from: House of Lords Library (2022) Housing in England: Issues, statistics and commentary | Available at: https://lordslibrary.parliament.uk/housing-in-england-issues-statistics-and-commentary/
[3] Research report: Shelter (2023) Still Living in Limbo | Available at: https://blog.shelter.org.uk/2023/03/why-use-of-temporary-accommodation-must-end/ | I defy you to read this report and not get angry.
[4] See: https://england.shelter.org.uk/support_us/campaigns/social_housing_deficit
[5] For a fuller analysis, see: House of Commons Library (2023) Overcrowded Households (England) | Available at: https://researchbriefings.files.parliament.uk/documents/SN01013/SN01013.pdf
[6] National Housing Federation (2023) Overcrowding in England | Available at: https://www.housing.org.uk/resources/overcrowding-in-england-2023/
[7] For a 200 year view on housing affordability, see: https://www.schroders.com/en-gb/uk/individual/insights/what-174-years-of-data-tell-us-about-house-price-affordability-in-the-uk/
[8] The Housing Benefit bill peaked at £30 billion per year in 2012, but recent Conservative Governments have brought this down by refusing to increase this benefit in line with inflation or rising market rents and capping it in each area. This has helped to reduce public expenditure, but the predictable impact has been a growth in overcrowding, homelessness and longer waiting lists for social housing. Simply refusing to pay for things hasn’t solved our housing problems, it has just pushed them elsewhere.
[9] The NAO estimated that in 2021/22, some £1.6bn was spent by local authorities housing people on a temporary basis, double what it would cost to house them in social housing. Data drawn from: House of Commons Library (2023) Households in Temporary Accommodation (England) | Available at: https://commonslibrary.parliament.uk/research-briefings/sn02110/
[10] A detailed technical justification for this target is set out here: https://researchportal.hw.ac.uk/en/publications/housing-supply-requirements-across-great-britain-for-low-income-h
[11] For a fuller theological reflection on the importance of ‘home’ to human flourishing and how prosaic matters like ‘work’ and ‘housing’ contribute to that, read: Williams, M N (2022) A Biblical Response to Working Poverty | Available at: https://www.beautifulenterprise.co.uk/jubilee-centre-reports