“Housing policy is killing British civilisation,” said my interlocutor. “Right to buy has been a social catastrophe, making today’s generation pay for the earlier generation’s bonanza of buying their council house on the cheap – the stock has collapsed because the homes were not replaced. There is too little or no affordable housing or rents in great parts of the country where young people can start or bring up a family.
“It is already hitting the birthrate. Forget building a quarter of a million houses a year rising to 300,000: it is not going to happen with the new planning rules that enthrone the nimbys. This country so safeguards the interests of the old and the equity in their houses, it is literally killing off its future.”
This was no radical member of Momentum or a spokesperson for a housing action group. It was the director of a well-known construction company speaking off the record but with a forcefulness that took me aback. But it is hard to contest the points being made. With inaction and nimbyism the order of the day, the housing market is going to do to Britain what the silting up of the lagoon and changing trade routes in the 16th century did to Venice or the grip of an ossifying, overmighty church and crown did to 18th-century Spain: prompt economic and social stagnation, a falling population and national decline.
In my network alone, several couples are downsizing, passing some of the equity released over to their children as a house deposit and the smaller house they are buying in too many instances is a former council house built to better standards than today. It’s the phenomenon of our times. Recent research disclosed that parents are passing on £11bn a year to their kids in their lifetime, while bequests from estates are running at £100bn a year. Meanwhile, council and social housing is in stasis, unable to meet the demands on it.
Unearned luck is the order of the day – the luck to be a baby boomer sitting on hundreds of thousands of pounds of equity by virtue of being born between 1946 and 1964 (three-quarters of all housing equity is owned by the over-50s); and the luck to have parents in a position and ready to downsize and pass on the cash to their children to make the sky-high down payment to buy a house. The unfairness is systemic. Record house prices, notwithstanding the five-month recent decline, costing more than eight times average disposable incomes can only be supported by the generation below spending nearly two-fifths of their take-home pay on a mortgage as first-time buyers, according to the Nationwide. The rest of our under-40s have to take their chance in the private rental market where rents are 42% of average post-tax income.
Routinely I come across young couples who are either deferring having a child or not having a second or third because they can’t afford the rent or mortgage for a larger house or flat, especially on top of paying childcare costs that are the highest in Europe. The fertility rate has been below the replacement rate necessary to keep the population stable since 1973. This has numerous causes, but property costs are one of the most important. A tax on life, the cost of having a roof over a family’s head, is a gathering social disaster.
Start with right to buy. Until there are failsafe mechanisms for replacing any social housing that is sold with new-build homes, the programme should be suspended. To her credit, Theresa May lifted the borrowing cap on councils so they could borrow to build, but they need cheap land; to retain more of the proceeds on any sales of social housing; and more capacity to drive development forward if council and social housebuilding is to be mobilised.
The plumbing of our financial system is organised around property lending as a guarantor of profitability and balance sheet soundness – an engine for property price inflation. Its reconfiguration is a decade-long task for which there is zero appetite. But land is expensive because the property that can be built on it is so expensive. Which means the taxation of property has to take the load; it has to be well designed and effective. It is not. Britain has not revalued its residential property values on which council tax is based since 1991, so that residential property taxation runs at a small fraction of what it was 30 years ago. This is the kind of ludicrous aberration that Venice and Spain experienced in decline; the best in both states knew what was driving them down but powerful vested interests stopped any reform. No politician will go near revaluing residential property values, even if simultaneously council tax were to be redesigned to protect those living in properties with average prices or below from hikes. The campaigns from the rightwing press and protests from pensioner homeowners make politicians shudder.
Yet until property is taxed properly, the incentive to downsize is minimal. Couples or the bereaved know it would make sense to live somewhere smaller than a large, multi-room family house. But there are few suitable smaller homes to move to and swingeing stamp duty is another deterrent.
We need a strategy across the board – to build for young families, for elderly people, for key workers in cities, for single people. And not least to rescue ourselves from having the oldest housing stock in Europe and achieve net zero by 2050. We need a planning system that releases land to deliver these goals and which protects great schemes from the veto of well-organised, usually elderly middle-class opponents.
It’s hard to be optimistic. A precondition for meeting expansive targets is to have sufficient housebuilding companies with the skills and capacity to take up the opportunities. But there has been an epidemic of bankruptcies among small- and medium-size housebuilders – building costs have soared, volumes are falling and the construction industry, like the NHS, is one of the casualties of Brexit with acute skill shortages.
We can’t go on like this. Britain has become a country organised to benefit the old – the Conservative party’s electoral base. There is a constituency for better. Reform starts by ceasing right to buy, taxing residential property at today’s values and celebrating housebuilding as a vital national need. Few old people want to be complicit in the slow strangulation of our society. There are votes in addressing this crisis, but it demands will and daring.
