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Wednesday, 6 May 2009

The 'housing demand' myth

In every call for an increase in social rented housing, the need is justified by quoting that some 4.5m people or 1.8 million households are now on waiting lists. Have you ever asked yourselves where these millions of people are living now? Are there great tented camps in Hyde Park? Are they sleeping in your High Street? Well, since the latest figures for 'rough sleepers' are astonishingly low, I guess almost all of these 4.5 million people are already living somewhere with a roof over their heads and a bed to sleep in.

If I were to offer X-Box 360s at a sixth of the retail price to whoever joined a waiting list, I've no doubt that the waiting list would reach into the millions within weeks. So why couldn't I then press the taxpayer for more money to buy more subsidised X-Boxes on the basis of the scale of demand? The answer from most sane people would be that the taxpayer shouldn't pay for something that the private sector is capable of providing, that State economic intervention was only justified in cases of market failure or in the provision of public goods such as roads. So why should housing be any different?

When the Parker-Morris standards for Council housing were introduced, the committee realised that they were specifying homes of superlative constructional quality. Being pragmatists, they realised that offering homes equal or better than private sector ones would create huge and unsatisfied demands, so they sought some way to make council houses just a bit less attractive than private homes. What they did was to reduce room sizes. If you've ever been inside a pre-1970s council house you'll know what I mean. Room dimensions were calculated to be just big enough for their purpose, with even the pram measurements of the day used to calculate hallway widths.

Now of course there's little difference between a Barrett starter home and a council house in terms of room size, and planning conditions for social housing often mean there's no constructional difference at all between HA flats and private flats in the same block. So hardly a surprise, is it, that 4.5m people want to move into a heavily subsidised new-built home with laminate flooring, galvanised balconette and halogen down-lighters straight out of the DFS catalogue.

No, before we invest further in social housing we should look at bedspaces in existing social housing. Buried in the census information this usefully reveals overcrowding at the SOA level - at the level of each 'clump' of about 1,500 subjects across the nation. It also reveals chronic under-occupancy on some council estates. Of course, many are now RTB but nevertheless I'll bet there is no overall shortage of social housing bedspaces in many LA areas.

The 'needs' based priorities are hugely discredited and every prospective tenant knows how to fiddle the criteria. Even 'Baroness' Uddin, a deeply corrupt Labour peer, knows how to fiddle herself an HA flat. There is no market failure in house construction. There are few reasons in the 21st century to continue to provide State subsidised social housing. The Hills Report reveals that each social housing tenant will enjoy a rent subsidy at the taxpayer's cost of £65,000 at NPV over an average tenancy, and the cost to the economy of subsidised rents is £6.6bn a year.

And more importantly, the value of 'our' social housing stock before the crash was some £400bn. Imagine if this was privatised, as Thatcher privatised British Gas, with preference given to small-scale and local investors, and in lots small enough to be 'owned' but large enough to be economically managed. With a phased shift to market rents and returns. George Osborne please take note. This is the one route you have to reverse Brown's scorched earth destruction of the national economy, and at the same time create massive positive externalities and social 'good'. Privatising the nation's social housing stock is an idea whose time has come.


Anonymous said...

Another point to note is that council tenancies are largely hereditary.

Round where I live, it's absolutely normal, when Granny is getting a bit near the end, for her daughter and family to move in with her, just to ensure that the house stays in the family when the old dear pops off or gets moved into a home.

Naturally this occurence is preceded by one of the daughter's own daughters, complete with babies various, moving in with HER, and then staying there, so that THAT house also remains in the family.

Thus we end up with tribal areas in our "schemes": such-and-such a street is where all the so-and-so's live, and will be for ever.

None of them, of course, ever pays anything resembling a market rent, regardless of family income - which, with a couple of tradesmen sons or brothers in residence, can be considerable.

Your tax £ at work.

Anonymous said...

I don't want your stinking Xbox 360, Raedwald. If, however, you ever find yourself in possession of a Playstation 2 going at 1/6 of the retail price, I'll be your huckleberry.

Pat said...

Further, many 18 year olds (myown daughters amongst them) put their name on the list because they know that they will want their own place sometime- but end up buying or moving in with someone. Hence the number on the list is a very poor indicator of demand- many have no immediate need, and better options in the long term.
I have long thought that if we wish to help those too poor to house themselves we should give them money- and let them pay market price for housing. Similarly with other benefits in kind.

Blue Eyes said...

Yup I agree with Pat. Why not just boost unemployment benefit or whatever so that those genuinely in need can afford to rent properly?