The Solution to the Housing Crisis: More Council Houses

The rallying cry to 'build more housing' has gained momentum across the political spectrum – but solving the housing crisis is about affordability and access, not supply. We need housing for public good, not private profit.

Earlier this month, the Independent reported on a recent analysis published by the Public Accounts Committee, which criticised the government for failing to meet its housebuilding target. The analysis had apparently been commissioned by Labour’s shadow housing minister Thangam Debboniare, presumably as a stick to beat the Tories with: ‘this is yet more evidence,’ she said, ‘of the Conservatives making promises they can’t deliver.’ It is often helpful to point out that the government has failed even by its own standards. It is, however, troubling that the Labour Party and others on the left are still prescribing housebuilding as the cure for the housing crisis.

Since the crisis began to bed in, there have been calls from all quarters to build more housing. At first glance, it is a policy that is both obviously correct, and impossible to oppose. Everyone from homelessness charities to the Conservatives have proudly waved the ‘build more housing’ flag. But as the housing crisis has matured, so too has the thinking around building more housing as a solution. Like many slogans, its simplicity disguises the poor economic and policy analysis that underpins it. The basic premise of ‘build more housing’ is that a greater supply of homes will ease the crisis, but those who see the housing crisis as a supply issue need only to look at a city like San Francisco, where the number of empty homes far outstrips the number of unhoused people in a region in the grips of a similar housing crisis to the UK’s. Supply—even massive local over-supply—does not solve a crisis caused by a system of house price speculation. Far from it.

We know this from the UK, too. As the right-wing think tank Centre for Policy Studies has pointed out, it was the landlords who benefited from the 1.6 million new homes that were built in England between 2005 and 2015. Just like San Francisco, recent statistics show that the UK has about five times more empty homes than unhoused households. Danny Dorling explored this question more than five years ago in his 2014 book All That Is Solid.

In a landmark 2019 report for the Labour Party on land ownership, economist Beth Stratford and others explained how and why the housing crisis is a matter of policy and ownership, rather than a question of the number of homes in existence – they cite the government’s own statistics, which cast doubt on the plausibility of lowering prices through housebuilding. Anna Minton has researched the link between gentrifying developments and rising prices in her 2017 book Big Capital. In fact, we can go back as far as Engels, who argued in The Housing Question that for-profit housebuilding is (necessarily) incapable of solving a housing crisis, using contemporary European examples to prove his point.

Not only is the analytical evidence stacked against the ‘build more housing’ thinking, but it is actually difficult to find factual evidence in favour of its basic arguments. It is undoubtedly true that the housing crisis has spiralled out of control over the past 20 years and—if the problem really is one of supply—we would expect to see that borne out by the data. But the ratio of persons per dwelling in England has stayed almost exactly the same since 2001, at around 2.3 people for each home. In fact it had fallen slightly by 2017. And in London—the albatross around the country’s neck in terms of accommodation prices—demand for housing is thought to have fallen by staggering 700,000 people (eight percent of the population) over the course of 2020. The notion that this is a supply problem looks increasingly absurd.

In this (apparently leading) study on the link between housebuilding and accommodation costs in the UK, the authors blame the crisis on strong demand set against lack of housebuilding to meet it (due to planning laws, and the fact that there are too many hills). They note correlations between building rates and house prices. They then try to prove a causative effect by casting housing as a matter of consumer preference for particular locations with limited supply, rather than acknowledging the grim reality: that rising costs and insecurity push people around cities like chess pieces. But most importantly they fail to ask the critical question of why—in a context where there are enough homes to go around—demand is so staggeringly fierce. Had they been curious enough to think about this, they might have found that additional demand exists because housing is valuable. And it is valuable because it generates large and fast-rising profits. And it generates those profits because that is exactly what the system of housing legislation is designed to achieve.

This crisis has always been about access to housing (affordability), and not the amount of homes that exist. It was started by the Thatcher government, whose still-existing framework of housing laws was purely concerned with rights (or, more accurately, denying rights to private tenants), and not with buildings, because they realised that the nature of those rights affects the costs of accommodation. It was this package of rights, which was designed to generate a thriving market out of rents and land value, that led to the current crisis, and not the number of buildings in existence.

In that context, lingering demands for more housebuilding are, in 2021, difficult to justify. It is a very palatable policy – attractive to property developers on the one hand, and to unserious housing analysts on the other – but as a movement we can no longer get away with using it.  Important, accessible works like Land for the Many have made it clear beyond doubt to the housing movement that—as we wander around towns and cities stacked to the gunwales with residential buildings—the call to build more housing is not a call that serves our interests (let alone the interests of the environment).

What does all this housebuilding achieve? Speculative building projects are located and executed for maximum profit. Homes are sold or let at the greatest possible price, and generally sited with a view to stimulating ‘deprived’ areas because that’s how the largest profits can be made. If I lived in a crumbling studio flat in London’s Old Kent Road, where the massive amounts of new homes currently under construction are going to drive up rents and prices in the area, the insecurity of the UK’s private rented sector would ensure that I was quickly pushed out to somewhere cheaper. And, as Anna Minton argues in Big Capital, this phenomenon causes a knock-on effect whereby I would displace other people in the ‘somewhere cheaper’ that I had moved to, and they would displace others in turn, et cetera. This increase in the number of homes is obviously not a solution to the problem of how to house the populations of our towns and cities.

‘Build more council housing’, on the other hand, is a call with a proven track record. As Owen Hatherley has argued in his recent book Red Metropolis, a sustained project of municipal building in London from the 1930s onwards achieved its aim of ‘wresting housing out of the hands of slum landlords’: by the time Thatcher came to power there was no housing crisis to speak of, and the private rented sector had been reduced to just eight percent of homes in England. At Housing Action Southwark and Lambeth we are leading the call to build more of three-, four- and five-bedroom council homes because—as things stand—larger families are being forced into the small number of one- and two-bedroom and council homes that still exist, literally crowding out other applicants, who must languish in the over-priced private rented sector. Building council housing must remain a core demand.

But aside from a mass council house building campaign—which would take years if not decades to complete—a new package of occupation rights (rather than more private building) is key to solving this crisis. The effects of the Thatcher-era housing law framework have proved that the housing crisis hinges on rights and not on buildings, and restoring those rights—attacking the profitability of landlordism and price speculation—is the process by which the current crisis must be undone.  This could be achieved through a return to security of tenure, which would stabilise rents and house prices. And, if there is a serious housing crash in the next few years, we will need to find ways for local authorities to acquire the glut of glittering palaces in the sky from distressed investors, and let them as social units.

Why build more housing when there is already a surplus equal to five times the homeless population? How many more empty homes do we need? Who would that serve? We know from San Francisco, the UK and other places around the world that it doesn’t serve unhoused or badly-housed people. Society’s needs could, instead, be met by deflating the profits of the housing market, making the existing stock more affordable (and, thus, accessible) for everyone, just as we did throughout the middle of the last century. Going further, we can only solve it through that method because building more homes without decommodifying them simply drives up prices, and continues to make things worse.

We need to replace the housing law framework. Housing is governed by the economic consequences of laws, and legislative reform (together with council housing) is the only route out of this crisis. The ‘build more housing’ slogan might very well serve the property developers, but—as those of us working to see an end to the housing crisis can see—it is merely a call to replicate the exact system of housing profits that have led us to this point of intolerable crisis.