A new council house building programme

David Winnick MP

In the past there were those on the left who argued that there was little necessity for a substantial increase in public sector housing. By now they have probably by now changed their views on this issue.

The banking crisis, austerity measures, and general economic uncertainty have clearly reversed the trend which led to such huge increases in owner-occupation. The current difficulties of securing and servicing a mortgage, unless the income is well above the national average, are of course well known.

By all accounts, this trend towards renting, as opposed to owner-occupation, is to continue for some years; the study by Cambridge University, widely publicised in the media, concludes it is likely that just 27 per cent will be in what is described as mortgaged home ownership by 2025, compared to 43 per cent in 1993-4, and 35 per cent at the moment.

One thing is clear: increasingly not only individuals living on their own, but couples, as well as those with children, have no alternative to renting. In London, families renting privately are likely to increase from the present 25 per cent to 33 per cent within 13 years. A report from the Joseph Rowntree Foundation also states that by 2020, the number of home owners under the age of 30 will fall from 2.4 million to 1.3 million, a reduction no less of 46 per cent.

One hoped that the days when so many were subject to private landlords and companies, with all the insecurity, high rents, indifference and slowness to carry out essential repairs were on the way out.

The Labour government put more emphasis on the regeneration of social housing, rather than new build; clearly it was felt that such new rented accommodation was not a priority. In all fairness, the situation during most of that government’s time was very different before the economic crisis, which had such worldwide implications.

The next Labour government should have a policy of a substantial council house building programme, bearing in mind all the difficulties of becoming an owner-occupier now.

However, if such a programme was undertaken, what of the right to buy, as far as local authorities are concerned? As the matter now stands, a council tenant is able to purchase after just five years; moreover, this period does not have to be spent as a tenant of the property they are intending to buy, and can be accrued with different public sector landlords. For a house the discount after five years is a huge 35 per cent, with an additional 1 per cent discount for each extra year you’ve been a public sector tenant, up to a maximum of 60 per cent. For a flat this discount is 50 per, which an additional 2 per cent for each extra year, up to a maximum of 70%. Although there is a cap of £75, 000 maximum discount across the board.. It’s also worthbearing in mind the overall market price will be less than non-council properties in the vicinity.

What purpose would be served if a new council house programme was pursued, and after such a relatively short period of time, the place could be purchased by the sitting tenant? Neither should we forget for a moment, the very long waiting list in so many parts of the country for such housing.

When the Tory legislation in the early eighties was going through, Labour warned it would be the best properties that would be bought, and not the multi-storey flats, particularly in certain unpopular localities. Hardly anyone was surprised by the outcome, and with the resulting ghettoisation.

Housing association tenants do not have the same right to buy, but then again, such organisations, however useful in providing social housing at a time of such need, tend to lack genuine democratic accountability.

There is no reason why other house building could not be included in the policy which I am advocating, which would allow the tenant, as various schemes do now, to first rent and then turn the tenancy into a mortgage at some stage, if that is the wish of the occupier. But this should be separate from the main task of providing secure accommodation with reasonable rents for families who otherwise would have no alternative but renting from the private sector, since housing associations also have, as we know, a lengthy waiting list on their books.

And while we are about it, there is also a case that effective measures should be taken, which will certainly not come from the present government, to ensure some control, again, over the level of private rents and to provide at least more security than at present.

No one would argue that, given the means to do so, most would wish to own their own home. Until recently, all the indications were that the growth of owner-occupation would continue apace. However, in a very different situation to which we are now in, where all the indications pointed to it being likely to last for some considerable time, there is a need to rethink our housing strategy, and to do so quickly.

2 Comments:

  1. George Talbot

    When David Winnick questions building new council houses if sitting tenants could buy them after a few years, he admits two very different cultures. In one, houses were built for those living and working in a community. Rents paid for upkeep and improvements and serviced capital; variously subsidised by the rates. In the other culture, houses were privately built, traded on a capital market and bought by individuals, often highly mortgaged.

    In the community approach, the housing authority allocated houses to those deemed worthy. With free markets, anyone with the capital or enough reliable income to obtain a mortgage could buy. The right to buy presumed the free market approach was better than that of the moral community. I suppose it was initially popular, helped by the large discounts.

    If Fabians want to rethink their housing strategy, I urge them to compare the results of the two cultures. I am no expert in housing but am sure deregulation of the global economy and finance has failed even on its own terms and I suppose its application to housing has been similarly unsatisfactory.

    As an example, the free labour market has deprived many of properly paid work while the free capital market has allowed large inflows of foreign savings seeking safe returns. Via mortgages, these savings have driven up house prices and rents so greatly increasing housing benefits. Now the Coalition tries to exculpate its ideology by blaming those in receipt of a benefit its policies have inflated. How nasty!

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  2. David Beere

    The big Tory bribe of the massively subsidised sell-off of council housing worked in 1979 .And they are trying it on again.. We are now paying the price.Far too much of the nation’s wealth is spent on housing and millions face an uncertain future as far as housing is concerned.

    David Winnick is undoubtedly correct in asserting the need for some controls over rent. These would surely be popular.

    I noticed in the poll in the current Fabian Review that taxation for Housing was a ‘negative’. I guess this is a hangover from the days when Council Housing was subsdised. Of course the review also showed how people have ,at best, a hazy idea of what Public expenditure is spent on what. Sadly , Labour has done nothing over the years to challenge misconceptions that trap us into sticking to regressive policies.

    My late mother, who was a Labour Councillor, for many years had an interesting idea on Housing. It was this: let people be Council Tenants for ,say, five years and then give them the money that they had paid in rent as a deposit on a home, so that they would leave their council hom (and release it for others). I have no idea what the economics of this would be but it would surely be more economic than the absurd state of affairs that now obtains where housing benefit is ,in effect, very largely a direct transfer of state funds to private landlords.The Tories always know how to look after their own and have succeeded magnificently with this over the years.Perversely, now that they are in government , they are having to ‘control’ housing benefits-but not rents!! And the social consequences are grotesque.
    House building at the ‘New State’s behest could have nothing but beneficial effects economically. However new housing is commisioned by the state it should be designed , by fair means or foul, to undercut the private market , stabilise and gradually reduce house prices and enable the much prized swing voters to be housed and have to spend less on housing. Surely we can defeat the free marketeers on housing ?

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