I have been working in Town Planning for ~20 yrs. Here is a lock-down induced rant on what I think is wrong with the housing market in the UK

[teccuk]

A bit of a rant and just opinion. But if people are interested, I might try and dig out numbers to support it (or completely prove myself wrong in the process).

Problems
1. Growth in Households and demographics.

Household rates have grown massively since the 80s (small decrease since 2010). Not just because of population growth but because of smaller households (people living on their own etc). At the same time older people are still living in the big 3bed semis they bought for £10 5s in 1969. No easy answer to this except more housing.

2. Reliance on the private sector to deliver all types of new-build housing

Housing has been almost entirely out-sourced to the private sector, or at least the bits anyone can make money on. Most council’s housing stock is at least revenue neutral and as an asset looks good on balance sheets. The urgency with which successive governments have privatized housing is more ideological than practical.

The problem with relying on the private sector to deliver affordable housing units is that the land owner will go out of their way to absolutely everything they can to avoid it (of course). In my experience this is the case for public and private landowners. The Residual Land Value is a calculation based on the saleable value – construction – professional fees – misc costs and assuming a 20% margin for the developer. At the end you get the land value. There is a whole science behind it, it is more profitable to build fewer houses than trigger ‘affordable housing’ policies most of the time. Result is less housing overall and less affordable housing.

3. Commodification of housing

In the UK (or at least part of it) houses are no longer priced by their utility value (the value of the house to actually live in) but by their commodity value (their value as an asset with an RoI). This is a very easy calculation, it is effectively the rental value to arrive at a ~3% yield + any assumption about capital asset increase costs. This results is vicious cycle especially in the current environment where ‘income’ is extremely rare and bond and interest rates are very low. Cash is bad if you’re rich. You want a return on it. Within the context of income rarity and demographic changes, housing is a ‘sure thing’.

4. Reliance on property investments of the middle class

Related to the above, the middle class need a safe place for their cash. Pensions have been undermined over the last decades. Savings are pointless. The stock market is scary. Many middle class people have become accidental landlords or if they do well, can afford to buy another property and rent their first.

5. ‘Slum landlords’

Yes these bastards. Must be one of the oldest jobs in the world. Get a bit of capital, exploit, borrow against capital, buy, exploit etc…



How to fix it?

1. Reform the planning system

We don’t have a planning system in the UK in the same way they do in Europe. We have a consenting system. Yes land is designated in local plans for housing, but its not ‘planned’. The land owner /agent makes their case ‘call for sites’ its designated and then the developer effectively negotiates with your understaffed local council with worse lawyers than they have.

In Denmark, Switzerland, Holland, the planning system is much more active. Land is effectively compulsorily purchased, master plans are drawn up with local communities, infrastructure is frontloaded (highways, even trams etc.) and paid for out of development profit. Lots are contracted to developers who sell / build with a reasonable margin.

2. Council Housing / co-ops
Council tenants will complain, and have every right to, but councils are in the main better landlords than private sector. Council’s have been doing this for 100 yrs in some cases. Housing associations are such a mixed bunch. Co-ops can be great, can not work. Building societies in their old fashioned sense with a mix of well planned (as above) communities and council, co-op and privately owned housing.
Freeholds and leases also need democratising and reform. No, I would not suggest the hell that is the US 'Home Owners Associations', but again we can look at Europe, Germany for e.g.

3. Improve pensions
Decent pensions, contribution based nationalized pensions with a good state pension to back it up (I don't know much about pensions).

4. Tax, regulation
Tax landlords, regulate private rents.

 

[marty21]

Just from a Social Housing perspective (I've worked in Social Housing for 25 years, at a variety of places , LAS,HAs, Co-ops,TMOs, Housing Trusts) .

Local Authorities are finally building again , not in great numbers but it will make a significant impact over time . Also some buy-back of RTB properties (we use these for temporary housing) . We need to build more , as I've noticed recent trend from HAs into building places which aren't for social rent (which is a disturbing trend) .

 

[WouldBe]

My dad worked in planning for years. One of the biggest problems is the lack of building bungalows so older people can move out of their 3/4 bed houses freeing them up for younger families instead of just keep building new 3/4 bed houses.

 

[marty21]

My dad worked in planning for years. One of the biggest problems is the lack of building bungalows so older people can move out of their 3/4 bed houses freeing them up for younger families instead of just keep building new 3/4 bed houses.

We have this sort of issue, we have financial incentives for downsizing but it is difficult to find suitable flats for the older people to move to. Not surprisingly, they hold out for the best flat they can get.

 

[kebabking]

Yup, my mum and dad have this right now - they are both perfectly mobile, but they want to get themselves sorted out before they need to rather than have it all be a rushed gangfuck. So they are 'stuck' in a four bed house with a three bed bungalow costing about £100k more than the house they live in...

 

[teccuk]

Just from a Social Housing perspective (I've worked in Social Housing for 25 years, at a variety of places , LAS,HAs, Co-ops,TMOs, Housing Trusts) .

Local Authorities are finally building again , not in great numbers but it will make a significant impact over time . Also some buy-back of RTB properties (we use these for temporary housing) . We need to build more , as I've noticed recent trend from HAs into building places which aren't for social rent (which is a disturbing trend) .

Couldn't agree more!

I would love to hear your perspective. How do you find land? or do you tend to just get the affordable units built on new build sites? Do the HAs you work with actively seek properties to buy?

Yeah there are a few which are more or less developers now. Curo is the big one in the Bath/Bristol area. They build out-and-out commercial developments, which they justify as they say it allows them to build the affordable element. Within the confines of the current system, its a justifiable approach, but we need real drastic overhaul of the market to make proper structural changes.

 

[teccuk]

Yup, my mum and dad have this right now - they are both perfectly mobile, but they want to get themselves sorted out before they need to rather than have it all be a rushed gangfuck. So they are 'stuck' in a four bed house with a three bed bungalow costing about £100k more than the house they live in...

Bungalows are great, but just take up a lot of land. In southern Europe they are sort of the default in rural areas as land is cheap and build costs for bungalows are lower.

 

[marty21]

Couldn't agree more!

I would love to hear your perspective. How do you find land? or do you tend to just get the affordable units built on new build sites? Do the HAs you work with actively seek properties to buy?

Yeah there are a few which are more or less developers now. Curo is the big one in the Bath/Bristol area. They build out-and-out commercial developments, which they justify as they say it allows them to build the affordable element. Within the confines of the current system, its a justifiable approach, but we need real drastic overhaul of the market to make proper structural changes.

I manage Council housing, so not involved in procurement of land . My brother lives on a relatively new Curo estate in Bath, out by RUH , seems a good build imo.

 

[Pickman's model]

And another thing, socialise all the flats in London and elsewhere bought as investments but sitting empty and in which no one may ever live. Stop the demolition of council estates and their replacement with yuppie flats.

 

[Pickman's model]

Oh and build a new town round chipping norton

 

[marty21]

And another thing, socialise all the flats in London and elsewhere bought as investments but sitting empty and in which no one may ever live. Stop the demolition of council estates and their replacement with yuppie flats.

One of the more common funding models does include yuppie flats , councils get council housing in return for allowing private housing on the same site. I've visited a fair number of these developments & the council tenants do get decent flats out of it. I'd prefer it to be all social housing but this funding model does increase council housing stock.

 

[nadia]

Because of the plots sizes a lot of bungalows round here go to property devlopers who just add another floor and turn it into a large house.

 

[SpookyFrank]

Local Authorities are finally building again , not in great numbers but it will make a significant impact over time . Also some buy-back of RTB properties (we use these for temporary housing) . We need to build more , as I've noticed recent trend from HAs into building places which aren't for social rent (which is a disturbing trend) .

Some local authorities are building not social housing but housing for private rent to plug the holes in their budgets. Some are even building luxury flats in a cargo cult-esque attempt to lure commercial gentrifiers into unfashionable areas.

 

[Crispy]

Replying to Watch thread.
Also, paging Brainaddict

 

[marty21]

Some local authorities are building not social housing but housing for private rent to plug the holes in their budgets. Some are even building luxury flats in a cargo cult-esque attempt to lure commercial gentrifiers into unfashionable areas.

The local authorities are probably working with the private developers who do the building bit . It's not ideal, I agree. I worked on one estate about 5 years ago (it had "issues" ) a lot of social housing was built , good quality, but also expensive flats for sale. Tbf, knowing the issues on that estate , I wouldn't fancy spunking a million quid on luxury flat there.

But there is a history of social housing leading gentrification in unfashionable areas, in the mid 60s a lot of Housing Associations started buying run-down houses in Notting Hill/Bayswater/Maida Vale . They started doing these houses up, the areas started looking better, others started buying up, and years later Hugh Grant turned up. The area at the time was dominated by Rachman & similar landlords.

 

[oryx]

2. Council Housing / co-ops
Council tenants will complain, and have every right to, but councils are in the main better landlords than private sector. Council’s have been doing this for 100 yrs in some cases. Housing associations are such a mixed bunch. Co-ops can be great, can not work. Building societies in their old fashioned sense with a mix of well planned (as above) communities and council, co-op and privately owned housing.
Freeholds and leases also need democratising and reform. No, I would not suggest the hell that is the US 'Home Owners Associations', but again we can look at Europe, Germany for e.g.

Plus end Right to Buy.

 

[AnnO'Neemus]

Just from a Social Housing perspective (I've worked in Social Housing for 25 years, at a variety of places , LAS,HAs, Co-ops,TMOs, Housing Trusts) .

Local Authorities are finally building again , not in great numbers but it will make a significant impact over time . Also some buy-back of RTB properties (we use these for temporary housing) . We need to build more , as I've noticed recent trend from HAs into building places which aren't for social rent (which is a disturbing trend) .

The housing association that owns my flat - which was a council housing stock spin-off/ALMO - has seemingly done some corporate restructuring to escape out of its former social housing remit, and has increasingly been building not just shared ownership, which has been common for many years now, for housing associations to offer shared ownership as a means of helping people get a foot on the property ladder, but now they've also been building market rent properties, ostensibly to plough profits back into the rest of the business.

The one good thing about their market rent properties near me - theoretically - is that tenants can supposedly sign up for long leases of up to five years, which some might welcome, given that one of the (many) complaints about renting in the private sector is the lack of security of tenure. I say the availability of long leases is a benefit, in theory, because the designers/builders tried some new-fangled supposedly efficient heating system, but it's been a nightmare by all accounts, with vents that allowed cold air into their flats and made it really hard and very expensive to heat them, plus they're blighted by crime, bikes keep getting stolen and parcel deliveries going missing, and there's seemingly quite a high turnover of residents.

Meanwhile, there are thousands of people on the housing waiting list in the city.

 

[AnnO'Neemus]

The local authorities are probably working with the private developers who do the building bit . It's not ideal, I agree. I worked on one estate about 5 years ago (it had "issues" ) a lot of social housing was built , good quality, but also expensive flats for sale. Tbf, knowing the issues on that estate , I wouldn't fancy spunking a million quid on luxury flat there.

But there is a history of social housing leading gentrification in unfashionable areas, in the mid 60s a lot of Housing Associations started buying run-down houses in Notting Hill/Bayswater/Maida Vale . They started doing these houses up, the areas started looking better, others started buying up, and years later Hugh Grant turned up. The area at the time was dominated by Rachman & similar landlords.

As you know, the problem, in many instances, with local authorities working with private developers, is that they're in cahoots, in terms of regenerating old council estate by knocking down lots of social housing and failing to provide like-for-like replacement, the number of social housing units is reduced, people are forced out of their homes and many are moved miles away from families, friends, social and support networks. Heads the property developers win, tails the social housing tenants lose. Trebles all round.

 

[AnnO'Neemus]

Some local authorities are building not social housing but housing for private rent to plug the holes in their budgets. Some are even building luxury flats in a cargo cult-esque attempt to lure commercial gentrifiers into unfashionable areas.

Yeah, I heard this in relation to Manchester. Off the top of my head, iirc, around 70 per cent of the city's housing stock was in Council Tax Band A (plus we have one of the highest student population's in the country and most students don't pay council tax). So there's been a deliberate policy on the part of the council to encourage and facilitate developers to build fancy apartments, (the more expensive the better, really), so that there are more properties in higher council tax bands, to try to generate more revenue, because they apparently need more money. But then they go and spunk £38 million on buying an empty/derelict retail park. Place North West | Manchester to appeal car park judicial review

 

[AnnO'Neemus]

And another thing, socialise all the flats in London and elsewhere bought as investments but sitting empty and in which no one may ever live. Stop the demolition of council estates and their replacement with yuppie flats.

I don't like to think about it, because it makes me apoplectic with rage, but there are three new tower blocks near me, part of the development of a former industrial/commercial zone that's mostly had 'temporary' car parks for the past couple of decades. What enrages me is that public funds were used to give cheap loans to private sector property developers. At least the two blocks with flats to rent look like they're mostly occupied, but the tower that had flats for sale, apparently most of them have been bought up by overseas investors and the difference is noticeable. The buildings are next to one another, and whereas there are lots of lights on in the blocks with rental flats, the block that had flats for sale is mostly unoccupied.

Again, thousands of people on the housing waiting list, there's no way most of those people would be able to afford the high rents for fancy flats. There are lots of homeless people in Manchester, gawd knows how many homeless families in B&Bs, more will probably be made homeless when Covid-19 restrictions against evictions are lifted. It obscene for public funds to be used to build flats that are left empty, meanwhile local residents can't find affordable homes to rent.

 

[Athos]

100% tax on income and capital gains from any property that the owner doesn't live in.

 

[Leafster]

Because of the plots sizes a lot of bungalows round here go to property devlopers who just add another floor and turn it into a large house.

Anywhere where the land values are high you have the problem that developers want to maximise the profit on a development or conversion.

with new build the development models seem to go in two ways. Build up as many floors as possible so flats are the most profitable for them or build big and luxurious on the smallest plots possible. This distorts the mix of housing stock so there’s only small flats or large expensive houses.

With builders specialising in renovations they add an extension, build into the loft or add another complete floor (as you suggested). Again, this changes the housing mix.

Similarly, existing homeowners find it cheaper to extend than move which, again, distorts the housing mix.

So, what you get is too many flats or larger houses and nothing in between.

If planning rules were different it might be possible to direct development or redevelopment towards what is required for an area rather than what is permissible.

 

[marty21]

Plus end Right to Buy.

Absolutely yes, it doesn't seem to a big thing in London anymore, I have to do a report as part of the RTB process, rarely do one, probably to do with London prices .

But I'd stop RTB forever. If tenants are in a position to buy a home, give them a generous grant to buy on the open market (after a qualifying period as a tenant of at least 5 years)

 

[marty21]

As you know, the problem, in many instances, with local authorities working with private developers, is that they're in cahoots, in terms of regenerating old council estate by knocking down lots of social housing and failing to provide like-for-like replacement, the number of social housing units is reduced, people are forced out of their homes and many are moved miles away from families, friends, social and support networks. Heads the property developers win, tails the social housing tenants lose. Trebles all round.

I agree , but in the absence of an Attlee like Labour Government, we aren't going to return to the days of big council house building, sadly.

 

[Winot]

100% tax on income and capital gains from any property that the owner doesn't live in.

This is the point, isn’t it. There isn’t a technical problem with sorting out housing - there are lots of decent ideas on this thread. The problem is that there’s a lack of political will.

 

[baldrick]

A bit of a rant and just opinion. But if people are interested, I might try and dig out numbers to support it (or completely prove myself wrong in the process).

Problems
1. Growth in Households and demographics.

Household rates have grown massively since the 80s (small decrease since 2010). Not just because of population growth but because of smaller households (people living on their own etc). At the same time older people are still living in the big 3bed semis they bought for £10 5s in 1969. No easy answer to this except more housing.

2. Reliance on the private sector to deliver all types of new-build housing

Housing has been almost entirely out-sourced to the private sector, or at least the bits anyone can make money on. Most council’s housing stock is at least revenue neutral and as an asset looks good on balance sheets. The urgency with which successive governments have privatized housing is more ideological than practical.

The problem with relying on the private sector to deliver affordable housing units is that the land owner will go out of their way to absolutely everything they can to avoid it (of course). In my experience this is the case for public and private landowners. The Residual Land Value is a calculation based on the saleable value – construction – professional fees – misc costs and assuming a 20% margin for the developer. At the end you get the land value. There is a whole science behind it, it is more profitable to build fewer houses than trigger ‘affordable housing’ policies most of the time. Result is less housing overall and less affordable housing.

3. Commodification of housing

In the UK (or at least part of it) houses are no longer priced by their utility value (the value of the house to actually live in) but by their commodity value (their value as an asset with an RoI). This is a very easy calculation, it is effectively the rental value to arrive at a ~3% yield + any assumption about capital asset increase costs. This results is vicious cycle especially in the current environment where ‘income’ is extremely rare and bond and interest rates are very low. Cash is bad if you’re rich. You want a return on it. Within the context of income rarity and demographic changes, housing is a ‘sure thing’.

4. Reliance on property investments of the middle class

Related to the above, the middle class need a safe place for their cash. Pensions have been undermined over the last decades. Savings are pointless. The stock market is scary. Many middle class people have become accidental landlords or if they do well, can afford to buy another property and rent their first.

5. ‘Slum landlords’

Yes these bastards. Must be one of the oldest jobs in the world. Get a bit of capital, exploit, borrow against capital, buy, exploit etc…



How to fix it?

1. Reform the planning system

We don’t have a planning system in the UK in the same way they do in Europe. We have a consenting system. Yes land is designated in local plans for housing, but its not ‘planned’. The land owner /agent makes their case ‘call for sites’ its designated and then the developer effectively negotiates with your understaffed local council with worse lawyers than they have.

In Denmark, Switzerland, Holland, the planning system is much more active. Land is effectively compulsorily purchased, master plans are drawn up with local communities, infrastructure is frontloaded (highways, even trams etc.) and paid for out of development profit. Lots are contracted to developers who sell / build with a reasonable margin.

2. Council Housing / co-ops
Council tenants will complain, and have every right to, but councils are in the main better landlords than private sector. Council’s have been doing this for 100 yrs in some cases. Housing associations are such a mixed bunch. Co-ops can be great, can not work. Building societies in their old fashioned sense with a mix of well planned (as above) communities and council, co-op and privately owned housing.
Freeholds and leases also need democratising and reform. No, I would not suggest the hell that is the US 'Home Owners Associations', but again we can look at Europe, Germany for e.g.

3. Improve pensions
Decent pensions, contribution based nationalized pensions with a good state pension to back it up (I don't know much about pensions).

4. Tax, regulation
Tax landlords, regulate private rents.

A big issue round where I live are landlords buying up family homes & turning them into HMOs. And not just HMOs but 'supported living' HMOs which in theory attract a higher rate of benefit for the provision of additional services to the residents. Only the additional services don't materialise and a bunch of vulnerable people are left to their own devices. Meanwhile the landlord is trousering shitloads of money so they buy another family home and turn that into an HMO as well. It sounds crazy but it's reached a point now where this is having a material effect on quality of life in the area - old appliances and furniture abandoned in the street, rubbish not properly dealt with so it's not taken in the bin collection and just left to fester, drunk and drugged people hanging around and having fights, landlords not maintaining their properties so fencing falling down, gardens full of shit. It sounds completely ludicrous but this is happening all over Birmingham partly because of the lax attitude of the council (though some attention is finally being paid to this due to the sterling efforts of residents) and also because there is literally nothing to stop private landlords from taking advantage.

 

[Leafster]

Absolutely yes, it doesn't seem to a big thing in London anymore, I have to do a report as part of the RTB process, rarely do one, probably to do with London prices .

But I'd stop RTB forever. If tenants are in a position to buy a home, give them a generous grant to buy on the open market (after a qualifying period as a tenant of at least 5 years)

Yes, definitely stop RTB. But why do think there is a need to give a grant to encourage tenants to buy on the open market? It is just to free up the existing social housing stock for more needy people/families?

 

[marty21]

A big issue round where I live are landlords buying up family homes & turning them into HMOs. And not just HMOs but 'supported living' HMOs which in theory attract a higher rate of benefit for the provision of additional services to the residents. Only the additional services don't materialise and a bunch of vulnerable people are left to their own devices. Meanwhile the landlord is trousering shitloads of money so they buy another family home and turn that into an HMO as well. It sounds crazy but it's reached a point now where this is having a material effect on quality of life in the area - old appliances and furniture abandoned in the street, rubbish not properly dealt with so it's not taken in the bin collection and just left to fester, drunk and drugged people hanging around and having fights, landlords not maintaining their properties so fencing falling down, gardens full of shit. It sounds completely ludicrous but this is happening all over Birmingham partly because of the lax attitude of the council (though some attention is finally being paid to this due to the sterling efforts of residents) and also because there is literally nothing to stop private landlords from taking advantage.

I regularly talk to a bloke who lives around the corner, he has a 'flat' in a house (looks like a 5 bedroom house originally) divided into 11 studio/bedsits. He regular moans about the landlord trousering the rent money (he pays about £1100 a month just for his studio) .

The bloke would qualify for Sheltered Housing I think ,some councils take applications from 55 year olds, meaning I qualify too (If I wasn't a home owner) . He'd get a secure tenancy , reasonable rent , and less chance of 'trouble' . He said one of the studios regularly has a few people living in them and fights breaking out . I have told him to look into sheltered, it would be vastly better than his current living situation.

 

[marty21]

Yes, definitely stop RTB. But why do think there is a need to give a grant to encourage tenants to buy on the open market? It is just to free up the existing social housing stock for more needy people/families?

Yep, it would free up stock . I was able to buy a place 24 years ago as Mrs21 was a HA tenant and they had a grant of £16000 towards buying a home elsewhere. At the time that was a sizeable percentage of a new home.

 

[Pickman's model]

A big issue round where I live are landlords buying up family homes & turning them into HMOs. And not just HMOs but 'supported living' HMOs which in theory attract a higher rate of benefit for the provision of additional services to the residents. Only the additional services don't materialise and a bunch of vulnerable people are left to their own devices. Meanwhile the landlord is trousering shitloads of money so they buy another family home and turn that into an HMO as well. It sounds crazy but it's reached a point now where this is having a material effect on quality of life in the area - old appliances and furniture abandoned in the street, rubbish not properly dealt with so it's not taken in the bin collection and just left to fester, drunk and drugged people hanging around and having fights, landlords not maintaining their properties so fencing falling down, gardens full of shit. It sounds completely ludicrous but this is happening all over Birmingham partly because of the lax attitude of the council (though some attention is finally being paid to this due to the sterling efforts of residents) and also because there is literally nothing to stop private landlords from taking advantage.

basically creating slums on the council's money