Tuesday, 24 February 2015

Home, Sweet Home.

Wow, I started writing this AGES ago, but after our housing policy made the news today, it seemed worth getting back to this!

Following on from my earlier post exploring why immigration is not to blame for the UK's woes, this piece will elaborate on the housing crisis, with which many of us will be personally familiar.

There are currently more than 610,000 empty homes in England alone. Estimates including Wales & Northern Ireland push this up to more like 835,000. Why are they empty? Most are privately owned as second homes and registered with the council (for council tax purposes) as empty. Some were intended to be rented out but have fallen into disrepair. Some are flats located within (above or behind) and owned by shops. There are even some which were intended to be part of new developments built by investors but were then abandoned before completion! In 2013, government data recorded 1.8million people on social housing waiting lists in England. 

Looking at these two pieces of information, should we not be more than a little irked that the government aren't doing MORE to turn these empty houses into functioning homes to alleviate the housing crisis?

Moreover, in the past 30 years 2.5million council houses have been sold through the Right to Buy scheme for up to 47% less than their market value. Now while the idea of enabling council tenants to secure ownership of their homes sounds like a great idea, bear in mind that this enormous amount of social housing has not been replenished by the government, and 2013 data shows that only 1.7million council properties remain.

This idea of owning your home being the norm was very much a Thatcher-era way of thinking, and that legacy has expanded to the extent now that houses are a commodity for investment, not just a home to live in. According to the Council of Mortgage Lenders, "buy-to-let" mortgages accounted for almost 12% of mortgage lending in August 2014 alone. The Private Rental Sector (PRS) now accounts for some 13% of housing in the UK, with plenty of problems to go with it:
  • No security. Tenancies are frequently 6 - 12 months long, with no guarantee of renewal and a landlord's ability to end the contract with 2 months notice.
  • Uncapped letting agents' fees. The average fees for an agent are £350 every time you move house. 
  • Deposits with no guarantee you'll see the money again. Six weeks rent is the norm for a security deposit, intended as as a safeguard against any damage to the property. This is paid in advance of moving in and returned (if you're lucky!) after you move out. If you're moving from one rented property to another, you need to come up with the deposit AND first month's rent in advance before receiving your previous deposit refund.
  • Extortionate rent. Competition and government subsidies through housing benefit have allowed rents to soar. An "affordable" 4 bedroom flat in London now requires an annual salary of £100k. 
Homelessness from the private sector is on the increase, accounting for 11% of those acccepted as 'homeless' in 2009, as families find themselves with a terminated contract yet unable to either find or afford a new tenancy.

So what do we do? How do we fix this? The government's social housing budget is currently just £1.5bn, nowhere near enough to address the 1.8 million people long waiting list. We need a serious commitment to ending Right to Buy and building sufficient social housing homes.

Earlier this month, the Green Party announced a manifesto commitment to build 500,000 social housing homes over the course of the next parliament if elected to government, as well as ending the Right to Buy scheme and implementing additional policies such as rent caps for the private rental sector and ending "revenge evictions" for tenants. The full details will be released with the manifesto next month, but I wanted to take a closure look at the announcement to build half a million social homes.

First question - how in the devil do you intend to afford this? What will it cost?

Simple answer: 500,000 homes costing £60,000 each to build over five years = £30 billion over the course of the five year parliament. 

How to do this? Gradually, of course. We know the government's current social housing budget is an insufficient £1.5bn, so we increase this gradually each year until the annual social housing budget in 2020 reaches £9billion/pa.

Why do you have to do it slowly? Where does the money come from?

As with our other policies such as zero university tuition fees, reinstating EMA for college students, investing in the NHS, bringing the railways into public ownership - the money comes from overhauling the tax system. It takes time to bring that money into the public purse, so we stagger the spending accordingly.
  • The shortfall from tax avoidance and evasion is currently around the £100billion mark. We have already pledged our commitment to a Tax Dodging Bill that would clamp down on this and bring significant sums of money into the economy. Let's estimate, for now, that we could reliably set this figure at £25billion (a very conservative fraction of the actual amount that should be paid but isn't). 
  • A wealth tax of 1% on the assets of those with a personal wealth of over £3million pounds would bring in at least £22billion over the course of a five year parliament.
  • Scrapping Trident would save £100billion
  • Scrapping HS2 would save more than £40billion 
That's not even the full picture of changes we would implement, and already we've saved or generated an additional £187 BILLION for the UK economy. That £30billion cost of building half a million social homes doesn't look so scary now, does it?

Let's also remember the hidden costs of not having enough social housing: housing benefit makes up 14% of welfare spending at the moment, and as most of it is paid to working people on low wages living in private rented accomodation, that money disappears straight into the hands of private landlords. Additionally, homelessness is estimated to cost the government £1billion every year.

By building enough social homes for people on low incomes to live, we not only take a huge step towards redressing the coalition government's legacy of soaring inequality, but we also begin to create a more sustainable society. 

Building these homes is a very sensible move. It works financially and it works morally.