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10 Ways To Fix The Housing Crisis

Making renting less of a nightmare and making housebuilding actually profitable would be a good start, apparently.

After the government released a white paper of plans to fix the "broken" housing market, we asked some scientists and academics what they'd do to sort things out. Here's what they said.

1. Make housebuilding less scary

“The government is right, we don’t build enough homes,” says Dr Ed Ferrari, a lecturer in urban studies and planning at Sheffield University. “But that’s obvious. The question is why.”

One reason, he says, is that British people are scared of new homes being built in their area because they’re worried that the influx of people will overwhelm local services. “As a country we’re pretty awful at making sure we improve the infrastructure and services in an area as well as building new houses,” he says. “We’ve failed to convince communities that the local schools and GPs won’t be overwhelmed, that they’ll still be able to get their car out of the driveways.”

What the government ought to do, he says, is what happens in Germany and the Netherlands, where they invest in the infrastructure first.

That should have two advantages, he says. First, it’ll reassure locals and reduce their opposition to new building. Second, it’ll reduce the risk for developers. Investors usually demand a high profit on high-risk investments – and housing is a high-risk investment, because of fluctuations in the market. “They currently want 20 to 30% profit,” says Ferrari, “because they say it’s risky. If you take the risk out, then maybe the profit can go down to about 10%, and that’d bring house prices down.”

2. Break the stranglehold of the big companies

About 50% of all new homes built in the UK are built by the same 10 companies, says Ferrari, citing a Sheffield Hallam University report. That’s not how it used to be – in the 1980s, nearly 60% of houses were built by local small businesses. Now it’s just 27%.

That’s a problem, because it’s not in these big companies’ interest to build lots of houses at once, says Peter Rees, a professor of places and city planning, at University College London (UCL). “Their primary incentive is to make a profit,” he tells BuzzFeed News. If they build thousands of houses in an area, they’ll flood the market, and reduce the cost of each house. “If you offer builders an opportunity to build 10 times as many houses and bring prices down, they’ll think you’re loopy,” he says.

One way of reducing this problem, says Dr Iqbal Hamiduddin, a lecturer in transport planning and housing at UCL, would be to encourage more people to commission homes built to their own specifications by local builders and architects. “Custom-built properties are only about 10% of the total at the moment,” he says. “But in Germany it’s more like 60%. There’s a lot more support for it there from local authorities.”

There are pilot schemes to help people create their own homes in the UK, he says, and there’s a “real appetite” from the public. “It won’t solve the housing crisis on its own, but it’s one measure in a suite of measures.”

3. Sell off government land more cheaply

There’s lots of unused land sitting around in public ownership, says Hamiduddin. But the government is constrained by Treasury rules on the sale of public assets – it has to try to get “the best possible purchase price” for it. That makes it less attractive for developers and slows down the process, he says.

“You have to ask yourself why, in the middle of the housing crisis, ex-MOD sites, old airfields, and so on that were bought at very low agricultural land values in the 1930s and 1940s are now being sold at the highest possible price,” he says. “If you sell at a very high price, the project is riskier for developers, so it moves more slowly.

“We need to think about what ‘best value’ means, whether it’s simply about pounds and pence, or whether the priority should be about getting these sites developed as quickly as possible.”

4. Punish developers who have land but don’t build on it

Sometimes, bizarrely, a housing developer can make more money by keeping land undeveloped than by building houses on it and selling them. Partly that’s to do with the “flooding the market” thing, mentioned above, but it’s also because they can hold on to the land itself and sell it when it becomes more valuable, a process called “land-banking”.

“It’s a fundamental issue,” says Ferrari. “The main players in the housebuilding industry don’t actually make much money building houses.

“If Samsung found that in order to make money from TVs they didn’t actually have to make TVs, it wouldn’t be very good in terms of building more TVs.”

It’s not clear how big a problem this is, says Hamiduddin – “it’s very murky. There’s lots of anecdotal evidence, but no clear picture” – but it certainly happens. “Other countries have addressed this issue by taxing vacant land,” he says. The government’s new housing white paper has provisions to “name and shame” companies who land-bank.

5. Make renting something people want to do

Successive governments in the US and UK have stigmatised renting, Rees says: “They’ve all said that to be a true stakeholder in society you should own your own home." He blames that attitude for the financial crisis. The subprime lending crisis (in which several major banks went bankrupt after lending billions of dollars in mortgages to people who could never have afforded to pay them back) was politicians’ fault, he says, for “setting banks a challenge to fund homeownership for everyone”, even those who couldn’t afford to pay it back.

Housing isn’t just housing any more, Nick Gallent, a professor of housing and planning at University College London (UCL), tells BuzzFeed News – it’s an investment. “We’re not building enough houses, and we’ll never build enough, because we’ve recast housing as more than housing,” he says. “You’ve been told that renting is dead money.”

One solution, says Rees, is to provide security for renters. As it is, most people can be thrown out at the end of their one-year contracts; landlords often sell out from underneath the tenant, or push rent up to force them out. “In Germany,” says Rees, “renters can have tenure for life.”

6. Slow the buy-to-let craze

There’s been a huge increase in the number of buy-to-let mortgages in the last few years. “It’s mostly fuelled by small investors,” says Rees. “Canary Wharf guys who’d had a good bonus, or middle-aged couples who’ve had an inheritance and want to invest in property as a pension.” That makes sense from an investment point of view, but it pushes up house prices for other housebuyers. Also, it’s not good for renters, says Rees: “The properties are managed by amateurs, so they’re not filled all the time, they’re not managed well, and there’s no security for the people living in them.”

That’s another reason to give renters more security, as in Germany, he says: It would discourage the buy-to-let market, because owners would know they couldn’t trade in the property whenever they needed the cash.

7. Stop foreign investors using homes as safety deposit boxes

A smaller-scale but more dramatic problem is caused by overseas investors, says Dr Tse-Hui Teh, a lecturer in architecture and urban design at UCL. “They buy an apartment on the Thames, lock it up, and never rent it out,” she says. “Because they increase in value, and because they’re bought for such a high price, they don’t have to do anything with the property.”

Rees says it’s mainly money from the Middle East, China, and Russia, from those looking for safe places to invest away from their own volatile or dangerous markets – ”London and New York are top of the tree”. Chinese investors keep plastic wrapping on the taps, he says, to show the properties have never been lived in. “I’m all for foreign investment in the UK,” he says. “If someone wants to buy office blocks and rent them out, great, it’s what the city needs.

“But this is passive capital. They’re using high-end residential flats as safety deposit boxes.”

8. Give local planning teams more money

The process of local authorities giving planning permission is time-consuming and expensive, Dr Sarah Payne, a lecturer in urban studies and planning at the University of Sheffield, tells BuzzFeed News. “It’s a complex process, and it should be,” she says: sites have to be inspected, plans studied, impacts assessed. “But it’s suffered from budget cuts, from austerity.

“The focus is always on demand, but we also need to talk about how much land we make available. Local authorities just don’t have the resources for the land and the planning permissions that go through the system.

“Housing is a production line: If you want more housing coming off the end, you need to put more land in the top, which means more planners.” The problem is compounded, she says, because many local civil servants have retired or left, leaving a skill shortage. “A whole generation has gone, taking a lot of experience with it.”

Hamiduddin agrees: “Local authorities’ capacity for planning has been stripped out in the last six or seven years. The new white paper does recognise that there’s not enough capacity to deal with planning – I was pleased to see it being mentioned that austerity can be self-defeating.”

9. Build high-density housing in inner cities

Building on the green belt isn’t necessarily the way to go, says Rees. “Developers won’t build affordable homes there,” he says. “They’ll build villas with triple garages.

“What we need is high-density accommodation downtown. Not skyscrapers, but five- to seven-storey blocks, built around a central garden, for young people or older people who’ve downsized. Leave the suburbs for families.”

These high-density homes should be rented out, he says, and managed by professional companies. “In Paris, Berlin, Vienna, most people rent rather than own,” he says. “It means the centres are much more vibrant – if you stop using [that home, or] if you move jobs, you stop renting it.” Whereas if you own a property, you’re more likely to hang on to it when you move, either renting it out or keeping it empty.

10. Get more Britons building

“Let’s be honest about this,” says Hamiduddin. “With Brexit, we’ve got a real challenge coming when it comes to skills.” Britain has tended to import construction skills when we need it – by encouraging immigrant workers to come and help in the construction sector during housing booms. If Brexit leads to a crackdown on immigration, that could make this a lot harder. “We need to address the issue of homegrown skills,” he says. In short, we need to get a lot more young British people working in construction.