There is little doubt that we are facing significant problems in the housing market. Most obviously, problems of access and affordability. And there is little doubt that we must be heading towards a housing statement from the Government. Reports from think tanks and lobby groups – each trying to exert some influence over the direction of policy – are appearing with alarming regularity. Last week it was the turn of the little-known Intergenerational Foundation to produce a report called Hoarding of Housing. The report received quite a lot of media coverage. As far as I could tell most of it was negative. That seems to me both fair and unfair.
The premise of the report is that the housing problems we face are not going to be addressed any time soon by an expansion in housing supply, although an increase in supply would undoubtedly be welcome. It also argues that other possibly options regularly considered – dealing with empty homes and second homes – are not going to make a real dent in the problem. A further possibility – that the problem lies with a surplus of households rather than a shortage of houses – is not raised, although it has inevitably featured in the online response to the report from the Little Englander tendency which blames “immigrants” for pretty much everything.
That only leaves changing the utilization of the existing housing stock as a possible solution. Over a relative short time period of time the number of homeowners underoccupying their properties – that is, living in a property with at least two more bedrooms than they ‘need’ – has increased dramatically. The report’s author estimates that there are now more than 18 million ‘spare’ bedrooms in underoccupied properties. This observation is wrapped up with an argument that house price rises have reallocated wealth from younger to older households. And that most of the underoccupying is being down by older childless households. Or, as the author puts it, “[a]s housing wealth shifts irresistibly up the demographic scale, the ‘family home’ is increasingly in the hands of an ageing population that is no longer actively raising Britain’s families” (p.17). At the same time younger people are condemned to languish in insecure private rented accommodation, which is bad for household formation and doesn’t provide the stability needed for family life. The solution is argued to lie in underoccupying older households moving and freeing up family accommodation for those who need it.
The report proposes five possible policy solutions: abolishing stamp duty for those downsizing; changing the planning rules to increase the supply of suitable housing for people downsizing; ‘nudge’ policies such as the withdrawal of some ‘universal’ benefits for those living in houses worth over £500,000; a property value tax; and abolition of council tax concessions for single occupation.
The IF report is hardly the first to point out that underoccupation in the ownership sector is on the increase. It has been recognised for a quite while (I blogged here in response to something George Monbiot wrote at the turn of the year). But it is a topic that raises some profound issues. The question is whether it is a ‘problem’. And whether it is an issue over which Government should have leverage. We know that the Government doesn’t want leverage over it. Grant Shapps’ initial response to the report was to say that: ‘We do not agree that people should be taxed or bullied out of their homes’.
Part of the problem with the reception of IF report lies in its origins and tone. The Intergenerational Foundation’s strapline is “fairness for future generations”. The report’s author – Matt Griffith – is also associated with the Priced Out campaign for first time buyers. Despite protestations to the contrary, it was almost guaranteed to be construed as firing a salvo in some form of intergenerational conflict. It was also almost inevitable that it would be construed as ageist – older people have had their turn, they really should shuffle off out the way and make way for the younger generation.
In this respect it seems to me to be a vivid, but indirect, illustration of the benefits of (relatively) disinterested social scientific research. This is undoubtedly a topic of profound significance, but how can it be raised and debated without being seen as one sectional interest against another, one generation against another? The heat needs to be taken out of the debate. So it is very timely that a substantial Leverhulme funded project entitled Mind the (housing) wealth gap is just getting under way, led by Beverly Searle and bringing together researchers from the St Andrews, Durham and Birmingham Universities.
Quite apart from the fact that the IF report inevitably appears partisan, I had a number of difficulties with it.
First, it is based upon a model of the lifecycle that seems rather anachronistic. The idea that people leave the parental home, form an independent household, rear children and then trade down as “empty-nesters” made sense in the 1950s. But for the last couple of decades we have been thinking about the breakdown of this conventional lifecycle. Extended families, fractured families, divorce, remarriage, multi-adult households, kidulthood, middle youth, whatever – many people will not experience the conventional lifecycle. And that has implications for the use of housing space. The report has been criticised for failing to grasp that rooms it labels as ‘spare’ may in fact not be because they are used for visiting family or for other purposes. That criticism has some validity. Although some critical comments took it too far: if your adult children have not left home or return home because of relationship breakdown or job loss then the room they are using is no longer spare, you are living in a multi-adult household.
Second, the report shows no great appreciation of how we have arrived in the position we are in. Or rather it does, but significantly underplays it. Policy has strongly pushed homeownership for the last thirty years. Of course the proportion of older people who are home owners has increased. But that housing policy has been embedded in a broader discourse of the desirability of saving and asset accumulation through housing. It has been linked to a shift in the understanding of the nature of the welfare state – a move to asset-based welfare where there is an expectation that older people will liquidate their physical assets to pay for care in older age. These moves are contested. They disrupt intergenerational relations and place question marks over established practices around inheritance. But they are, in turn, thrown into question by the current house price slump. In the absence of a very concrete Government response to the Dilnot Committee, the requirements for older people to fund their own care remain vague. In that context it would be rational to hold on to assets in the form of housing. Stuart Lowe provides an overview of these issues in his recent book The Housing Debate.
Third, the report labels underoccupation as the ‘hoarding’ of housing. This implies there is a conscious strategy to keep it away from others. In the context of paying for care that might make sense, but in many other respects the accumulation of wealth among older people and its redistribution away from younger people has not been a conscious strategy of hoarding. To stay living in the same property that you have occupied for many years, if you can afford to, is hardly unreasonable behaviour. It allows older households continued access to established social networks and provides neighbourhoods with stability. Housing is infused with meaning. It can offer a place of safety and security in an otherwise hostile world, particularly in Britain where we place huge cultural significance on the ownership of property – “An Englishman’s home is his castle” and the like. The house price rises that have redistributed wealth are an aggregate byproduct of individual behaviour that is perfectly understandable and not indefensible.
Fourth, the report raises questions of rights and values. If an older person owns a property do they have the right to continue to occupy it for as long as they want to? Does the Government or anyone else have the right to say they should move and make way for some else? Is the welfare of younger people more important than the welfare of older people? Implicit in the IF report is that the answer to these questions is no, yes, and yes. One aspect of the report that seems to have riled many people is its managerialist tone. The idea that it is appropriate for someone to make broader judgements about who should and shouldn’t occupy property, about how well individual households are using the space they have available, about what they ‘need’ and don’t ‘need’, and about how households should be moved around to make better use of that space.
This is fair comment. The report undoubtedly has a housing management flavour.
This brings to the fore both the complexities and some of the incoherence of current housing debates. On last week’s BBC Question Time Jacob Rees-Mogg responded to a question on this issue with the “Englishman’s home is his castle” cliché. But he was very careful to say that older homeowners should not be forced to move out of their homes to make way. This was not a statement encompassing all older people. As Patrick Butler of the Guardian has highlighted very effectively, the Government is not applying the same arguments in the social rented sector. Through the Welfare Reform Bill it is legislating to reduce housing benefit for households who are underoccupying with the aim of incentivizing them to trade down and free up family-sized accommodation.
So it appears it is appropriate to administer this unpalatable medicine to social tenants, but entirely inappropriate to seek to incentivize older home owners to act similarly. Of course, that is in part because such social tenants are only able to remain in their homes as a result of the State’s beneficence. Their tenure is contingent. Their rights not absolute. So they are fair game for manipulation. But this distinction is clearly not inviolable. It is only with the arrival of the Coalition that the idea that underoccupying older social tenants are doing something inappropriate and unacceptable has taken hold in the popular consciousness. Up to that point it was largely a non-issue, although it has been well-known as a housing management problem for a while.
Much of the response to the IF report was visceral and outraged – along the lines of “How dare anyone suggest that I should be deprived of this property/wealth I have worked so hard for just to make way for someone else. It’s mine”. We might dispute the statement that much of the wealth accumulated through housing is the product of owners’ hard work. Much of the gain is windfall gain. And it is possible to imagine a society that settled on a different understanding of the issue. But it would require a greater sense of the collective rather than the individual. It would be more likely to be realised in a context where there was greater emphasis upon environmental sustainability – so we don’t look to build our way out of the problem – and an appreciation of stewardship – it isn’t my property, it is a property that is in my possession for a period of time but it will be in someone else’s possession long after I’ve gone. But that is not the society we live in.
Finally, and more trivially, I was a bit peeved that my own work was cited in passing in the IF report in support of the case being made. That was for two reasons. First, the report cites a 2010 publication on social status and the demand for housing that doesn’t exist. I made a conference presentation on the topic in 2010 and there is related blogpost in 2011. But there is no report or paper in the public domain yet. Second, my argument about social status has nothing to do with age. The argument is that if housing is an observable signal of social status – and I argue that it is – then there will be an overinvestment in housing compared to other less observable assets. This will have implications for the way housing markets operate and, just as importantly, will distort the profile of investment within an economy away from productive and towards unproductive investment. In a society like Britain where homeownership is particularly valued that distortion will be all the greater. This argument can lead to the prescription of some form of consumption tax – which is similar to one of the suggestions of the IF report – but it gets there by an entirely different route.
The underoccupation debate is one that is worth having, if only as a means of clarifying thinking and principles. But I’m not sure that the Intergenerational Foundation report has got things started in quite the most helpful way.