Today’s papers bring us further news of the sickness that afflicts our housing market.
On the front page of the Telegraph is a piece focusing on St Vince of Cable’s warning that the housing market is exhibiting all the signs of overheating and that Mark Carney is considering stepping in on the lending side. He fears we’ll repeat the mistakes of the benighted Brown. The story takes the usual form – there are references to the danger that the market ‘may be heading for a bubble’, never the suggestion that there’s already a problem. There is no real appreciation of the lags associated with these types of macro-relationships. The market has already been given a big push, which hasn’t worked its way through the system yet. And nor, of course, is there a discussion of the difference between a boom and a bubble.
In my view Vince is right to be worried, but I don’t suppose it will have much effect. Yet by the time it becomes hard to dispute a boom is in progress it’s already way too late to act.
Over in Graunland private renting is described as the “social scandal that is being ignored”. And there is a piece about our old friend Mr Fergus Wilson, Britain’s biggest buy-to-let landlord. It reports that Mr Wilson has decided to evict the 200 of his 1000 tenants who receive housing benefit. The argument here is that rents are increasing while benefits are being eroded. Benefit-dependent households are therefore more likely to be in arrears, even before the arrival of Universal Credit. Mr Wilson considers he’d be better off reletting the properties to Eastern European migrants because they are more reliable.
One interesting additional wrinkle in the story is the difficulty of getting rent guarantee insurance for tenants on housing benefit. Mr Wilson will no doubt attract criticism for his actions. Indeed he already has. But if insurance is difficult to come by then it may well be that even landlords who would be willing to let to benefit recipients are not able to do so on a sustainable commercial basis.
Of course, rising prices and the rental squeeze are not entirely unrelated. But the problems in the private rented sector are compounded by the idiocies of welfare reform. In a high pressure market, the retreat of private landlords from housing benefit recipients once their income stream became more insecure was entirely predictable, and indeed widely predicted.
You may well think the coalition’s policy agenda constitutes a conscious attack on the poor. The most benign interpretation is that it is an abject failure of holistic thinking and joined up government. If you speak to policy makers at the DWP you will hear that the housing benefit bill must be contained. That is the key priority. So benefits must be made less generous. As more and more people are forced to claim benefits, and the total bill therefore goes up, the first thought is to work out how benefit rates can be pared back even further.
The fact that this makes it impossible for households to secure adequate housing is not the primary concern. Housing isn’t a DWP responsibility. That’s for CLG to worry about. But CLG’s budgets have been cut substantially so it doesn’t have much scope for acting decisively to develop the supply of genuinely affordable housing, even if it wanted to. Housing policy decisions of any significance are now taken by the Treasury, who, in my experience, have little or no feel for how the housing market works.
That is a problem for effective policy making. It is a tragedy for those who are unable to find safe, secure and affordable housing.
One of the aspects of the contemporary housing policy debate that I find particularly striking is that we appear to be destined to replay debates that last took place in the 1950s and 1960s. That was went the private landlord was last big news and private landlordism cemented its reputation for being rather disreputable, barely legal, and exploitative. Policy concluded that the private landlord offering market rented housing on an unregulated basis was not a suitable vehicle for providing decent housing for low income households. It appears we are rediscovering many of the old practices and the old arguments.
There seems to be a growing inclination in the mainstream media to look back into the history of housing policy to work out how we have ended up with the current mess. For example, James Meek’s piece in the London Review of Books, which I blogged about here, has attracted all sorts of attention, even though it is a rather council housing-focussed account of housing policy. There is much more to say to tell a rounded story. Policy towards private renting between the development of the 1957 Rent Act and the passage of the 1965 Rent Act is a particularly fascinating part of the overall story.
But that brings me to the point that the history of housing policy does not loom large in the collective policy memory. We seem to be destined to replay old mistakes and old debates in part because we have little sense of where we’ve come from. And there is a bigger question for the academy here.
The British housing studies community, ever since I have been involved, has tended to contract out historical investigation to a small number of scholars. I’m thinking here of Alan Holmans, Alan Murie and, particularly, Peter Malpass. But these colleagues have now all retired. Alan Holmans has retired about four times as far as I can make out. While the two Alans remain active they are not, as far as I am aware, undertaking major new works of historical scholarship. Peter retired a couple of years ago and that was a genuine retirement from academic life.
At present we don’t therefore have any academic heavy hitters championing the importance of understanding the history of housing policy. There may be younger scholars around, just setting out on this road, who I am not aware of. That’s great. But a secure grasp of our trajectory to the present can bring great wisdom to the policy process. And just when we need it most, it seems least accessible to us.
“Manhattan Real Estate Holdings, A Real-Time Social System as of May 1, 1971”
Perhaps kicking it a bit too old skool, but rather than the 1950s or 60s, didn’t all this kick off in the 1910s?
«private landlordism cemented its reputation for being rather disreputable, barely legal, and exploitative.»
But today most middle class middle aged people are owner occupiers and could not care less about losers, and many are private landlords and are really enjoying being all that.
A long time ago “private landlordism” meant a small number of big owners, today “private landlordism” means a large percentage of swing voters especially in the South East.
Things have changed a lot, because Thatcher and Blair engaged in massive social engineering.
There was a paper in the late 1970 by one of the conservative think tanks that proved that people who owned houses, saved in stocks, and used cars voted far to the right of renters, those with a pension, and used public transport, even *given the same level of income and class*. Besides people with a mortgage were far less likely to strike for better wages.
Therefore tory (Conservative and New Labour) governments have been working hard for decades accordingly in most anglo-american style countries, with amazingly successful results.
Private landlordism and massive increases in house prices are part of a very successful brand of politics, they have nothing to do with good policy and «the importance of understanding the history of housing policy» is probably close to none.
BTW I was very amused by a relatively recent book by Oxford University Press on understanding the history of housing policy in the inter-war period:
Apparently 95% mortgages against vastly inflated prices for shoddily built semi detached houses happened before, even if in a somewhat different for…
@Blissex – thanks for your comments.
I knew that book was out, but I’ve not read it yet. I guess the difference in the inter-war period – or indeed up until the 1970s, was what types of household were able to access mortgage finance. It wasn’t until later that mortgages became accessible to those on precarious/low incomes.
In terms of your previous comment about the irrelevance of housing history, I’m not sure I entirely agree. Or rather I do and I don’t. I agree with your analysis of the Thatcher/Blair policy. We used to say that the Thatcher-Major government didn’t really have a housing policy it had a tenure policy – everyone should be an owner occupier. And I don’t disagree with your point on differences in the political economy, although by the 1960s private landlordism was dominated by small landlords as it is today. If I remember correctly the last major institutional investor in private renting exited the market in the 1950s. Policy since the 1980s has been trying to tempt institutional investors back. One of the few clear “achievements” of the coalition is to succeed in this area where previous governments failed.
But I don’t agree that history is irrelevant. My point was just that all the things that are now being discovered – that some/many landlords are exploitative, they don’t like tenants on benefits etc – are simply relearning lessons from an earlier era. Back then they led to the rejection of the private landlord as a provider of good quality housing for low income households. That may not be the case this time around precisely because the political economy is different. We will see …
«But I don’t agree that history is irrelevantx
But I agree that history is relevant, to me and you. But I meant that it is irrelevant to making policy in the context of “a very successful brand of politics”… at least in the current climate.
My perception of the current climate is that the idea of there being “provider of good quality housing for low income households” is something that the majority of voters could not care less. The mood of a lot of voters is “F*ck you! I am allright jack!”.
Even worse, I reckon that very many voters, and perhaps even a majority of voters, is very much against there being any “provider of good quality housing for low income households”, because that would mean lower house prices and lower rents in general.
Most voters are property owners and (in the South East) have enjoyed for decades fabulous tax-free capital gains on their properties cashable with remortgages at very very low interest rates, plus ever increasing rents for those that have done B2R.
I have found your blog because of a link from MainlyMacro, and I have put there a comment with the relevant numbers to support the contention that interest rates will stay very low:
Suffice to repeat here that working class (median wage) workers who own a terrace 2up-2down in the South East have enjoyed tax-free capital gains of £12,000 a year for at least a decade, nearly doubling their after tax income.
«I knew that book was out, but I’ve not read it yet. I guess the difference in the inter-war period – or indeed up until the 1970s, was what types of household were able to access mortgage finance. It wasn’t until later that mortgages became accessible to those on precarious/low incomes.»
Than that book needs to be read sooner, because its main thesis (thanks also to the discovery of hundreds of working class household budgets) is that contrary to common opinion there was a large number of low income households were able to get 95% mortgages in the 1920s and especially the 1930, in part due to financial spivving not that different from the subprime situation in the USA.
Well that certainly sounds like an important addition to the literature. Will need to look at it sooner rather than later.
«our analysis of the Thatcher/Blair policy. We used to say that the Thatcher-Major government didn’t really have a housing policy it had a tenure policy – everyone should be an owner occupier.»
Add to that Blair and Brown. In several other posts I have mentioned the fundamental reason for “owner occupier” as a policy, and I’ll repeat it here as it is extremely relevant.
In the late 1970 a right wing think tank (I vaguely remember the ASI) discovered the most important psephological fact of the past 30 years: that even given the same income and class, people who own houses, shares, cars vote far to the right of people who don’t. Right To Buy, the distribution of BT shares etc., the replacement of defined benefit pensions with share-account ones, the undermining of public transport, all derive from that study (plus other reasons of course). There had been talk of the “ownership society” before, but the study proved those voting patterns with strong numbers.
The result has been 30 years of continuous movement of the median voter to the right (at least in the South East), and both Blair and Brown either surrendered to the inevitable or just went along opportunistically.
I have not been able to find that study again or the article in The Economist mentioning it, but right-wing political strategists know it very well. Here is a recent summary from one from the USA, Grover Norquist:
«The growth of the investor class–those 70 per cent of voters who own stock and are more opposed to taxes and regulations on business as a result — is strengthening the conservative movement.
More gun owners, fewer labor union members, more homeschoolers, more property owners and a dwindling number of FDR-era Democrats all strengthen the conservative movement versus the Democrats.»
(in the USA it is also gun ownership).