21 February 2023

Our childish ‘goodies vs baddies’ housing debate doesn’t help anyone


After 13 years in office, the Conservatives have delivered a truly abject record on housing. Time and again, the Government has chased the short-term electoral high of another demand stimulus rather than tackling the structural causes of this country’s housing shortage.

Planning reform offered one of the only substantive planks of Boris Johnson’s policy agenda. But even with a big majority in the House of Commons, he was not inclined to fight the battles necessary to deliver it. Robert Jenrick was dismissed; Michael Gove backed off full-fat reform, and then last year abandoned the pared-down version as well.

Notwithstanding the big picture problem that funnelling more credit into a market where demand far exceeds supply is only going to see prices rise, the Tories have also consistently mangled the fine detail.

Secretaries of State keep calling in and vetoing good projects; the flagship long-term savings vehicle, the Lifetime ISA, has an arbitrary and non-index-linked cap on what you can buy with it, which will make it increasingly useless to first-time buyers, with no obvious benefit to the Treasury at all.

Little wonder then that support for the Conservatives amongst younger voters is cratering. If even the party’s own younger activists struggle to hide their anger, one can only imagine how voters without that pre-existing link must feel.

But it does not follow that because the Tories are bad on housing that Labour will be good on housing. And with a Labour government after the next election looking increasingly likely, the auguries are not at all promising.

Over the weekend, Sir Keir Starmer trailed five so-called ‘national missions’: the economy, the NHS, crime, climate change and education. These are the stars by which his government would sail. Housing is noticeably absent from this list.

The broader progressive policy space also seems well-stocked with people disposed to downplay or deny outright that there is a housing shortage at all – and often on the basis of almost parodically bad arguments.

For example Torsten Bell, the Chief Executive of the Resolution Foundation, dismisses the idea that landlords selling up is exacerbating pressure on renters with this jewel: ‘If landlords after some sympathy start bulldozing their houses, then I’ll believe it matters for rent levels.’

Yet the idea that ‘landlords selling up doesn’t shrink housing supply’ is, from the perspective of renters, quite obviously wrong. If a house is sold to an owner-occupier, it leaves the market for rental housing and is of no use to a prospective tenant. And as overcrowding is five times higher in the private rented sector than the owner-occupied one (likely especially so where the crisis is most acute), even a sale to a first-time buyer – and first-time buying levels are not great – can decant more people back into the shrunken rental market than it removes.

The mathematics for renters of transferring a single House of Multiple Occupation to single-family use are obvious; multiply that by lots of sales and you have a real problem, even though nobody has knocked the house down!

Meanwhile Ian Mulheirn of the Tony Blair Institute hangs a lot on the fact that: ‘The number of houses has grown significantly faster than the number of households in the UK over the past 25 years.’

Notwithstanding that this completely occludes the fact that we have a housing crisis in specific bits of the country – and the fact that by definition you can’t have more households than houses – it’s also an extremely one-eyed approach to the data. 

Four young professionals in their early thirties pouring their post-tax income to letting rooms in a cramped HMO are one household; that doesn’t mean they aren’t obviously suffering from a distorted housing market in which last century’s relatively ordinary stock is this century’s unattainable fantasy home.

One can perhaps understand why the Tony Blair Institute might not want to look the housing crisis in the face, given what happened to prices under New Labour. But the broader reluctance to confront the issue needs some explaining; after all, Labour are much less beholden than the Conservatives to the one generation for whom the current economy works.

Some of it seems to boil down to a childish politics of goodies and baddies. Landlords are baddies, so the idea that there might be adverse effects of driving some out of the market can’t be right. Building houses would make money for developers (the same developers who supposedly conspire to create artificial shortages through land banking), so YIMBYs are probably corporate shills.

There is also a brute political logic to imposing arbitrary palliative policies on the dysfunction rather than solving it. Whatever the woeful broader impact of rent control, it does create a constituency of tenants whose housing situation depends on government.

Meanwhile, expanding council and affordable housing stock aren’t bad in themselves, but aren’t a full solution either; they don’t do much to expand choice and reduce cost pressures in the rest of the market. And like rent controls, both afford government many more opportunities than private housing for deciding what people get and which people get it.

Obviously, the fact that any of these positions is wrong does not necessarily mean the inverse position is right. 

But issues such as the proliferation of buy-to-let landlords, for example, are in part a symptom as much as a cause of the problem: once house prices really started to run away from incomes, it became harder and harder for first-time buyers to compete with those already on the ladder who wanted to buy a portfolio; the latter had asset wealth they could unlock whilst still living in their home, and having more capital meant borrowing on more favourable terms too.

Making life difficult for landlords today doesn’t reverse that process; in some cases, such as removing tax relief for improvements to properties, it very obviously disincentivises behaviour that is good for renters. Meanwhile proposals to give tenants more legal protections can look attractive on paper, but must reckon with the fact that it is difficult to actually assert such rights when competition for rooms is so fierce and you have nowhere better to go.

(Ideally they would also, as the Government’s recent White Paper did not, acknowledge that this country used to have a system of highly-regulated tenancies, and address why previous governments of both persuasions dismantled it.)

Perhaps, ultimately, it comes down to a sort of political lag. Today’s senior politicians and wonks are largely drawn from a generation and class for whom the housing crisis is not personally a problem. Until that changes, housing is perhaps not likely to make the top five priority list of any government, of either party.

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Henry Hill is Deputy Editor of ConservativeHome.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.