Having spent a large part of January
marshalling the evidence that the chronic shortage of housing
demands an expansion of housebuilding to at least 240,000 new homes
a year, I find it a refreshing challenge to consider the argument -
made by a respected Oxford professor - that a shortage of housing
is not the fundamental reason for our national housing crisis, nor
is building a lot more homes the answer to it.
In his book, 'All that is
Solid' Danny Dorling argues that inequality is the true
root of our housing problems, and only by beginning progressively
to separate housing from wealth can we end them.
For Dorling, the fundamental problem is that a growing
proportion of our housing has become treated as an investment,
rather than as just a place to live. Resurgence of the private
rented sector means that there is a new generation of landlords in
business to make money from housing. And for many owners, their
home has become their only or main source of wealth, in effect
their pension plan and savings pot. Housing equity represents 61
per cent of England's net worth, or around £4 trillion.
At the same time as housing benefit for the poorest tenants is
removed from spare rooms, owners have strong incentives to buy the
biggest home they can afford in the most expensive area, since the
return on their investment is likely to be correspondingly greater.
In 2001, the best off 10% of households had 3.7 times as many rooms
per person in their homes and the worst-housed tenth.
Tenure-based inequality is compounded by inequality among areas
and regions. While house prices in London and the South East are
now rising fast enough to prompt concerns about the creation of a
housing bubble, prices in some other parts of England continue to
flatline or fall. Partly this reflects the economic buoyancy of
London compared with the rest of England, but it also reflects the
fact that the buoyant housing market is a major contributor to the
economic buoyancy of London and surrounding areas. But the effect
is that, while housing is expensive and hard to come by in London
and the South, houses stand empty and unused in other parts of the
Contrasting the years since 2008 with the corresponding period
after the 1929 crash, Dorling argues that in 1929 there really was
almost no unused housing so that the building boom of the 1930s was
both necessary and successful, although it is arguable that it
might have run out of steam if war had not broken out in 1939.
Today, however, there are 2.3 people for every dwelling, compared
with 4.3 in 1931. It is for this reason that he argues that the key
challenge is to make better use of the homes that exist, rather
than focus on building more.
So, what should be done? Dorling offers ten options to think
about, including raising benefit levels and reintroduction of rent
controls, but his most challenging suggestion - for any government
that seriously considered implementing it - is that council tax
should be progressively transformed into a national land and
property tax based on current property values.
Presumably the idea is that this would help to level the playing
field between housing and other investments and help damp down
house price rises. Even if one accepts his analysis of the problem,
it would be an uphill struggle for any party to win electoral
support for such a policy.
As Dorling says "the great challenge we face today is that many
people have forgotten - or not been told - that not so long ago we
were a much more equal society". His argument is that they need not
just to be reminded of this, but persuaded that it is both
desirable and feasible to be a more equal society again.