Memorandum by Housing Justice (AH 61)
INTRODUCTION TO
HOUSING JUSTICE
1. Housing Justice was formed in 2003 by
a merger of the Catholic Housing Aid Society (CHAS) and the Churches
National Housing Coalition. Housing Justice is the national voice
of Christian action in the field of housing. We unite Christians
and churches of all denominations to work to prevent homelessness
and bad housing.
2. Housing Justice enables local groups
and churches to provide practical help to people in housing need.
Through the alliance of 11 housing advice centres that Housing
Justice supports we are in touch with homeless people and work
to prevent homelessness and ensure adequate housing. Housing Justice's
Regenerate Guide Neighbourhoods programme, funded by the Home
Office, works with tenants to take the lead in regenerating estates.
In total Housing Justice is active in 35 communities across the
UK.
3. Housing Justice and its predecessors
have a long history of involvement in developing housing policy.
The Catholic Housing Aid Society was one of the six organisations
which persuaded Stephen Ross MP to adopt the Private Member's
Bill which became the original Housing (Homeless Persons) Act
1977. From 1977 to Housing Justice's formation in 2003 CHAS was
involved in influencing housing and homelessness policy. CHAS
took the lead in founding and administering the All-Party Parliamentary
Group on Homelessness and Housing Need. Today Housing Justice
continues to work with the Labour Chair and Conservative and Liberal
Democrat Vice-Chairs of the Group to arrange meetings of relevance
to the over 200 members drawn from both houses of Parliament.
INTRODUCTION
4. Housing Justice welcomes the opportunity
to contribute to this inquiry. Evidence from the Housing Justice
Alliance of Housing Advice Centres and from informal discussions
with housing professionals, churches, church based projects, tenants
in the Guide Neighbourhoods and MPs indicates that housing is
a concern for almost everybody is Britain today. More and more
people are finding that they are unable to afford private housing
and unable to access social housing. We believe that the government's
five year strategy Sustainable Communities: homes for all
announced in January will begin to address the problems of homelessness
and poor housing but have concerns that the initiatives will do
little for those with the least choice in housing.
TOPICS FOR
DISCUSSION BY
THE COMMITTEE
The potential benefits of and scope to promote
greater homeownership
5. Home ownership is an important aspiration
for British people: research carried out for the government and
other organisations regularly returns results showing that 90%+
of British people would like to own their own home.
6. The benefits of home ownership for individuals
come from the increased feelings of security, control and of having
a stake in their local area. In recent years, especially, the
increases in house prices have delivered at times spectacular
returns on the money invested and certainly better returns than
would be achieved by investing in savings accounts or stocks and
shares. As a result of these house price increases there is a
perception that home ownership is an easy route to wealth which
people who are not home owners are not able to benefit from.
7. The benefits of home ownership for communities
come from having a more stable, settled population which makes
the community more sustainable.
8. Governments over the past 30-40 years
have stressed the benefits of home ownership and given that home
ownership only accounts for 70% of housing in the UK there would
seem to be scope to increase home ownership if aspirations could
be met. Housing Justice is concerned however that moves to increase
home ownership risk excluding those who are unable to own their
own homes. More than 30% of the population do not live in owner
occupied housing; the emphasis on home ownership risks overlooking
their needs. Most people pass through different tenures at different
times in their lives so it is important for the economy and the
population that a healthy mixed housing market operates.
9. Housing Justice has concerns that government
policy aimed at expanding home ownership will increasingly bring
into owner occupation more marginal groups who may find it harder
to keep up mortgage repayments if interest rates were to rise
in the future or if unemployment increases significantly.
10. Housing Justice has concerns that interest
rate rises coming on top of the record levels of consumer debt
might result in large numbers of repossessions. Evidence from
our central London housing advice centre suggests that home owners
with housing problems already have consumer debts of £60,000
on average when they contact the housing advice centre.
11. Housing Justice would like to see a
mixed housing market and in particular a stronger private-rented
sector. We would like to see reforms to private sector tenancies
to give extra security to tenants. We believe that if tenancies
could be made more secure than the current six or 12 months of
an assured shorthold tenancy the private rented sector would be
more attractive for groups such as older people who may not want
the maintenance and other responsibilities of owning a home.
12. If there were a larger supply of good
quality rented accommodation in the private sector with security
of tenure then more social housing could be freed up for those
in greatest need.
The extent to which home purchase tackles social
and economic inequalities and reduces poverty
13. House purchase has become the prime
means of passing on wealth in this country between generations
to the detriment of those who have not owned their own homes creating
inequality between families where the parents were home owners
and families where they were not.
14. According to the Nationwide Building
Society house prices increased by almost 680% in the period 1979-2005
and almost 210% in the period 1995-2005. This growth in house
prices occurred because of the high general level of inflation
in the 1970s and 1980s which reduced in real terms the cost of
repaying the loan. In more recent years house price increases
have occurred because the country has not been building enough
new homes in the private or social housing sectors.
15. Over the past 20-30 years house prices
have outperformed shares and savings accounts in most cases. Poverty
since 1979 poverty, as reported by the Child Poverty Action Group,
has increased so that in the year 2003-04 12.3 million people
(21.1% of the population) lived in poverty compared with 13% of
people who were in poverty in 1979. Thus the increase in home
ownership and house prices has not led to a reduction in poverty
and inequality.
16. Housing Justice believes that home purchase
should not be used as a tool to tackle inequality as the results
are too unpredictable and unequal across the country. Housing
Justice also believes that homes should be purchased primarily
for habitation rather than as investments. Inequality needs to
be tackled at the level of pay rather than housing—higher
basic incomes and a higher rate for the minimum wage will do more
to make society more equal than allowing a few extra people to
buy their homes
The economic and social impact of current house
prices
17. House prices are unaffordable for almost
everyone in the United Kingdom. According to the Nationwide Building
Society the average first-time buyer paid £135,526 in the
third quarter of 2005 for their home and in October 2005 the average
house sold for £157,107. Home ownership is thus unaffordable
for most people on average salaries.
18. The Joseph Rowntree Foundation in 2004
looked further at the affordability of housing and found that
for households with two incomes housing was unaffordable across
most of the country with 21 areas where house price to income
ratio was greater than 5:1 and only four areas where the ratio
was less than 4:1: given that mortgage providers will not generally
lend more than 3.5x joint income this means that house purchase
is unaffordable across the whole country.
19. There is a danger that the high cost
of housing today is storing up problems for future generations
as people are paying for their housing rather than saving for
pensions and are likely to suffer from poverty in old age. The
costs of housing and lack of social housing around the country
is creating a situation where communities are or will become unsustainable.
There is a danger that rural areas in particular will become unsustainable
as new residents such as families and younger people will be unable
to afford the cost of housing.
20. The high cost of housing has an impact
on families as parents need two incomes to pay for the cost of
housing. As a result they are spending less time together as a
family. Parents may also have to undertake longer commutes if
housing they are able to afford is not available near their place
of work. Housing Justice believes that housing must become more
affordable if we are not going to create future social problems.
The relationship between house prices and housing
supply
21. The relationship between house prices
and housing supply was demonstrated in the Barker Review. Housing
Justice agrees with the main findings of Barker and calls for
an increase in house building to counter the effects of house
price inflation caused by the lack of supply. If anything we believe
that Barker was too conservative and we believe that the government
should be increasing the amount of new social housing radically
if it is to counter the effects of inflation and begin to find
housing for the 100,000 households currently in temporary accommodation.
Other factors influencing the affordability of
housing for sale including construction methods and fiscal measures
22. Housing Justice believes that the lack
of housing supply is the major influence on the affordability
of housing. The government must increase the supply especially
of social housing to prevent homelessness. Evidence from our housing
advice centres suggests that in particular family housing is in
very short supply. New housing must meet the needs of families.
23. We believe that the government could
do more to bring the large number of empty homes in England back
into a habitable state. We welcome the empty dwelling orders contained
in the 2004 Housing Act and hope they will have an impact on empty
homes. We would like to see reform of the VAT treatment of home
renovations so that the cost of bringing homes back into use is
reduced. Housing Justice believes that by bringing empty homes
back to the housing market the supply of homes will be increased
allowing people in housing need to be re-housed.
The scale of the Government's plans to boost housing
supply
24. Housing Justice believes that the plans
that the government outlined in its housing strategy, whilst welcome,
will have only a small impact on the problems of homelessness
and bad housing in England. We have concerns that the plans will
not produce the quantity of homes needed and will not provide
the family homes that evidence from our housing advice centres
suggests we need.
The relative importance of increasing the supply
of private housing as opposed to subsidised housing
25. Housing Justice believes that it is
important to increase the supply of housing in all sectors: privately
owned, social housing and the private rented sector. We welcome
the government's efforts to mix tenures in new housing developments
as we believe that this will promote mixed communities. We would
like to see a greater mixture of housing within tenures too with
a variety of different types of housing likely to appeal to couples,
families, older people etc so that sustainable communities can
be built.
26. Housing Justice is concerned that current
schemes to offer subsidised housing to particular groups of "key
workers" favour these groups over people who are in genuine
housing need. Housing Justice believes that all people make up
a community and thus all are key workers. We would to see reforms
to the existing key workers scheme so that the subsidy available
does not go exclusively to the individual workers who are then
able to profit from government spending when they sell their homes.
We believe that subsidised housing should be built on land owned
by the community so that the resource is able to be kept within
the community. If this is not possible we would like to see restrictions
put on the sale of key worker homes so that if they are resold
for a profit within a certain time period, say five or 10 years,
a percentage of the profit goes to the housing association that
originally sold the house.
How the planning system should respond to the
demand for housing for sale
27. Housing Justice believes that the planning
system should promote mixed communities and ensure that as well
as housing developers are required to build community facilities
as sustainable communities are not built around housing estates
but around the local school, churches, doctors and shopping facilities.
28. Housing Justice is concerned however
that local authorities are often in a weak position when negotiating
with developers who may be unwilling to negotiate with councils
and are able to water down mixed community policies. We would
welcome increased emphasis from the government on the importance
of building the mixed developments.
The scale of housing development required to influence
house prices and the impact of promoting such a programme on the
natural and historical environment and infrastructure provision
29. As the Barker Review outlined the country
needs to build another 140,000+ new homes a year to reduce the
effects of house price inflation. We believe that this number
of homes is the bare minimum required to begin to address the
problems of bad housing and homelessness in England. We believe
that the impact on the natural and historical environment and
infrastructure provision can be reduced provided the government
is prepared to commit adequate spending. We believe that investment
in housing and infrastructure will bring benefits for the whole
of society far beyond the initial expenditure.
30. Housing Justice believes that there
is a role for the government in promoting the new housing developments,
outlining the number of new houses required and stressing the
minimal environmental impact of the proposed new development.
Only with a strong voice from central government will local government
be able to counter the objections of the small band of local people
who do not want housing developments in their area. Housing Justice
would be happy to work with the government to create a climate
where the need for more housing is accepted and the benefits of
creating sustainable communities are recognised
The regional disparities in the supply and demand
for housing and how they might be tackled
31. Housing Justice believes that the regional
disparities in supply and demand for housing are a symptom of
the great economic divides within Britain. The government should
make greater efforts to attract investment and regenerate areas
away from London, the East and South East so that regional differences
in prosperity are broken down and prosperous sustainable communities
are created everywhere.
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