HOME TRUTHS


higher to compensate. Ever rising house prices (see graph below) have a serious effect on the distribution of real incomes and wealth. The old are favoured compared to the young; owner-occupiers over renters; and the children of house owners are the lucky winners in the next generation. We do not just have an increasing problem of housing haves and have-nots but also intergenerational transmission of wealth inequality.


How has our housing got into such a state? The


root cause is our planning policy, although our local tax system plays its negative part. This effectively fines local communities that allow anything to be built, since Council Tax gains from more houses are offset by lower payments in grant from central government, but services still need to be provided. The coalition’s New Homes Bonus is supposed to address this imbalance of fiscal incentives but since it does not come in till after existing housing targets have been abolished and – even if it is ‘new money’ – will be quite modest, it is doubtful, given other pressures for ‘nimbyism’, that it will have much impact.


Policies to restrict land supply for housing remain unabated. Urban containment came with the 1947 Town and Country Planning Act and has been successively reinforced since then – most recently by the requirement that 60 per cent of new housing should be on brownfield land. We deliberately constrain the supply of something – space – which would-be house buyers most value. Over the two generations we have been constraining the supply of land for urban development the real price of houses has increased by a factor of 4.5 but that of housing land has increased by a factor of 12 (see graph below). More unresponsive supply means that not only do prices trend inexorably upwards relative to incomes but that short-run changes in demand require ever larger changes in prices to accommodate them. That is why we have such price volatility. But if you constrain land supply its price gets bid up and in the process houses become smaller, and less funds are available for good design and materials. Recent Spatial Economics Research Centre research has demonstrated that the restrictiveness of local authorities in terms of allowing development is the most important direct cause of rising real house prices.


REAL LAND & HOUSE PRICE INDICES (1975 = 100)


600 500 400 300 200 100 0


Land Price Index House Price Index


Note: House and land data for war years are interpolated


THE EFFECTS OF HOUSING POLICY ON URBAN SOCIETY Richard Rodger, Professor of Economic and Social History, The University of Edinburgh


SIGNIFICANT STRUCTURAL AND sociological shifts have been brought about by housing policy changes over the last 100 years. The spatial extent of the city leap-frogged its pre-World War I boundaries with the introduction from 1919 of council housing. This fundamentally altered demand, restructured the building industry, and introduced extensive, homogeneous housing estates on the urban fringe. Council housing also ushered in the era of mass-produced, system-built, shuttered concrete- and steel-framed construction of houses from the 1920s. This new type of housing undermined small building firms and traditional craft skills in favour of more industrial forms of construction. Social housing largely replaced housing for the working classes in the inter-war years.


Almost simultaneously, the introduction of Rent Control – the Increase of Rent and Mortgage Interest (War Restrictions) Act, 1915 – radically altered the balance in the rental market by limiting the rents charged by landlords. Rents were virtually frozen and this led to the decay of the landlordism which prior to the World War I had made up 85-90 per cent of all housing. It took another 40 years before rent control was largely abandoned, though in removing the restrictions the 1957 Rent Act exposed sitting tenants to harassment as many landlords sought to let to new tenants at greatly inflated rents.


Combined with the introduction of council housing and Rent Control, historically low interest rates in the 1930s and, later, mortgage interest tax relief gave a stimulus to middle class semi- detached (and in Scotland, bungalow) building for private ownership. Together with council housing, the result was that residential segregation reinforced the social segregation of British cities. Tower blocks were a feature of mass house building which redefined the cityscape in the 1950s and 1960s. In these decades, Treasury subsidies were targeted towards high-rise blocks. In London, Glasgow, and Birmingham, where the councils held land for housing, the subsidy incentives encouraged high-rise construction, often on the periphery of the city.


As with council housing in the inter-war years this propelled the poorer families to the outskirts of the city and further disadvantaged them in terms of additional transport costs, disruption to social networks, and loss of informal credit sources. It also denied them neighbourhood facilities, including local shopping, and contributed to a sense of dislocation and exclusion that resulted in boredom, as often exhibited in anti-social behaviour. High-rise building was already in retreat for these reasons before the collapse of the Ronan Point tower block in 1968 in Newham, London as a result of a gas explosion.


AUTUMN 2010 SOCIETY NOW 11


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1892 1898 1904 1910 1916


1922 1928 1934 1940 1946 1952 1958 1964 1970 1976 1982 1988 1994 2000


2006


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