Housing in the United Kingdom

Victorian era

The very rapid growth in population in the 19th century in the cities included the new industrial and manufacturing cities, as well as service centers such as Edinburgh and London. The critical factor was financing, which was handled by building societies that dealt directly with large contracting firms. Private renting from housing landlords was the dominant tenure. P. Kemp says this was usually of advantage to tenants. People moved in so rapidly that there was not enough capital to build adequate housing for everyone, so low income newcomers squeezed into increasingly overcrowded slums. Clean water, sanitation, and public health facilities were inadequate; the death rate was high, especially infant mortality, and tuberculosis among young adults.

1900-1939

The rapid expansion of housing was a major success story of the interwar years, 1919-1939, standing in sharp contrast to the United States, where new housing construction practically collapsed after 1929. The total housing stock in England and Wales was 7.6 million in 1911; 8.0 million in 1921; 9.4 million in 1931; and 11.3 million in 1939.

The private sector rental market provided 90 percent of the housing before the war. Now came under heavy pressure, regarding rent controls, and the inability of owners to evict tenants, except for nonpayment of rent. The tenants had a friend in Prime Minister Lloyd George, and especially in the increasingly powerful Labour Party. The private rental sector went into a prolonged decline and never recovered; by 1938, it covered only 58 percent Of the housing stock.

A decisive change in policy was marked by the Tudor Walters Report of 1918; it set the standards for council house design and location for the next 90 years. It recommended housing in short terraces, spaced at 70 feet (21 m) at a density of 12 to the acre. With the Housing and Town Planning Act of 1919 Prime Minister David Lloyd George set up a system of government housing that followed his 1918 campaign promises of "homes fit for heroes." Called the "Addison Act," it required local authorities to survey their housing needs, and start building houses to replace slums. The treasury subsidized the low rents. The immediate impact was the prevalence of the three-bedroom house, with kitchen, bath, parlor, electric lighting, and gas cooking, often built as subsidized council housing. Major cities such as London and Birmingham built large-scale housing estates – one in Birmingham had a population of 30,000. The houses were built in blocks of two or four Using brick or stucco, with two stories. They were set back from curving streets; each had a long garden strip. Shopping centers, churches and pubs sprang up nearby. Eventually The city would provide a community hall, schools, and a public library. The residents typically were the upper fifth stratum of the working class. The largest of these two communities was Becontree in the outer suburbs of London, where construction began in 1921 and by 1932 there were 22,000 houses holding 103,000 residents. Slum clearance now moved from being a public health issue, to a matter of town planning.

Liberal MP Sir John Tudor Walters was inspired by the garden city movement, calling for spacious low-density developments and semi-detached houses built to a high construction standard. Older women could now vote. Local politicians consulted with them and in response put more emphasis on such amenities as communal laundromats, extra bedrooms, indoor lavatories, running hot water, separate parlours to demonstrate their respectability, and practical vegetable gardens rather than manicured yards. The housewives had had their fill of chamber pots. Progress was not automatic, as shown by the troubles of rural Norfolk. Many dreams were shattered as local authorities had to renege on promises they could not fulfill due to undue haste, impossible national deadlines, debilitating bureaucracy, lack of lumber, rising costs, and the non-affordability of rents by the rural poor.

In England and Wales, 214,000 multi-unit council buildings were built by 1939; making the Ministry of Health largely a ministry of housing. Council housing accounted for 10 percent of the housing stock in Britain by 1938, peaking at 32 percent in 1980, and dropping to 18 percent by 1996, where it held steady for the next two decades.

Increasing the British ideal was home ownership, even among the working class. Rates of home ownership rose steadily from 15 percent before 1914, to 32 percent by 1938, and 67 percent by 1996. Local building societies were primarily responsible. In the 1920s favourable tax policies encouraged substantial investment in the societies, creating huge reserves for lending. Beginning in 1927, the societies encouraged borrowing through gradual liberalization of mortgage terms.

The fierce debates over high-rise housing that took place after 1945 were presaged by an acrimonious debate in the 1920s and 1930s in London. It pitted enthusiastic advocates and angry critics of multistorey flats for social housing. On the political left, there was firm opposition to what was denounced as 'barracks for the working classes'. Reformers on the right called for multi-story solutions to overcrowding and high rents. One result were attempts to compromise by developing new solutions to urban living, focused especially on slum clearance and redevelopment schemes. The compromises generally sought to replace inhospitable slums with high-rise blocks served by lifts. In the Metropolitan Borough of Stepney they included John Scurr House (built 1936–1937), Riverside Mansions (1925–1928) and the Limehouse Fields project (1925 but never built).

Post 1940

Housing was a critical shortage in the postwar era. Air raids had destroyed a half million housing units; repairs and maintenance on undamaged had been postponed. In all 3 million new dwellings were needed. The government aimed for 300,000 annually, compared to the maximum prewar rate of 350,000. However, there were shortages of construction workers, materials, and money. Not counting 150,000 temporary prefabricated units, the nation was still 1.5 million units short by 1951. Legislation kept rents down, but did not affect purchased houses. The ambitious New Towns project was idealistic, but did not provide enough urgently needed units. When the Conservatives returned to power in 1951, they made housing a high priority and oversaw 2.5 million new units, two thirds of them through local councils. Haste made for dubious quality, and policy increasingly shifted toward renovation rather than new construction. Slums were cleared, opening the way for gentrification in the inner cities.

Working class families proved eager to purchase their council homes when the Thatcher government offered a good financial bargain in the 1980s.

Demography

In early 2014 there were approximately 23 million dwellings in England, of which 63% were owner occupied, 20% were private rented, and 17% were public housing. The overall mean number of bedrooms was 2.8 in 2013-14, 37% of households had at least two spare bedrooms. 20% of dwellings were built before 1919 and 15% were built post 1990. 29% of all dwellings are terraced, 42% are detached or semi-detached, and the remaining 29% are bungalows or flats. The mean floor area is 95 square meters. Approximately 4% of all dwellings were vacant. Approximately 385,000 households reported a fire between 2012 and 2014, the majority of which were caused by cooking. In 2014 2.6 million households moved dwelling, the majority of which (74%) were renters.

Construction History

The Labour government suspected that there might be supply side problems in the construction sector, and in 2006 commissioned the Callcutt Review of House Building Delivery., which was published in 2007. The Callcutt report noted the failure of the home building industry to increase the supply in response to price signals.

There was a fall after the 2008 recession, but by 2014 it was back up to 152,000, but this only two thirds of what Baker said was needed.

The Baker report underestimated the demand for new dwellings. In the 1970s the UK was building about 300,000 new dwellings a year and there was little or no population growth. The new dwellings were used to reduce over crowding and to replace inferior the housing stock. After 2004 (when the Baker report was published) UK experienced strong population growth, primarily due to immigration from EU accession states. From 2000 to 2013 the population of the UK increased by about 4.1 million from 60.0 to 64.1 million.

Purchase price of a dwelling

During the era of the Keynes–Beveridge consensus the purchase prices of dwellings increased slightly faster than the Retail Price Index (RPI), so there was an increase in the real price. In 1950, in 2012 pounds, the average dwelling cost was £50,000, at the end era it cost £75,000.

In September 2015 the average house price was £286,000, and affordability of housing as measured by price to earnings ratio was 5.3.

The London effect

In 2015 in London the average price for a semi-detached ex council property was around £550,000. This was over fifteen times median earnings. In the era of the Keynes/Beveridge consensus, the market for London property was mainly owner-occupiers, but since then it is investors, often foreign, seeking buy to let, and buy to speculate investments.

There is concern that councils in central London are aggravating the housing crises by pursuing policies of gentrification.

London is ranked as the top city in the world in terms of the number of ultra high net worth individuals who are resident in a city. The consequence of this is seen in the high price for top-end dwellings. The most expensive home ever sold in the UK was 2 to 8a Rutland Gate, Hyde Park which sold for £280 million in 2015. The most expensive street in the UK is Kensington Palace Gardens, London, where the average price of a home is approximately £42 million.

See below for further information on the extent of London property kept empty by speculators.

Desirability of rising house prices

Dwellings represent the largest non-financial asset in the UK balance sheet, with a net worth of £5.1 trillion (2014). In the national statistics rising house prices are regarded, as adding to GDP and thus a cause of economic growth.

Historically, the assumption in the media and elsewhere was that rising house prices were a good thing. There is evidence that the public no longer share this view.

Rent for a dwelling (Generation Rent)

Nearly two out of five households rent their home. During the era of the Keynes/Beveridge consensus nearly all rented dwellings were provided by local government. This changed during the era of the Thatcher/Blair consensus. In 2014 most rented dwellings where provided by private landlords. The proportion of dwellings rented form of the private rented sector is increasing, whilst the public sector is declining. In the financial year 2014, the private rented sector increased by 123,000 dwellings, and the public sector declined by 9,000 dwellings.

At the start era of Thatcher Blair Consensus, before the deregulation, there were no market rents, and fair rents in private sector and council rents were both about the same at, in real in terms £(2014) £40pw, or £(2014)170pcm. By the 2000s rents had increased substantially. There were no longer any fair rents, and the market rent was £(2014) 150pw or £(2014)650pcm. A nearly fourfold increase (See the graph above History of Rents in England by Tenure).

In the era of the Thatcher Blair consensus the rates were abolished, and in the UK there is now no property tax based on ownership, a situation almost unique in the OECD. Further, councils lost the power to set rents. Instead, rents for housing associations and council houses are now set by central government, and far from being subsidized they are used to provide a revenue stream for social housing. This has had the consequence that, in real terms, council rents have doubled, from under £(2014)40pw in 1980, to £(2012) 80pw in 2012, or £(2012)173pcm to £(2012)346pcm.

High rents have not just effected those in the lower half of the income distribution. who always been lifelong renters. In the era of the Keynes/Beveridge consensus those in the upper half of the income distribution would typically, rent a home while saving for deposit to get on the property ladder. This is no longer possible, money which would have been used in saving for the deposit now goes in rent. The majority of new households formed in the UK can now expect to rent from a private landlord for life. This phenomenon has been called generation rent and there is much debate about the social consequence of this change. See the Thatcher Blair Consensus and inequality for further information.

In London, rents are double the national average and this is driving gentrification. Londoners on median earnings find they can no longer afford to rent an apartment in central London. Those on median incomes, who work in central London have had to move to the outer suburbs, and the commuting towns in SE England. Many find, that commuting using London's congested transport infrastructure lowers their standard of living, and is disruptive of family life.

Homelessness

In June 2015 there were approximately 67,000 households in England in temporary accommodation. In Autumn of 2014 there were around 2,400 rough sleepers in England, 27% of which were in London.

Overcrowding

The consequences of the housing shortage and high rents manifests itself in overcrowding rather than In homelessness, The problem of over crowding is especially acute in London. In 2011 it was estimated that there were 391,000 children in London living in overcrowded conditions.

Between 1995-1996 to 2013-2014 overcrowding, as measured by the bedroom standard increased from 63,000 households to 218,000 households. The bedroom standard understates overcrowding. It does not include potential household units forced to live in the same dwelling. For example, divorced couples living in the same dwelling, adult children being unable to form own household but having to live with their parents. It has not proved possible to find statistics on the true extent of overcrowding.

A report issued by the Deputy Prime Minister's Office reviewed the evidence that overcrowding, in addition to the known impacts on physical health, adversely effects mental health, and child development.

Housing Quality

It is useful to consider housing quality under two sub headings physical and social. In the era of Beveridge Consensus there where large scale slum clearance projects. Council environmental health officers inspected dwellings in a borough and those which failed to meet standards were compulsorily purchased for a nominal sum and demolished. New dwellings were built to rehouse the slum dwellers. Slum clearance significantly improved the physical quality of the UK housing stock. But in a seminal study Family and Kinship in East London it was found that although the physical quality of the housing had improved, its social quality had deteriorated. The residents of apartments in tower blocks appreciated their clean, warm, bright new apartments, but missed the supportive community networks of the slums.

Physical Quality

Undocumented migrants, as they fear being deported, are easily exploited, and do not report housing conditions which constitute a public health risk. This means that the extent of the problem is not known.

Although overall the quality of English housing stock has improved over the last thirty years (a generation), the quality of housing for new households formed from those at or below the median income has declined. Thirty years ago a new household in this group could rent a council house built to Parker Morris standard. In 2016, a new household from this group, has to rent from a private landlord a dwelling, which will have less space than the Parker Morris standard dwelling, and likely to be damp, and they pay in real terms, at least three time the rent of their parent's generation.

Jessica McLean was a tenant who complained about a dwelling and claimed that she was evicted due to this.

Social quality

For many people the social life their home enables is as important as the physical conditions the home provides. There is a debate about whether the generation born in the 1980s, at the start of the Thatcher/Blair consensus era are better or worse offthan their parents. Economists who believe in the Thatcher/Blair consensus claim living standards have improved for what has been called generation X, whilst others hold they have declined. The economist point to fourfold growth in the nation's GDP during the era of the Thatcher/Blair consensus, an increase GDP per capita, and an increase median earnings. Those who content that there has been a fall living standards for generation X, say that increasing GDP per capita can be, and is in the UK, associated with a declining quality of life. And that housing conditions of Generation X has made their standard of living far lower than that of their parents. They claim that the two major cause of decline in the social environment provided by housing are: symmetrical tenancy agreements and socially segregated housing developments.

Symmetrical tenancy agreements

Nearly all dwellings are let using Shorthold Assured Tenancy agreements. There is a short period, typically six months or a year, where neither side can terminate the agreement. After this period, both sides can terminate the agreement at a months notice.

There is evidence, that main the beneficiary of the symmetrical tenancy agreements have been UK landlords, as it has enabled rents rise not only faster than the RPI, but also far faster than wages. In 2015 private sector rents in the UK rose by 4.9% with particular large rises in Brighton and Bristol whilst earnings growth in the UK was 2.9%.

Factors which lower the social quality of housing such as: homelessness and fear of homeless, and transient unfriendly neighborhoods have been attributed to symmetrical tenancy agreement. Evidence of the comparative insecurity in the private rental sector is, is provided by the statistics on recent movers. In the year 2013, for every 1,000 residents, 340 of those in the private rented sector would move, compared with 5 owner occupiers, and 9 in the public rented sector.

Socially Segregated housing

The current position is that in London, only UK citizens who are top earners, are in the market to become home owners. In London, the effective demand for new dwellings now comes from property investors, not those hoping to become owner occupiers. Property investors, are not primarily interested in whether a dwelling unit provides a good social environment for a family. The investor is looking for standardized dwelling units which can provide a good rental income and predictable maintenance costs. This has reduced the demand for three bedrooms houses with gardens, which are normally consider to provide the ideal family homes, instead the demand is for apartments in multi-story blocks. In London, many such apartments are marketed too, and bought by foreign investors. The ideal unit for such investors, is in a gated development with a tower block of apartments, with car parking instead of gardens. Standardized dwellings units are desirable as they can be traded on the global market like any other commodity.

There is evidence that gated developments intensify social segregation, and rather than preventing crime they create fear of crime. The residents of the gated development become fearful of those living outside of their secured space and only leave the development by car. They are too fearful to walk out of it and socialize with their neighbours outside.

Having separate estates for owner occupiers and council tenants reinforced class divisions and class stereotyping. There were residents on owner occupier estates who call those who lived on council estates 'common' meaning they were social inferiors, and there were residents in council estates who would call those lived in owner occupied estates 'snobs' meaning they people who were to proud to socialize with those they considered their social inferiors. Due to limited social interaction between owner occupiers and council tenants there is much scope for misunderstanding.

Cost of Home Heating (Energy Efficiency)

UK homes are some of the most expensive to heat in Europe, which results in high levels of fuel poverty (for further information see Fuel poverty in the United Kingdom). The problem results from age of the housing stock with most dwellings being built prior to oil shock of 1973, after which insulation standards for newly build housing improved. The UK dwellings have the oldest age profile in the EU with over 60% being built before 1960, and with only just over 10% being built between 1991-2010. The graph above on the history of construction of new dwellings shows this age profile is a consequence of the reduction in the number of in new dwellings build per year after 1979.

There is a particular problem with dwellings built before World War I (1914-1918), which are now over hundred years old. The terraced houses of this period, build for sale to the buy to let investors of the time, are particular difficult to insulate. These dwellings were built for heating by open coal fires, and had large drafty windows to allow the fire to draw. They have very small rooms and have solid walls with a single tier of bricks. This structure makes wall insulation expensive and in many cases impractical. Many of the dwellings of this type were replaced by council houses in the post war slum clearance program, but with the ending of public sector building of dwellings this route for improving the energy efficient of the housing stock ended.

There also insulation problems in the pre-1914 large houses built for the top decile of the time. These houses were built with servant quarters in the roof space. Most such houses have been converted into blocks of flats and sold to buy to let investors. These flats are difficult to insulate, especial the top floor flat in the roof space. The expense of insulation means that it is not often not cost effective for the landlord to insulate such dwellings. This is especially true in London, where due to the housing crisis, landlords can let a property in poor condition, and consequently improving the energy efficiency of a dwelling is not a priority for buy to let investors.

There is also a problem in that only half the poorly insulated dwelling in the private rental sector use central heating, instead using more expensive electrical heaters.

Government policies for improving home energy efficiency

To encourage home insulation the governments introduced The Green Deal, the Energy Company Obligation, and Energy Performance Certificates(EPCs).

The Green Deal does not offer any subsidies or grants for home insulation. Instead a new type of loan is provided which is attached to the property rather than the individual who takes out the loan. The purchaser of property becomes liable for the loan taken out to insulate the property. The Green Deal policy has met substantial criticism. In 2013, the Telegraph wrote that the high rate of interest charged for loans taken out under the Green Deal, will mean there will be insignificant take up, and hence the policy will be ineffective.

The Energy Company obligation provides means tested grants for home insulation. The funding for these grants does not come from government taxation. Instead there is legislation that allows the energy utilities to raise a levy on all utility bills to pay for the mean tested insulation grants. In 2015 these charges added about £112 to the average utility bill. If the utility fails to spend the money it raises from the levies in insulating the homes of those in fuel poverty it is fined. There have been problems with scheme, utilities have been paying fines rather than providing the insulation.

The difficulties the utilities have had is in the low uptake of the grants. There is a particular problem in that most of the people in fuel poverty who are entitled to the grants are in the private rental sector. A tenant who applies for and gets a grant which improves his landlords property has no security of tenure. The tenant will not benefit from reduced fuel bills, if the landlord puts up the rent, as the property has been improved. Understandably, tenants in fuel poverty have been reluctant to apply for the grants. The consequence of failure to take up grants, is given as one of the reasons the UK is missing carbon reduction targets.

The idea behind EPCs was that if those buying or renting a property are informed about its energy efficiency market forces will lead to better insulated dwellings. To improved the working of the market by providing better informed purchasers, under UK law, whenever a dwelling is built, sold, or rented an EPC is required.

An EPC gives an indication of the energy efficiency of a dwelling. The certificates have been criticized as they are based on visual inspection of the property, and examination of documents, and not on measurements of energy use, or the insulation characteristic of the building. It is not possible to calculate the cost heating a dwelling from its EPC, or the amount energy which can be saved by insulating a wall, roof or window. There are claims that EPCs are of no real value. It is held that a certificate which can be bought for just £34, produced as result of form filling exercise, can not possibility be as useful as a proper energy survey based on measurement.

There have been improvements housing in insulation but this is manly in the owner occupier sector. Between 2001 and 2013 the prevalence of cavity wall insulation of houses which have cavity walls rose from 39% to 68%. Over the same time period the proportion of fully double glazed dwellings rose from 51% to 80%. It has not proved possible to find evidence that these improvements were the result of government policy or would happened anyway.

If all the recommendations by energy performance certificates were implemented the notional carbon dioxide emissions, from UK dwellings could be reduced by over 20%.

Empty homes

According to official statistics, on October 2015, there were 600,179 vacant dwellings in England, a decline from the 610,123 from a year earlier. Of these vacant dwellings, 203,596 were vacant for more than six months. This it is believed is mainly due to financial reasons, such as the owner being unable to sell the house or raise enough money to renovate the property. Empty Dwelling Management Orders (EMDOs) allow councils to take over the management of long-term empty properties but these are generally seen as a last resort and only 43 EDMOs were successful from 2006 to 2011. Government statistics show that long-term empty homes are generally concentrated in the North of England and in seaside towns, where property prices are generally lower, with the lowest percentage in London which had 20,795 long-term empty properties.

According to official statistics, the percentage of empty homes in England has fallen from 3.5% in 2008 to 2.6% in 2014. One explanation for this housing transactions have picked up since the financial crisis, and because of government efforts to reduce the number of empty homes. An alternative explanation is that before April 2013 there was an incentive for property owners to report a property as empty, as there was a rebate on council tax for vacant property. And when this incentive was removed, property owners ceased informing the council that their property was empty, and it was this which has led to apparent fall in empty homes reported by official statistics.

The number of empty homes includes homes where the previous occupier is in prison, in care, in hospital or recently deceased.

The charity Empty Homes argued that empty homes were helping contribute to the housing crisis, saying in a report "The longer a property is empty the more our housing assets are being wasted. Also, the longer a property lies empty, the more likely it is to deteriorate; the more it is likely to cost to bring back into use; and the more it is likely to be seen as a blight by the neighbours."

London

Research by Islington Council revealed that nearly a third of new dwellings built did not have anyone on the electoral register after six years, although this may exclude students and foreign tenants.

The Observer reported on what has been termed 'lights out London' .. 'where absentee owners push up property prices without contributing to the local economy'. A local restaurateur explained the problems this caused, 'my original customers [have sold to ] non-doms who do not live in their [property]. In some some apartment blocks 20% were unoccupied... It makes a big difference [to my business]'.

The Guardian investigated the occupancy and the ownership of the apartments in St Georges Wharf Tower on the south bank of the Thames. The investigation found that 60% of the apartments were foreign owned, often by companies registered in tax havens. It further found that although there were bedrooms for over 600 people, there were only 60 people registered to vote.