17th April 2015

House bricks

past, present and future

by Trevor Locke

Part 2 – Housing, employment and transport: why we need to be joined up policies.

House bricks Photo Alamy — House bricks
Photo Alamy

In part 1, I looked at bricks and other kinds of building materials, asked if there can be viable alternatives to traditional materials and considered how building design might change to take account of the rise of new materials.

In part 2, I move on to discussing the kind of policies that are increasingly playing a part in the supply of accommodation.

The need for affordable homes.

Are people ready to move away from standardisation and traditions? If the media is to be believed, the average Jess and Joe want to get married and start a family. They want to own a home of their own. But does Mr & Mrs Average want to live only in the traditional house? Through the medium of television, we have seen people who have abandoned the traditional notion of the house and built themselves a home from materials you would not find on the average housing estate – such as blocks of straw. Others have done away with the conventional idea of a slate roof and covered their structures with grass.

In post-war Britain, there was a trend to build ‘pre-fabs’ – prefabricated houses built in bits in factories and then assembled on site. Prefabs were cheap, cheerful and provided a quick fix to the shortage of housing after the blitz. The decades of the 1940s through to the 1960s brought us the baby boom. As those generations grew into adulthood, demand for housing increased. Recently, the lack of access to mortgages, following the financial crash of 1998, has led to an increase in rented properties. Couples and new families, not wanting to be stuck at home with their mums and dads, are going out to find rented accommodation. In the urban areas, this is fairly easy but in the countryside, it is much more of a problem. House-prices in rural areas is very widely beyond the reach of workers in villages and rural areas.

Today, the baby boomers of the 60s are down-sizing. Having brought up their families, couples find themselves living in houses that are bigger than they need. So, couples aged 60 and over are moving into smaller properties. Whilst this should be releasing houses for occupation by younger people, the problem is that house prices have increased and the mortgages needed to buy these properties are hard to come by.

Politicians have made a big thing about new-build. To them, the housing supply is all about the new build. In order to get anywhere near the level of demand for houses that there in England today, the solutions are always stated as being about building new homes. Only the more radical politicians give credence to the idea that the supply of housing might also include a wider set of options.

Housing is the key to everything

If you do not have a home, you cannot get a job. If you do not have a suitable home, you are going to find it difficult to marry and start a family. Most people who are homeless are also likely to be unemployed. It’s not just a question of being homeless. Often the problem is more about inappropriate housing and unsuitable accommodation. Energy poverty rides on the back of inappropriate housing; people who live in accommodation that is not suitable are likely to suffer from high energy costs, which will lead either to inadequate heating or people failing to feed themselves properly to keep up with the demands of energy suppliers. Poorly built houses are also likely to suffer from damp, drafts and lack of insulation.

It is said that we need to build 250,00 new homes. In that context what do we mean by ‘new?’ Do we mean new build or do we mean more supply of housing stock of all kinds? Around four million people are now renting their homes. In many continental countries, renting is standard; now that house-ownership is so difficult in England, renting looks like it might become the standard approach to securing accommodation. For policymakers, the issue is one of renting not being as secure, for tenants, as it ought to be.

Housing and employment

Most people in this country need two things: somewhere to live and a job to fund it. There is a reciprocal relationship between housing and employment. People need a home in order to get and hold down a job; people need jobs in order to be able to fund a home.

If we are to have policies that work, we must be able to make housing and employment work together in a way that reinforces them both. How does the housing market relate to employment? What proportion of the labour market can afford housing? What people are being paid relates directly to the type of housing they can access. Those with well-paid jobs, that have long-term prospects, will be able to attract mortgages. Mortgage providers are less keen to fund those whose jobs are short-term or occasional – such as those on zero-hours contracts. It is not always the level of pay that gives access to mortgages – it is more to do with the long-term prospects for continued employment that will fund a mortgage over its term (typically 25 years.) People who are on zero-hour contracts are not good prospects for mortgage providers. Precarious employment contracts are not good for home-ownership and access to mortgages and leases.

Despite the fact that the UK has a record level of employment – the best since 1971 – homeownership is as low as it was in the 1970s. Can government policies be synchronised so that there is both full employment and a strong supply of housing? Traditional homeowners (in terms of their employment status) are becoming a small proportion of the labour market. People who have to survive on precarious jobs are finding it more and more difficult to gain access to suitable housing. The Labour Party’s pre-election headlines have placed emphasis on increasing the supply of new-build housing; but if they do not have synchronised policies for employment, too few people who will be able to buy into that housing and the policy will fail. What people need to access new build housing are jobs that offer long term stability and a predictable income. Around 15% of the labour force is now self-employed. There have been huge increases in people gaining their primary income from a small business. “Nowadays, although it is not impossible for someone who is self-employed to secure a mortgage, it can certainly be a difficult process because lenders are far less willing to take what they see as a risk on those with a ‘non-standard’ income”, claims the Thisismoney website. Lenders want to see a history of business success and to be convinced that this will continue over the life of the loan. That immediately places people into age categories.

In 1971 half the population was renting and the other half owned their homes. The number of people in work is now at its highest level since 1971. What proportion of people who are employed can afford access to housing? We hear a lot about the difficulties that people have in securing a mortgage, especially for those aged 20 to 25. These might be people who are in work but the kind of earnings they have do not give them access to housing. If we now have record numbers of people in housing, why are so many not able to get a mortgage or cannot afford to rent suitable homes?

Guy Standing has written about The Precariat, a social class formed by people suffering from precarity, which is a condition of existence without predictability or security. Many of these are people whose income is precariously based on things like zero-hours contracts. These are casual workers who lack a long-term reliable income, the kind of income which would allow them to secure permanent housing. If your job cannot be relied on to provide you with enough money over a long enough period of time, then you are likely to have difficulties in accessing the kind of housing you desire. Housing requires permanent employment, a stable income over a long period of time and a level of income that will convince mortgage-providers and people who lease or rent apartments that you are a reasonably safe bet. Zero-hours contracts might offer a hand fix for some people, for some of the time, but in the long term the creating disadvantage in terms of housing.

Employment and transport

Some parties have added transport into the housing/employment equation. Some have gone on to put this in a regional context. We can look at England as a whole but when you regionalise the equation, there are areas of the country that need special attention. Some local authorities have developed policies that address the issue of the supply of land as being the key to dealing with meeting housing needs. Policy, therefore, has to balance two sets of supplies: jobs and homes. This also needs to consider travel to work areas – the ability of people with jobs to travel to work, to areas away from their homes. This is where transport comes in – if the supply of transport lags behind the supply of housing and the availability of jobs (within a travel-to-work area) then people are going find it difficult to get housing within a reasonable distance of where they want to live. The choice of where to live, for a majority of families, dictates where their workplaces can be. They have to take into account their relatives – particularly dependents – access to schools and access to health care if they have specific needs in that respect.

Formulating housing policy is a non-starter if not related to employment and education and, some would argue, transport policy. Joined-up policies are the most likely to be credible and effective because they pull together these variables that all depend on each other. If we want our housing policy to succeed we have to make sure that the labour market has a sufficient proportion of employed people who have the kind of income that is required for stable homeownership (whether via mortgages, leases or tenancies.) The more people whose jobs fall into the short-term, precarious end of the labour market, the more difficult it is going to be to have a robust housing policy. Allowing employers to lead the market for jobs is bad for the economy as a whole; it is free-marketism of the worst kind. Allowing more and more employers to indulge in short-term and zero-hours contracts is harmful to the economy as a whole. It is a practice that cannot join up jobs, homes, education and transport and for that reason, it does the country no good at all.

In part 3, I will look at some of the issues that affect the supply of housing stock, how we can make better use of land and possible options for addressing the shortfall in housing supply.