Let's be very clear. It is not in doubt that the United Kingdom is
in the grip of a Housing Crisis. What is in doubt however are the causes of this crisis.
Many people would attribute the crisis to the economic crash of
2008. This is a perfectly legitimate view however it does not paint a complete picture of the changing economic and social conditions which have led the United Kingdom into this crisis.
According to the Office of National Statistics the population of
the UK grew by 7,483,700 between 1996 and 2016 and is projected to grow by a further 3,586,879 by 20261. Over this same period the housing stock of the UK grew by only 3,782,000 homes. The vast majority of these new homes were in the private rental sector whilst the number of homes rented from councils reduced by almost 54%2.
This increase in population and shift in the balance of the
housing market can be seen as a major contributing factor in the development of the current housing crisis as the lack of cheap rental property couple with rising house prices3 have kept the housing sector in a state of near terminal stagnancy with the number of private rented homes continuing to rise and two decades of near uninterrupted price increases squeezing people off the housing ladder.
Exacerbating the crisis is the difference in prices between
private and public rental. Private rental properties are significantly higher than those of public sector rents, in 2018 for example the average monthly rate for a council rented home was £3794 whereas the monthly rent in the private sector stood at an average of £906 per month5&6. With the limited amount of public rented council property available and the rising number of private rental properties it has led to a significant shift, whereas once renting whilst saving a deposit for a home was achievable it is no longer an option for many people meaning that the rental market itself has stagnated with tenants who previously purchased properties after a number of years now being unable to move on.
In that same period the definition of affordable homes has
1 https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overv iewoftheukpopulation/november2018 2 As taken from government statistics, specifically table 102 which is available here https://www.gov.uk/government/statistical-data-sets/live-tables-on-dwelling-stock-including-vacants 3 Average property prices rose from £56,630 in May 1996 to £210,872 in 2016 an almost 300% increase despite the financial crash of 2007/8 (http://landregistry.data.gov.uk/app/ukhpi/browse?from=1991-01-01&location=http%3A %2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Funited-kingdom&to=2018-03-01) 4 This is the all England average, as found from government statistics on table 702 available here https://www.gov.uk/government/statistical-data-sets/live-tables-on-rents-lettings-and-tenancies 5 This figure is taken from the buy association https://www.buyassociation.co.uk/2018/03/16/what-average-rent-uk- where-rising-most/ 6 It is also worth noting that even when taking London's rental values out of the private renting average the figure is still £758 a month, literally double that of council rented properties. changed. Intermediate rent schemes where rents can be up to 80% of market rate are now being classed as 'affordable'7, as are shared ownership schemes8 and help to buy schemes9. The difficulty with all of these options is that whilst housing prices have risen substantially wages have not. The average annual wage in the United Kingdom has seen anaemic growth over the past few decades, a UK worker in 2000 received an average wage of £30,643 (adjusted to spending power in 2017 for comparison) where as in 2017 that same worker received £35,16310, an increase of roughly 14%. Taking this into account none of these schemes no matter how well intentioned are really affordable for the average worker.
Additionally we have seen an increase in the number of illegal in
cities, these offer a cheap alternative for both immigrants and young people. Some stories of these 'homes' include being offered where they are literally inside a shed put up in communal areas11 with several councils initiating crackdowns on illegally converted dwellings in the last few years12
To summarise we have a market that is undergoing a rebalancing, we
have a population boom, we have a wage stagnation, illegal homes popping up and price inflation that means people cannot get on the housing ladder. These factors have created the perfect storm in the UK housing market and have led to the situation we face today.
7 And actively advertised as such (https://www.sharetobuy.com/guides-and-faqs/rental-options/)
8 Which leave tenants paying both a mortgage and rent (https://www.sharetobuy.com/guides-and-faqs/what-is-shared- ownership/) 9 Which advertise flashy rates and low cost deposits (https://www.helptobuy.gov.uk/) 10 https://stats.oecd.org/Index.aspx?DataSetCode=AV_AN_WAGE 11 https://www.theguardian.com/money/2015/sep/02/london-housing-crisis-480-a-month-for-a-bed-in-a-shed-in-the- lounge 12 https://ceasefiremagazine.co.uk/north-london-council-evict-1500-tenants-unauthorised-living-industrial-warehouses/