Our housing crisis – is it under-supply or under-occupation?

Is the crisis in UK housing a problem of under-supply of new homes, or of under-occupation of our existing stock? Do we need to be building 240,000 more new homes a year?

Simon Jenkins in The Guardian, 21 May 2014, (link below) makes a strong case for under-occupation being the market failure, and as such he challenges the British economic orthodoxy in construction over the last ten years, since the Barker Review in 2004.

His point especially about the abandonment of the brownfield-first planning policy is correct and well made. However, he is wrong to support the principle of the bedroom tax. This tax is regressive – poorest people pay the most, and often in circumstances where they have no options for a smaller house or flat.

He could have added that an emphasis on refurbishment over new-build would impact on construction employment because refurb is more labour intensive. And can have a strong impact on fuel poverty and carbon emissions.

But perhaps the key market failure he misses is the mismatch between urban living and urban employment across Britain, rather than just the South East.

In short, market failure needs a programme along the lines of:
1 – more jobs outside the South East
2 – reinstate brownfield-first planning policy
3 – refurbish social housing, including houses-to-flats conversions
4 – tackle poor quality private rented properties, and
5 – begin to address the issues of poorer, older owner-occupiers.


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