Stop talking about housing as a national emergency - and use the three Ps to get a grip on it

‘Housing’ has risen up political agendas, in Scotland and across the OECD, because of rising homelessness, growing rent burdens and falling home-ownership rates for under-40s.

Half of Scots report ‘a housing problem’. Discontent grows in left-behind places and disaffection spreads across younger generations denied the lifetime prospects of, not just their affluent peers, but their own parents.

Housing will change politics, if politics does not change housing.

Stop talking about a housing emergency, writes Prof Duncan Maclennan | Lisa Ferguson/NationalWorld

There are too many individual housing emergencies, for those unhoused on the streets, for children in temporary and unhealthy homes, and for renters and owners desperately trying to maintain housing payments.

For governments, however, a different label for the policy problem is required. ‘Emergency’ implies a sudden, almost unanticipated event.

The crises and disorder prevailing across the housing system, for middle income as well as poorer Scots, has both been predictable and emerging for at least a quarter century. They arise from two major social and economic processes and policy responses to them.

First, income distributions have shifted against the poorest fifth of households whilst rents have risen faster than average incomes.

Professor Duncan Maclennan | Contributed

If governments had maintained their long-standing ‘merit good’ commitments to providing decent low-income housing with a tolerable payment burden, they would have been steadily increasing non-market provision throughout that period. They have not and this was a moral, political choice.

In fairness to all Scottish governments, there has been a strong commitment to maintaining such programmes, though the extent of provision for poorest Scots gets lost in ‘affordable’, weasel-word, labelling of policy spend.

A second, related process, has been that despite cyclical periods of relative stability, real house prices have risen relative to incomes.

That sustained process has transformed home ownership from a steady saving system for growing shares of younger households to a speculative system, with untaxed returns, that now regressively redistributes wealth and distorts savings and investment patterns into property rather than productivity as is as much driven by family wealth as individual effort.

Politics acts as if the sector behaves as it did 40 years ago. In consequence there has been a widespread failure to manage market systems to grow without adverse wider outcomes.

These outcomes reflect local, national and global demand side effects that impact on inherently sticky local housing supply chains.

Scottish governments have not been effective policy makers for the housing market. The Parliament intuitively thinks ‘need’ and ‘social housing’, ‘more spending’ and ‘tighter regulation’.

At present, there is no national housing market strategy. The National Planning Framework pays scant attention to housing. There is no housing evidence programme.

For the future, there is a well-intentioned strategy for better housing system outcomes by 2040. However, it ignores that four-fifths of our housing is provided by markets and that key policies driving them, including fiscal and monetary policies, are not designed at Holyrood.

The powers that reside at Holyrood could have fashioned more effective supply. Supply chain improvement involves much more than faster planning permission processes but also better land supply arrangements, coherent strategic spatial plans, more infrastructure investment and better aligned with housing development, skills training for the construction sector that was markedly more effective.

The HNDA housing planning system seems to have crashed into a wall and requires refurbishment.

On the demand side, there is neither fairness nor economic rationality in the systems for local taxation and land and buildings transfer taxes nor any apparent thought to how their design impacts the housing system.

Broad sectoral policy choices at Holyrood impact housing demands. There are multiple good reasons to raise immigration to Scotland, but little attention to how immigrants will impact the housing market.

Sectoral policies impact too. In the university sector, policy induced a business model, of sharply increasing number of overseas students, that had many merits but saw universities take a free ride on their local rental housing markets with significant private investment in student housing emerging after peak demand had passed. Scotland needs to do better than this.

For the present, unclear and poorly designed rental controls (effective systems can be designed) have deepened the supply side crises in major cities. Shooting oneself in the foot is undoubtedly an emergency that is unlikely to attract public sympathy.

The Chartered Institute of Housing Festival this week, despite the times, is well named because it brings together organisations and individuals full of ideas and experience, and appetites for change.

On the ground in Scottish housing, often not reflected in higher level debate, there is a realisation that the adverse outcomes across the system will not be resolved by more housing rights and unlikely surges in housing policy spending. The business-as-usual approach to housing policy and provision won’t work. The supply side of the system has to change, and that includes non-profits as well as the planning and development sectors.

Above all the governance of housing in Scotland has to change. The Scottish Government have to think what housing is and what does.

Stop talking emergency and identify the dysfunctional outcomes of the overall housing system and the socio-economic and policy influences that drive them.

Placing housing policy, with transport and other infrastructures, in a Department or Division for Housing, Infrastructure and Communities would be a good start.

Within the Government, have housing impact statements from all major policy areas so that the Housing Minister is not left with inadequate resources to try, and fail, to stem the damage of broader policies.

Don’t fool around trying to develop a single housing indicator for the National Performance Framework (NPF). Identify the housing outcomes that are palliative (easing financial, physical and mental stress of households).

Identify the benefits of the housing outcomes that are preventative (that save future health expenditures arising from unhealthy housing, or education/training spending because kids were unable to develop their human capital in transitory, crowded homes).

Finally, get some grip on how housing outcomes do more than create short-term jobs, and shape the development of human capital, the formation of small firms, and the overall allocation of our savings between property or prosperity. Links these outcomes to diverse NPF outcomes, for that is what housing does.

New regional collaborative structures to deliver strategic flows of housing and infrastructure support are urgently required. Devolving responsibilities to regional scales, such as the Glasgow City Region, offers a prospect of long-run system improvement.

It’s time to get a grip of the 3Ps of housing – palliative and preventative to deliver prosperity for more people.

- Professor Duncan Maclennan is Emeritus Professor in urban economics at the University of Glasgow.