Evolutionary Housing
Policy in the UK
Lanson Zhang 23 Jan. 2014
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OUTLINE
I.
Key Problems in Housing
II. Roots
III. Solutions ?
IV. Enlightenment for Shanghai
2
[I]
Key Problems
[I] Key Problems
Rocketing Prices and Deteriorated
Affordability
Increasing Gap Between Demand and
Supply
Severe Shortage of Social Housing
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[I] Key Problems
1. Rocketing Prices and
Deteriorated Affordability
Housing price is close
to an all-time high,
the average housing
price rises by 5.5% to
₤247,000, while the
average price in
London soars to
₤437,000
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[I] Key Problems
1. Rocketing Prices and
Deteriorated Affordability
[I] Key Problems
2. Gap between Demand and Supply
‘we have not built enough new homes for more than a generation’.
In 2009/10, there were 115,000 completions in England. Meanwhile,
the latest projections suggest that the number of households will
grow by 232,000 per year
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[I] Key Problems
3. Shortage of Social Housing
There are 1.8 million people on England's social
housing list, 1 million in 1997
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[Ii]
Roots of Problem
[II] Roots of Problem
Home-owning Society
Austerity Policy
Privatization of Public Sector
Liberalization in Private Sector
Shortage of Decentralization
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[II] Roots of Problem
1. Home-owning Society: Main Characters
Tenure: Ownership is dominant
[II] Roots of Problem
1. Home-owning Society: Main Characters
Tenure: Ownership is dominant
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[II] Roots of Problem
1. Home-owning Society: Main Characters
Strong willingness to invest in housing
Age
Employer
Pension
Personal
Pension
Stocks
Shares
18-34
7%
4%
10%
56%
10%
13%
35-49
13%
5%
8%
57%
7%
10%
50-69
12%
6%
8%
49%
7%
18%
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Property High-rate
Others
Investment Saving
[II] Roots of Problem
1. Home-owning Society: Main Characters
Housing industry has become a crucial sector
[II] Roots of Problem
1. Home-owning Society: Main Characters
Housing industry has become a crucial sector
[II] Roots of Problem
2. Austerity Policy
So far the coalition has cut spending on public services
by 8%; by 2018-19 the target is a cut of 20%
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[II] Roots of Problem
2. Austerity Policy
Reform of Social Housing: Turning Point
Council
Housing
Social
Housing
Affordable
Housing
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Social Rent
Rents at 50% of
market rent
Affordable Rent
Rents at up to 80% of
market rent
2
Life time tenancies
Fixed term tenancies at
least 2 years
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Existing Tenants
New Tenants
‘The final nails in the coffin were driven into the great visionary
project of council housing’
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[II] Roots of Problem
2. Austerity Policy
Reform of Housing Benefit
Housing Benefit is one of the cornerstones of welfare. The
expenditure accounts for around 1.5% of GDP, increasing
from 11 billion in 1999/2000 to 21.4 billion in 2010/11, and
predicted to reach 24 billion by 2015/16
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[II] Roots of Problem
2. Austerity Policy
Reform of Housing Benefit
Bedroom tax
Cut by a fixed percentage:14% , one extra
bedroom; 25%, two or more extra bedrooms
Benefit cap
Limits are: £500 per week for families with
children; £350 per week for individuals
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[II] Roots of Problem
3. Privatization of Public Sector
Right to Buy (RTB)
This scheme is the most successful and controversial
policy which gives secure tenants of council and social
houses legal right to buy, at a large discount, since 1980
40% of council houses were sold through this scheme.
Housing tenure structure and social Classes were changed
dramatically
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[II] Roots of Problem
3. Privatization of Public Sector
Right to Buy (RTB)
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[II] Roots of Problem
3. Privatization of Public Sector
Large Scale Voluntary Transfer(LSVT)
LSVT involves the local Authority transferring the ownership of
its stock with the agreement of the tenants, to meet the Decent
Homes Standard
The policy has led to the transfer of 1.2 million(20%) council
housing to social landlords
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[II] Roots of Problem
3. Privatization of Public Sector
Large Scale Voluntary Transfer(LSVT)
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[II] Roots of Problem
4. Liberalization in Private Sector
Deregulation – Speculation
Free Pricing
– Rocketing housing price
Without effective interventions, How to iron out the Boom
and Bust of housing
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[II] Roots of Problem
5. Shortage of Decentralization
One size cannot fit all
Unbalanced right and responsibility between central and local
government
Local Council gets about 70% of money funded by central
government
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[IIi]
Solutions ?
[III] Solutions
Bridging the Gap between Demand and
Supply
Reasonable Intervention in Market
Localism and Decentralization
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[III] Solutions
1. Bridging the Gap between Demand
and Supply
On Supply Side A) Investing Affordable homes
The government has committed nearly £4.5 billion investment
in new affordable housing, providing up to 170,000 affordable
homes by 2015
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[III] Solutions
1. Bridging the Gap between Demand
and Supply
On Supply Side A) Investing Affordable homes
Bannerbrook Park near City of Coventry
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Affordable Houses:17.5%
Low-cost Houses: 12 %
Total: 29.5%
[III] Solutions
1. Bridging the Gap between Demand
and Supply
On Supply Side B) More Custom Build Homes
There is huge untapped potential. Only one in ten new
homes are custom built
The Government wants to make this way a mainstream
option –to create up to 100,000 additional Custom Build
Homes
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[III] Solutions
1. Bridging the Gap between Demand
and Supply
On Supply Side C) Tackling Empty Homes
Over 700,000 homes in England are empty. How to push them
out to be effective supply?
From 1 April 2013, local authorities can charge a premium on
the property that has been unoccupied and unfurnished for
two years or more. The premium can be up to 50% of the
council tax
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[III] Solutions
1. Bridging the Gap between Demand
and Supply
On Demand Side A) Help to Buy Scheme
Buy your home with at least 75%
of the cost met by a mortgage,
interest rate up to 5% and a
deposit of at least 5% of the
purchase price. The rest (20%) is
paid for by the government
through an equity loan
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[III] Solutions
2. Reasonable Intervention in Market
How to curb the speculation, to prevent the price
from rocketing?
Whether to Levy ‘a property speculation tax’?
Such a tax could be tailored to exclude owner-occupiers and
tapered so that it was levied at his highest on properties
"bought and sold over very short periods”
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[III] Solutions
3. Localism and Decentralization
The Localism Act:
New freedoms and flexibilities for local government, decisions
about the housing are to be taken locally
Social housing allocations reform
Social housing tenure reform
Council housing finance reform
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[Iv]
Enlightenment
for Shanghai
[IV] Enlightenment for Shanghai
Shanghai is one of the most densely populated mega-cities, with
24 million people and 6,400 square kilometers land
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[IV] Enlightenment for Shanghai
Holistic Policy Design
Innovation of Financial Policy
Fair Allocation of Social Housing
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[IV] Enlightenment for Shanghai
1. Holistic Policy Design
Social Housing
The government has
Government also
planned to provide
planned to build
almost 1 million social
200,000 units of public
houses to the shanghai
rental housing for the
citizens during 2011-2015,
immigrants
which accounts for
almost 20% of shanghai
households
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[IV] Enlightenment for Shanghai
1. Holistic Policy Design
Housing Market
Price has risen quickly in
The regulatory policies
recent years too. the
like property tax, income
average price of new
tax and purchasing
houses has reached
restriction should be
20,000 RMB per square
enhanced to prevent
meter (a flat of 100 sqm
bubble
values 2million RMB)
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[IV] Enlightenment for Shanghai
2. Innovation of Financial Policy
To make
To encourage the
To enforce the
preferential
policy to help the
first time buyers,
Like Help to Buy
scheme could be
helpful
poor households
to buy the houses
step by step, the
Shared-ownership
scheme can be
introduced in
Shanghai
empty houses
into effective
supply, a sort of
property tax
premium scheme
could be launched
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[IV] Enlightenment for Shanghai
3. Fair Allocation of Social Housing
Coventry ‘Homefinder’
system
Tackling tenancy
fraud
The property and
Social homes should not
household size standard,
be allocated to people
eligibility, banding priorities,
who are not qualified; to
bidding process, complaints
find effective ways, like
and appeal procedures are
raising rents, to fight
all well designed
against tenancy fraud
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Thanks!
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