Governments have a bad habit of taking action which achieves the opposite of what they are, or should be, trying to do. Nowhere is this more true than in the housing market in general and homes for rent in particular.
The value of houses is absurdly high as is the level of rents. This creates a double bind for young people; they can’t save for a house because their rent takes so much of their income. The result is that the average age at which people buy their first property has risen by around a decade since the 1980s. It is not that young people don’t want to buy their own home but that unless they have a particularly well-paying job or help from their families they simply cannot.
The baby boomer generation looks upon rising house prices as rather nice and doesn’t care too much about rental levels because they rarely pay rent.
The result is a massive intergenerational unfairness which as well as being wrong in principle causes changes which will have a profound impact on our society. One of the reasons women put off having children and have fewer of them is that this is a “choice” forced upon them by economics; for many it is not a choice at all unless they also choose poverty.
There are many underlying causes of the rise in house prices and rents but they all boil down to one thing, the demand for housing to buy and to rent outstrips the supply. If we want to make house prices and rents more affordable we have only two choices: either demand must be reduced or supply must be increased. Any action to fix the housing or rental market which does not recognise this fundamental truth is either, at best, useless or, more often, counterproductive.
There is no reason for governments to try to reduce the demand for housing. Why should they? People want and need to live somewhere. Government policy should act in a way that enables citizens to achieve what they want and it must therefore focus on increasing supply.
To create more houses for sale, the answer is pretty simple. Allow housebuilders to build more houses. Yet in order to build houses where people want to buy them housebuilders have to wade through years of treacle. Local plans must be fought over, detailed planning requirements negotiated, endless objections successfully countered, bats and newts surveyed.
We have to tackle this and stop the presumption being “why?” when a builder wants to build more houses and turn it into a “why not?” approach.
Taxpayer-funded social housing is not the answer except in the very short-term. The country cannot afford it and it is trying to manage a problem rather than fix it. Instead the private sector should be enabled to build enough houses which will in turn drive down their price relative to incomes.
The problem in recent years has been even more acute in the rental market. Rents have been rising faster than both wages and inflation.
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In Scotland housing is a completely devolved matter; there is no ability to blame Westminster, but recently rents have been rising here even more quickly than in England. Why?
The answer is that the Scottish Government, especially when the Greens were part of it, declared war on landlords.
The Scottish Government seems to think that capping rents, creating new regulations, preventing the eviction of tenants who do not pay their rent, whilst at the same time planning to impose requirements for large investment to meet energy efficiency targets, are sensible things to do.
Yes, for a tenant already in a home who wants to stay there, some of these changes may indeed be helpful but for society as a whole and in particular people who do not have a home but want to rent one they can afford, they are an absolute disaster. They reduce the supply of homes for rent, they disincentivise landlords to improve their properties to a good standard and they drive up rents.
The change of First Minister in Scotland, the welcome departure of the Greens from ministerial posts and the pause created by the UK election give a chance for a re-set.
Housing should not be a political battleground. If the SNP come up with sensible proposals, the Conservatives, LibDems and Labour should engage positively with them.
The ball lies in the SNP Government’s court to ditch its proposed burdensome new regulations for the housing rental market and come up with something which may not please the crowds but actually does the right thing.
The SNP Government has declared a housing emergency. They have been in power for 17 years; the emergency is of their own making. Stop the war on landlords and let the market work effectively to supply the extra homes for rent which the country needs.
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