The housing industry is the problem, not the solution

There is a cluster of housing-related news stories today – a campaign by the big property developers, a horrible story about mould in homes and another political intervention from rent campaigners.

Collectively they point to much of what is wrong in housing in Scotland, but equally they suggest that Scotland is about to repeat all the same mistakes again. The problem is that these stories point to landlords, developers and financiers as being the problem but also that further empowering landlords, developers and financiers is being put forward as the solution.

The Scotsman is running news of a campaign by Homes for Scotland to capitalise on the housing crisis to call for an improved trading environment for big developers. This is an extremely cynical use of the financial duress of young people to seek to boost the wealth of already wealthy big businesses.

The Homes for Scotland agenda is very simply. They want the public to make much more land easily available to them. They will then rapidly inflate the value of that land through development and extract the gain, at the expense of affordability.

They want the public to foot the bill for affordable housing while they cream the profits from unaffordable housing. The calls for constantly extending subsidies (whether direct building subsidies for affordable homes or buyer subsidy schemes) are simply market manipulations, getting the public to pay to artificially boost the profitability of housing markets.

They want planning regulations dropped, but they also want all other new regulation halted, whether environmental or for worker protection.

But the most telling demand is that housing “must” be moved to the Economy Directorate of the Scottish Government. What this means is that they want to drop the policy pretence that housing is a social good at all and instead convert housing into being purely a system of maximised profits for wealthy developers. It becomes the taxpayers' job to bail the nation out of this unaffordable housing spiral.

That is the vision of the property developers and it must be stopped if 'housing emergency' is to mean anything. All of the above is why we have a housing emergency in the first place. As Common Weal showed recently, the major problem with housing is not rates of supply but affordability.

This graph shows that it is the availability of finance which is driving house price inflation, not supply. There are nearly 100,000 empty properties in Scotland which are kept empty often for financial reasons (many if not most of the flats above shops in cities are kept empty by commercial property developers).

And of course developers have engaged in very large scale 'land banking'. They own property but will not develop it until 'market conditions are right'. What they are saying is clear if you understand; they will only build houses when it increases the cost of housing but they will not build on any other basis – unless subsidised.

The problem with all of this is two-fold. There are three unaffordable houses built for every affordable house. The former three bid up the market much more than the latter can moderate it. Housing is becoming more and more expensive as a result of public policy and it is developers and landlords who are gaining, not home owners or tenants.

Economists are measuring what they call 'supernormal profits' at British housebuilding corporations. They are making extraordinary profits out of this system. Likewise the role of rising property prices in Britain's acute economic inequality is key. The landlord class are profiting from this wealth transfer and then making it worse.

But the quality of housing is poor. Forget the low environmental standards housing lobbyists are fighting to reduce further, the whole point of the story about widespread mould in Scotland's housing is that nearly one in three houses that families are living in are deemed not fit for human habitation. That is a shocking statistic.

That is the legacy of the housing system we have, a housing system created by developers, financiers and landlords as a specific conspiracy against the interests of the majority of the population. Housing is the only market in which government gets involved in market manipulation to make prices more unaffordable.

The political aspirations of the housing lobby must be stopped. They are the problem, not the solution. We do not have a housing supply problem, we have a housing affordability problem and that needs methods to control prices – a property tax, stronger regulation, rent controls, public sector building for public rent, land value capture and more.

A full housing agenda can be found in Sorted. It might address the housing crisis. Following the above path will make it worse.