Economic

Co-housing is a type of habitation which requires large investment (financially and timely) from both individuals and companies.

Financial Support from Government

Governments have been hesitant to provide support to these schemes because of their high-risk nature and dependency on community involvement. Hopefully this is changing as financial support is becoming more common, such as the £4 million Community Housing Fund provided by the Ministry of Housing, Communities, and Local Government.

Quote from Housing Minister Rt Hon Christopher Pincher MP in an August 2021 press release:

“Community-led housing is about local people playing a leading and lasting role in solving their housing problems, creating genuinely affordable homes and strong communities where mainstream housebuilders are unable to deliver.”

“The Community Housing Fund has been set up to support housing schemes that are truly community-led and will last for generations to come, helping ensure we build back better.” (gov.uk, 2021)

This fund, and government acknowledgment of the work being done by grassroots organisations to improve the homes of people around the country, will surely contribute to the wider public awareness that is needed for the ambitious goals to reshape the housing market and make living affordable and inclusive.

Provided by the government and managed by the Community Led Homes (CLH) partnership of 4 leading home organisations (Confederation of Co-operative Housing, Locality, National Community Land Trust Network, UK Cohousing Network).

Housing Affordability

It is well known that the UK is suffering a shortage of affordable homes. This has become more problematic since the 1970s when the price of homes started rising faster than wages (Guardian, 2021):

In 1970 the average price of a home was £4,057, which would’ve risen to £64,000 in 2020 if prices had risen according to inflation
The average price of a home in the UK in 2020 was £238,000, 371% above what it would be if they had risen by inflation

The housing crisis is increasing the generational divide between young and old. In 1991, the likelihood of 65-74 year olds owning a home was 62%, and for 25-34% year olds it was 67%. In 2016 this is a dramatically different story; 78% of 65-74 year olds own a home, compared to a measly 38% of 25-34 year olds.

Only people with a lot of money to put down a deposit on a house can afford to own a home, which would include people who already own a house and are on the ‘property ladder’. The ‘property ladder’ is the idea that first-time buyers can buy an affordable home and subsequently purchase a more expensive one as they save money and as their existing property’s value naturally increases.

Inequalities between social classes are also reinforced and exacerbated, due to the ability for people with already-wealthy parents to buy a home, as opposed to people stuck in the poverty cycle. Half of first-time buyers now rely on their parents for financial support.

What is the root of the housing crisis problem?

A simple answer to why the UK is in this crisis is due to not enough houses being built, partly because of a lack of government funding and support. According to a 2017 report “Fixing out broken housing market” by the Department for Communities and Local Government, we need 225,000-275,000 homes to be built annually. Despite this, since the 1970s only 160,000 homes have been built on average per year.

Green Belts

Green belts restrict the supple of housing due to the restrictions on development on the outskirts of our towns and cities. A significant 13% of the UK’s land is assigned to green belts.

This can prevent housing being built on more affordable plots of land around the periphery of urban areas and can in turn make commutes longer and more environmentally unfriendly if people must travel further from other towns. This may also make city centre living more attractive and prevent people getting on the housing ladder as it may be more appropriate to rent in the city/town centres where property is expensive.

Planning Applications

The UK uses a case-by-case planning system which makes the process of getting approval very slow and time-consuming for local government. This causes richer development companies to dominate the market as they can take the financial risk involved in the uncertainty of planning approval. When fewer and richer developers dominate the market, the public inevitably pay more for our homes due to the lack of competition.

Right to Buy and the collapse of social housing

The collapse of social housing could be attributed in part to the Right to Buy scheme which was accelerated by the Housing Act 1980 bill introduced by the Thatcher government. This scheme allowed people who were living in a council house to purchase is at a highly discounted rate, thus removing them from the country’s total stock of social housing. The total stock of council houses did not get replaced by new building projects by successive governments, as local councils were not allocated the funding in order to do so.

The number of social houses in the UK in 1975 was 6.5 million, which despite a population increase of 10 million since then, has fallen drastically to 2.0 million in 2017 as a result of a lack of government appetite and funding in the construction of new homes. Shifting political priorities towards individual home ownership rather than solving the supply issues have manifested in Help to Buy schemes and tax incentives to make it much easier to buy a home. The emphasis on home ownership has detracted from more widespread issues such as the ability of low-income individuals and families to have appropriate and affordable living accommodation. Money previously used to build council houses for the poor has been diverted to these schemes such as Help to Buy and tax discounts.

Privately, and as a result of financial deregulation in the 1980s and 1990s, high risk mortgages have become easier to acquire without the assurance that people can pay them back. This has made buying homes easier for people who cannot afford to pay back the substantial debt, further destabilising the housing market.