What’s the problem? (Or ‘A tale of two cities, and ten boroughs’...)
Greater Manchester’s housing situation is a case study of the nation’s housing crisis. A “Mecca for buy-to-let investment”, the region received £1.54 billion of foreign-registered property investment in 2017. If you were to solely judge the region’s housing market on the increasing value it’s reflecting - or “cranes in the sky” as Deloitte’s ‘Manchester Crane Survey’ does - you could similarly conclude that it is one characterised by “market strength”.
However, this buoyant economic perspective ignores private development’s distinct supply-side limitations. Approximately 80,000 people in Greater Manchester are on the social housing waiting list, and in 2018 only 28 social homes were delivered. Whilst supply varies between boroughs, Wigan is an extreme case, experiencing a 69% increase in demand since 2018. Many residents find themselves stuck between this undersupply of social housing and private rental prices, which are predicted to rise by 3.5% a year.
Why is this happening?
The UK’s housing crisis is well-documented, with causes ranging from planning laws to the long-term effects of the Thatcherite ‘Right to Buy’ policy. Crucial to GM’s case is the “financialisation” of housing, whereby the meaning of housing has shifted from providing homes for residents, to constituting a tradable asset. In abandoning any notion of housing as a social good, luxury developments in high land value areas are prioritised for their more profitable returns, and the market takes a larger role in regulating supply.
Now consider this financialisation in relation to the various criticisms of the UK and GM’s housing supply: Theresa May’s critique of private property development’s “perverse logic” increasing profits via low housing supply; that 75% of 140 recent developments shouldn’t have been started due to “mediocre or poor” build quality; or the revelation that GM developers managed to avoid 20% affordable housing quotas by exploiting a legal caveat to argue that their presence would “undermine economic growth”. When understood as a commodity, housing will not fulfil its role of providing good-quality shelter to people of different incomes, and in different places.
This phenomenon accompanies a simultaneous rollback in state capacity for home building. The proportion of private developers as a share of total new builds in GM has increased from below 50% in 1980 to approximately 94%. As an area visibly failing to provide for the demands of residents, this growing private sector role will likely continue to manifest the same problems.
The Greater Manchester Combined Authority (GMCA)’s proposed ‘Spatial Framework’, which will last until 2037, confronts these issues through increasing new housing’s affordability across the boroughs. However, despite the promise of policies including “increasing the supply of low-cost market housing” and “delivering 50,000 additional affordable homes”, there are potential limitations.
These key promises depend on the same market-driven development which is currently failing. On top of the myriad of issues described above, simply increasing housing supply will not lower prices, as the issue is the type of housing which developers tend to build. Secondly, there is a focus on providing “affordable” housing, which differs substantially from “socially rented”. A broad term, ‘Affordable Rent’ homes are managed more like a private tenancy, with less secure tenures and higher rents than explicitly ‘social rent’ housing, which is provided by local authorities or social landlords at lower prices. By focusing on this sector, people whose economic situation requires social rent are being pushed into competing for Affordable Rent homes with higher income households.
What do we do?
With private developers’ evident inability to supply a housing stock which reflects demand, a diversification of housing provision is required. This would generate the benefits of providing multiple entry points to housing for households of different incomes, as well as reducing the bargaining power of any one group in housing supply.
A key intervention to achieve this would be to strengthen local authorities’ ability to purchase, hold, and build on land. In GM, there is existing policy infrastructure to build on. Mayoral Development Corporations (MDCs) can be formed by the Mayor, with powers to acquire and build on land. These Corporations can empower local authorities to shape their housing policies for residents - the Town Centre West MDC in Stockport plans to construct 3,500 mixed-tenure homes, with a portion of affordable and social rents.
However, national policy change can strengthen these MDCs, allowing them to further prioritise desperately needed social housing. Specifically, we need to change current land purchase laws. These force local councils to pay the ‘maximum future potential development value’ on land for projects, rather than the actual value of the land. They either have to build less social rent houses, or charge higher rents on the houses they build. With many councils financially struggling, this leaves them hamstrung. If councils had the power to compulsorily buy land at its ‘existing use value’ - undercutting market prices - they could focus on building more, higher-quality affordable homes. This would build on recent policies supporting local council development, notably the removal of the cap on council borrowing for building in 2018. While this was a positive step, future policies need a concerted focus on land acquisition itself.
Providing access to lower land prices would also challenge intra-regional inequalities in affordable housing provision, which are encouraged by the highly financialised development model. Currently, expensive land in desirable areas is snapped up by private developers for luxury developments, whilst any local authority housing must search for cheaper land in less desirable locations. In 2018, the few affordable homes which were built were in Openshaw, Gorton and Moss Side, which experience substantial income deprivation relative to the wider region. This in turn exacerbates inequalities between more prosperous and less invested-in areas. Giving councils a chance to compete for higher-value land can reverse this, and undermine the worrying segregation of communities on the basis of income.
This article contributes to growing calls across the nation for a renewed focus on what we want housing to do. While the broken framing of the housing market cannot be rectified by individual policies, nor at individual scales, here in Manchester local authorities could be empowered by national policy change to reformulate their housing strategies in the interests of residents. Boroughs around the region are formulating innovative responses to the ongoing affordability crisis - whether Stockport’s case above, or Salford’s ‘sensible socialism’ - but without increased support from the top, these may only prove to be impressive anomalies.