Ben Wray: The 10 actions we can take to fix housing in Scotland

CommonSpace columnist and Common Weal head of policy Ben Wray takes a look at what needs to be done to improve housing

AS poet Ben Okri has poignantly spelled out, Grenfell is about more than dodgy cladding. 

It’s about how housing is treated as a commodity rather than a social good essential to all of our lives. It’s about how the health of the poor comes well behind the profits of the rich in what our system values. But it’s also a call to action – to think big and bold about overturning a system which produces such injustice.

"If you want to see how the poor die, come to Grenfell tower. See the tower, and let a world changing dream flower."

 

 

It is not insignificant that no tower blocks in Scotland have been found to have the highly flammable cladding that lit up Grenfell tower and has now been identified in tower blocks across England (although the cladding has been discovered in some student accommodation). But neither should it lead to any deep sense of satisfaction. 

Three hundred older tower blocks have been found to be without sprinklers, which are mandatory in buildings built from 2005 onwards. More broadly, you might be less likely to burn to death in a Scottish tower block, but that doesn’t mean your health is assured.

Forty-seven per cent of homes fail the Scottish Housing Quality Standard (SHQS), with three per cent damp and nine per cent with condensation – roughly the same number as in 2003/4. In social housing – where there is a legal necessity to meet SQHS – 45 per cent still do not meet "the tolerable standard". Over 700,000 Scots are in fuel poverty (one third), with over 200,000 in extreme fuel poverty.

Visit our donate page to help us fund two new reporters

Dampness, mould, cold – these are well known drivers of serious health problems, especially for those with weak immune systems (babies and the elderly). They are overwhelmingly present in the homes of poor people.

Then there’s all the indirect effects of housing inequality that affect public health. If you are paying more money in rent relative to your income, you have less to spend on heating and food. If you are living in poorly designed homes with insufficient light and no access to green space your health will be negatively affected.

So let’s change it. The Scottish Government does not have all and every power in its grasp to transform housing, but it has most of them. It can be done. Common Weal will in coming months step up efforts to push for a transformation in housing in Scotland. 

Here’s a brief outline of 10 actions the Scottish Government could take now, based on the work Common Weal has published so far (here, here and here) on this issue.

Leave a comment below or email ben@common.scot with your criticisms, ideas or willingness to discuss/get involved further – we want to work with everyone in Scotland serious about creating a housing system that works for people, not Mr and Mrs Market.

1.) Build build build

We need to build more homes. Lots more homes. Audit Scotland has estimated 20,000 a year minimum until 2025 just to keep pace with demand. Building homes will cool house price inflation, ensure supply meets demand and create assets for the long term.

Leaving this to banks and property developers that directly benefit from a "low-supply equilibrium" is just tacitly accepting defeat. The Scottish Government must take responsibility for setting and meeting housebuilding targets. It should have a statutory obligation to, at minimum, meet in full the demand for public housing - the huge council house waiting list of over 150,000 people - by the end of this parliamentary term.

To meet that target, we need to do three things: provide the finance (more on that below), provide the land to build them on and have an active planning policy that will deliver quickly and effectively.

On land, councils must be empowered to buy land at use value rather than market value. A "use it or lose it" policy should be introduced on derelict and vacant land to prevent land banking. In rural areas it should be mandatory that a portion of common grazing is set aside in each community for local housing needs.

On planning, the Scottish Government should set up a special housing planning committee alongside local authorities (potentially through a national housing company) to actively target and plan housing developments across the country, provide logistical support for community and public housing applications and preference these over housing projects for asset speculation.

2.) Restore existing empty homes

It’s not just about building. We need to restore the existing built environment, most crucially the many run-down town centres across Scotland that could be revived by a transformational approach to housing.

First, we should restore Scotland’s 34,000+ empty homes – there should be an empty homes officer in every council area and they should be empowered to refurbish all of them. This provides high-skilled work, is environmentally friendly and fixes derelict homes that can be a scar on communities.

Refurbishment should be made much more easy and cheap. Currently to refurb a home means paying 20 per cent VAT, while to build one costs 0 per cent VAT. This should be, at minimum, equalised, with Brexit potentially providing an opportunity to remove nonsensical EU rules on VAT in this area.

3.) We need to diversify ownership models

The model of mortgage-owned homes needs to be diversified. We need to support different types of ownership - public rental, housing association, co-operative, self-build, mixed. The key is that tight regulation is in place to ensure quality (more below) across all of these ownership models.

There is certainly room for more directly owned local authority homes which can provide an income to cash-strapped councils over the long-term through rents. This should not be exploited (rents should be set at a fair rate in the private and public sector) but it is crazy that with the end of right-to-buy in Scotland councils are not both solving a social crisis and providing long-term revenue-
raising assets by building more homes directly.

Self-build, co-operative and housing association housing are all proven to be much more likely to produce quality homes at affordable rates and create sustainable communities than the private rented sector, with tenants having greater control. 

The Scottish Government and local authorities should provide grants, boost land reform for community ownership and provide other incentives to support the development of social types of ownership models.

4.) It's time for investment

As mentioned above, the Scottish Government has to take direct responsibility for financing a transformation in housing. This can be financially beneficial in the long term – unlike building roads, housing has a direct revenue stream in return for the investment in the form of rents.

The simplest way would be for local authorities to borrow the money and invest it – housing is exactly the sort of asset requiring significant upfront costs that capital borrowing is supposed to be for. Sadly, the UK Government’s accountancy rules consider this form of borrowing to be exactly the same as borrowing to spend on road repair – this isn’t stupidity, it is a deliberate ploy to restrict council house building.

So alternatives must be found. Common Weal has published reports (here and here) on both how this money could be raised and how the Scottish Government, working with local authorities, could spend it on housing schemes, energy developments and more. The image below depicts how this could work with a Scottish National Investment Bank and Scottish National Investment Company.

This is one option – there are others. Local authorities could establish local bonds that could finance house building, including drawing on council pension funds. A mixed-ownership approach alongside the construction sector could provide adequate financing, like the Sheffield Housing Company has successfully adopted

The point is that the money can be found through forms of borrowing that do not eat into austerity-hit revenue budgets and raise government revenue in the long term.

5.) Tenants must have much more control

Public or private – all tenants need much more rights than they have today over their homes. If Grenfell Action Group could have had some control over the cladding rather than writing prophetic blogs complaining about the danger of it, things could have been so much different. Going back to an old system of top-down state run council housing is not the answer.

A vision of housing for the future is one based on bottom-up, participatory democracy where decisions over everything from what to invest the budget for repairs into to how to establish a district heating scheme, is made by tenants themselves.

In her report for Common Weal on housing, Sarah Glynn outlined one proposal for publicly owned tenant democracy: "We envisage a three-part structure. Democratically-elected council ownership would control overall planning across the city or region - and cater to the needs of future as well as current tenants. 

"Locally-based management with active tenant involvement would see to day-to-day maintenance and specific problems. A strong independent tenants’ voice would help to keep the system in check. Tenants also need to be assured of freedom to personalise their homes, so long as this is consistent with good neighbourliness and does not devalue public assets."

In rural areas, the rights of crofters must be strengthened through beefing up of land reform so communities who have been working on the land have the right to own it.

Finally, everyone should have a right to a home no matter their personal circumstances. This principle should inform our approach to homelessness, where a 'housing first' approach that gets people a home to live in then seeks to use social services to address their specific issues - whether they be drug and alcohol abuse, domestic violence or another of the various problems which can lead to destitution – has been proven to work in a small test case in Glasgow and on a much larger scale in Finland

This basic right should be extended to asylum seekers as well who suffer appalling destitution at the hands of the UK Government.

6.) Introduce rent controls

Housing needs to be cheaper. The combination of high rents and high house prices is one of the major drivers of inequality and poverty in Scotland today. It also costs government directly through an extortionate cost in housing benefit payment and subsidies for first-time buyers.

The Scottish Government’s policy of rent controls only in high pressure areas, and only when the council makes a request to the Scottish Government to introduce them in a specific area, is confusing, lacks clear accountability and fudges the issue. 

Instead, it should take its lead from the likes of Germany and Netherlands and introduce a proper national system of rent controls with fair rent tribunals to make the cost of housing affordable for all. If a Living Wage can be set nationally by government, why can’t a living rent be set on the same basis? Gordon Maloney has outlined how to do this in a report for Living Rent and Common Weal her.

Government must also clearly acknowledge the need to sensibly reduce house prices and make it government policy to do so, rather than waiting for a housing crash to do it in a way that damages everyone. Tax (more below), housebuilding and other tools such as controls on credit should be utilised with the aim of create a more stable and equal housing market.

7.) Get rid of the council tax

There is nothing in Scotland’s tax system which disincentivises the use of land and property as a tool for asset speculation. This acts to undermine productivity in the Scottish economy, skew the housing market away from meeting housing need, increase wealth inequality and create dangerous bubbles that threaten the whole economy.

The council tax has to go. One of many reasons the Commission for Local Tax Reform recommended to the Scottish Government to seriously reform local tax was that the inaccuracy of the council tax system (based on 1991 property valuations) has the effect of skewing the housing market. 

It is an out of date Tory policy that is unfair and not useful for supporting Scotland’s housing needs.

In its place should be a tax on land or property (levied on the property owner) which incentivises the use of land and property productively rather than encouraging monopolisation for the specific purpose of asset price inflation. 

A land tax is likely to do this, with land owners paying significantly more than at present while 75 per cent of the population pay significantly less, as Andy Wightman MSP has shown.

Finally, the rise of buy-to-let further embeds inequality in the housing system and increases monopolisation of the existing housing stock by rentiers. Currently, the tax system incentivises buy-to-let by providing tax relief. These incentives should be scrapped. Indeed, all tax allowances for the private rented sector should be scrapped.

8.) Housing must be built to last

We need homes to last, that are pleasant to live in and are safe. There is absolutely no reason why this cannot be achieved for everyone in society no matter their financial means.

First, we need to equalise regulation throughout the sector – why does only the social housing sector have to meet the Scottish Housing Quality Standard? The private rented sector should be required to upgrade homes to meet SHQS by 2020 (rent controls premised on the quality of properties would provide a direct financial incentive to do repair and upgrade).

Second, we clearly need to strengthen building and fire safety standards. The Scottish Government have quickly announced a review of this and the outcomes should be a statutory right on all housing. We know after the review into the collapse of a wall at Oxgangs Primary that the self-certification model of construction companies signing off on their own work is fraught with problems.

After Grenfell, one architect proposed the following measures to address the problem which seems highly commendable: "Bring back building control to its rightful place in local authorities, working independently of the planning function and the private sector. Bring back fire officers working closely with council building control to scrutinise proposals and carry out proper inspections on all projects. Bring back the specification of materials to a single point of responsibility under the architect or engineer responsible for the specification of materials, working with the building control officer and fire officer."

Then, we need to make sure that housing is built with sufficient light and space to be pleasant to live in and that will last more than the 40 years that many poorly designed high-volume private-sector builds last today. 

A regulatory requirement to use high-quality timber that is eco-friendly, energy efficient and healthy for those living in the homes is a must. The potential for German-style housebuilding factories built off site could also be pursued alongside a new focus on quality.

Finally, we should set requirements on the size of flats and rooms that is healthy for people to live in – the desire by the former housing minister (now the prime minister’s chief of staff) Gavin Barwell to solve London’s housing problem through creating ever smaller flats so people are living in ever more cramped conditions is entirely the wrong way to go.

9.) Housing should be approached with community in mind

The future of housing cannot be private developers finding the cheapest land that they can on the edge of cities and building semi-detached homes connected to a motorway with no services, no community and no soul. 

Housing is fundamental to community, and community is fundamental to shaping our culture and our attitudes to one another

It’s healthy for people to living together in shared space, as long as there is plenty of green space with parks and places to walk. Local amenities and services should be integrated into housebuilding and refurbishment plans – no one should have to get in a car to take their kids to school or to buy food.

The key, as architect Malcolm Fraser discussed in his paper for Common Weal, is that planning departments and the construction sector must work on the principle of utility: "We should look to the utilitarian principles that suit us today, to lead the design of our communities. 

"Things like: sunny gardens with living spaces spilling into them; somewhere for our kids to play ball games and our families to have a barbeque; shops nearby and safe routes to schools – in short, simple utility as the driving principle."

We have done this in the past – the new towns around Glasgow like Cumbernauld and East Kilbride were built with utility in mind as they were planned and designed for social need. The modern version of this must start with restoring and refurbishing our existing built environment.

We also need to act to prevent gentrification, which disperses existing communities and forces poorer people out of urban centres. Scottish cities must follow the likes of Berlin and Barcelona in establishing rent caps, support for social types of ownership which are non-market orientated, tax policy which militates against asset speculation, limits on the amount of housing stock that can be used for holiday rental, and finally an active planning policy aimed directly at preventing gentrification: prohibit particular types of developments, prevent renovations which will force out tenants and give communities/government the right to purchase property for sale first before developers get the opportunity.

10.) We need social energy companies to challenge 'the big six'

Heating is one of the big contributors to Scotland’s carbon emissions, and is also a major household expense. Energy prices have also risen well above wages since the Great Recession – the Scottish Government missed its target of eradicating fuel poverty by November 2016 by an enormous 845,000 households.

Heating demand can be reduced if insulation in homes is improved. The Existing Homes Alliance Scotland has produced excellent work on how all homes can reach at minimum band C of energy efficiency by 2025 with an expanded public investment-led programme of insulation refurbishment. The Scottish Government’s SEEP programme goes someway to doing this.

On energy prices, the Scottish Government must help support the development of social energy retail companies to challenge the big six energy providers. Our Power Energy has established a scheme to produce a 10 per cent cut in heating bills for housing association residents, and will re-invest all profits into the service. 

The People’s Energy Company in East Lothian returns 75 per cent of all profits to customers. Local authority retail companies working with national government should also become part of this new social energy supply mix.

Perhaps most importantly of all, housing communities must be given subsidies to establish community owned and controlled district heating schemes, which should become the norm for new public house building.

Pictures courtesy of MyxiMatt, Amy RobertsonCIFORCafeCredit.com, Living Rent, Caelie_FramptonSole TreadmillChris RubberDragonChris RubberDragonMatthias Ripp

Look at how important CommonSpace has become, and how vital it is for the future #SupportAReporter

Comments

BarryJarvis

Mon, 07/03/2017 - 16:26

"Scottish Housing Quality Standard" I believe is what you are looking for. Based on 2015/16 data 92% of Social Landlords met this. Given it is a figure that is only applicable to the Social Housing sector it would perhaps be helpful if you mentioned that you meant all households as opposed to just the households that the standard is applied to.
https://www.scottishhousingregulator.gov.uk/sites/default/files/publicat... - Table 5

"There is certainly room for more directly owned local authority homes which can provide an income to cash-strapped councils over the long-term through rent" - As far as I am aware Councils account for Housing Revenue separately from general funds. This means that all rental income that tenants pays in theory goes towards supporting tenants. I personally believe this is fair why should council tenants have to bare an additional burden on top of everything else to support underfunded Councils?

Other than these two points I agree almost fully with what you say.

Alan Reid

Mon, 07/03/2017 - 17:04

Ben, it is quite common for commercial investment funds to forward fund or buy private Build to Rent developments, is there any reason why local government pension funds could not do the same?

For example could Glasgow City Council in effect have a development arm of City Building that would identify a suitable site, buy it, develop it and 'sell' it on to the city council's pension fund on completion?

It would have to be aimed at increasing the overall housing supply by providing good quality homes on secure tenancies to those able to pay market rates (but by increasing supply to match demand help attenuate rent increases across the sector) as local government workers need their pensions paid. Social housing provision should be subsidised by general taxation not local government pension funds.

I also fully agree that more must be done to return vacant housing to use, and the general taxation system must be changed to deter vacant properties. The 6 month exemption for vacant properties should be ended and if a residential property is empty for more than 12 months the local housing association should have the right to compulsory purchase the property at the market rate based on the condition of the property. Each council should be obliged to maintain a register of vacant properties and what actions it is taking to bring that property back into use. This should be available online and community councils should hold local authorities to account.

In urban areas (including villages) then planning permission should not be granted for housing more than 5 minutes walk from a shop or 15 minutes from a primary school (for new neighbourhoods these should be completed prior to occupation of the first house). At the same time it should be the presumption to grant planning permission for housing that meets these criteria.

In general I agree about smaller houses being 'a bad thing'. The one exception I would make would be for housing in highly prime and very central areas of cities with a population of more than 500,000 and only then when the buildings come with high quality communal facilities such as laundry rooms and bookable accommodation for friends and family visiting.

Watty

Thu, 07/06/2017 - 18:02

Alan Reid, one of the problems I see with the pension fund buying a development is that there is then the question of who manages the properties, pays for repairs etc? If the rent money goes to the pension fund, to get a return on the initial investment, then the burden can't be placed on the local authority to carry out all the housing management functions. This would mean current rent payers subsiding those in the new development.

Tommy Lusk

Thu, 07/06/2017 - 23:36

Number 5 should be number 1 priority. Otherwise, the number of houses built and the number of millions spent, will continue to be the headline that hides wasted resources and a lack of real progress.

Alan Reid

Fri, 07/07/2017 - 13:51

Edit - to make clear this was suppose to be a reply to Watty up the page.

The pension fund appoints a management company to manage the building. The management fee and repair costs are funded from the rent.

Forget whether the proportions are right or wrong, but here is the principle of the proposal:

Breakdown of rental income - Repaying original construction cost = 80%. Repairs (general upkeep and future major maintenance fund) = 8%, Management fee = 2%. Profit to pension fund = 10%.

I would stress I am not talking about the provision of social housing here. I am talking about closing the gap between the number of new houses needed and those that are currently being built. By increasing supply to meet demand it will make the housing market more sensible.

I would also say I am not talking about doing anything new or innovative here. Commercial pension and insurance funds are already doing this in the UK, both Build-to-Rent and Build-to-Sell. You just follow the model already established. It is also common in countries with healthier rental markets (Germany) than the UK. I am suggesting using a common commercial practice as a way of getting round rules limiting local authority borrowing for house building.

CommonSpace journalism is completely free from the influence of advertisers and is only possible with your continued support. Please contribute a monthly amount towards our costs. Build the Scotland you want to live in - support our new media.