Having spent the past 40 years working in housing across the country, including Edinburgh, Keith Anderson says it’s clear most people can’t plan for or achieve wellbeing throughout their lives when faced with runaway rent increases, insecure tenancies and house price growth that outpaces income growth.
Housing economics is both simple and complicated to understand depending on whether you are looking for a new home to buy or rent, manage homes as a landlord, live as a tenant or landlord, improve houses or building new houses. But daily headlines in the press and on television highlight the problems of affordability, homelessness and people, including children, not only stuck in temporary accommodation, but also in precarious and precarious. For a growing number of people, it is becoming increasingly difficult to find and maintain a warm, safe and secure home at an affordable price.
It is understandable that in the face of a wider cost of living crisis, a seemingly “simple” measure to freeze rents is controversial. Thanks to emergency legislation recently passed by the Scottish Parliament, the government has done just that and which affects all social and private landlords. At its September 22 meeting, Edinburgh City Council approved a freeze on rents for its own accommodation (which are the highest of all local authority rents in Scotland) for a third consecutive year. This will have a direct short-term benefit for some tenants (but not all, including those on full housing benefit) to help them cope with the rising cost of living faced by most acutely low-income households.
But what is more complicated and harder to understand is the impact this will have on homeowners’ decisions to invest in home improvements and build the new homes that the city’s growing population has so much to offer. need. For the Council and the many Housing Associations (HAs) operating in the city, their ability to retrofit their homes to meet the new energy efficiency standards required will be reduced (which have a direct impact on tenants’ ability to reduce their consumption of energy). The rent freeze on its own, and particularly if extended beyond March 2023, will most likely result in the reduction or complete halt of new social rental housing and mid-market construction projects. So instead of working towards delivering the extra 2,000 new social homes a year for each of the next 10 years, as recommended by Edinburgh’s Poverty Commission, it is likely that there will be fewer homes available for meet the demand of the city’s growing population. resulting in even less affordable housing in the future and potentially increased homelessness.
For private landlords and developers, the restriction of rent increases and the uncertainty will also mean a reduction in new investment. Volume homebuilders have already signaled their intention to stop approving new Build to Rent projects at least until restrictions on rent increases are lifted. We may even see developers of purpose-built student accommodation, the numbers of which have been the subject of much debate and controversy recently, thinking twice about whether their projects will be profitable enough to build and operate. Indeed, the probable interruption of new private and student rental projects should provide a good opportunity for the Council to commission a long-awaited independent assessment of the future needs and demand for this type of accommodation, and thus to the future to plan ahead with long less dependence, as we have been, on the vagaries and unpredictability of the private housing market and the profit expectations of developers.
Council has a duty to publish a housing strategy which should be informed by up-to-date estimates of current and future housing needs and demand. The main objectives of the current strategy are that people live in affordable, welcoming and safe housing, and that they can move if they need to. Edinburgh currently has the highest level of private renting (almost 23%) and the lowest level of social renting (14.6%) in the country. The latest official housing need and demand assessment for Edinburgh indicates that (under various growth scenarios) between 1,800 and 2,600 new homes across all tenures are needed per year for the next 10 years, of which between 1,100 and 1,900 should be for social. lodging. On this basis, therefore, approximately 60% of all new housing construction should be social rented in order to meet the greatest need and demand of the City.
This assessment, however, also recognizes that the method used to calculate these projections has underestimated the current housing need resulting from overcrowding and concealed households, so the upper estimate is probably the most accurate. As we are a long way from delivering anything like 1,900 new social housing units per year in the city, this can only be achieved by prioritizing significant additional public investment in construction through capital grants available to landlords. social.
Having spent the past 40 years working in housing across the country, including Edinburgh, it is clear to me that most people cannot plan or achieve lifelong wellbeing when they are facing runaway rent increases, insecure tenancies and housing price growth that outpaces incomes. growth. Having experienced both periods of significant house price inflation and “negative equity”, it is also clear that stability in house prices and rental costs is more sustainable and in the long-term interest. tenants and owners.
Thinking about what we can do differently in the future to solve all of this in a sustainable way, I would offer the following as starters for ten.
- First, a form of (permanent) rent control that caps annual rent increases as household incomes grow.
- At the same time, significant additional investment (i.e. double in the case of Edinburgh) from the Scottish Government through capital grants to social landlords to build new social and mid-rent housing.
- Assistance made available to all private and social property owners (through grants and loans) with the costs associated with upgrading the property to meet the ambitious energy efficiency/zero carbon targets the country is facing. ‘is engaged.
- Unauthorized short-term rented accommodation should be reintegrated into the mainstream housing supply, either through purchase by social landlords or through the owner-occupied or rental market.
For those who are skeptical of the wisdom (and ability) of the government to increase its support for homeowners through capital grants, repeated studies have been carried out by independent bodies (including Audit Scotland) showing that t’s a much more efficient use of public funds. than spending to support benefits which have soared over the past decades largely due to rising private rents (and which have risen by more than 15% in the past year alone).
Maintaining such a commitment over the next 10 to 15 years is the only way we can hope to solve the current housing crisis and provide needed housing for every household in the city. Demonstrating that the citizens of Edinburgh live in homes that meet their needs and circumstances would in effect make it ‘our one city’.
- Keith Anderson is a member of the policy and development committee of the Cockburn Association and former CEO of the Port of Leith Housing Association
This article originally appeared on the Cockburn Association website