Analysis of Affordable Housing in London
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1.1 Arguments and Discussions
A report published recently by the Greater London Authority on the problem of affordable housing in London in June 2005, revealed that the issue of “affordable housing” (Karn and Wolman, 1992; p.16) was the most pressing matter Londoners wished to see dealt with in terms of improving London as a place to live (Greater London Authority, 2005; Section 2.3). The Barker Review of Housing Supply, not only supported this viewpoint, but it identified housing as a basic human need (Barker, 2006; p.1).
Affordable housing in London is therefore a controversial and highly topical subject at the moment (Karn and Wolman, 1992; p.16) (Barker, 2006; p.7). The debate surrounding it is underpinned by various political, sociological, economic and financial factors (Greater London Authority, 2005; Karn and Wolman, 1992; p16 (Rugg,1999; p.19). This thesis will examine why there is an affordable housing shortage; who really would benefit from affordable housing and what sectors of the population are affected by problems associated with affordable housing. The concept of 'affordable' and who really wants it will be examined in detail, since the notion of affordability is essentially so subjective that it is open to interpretation on many levels. 'Affordability' as a concept, will therefore be examined from an ethical point of view; from an economic point of view and finally from a sociological and political point of view, since these viewpoints will all constrain and influence the ultimate interpretation of what it means to be affordable.
The thesis will attempt to discover if any agency or individual may be blamed for problems associated with affordable housing in London and the policy context this relates to. Historical factors such as Thatcher’s ‘Right to Buy’ policy (Evans, 2004; p.20) will be examined as well as contemporary initiatives such as equity loans for certain keyworkers’ schemes (Greater London Authority, 2005; Sections 5.16). Where historical issues have impacted the contemporary manifestation of issues connected with affordable housing, these will be analysed.
Specifically, the thesis will examine contemporary and historical issues relating to affordable housing through two in depth case studies. One will be on the subject of the ‘Right to Buy’ policy introduced by Thatcher and the other will relate to the definition and depth of debate contained within the idea of affordable housing. These two in depth case studies will be examined qualitatively and will be referred to throughout the thesis. There will also be an economic analysis of the problem of affordable housing, and ideas such as artificially controlling the prices of houses in London will be considered. In this sense, there will be a theoretical evaluation of who really wants affordable housing, as the research will specifically ask if it would be desirable to advocate the imposition of affordable housing upon the London housing market.
The thesis will also consider various issues which are related to the problem of affordable housing such as social and economic policies within the city itself and the social problems which are themselves shaped by shortages of affordable housing in London. Therefore various themes will be drawn out during the course of the thesis and these will include social exclusion, poverty, salary concerns amongst professional and semi-professional sectors, house prices, population and demographic cleavages, anti-social behaviour and crime (Greater London Authority, 2005, Section 5.16 ). These themes will be drawn together to ultimately address the question of ‘Who really wants affordable housing?’.
1.2 Conclusions and Recommendations
At this stage the conclusions and recommendations of the chapter are that given the issues which have been highlighted above, an argument can be made that affordable housing is a controversial issue which warrants further investigation. These investigations will attempt to shed more light on the concept of affordable housing and who really wants it. The next chapter will look at the methodology for the thesis, which will set out the means through which this may be achieved.
This section will explain the definition and nature of qualitative research and how it will be used in the thesis inquiry. It will outline the research methods which will be used in the research and what framework these methods will be used within. The research will be based upon a qualitative analysis of two case studies; one contemporary which will be based on the concept of affordable housing itself, and the other historical and this will centred on the ‘Right to Buy’ policy introduced by Thatcher in 1980. These case studies will be derived from examination of published texts within the field of economic and politics. These texts have been identified as an appendix to the thesis. Where quantitative information is relevant to the thesis this will be looked at, but evaluated qualitatively, since the basis of the research will be mainly qualitative in nature. Primary evidence in the form of interviews was also used.
There are two hypothesises which will feature in this thesis.
The first is that affordable housing is needed and wanted by the economically disadvantaged within London, and these groups include the poor, the disabled and specific sectors of workers who do not earn enough money to buy their own houses within London.
Another hypothesis of the study is that affordable housing is a problem which comprises many interrelated and intersecting issues; all of which may be seen as sociological, economic and political. It follows that any credible proposals in relation to lessening the problem of affordable housing must take this into account, and simultaneously address economic, political and sociological problems. The essence of this hypothesis is therefore that this is the best why to understand and to approach the description and evaluation of the problem of affordable housing in London and who really wants it. These hypothesises will be tested throughout the thesis.
2.3 Aims and Objectives
Specifically, the primary aim of the study is to examine whether the above mentioned hypothesises can be supported. Overall the aim of the study is to examine the concept of affordable housing in London, and who really wants it.
Primary qualitative data in the form of interviews with key workers and London residents affected by the affordable housing problem, will also be conducted in order to achieve a better understanding of the problem of affordable housing in London. Another aim of the study is to present and interpret these results. Various perspectives on the problem of affordable housing; its possible solutions and impacts will be advanced and discussed by the writer on the basis of these investigations. The study will aim therefore to use this discussion in order to achieve a more full understanding of the problem of affordable housing in London; who really wants it and related sociological, economic and political issues.
Ultimately the thesis will aim to add original literature to the research pool in relation to the problem of affordable housing in London, providing a detailed and holistic overview of the problem; who it affects and how its adverse effects may be lessened.
2.4 Arguments and Discussions
Definition of Qualitative Research/Explanation of Why Qualitative Research is Appropriate
There are two main categories of research methods; qualitative methods (Bryman, 1995: p20) and quantitative methods (Bornat, Chamberlayne and Wengraf, 2000; Chapter One). The best way to define one is by reference and comparison to the other since the paradigm of research enquiry is mainly split between these two different research rationales (Bryman, 1995; p95 and 20). Qualitative research aims to explain concepts and phenomena (Bryman, 1995; p95). Specifically the concept of affordable housing will be addressed in this research. As we have seen explained above, the focus of the research will be mainly qualitative in nature. However, in what ways is a qualitative research enquiry more appropriate to this question relating to affordable housing?
Qualitative research tends to be more holistic (Knowles and Sweetman, 2004; p.12) than specific which means that it seeks to understand a topic ‘in the round’ (Bryman, 1995; p.20). On the contrary, quantitative methods value specificity and outcome linked methods of research (Trout, 1998; p.113). This holistic characteristic of qualitative research fits the wider aim of this thesis enquiry, as the problem of affordable housing, its causes, purpose, its critique and its improvement are all topics which, too, must be understood and approached ‘in the round’. Therefore, while quantitative work tends to predict and hypothesise (Trout, 1998; p.113) about possible outcomes, the qualitative researcher will often embark upon their research enquiry with an open mind (Bryman, 1995; p.20), researching malleable conclusions as the enquiry unfolds. This open ended research framework therefore fits the infinitely complex dynamics of affordable housing more appropriately (Greater London Authority, 2005; Section 1-5).
This open-ended research aim (Knowles and Sweetman, 2004; p.12) relating to qualitative research may be contrasted with the aim of quantitative research which usually seeks to be confirmatory (Trout, 1998; p.113), rather than (and also more so than) explanatory (Harrison, 2001; p.68). In this context, qualitative research may be understood as inductive (Bryman, 1995; p.20) whereas quantitative research tends to be more deductive in nature. This type of research (qualitative) tends to be situational in nature and tends to reflect given cultural and theoretical mores (Knowles and Sweetman, 2004; p.12). This imbibes qualitative research methods with a level of subjectivity which would not be appropriate in a quantitative or positivist study, since the processes under examination (Greater London Authority, 2006; Sections 1-5) often cannot be pinned down by or encapsulated within a quantitative research framework. Again these characteristics of qualitative research fit the enquiry into affordable housing more appropriately since the levels of subjectivity involved in the arguments and theories connected with affordable housing are vast (Greater London Authority, 2006; Sections 1-5).
Differences between qualitative and quantitative research may also be explained by arguing that qualitative research is process related (Bryman, 1995; p.20) with a relative lack of control (Knowles and Sweetman, 2004; p.12) over the various processes which are to be understood, whereas conversely variables are strictly controlled within the framework of a quantitative research framework (Trout, 1998; p.113). Others have explained the differences between qualitative and quantitative enquiries by arguing that the former is anthropological in nature (Bryman, 1995; p.20) (since it has a focus on society and sociological forces), while the latter; quantitative research being more ‘scientific’ (Trout, 1998; p.113).
Qualitative research methods are also appropriate to this enquiry into affordable housing since they are unstructured (Knowles and Sweetman, 2004; p.12) and discursive (Bryman, 1995; p.20), allowing a researcher room to analyse possible outcomes/rationales/explanations (Knowles and Sweetman, 2004; p.12) as well as the ones which will potentially be accepted as the most credible. Colloquially, this characteristic of qualitative research leads many to regard it as a ‘soft’ subject’ area (Bryman, 1995; p.20) which lends itself well to the area of social science research as opposed to ‘hard’ subject areas such as maths or physics which may be described as more tangible (Trout, 1998; p.113).
However, this particular dichotomy between qualitative and quantitative research methods discredits qualitative research for no better reason than those who critique qualitative research in these terms fail to understand that concepts and phenomena which may be described in tangible, or ‘scientific’ terms do not take precedence over research enquiries into what is not tangible. Simply because a concept may be difficult to understand in isolation, as qualitative subject matter often is does not mean that it is not capable of being understood credibly. Simply because qualitative subject matter may be understood credibly in different ways by different people does not strip each differing rationale of validity simply because another explanation may be pointed to.
It must also be remembered that the objectivity of quantitative research often precludes the existence of other explanations of research phenomena, not because there are no valid alternative explanations but because the nature of quantitative enquiry is not always equipped to cope with multi-faceted concepts, whose existence and form may only be conjectured upon and not encapsulated within a given explanation. Concepts and phenomena are not always thoroughly understood through mere extrapolation, which is what makes the pragmatic and open-ended nature of qualitative enquiry universally important and specifically pivotal to this thesis enquiry into affordable housing.
These points should however, in no way, be interpreted as a critique of quantitative methods. Indeed, quantitative statistics and studies will be widely consulted as a vital part of the thesis enquiry (Greater London Authority, 2005; Sections 1-7). It just happens to be the case that qualitative research is a more appropriate means to seek to explain the particular context and rationales underpinning the issue of affordable housing in the context of this particular study. The points, mentioned above regarding the qualitative/quantitative aspects of the wider research paradigm are therefore merely a defence of the qualitative method which will form the main bedrock of this research design.
2.3 Sources and Framework
This thesis will rely upon primary data gathered through interviews with interested parties and stakeholders in the area of affordable housing. Specifically, groups such as local residents and key workers in London will be interviewed and an interview with a Housing Association in Notting Hill will be conducted. The methodology for this thesis will also rely on sources, such as Government reports and current debates, reports/sources from interested parties in the non-profit making sector, case-studies and contemporary and historical books.
These sources will all be used to contextualise the two case studies which, as has been explained previously, form a pivot of the thesis. Archival research in the form of retrieving and consulting relevant press publications and speeches through these means will also be important. The research will therefore be primary and secondary in nature, and it will mainly make wide reference to qualitative/phenomenological material. Reference will also be made to quantitative and empirically derived data. Examining the range of sources which have been explained above will ensure that the research engages the subject with the necessary degree of depth and theoretical perspective.
2.4 Conclusions and Recommendations
The conclusion of this chapter is that qualitative research is ultimately more compatible with the overall research aims and objectives. Primary and secondary qualitative research will be used to gather the information needed to comment on the validity of the hypothesises outlined above.
LITERATURE REVIEW PART ONE: DEFINITIONS; AND THE PROBLEM OF AFFORDABLE HOUSING IN LONDON
3.1.a Arguments and Discussions
What Does the Concept of Affordable Housing Refer to?
Affordable Housing has been defined by Plymouth City Council as: ‘Low cost market, and subsidised housing.....that will be available to people who cannot afford to rent or buy houses generally available on the open market….that definition should be framed to endure for the life of the plan, for instance through reference to the level of local incomes and their relationship to house prices or rents, rather than to a particular price or rent applicable at that one point in time (http://www.plymouth.gov.uk )'.
Affordable housing causes particular demographic cleavages such as the inaccessibility of certain areas of London to what are referred to as key or essential workers such as teachers, nurses, police officers and employees of the health and social services (Greater London Authority, 2005; Section 5.16) (Karn and Wolman, 1992; p.16). This problem of inaccessibility means that these groups are ‘priced out of the market’ which means that on the salary that is typically earned by people in their jobs, it is difficult to find a house which is affordable (Karn and Wolman, 1992; p.16).
The problem of affordable housing has also defined as ‘infrastructure needs’. These needs have been elaborated on in the following way: ‘The changing face of London’s population has immediate implications for every aspect of London life-education....transport and infrastructure....employment and employability, competitiveness and culture…Housing provides a useful example.....London has 42 per cent of England’s most overcrowded households.....’ (Greater London Authority, 2006; Section 2.8).
Affordable housing therefore refers to a situation where there are not sufficient numbers of houses being built to satisfy the level of demand there is for these types of houses and accommodation in general (Greater London Authority, 2006; Section 5.17 and Karn and Wolman, 1992; p.16) (Barker, 2006; p.7). This situation (some would say artificially) increases the price of property within certain areas affected by affordable housing shortages. These are essentially the mechanics of affordable housing. This definition therefore goes to the heart of what the concept means in practical and real terms. However, this definition does not encapsulate how malleable this concept of affordable housing can be when it is viewed from particular standpoints.
The concept of affordable housing is particularly linked with certain social and economic problems, such as social exclusion, poverty and crime (Pacione, 1997; p.7 and Rugg, 1999; p.19). This is also supported through the primary research findings of the writer. An interview with Kate Bond revealed that she was suspicious of the social problems which are associated with affordable housing developments and is reluctant to allow her children to play in these areas (Interview One, 2006; p.1).
Affordable housing can therefore also be interpreted from a purely ethical standpoint, in which case it would refer to the wider problem of housing shortages being linked to problems such as poverty, crime and low wages for certain sectoral groups. In terms of economics (and this will be looked at in more detail in the next section) this ethical perspective it somewhat suspended from the analysis and the problem becomes one which is defined in terms of how certain factors such as supply, demand, resources and money shape the concept of affordability in terms of the housing sector.
These issues of definition are important to an analysis of affordable housing since, if one is to examine the question of who really wants affordable housing, it is imperative to extrapolate the concept in sufficient detail. Therefore, the problem of affordable housing and its theoretical underpinnings and context will be examined alongside a discussion of what the concept essentially means to different people, as the next section, an economic analysis of the problem of affordable housing and who really wants it, will elucidate.
3.1.b Economic Analysis of the Problem
The price of housing in a free-market economy is determined by supply and demand. The supply of houses increases, other things equal, as the price of housing rises. The reason for this is that as the price of housing rises, other things equal, producers will find it profitable to allocate more resources to the production of houses relative to the production of other things they might otherwise produce. However, as the price of housing rises, other things equal, the demand for housing falls. The reason for this is that as the price of housing rises, other things equal, consumers will find it advantageous to substitute away from the consumption of houses towards the consumption of other goods that are now relatively cheaper to purchase. The price of housing, known as the “equilibrium” price, is the price at which these two forces, demand and supply are equal. This is how economists’ typically analyse markets (Landsburg, 2002; ch.1).
How does the price of housing adjust to ensure that “equilibrium” is reached? If demand exceeds supply, then there is more demand for housing at the existing price than producers are willing to supply at that price. In such circumstances, economists say that purchasers of houses are “rationed” – not everyone who wants to buy a house at the existing price can get one. These potential purchasers start competing with one another by offering suppliers a slightly higher price for a house than was the case in the market initially. This has two effects; first of all, the higher price induces more supply, and secondly, the higher price lowers demand. This means that the “excess demand” in the market that existed initially falls as a consequence of competition between rationed purchasers. Naturally, this process of competition will continue until prices have been bid upward sufficiently to ensure that demand and supply are equal. At this point, no-one is rationed and excess demand falls to zero.
Of course, this process can be reversed. Imagine that at the existing price the supply of houses exceeds the demand. Now it is the producers of houses who are “rationed” – not everyone who wants to sell a house at the existing price can. As before, these potential sellers start competing with one another by offering purchasers a slightly lower price for a house than was the case in the market initially. This has two effects; first of all, the lower price induces less supply, and secondly, the lower price raises demand. This means that the “excess supply” in the market that existed initially falls as a consequence of competition between rationed sellers. Just like the previous case, this process of competition will continue until prices have been bid downward sufficiently to ensure that demand and supply are equal. At this point, no-one is rationed and excess demand falls to zero (Landsburg, 2002; ch.7).
What are we to make of this analysis from economics? Economics helps us to understand how prices are determined. They are determined by the forces of supply and demand operating through the mechanism described above. But can this give us some insight into the concept of “affordability”? Not really. The notion of “affordability” is one that does not make sense within the discipline of economics. This might be a weakness of economics, but it might also be that the concept itself is meaningless.
Let me explain. In economics, the equilibrium price of housing (also known as the “market” price) is the price that is desirable from a social point of view. It can neither be too high or too low. Provided that the housing market is a so-called “competitive” market then the equilibrium price is the one that society ought to want (Landsburg, 2002; ch.8). How does economics reach this surprising conclusion? It does so from noting that at the equilibrium price, all gains from trade in the market are maximised (Landsburg, 2002; ch.8). In other words, despite claims that economics is a “positivist” subject, it is committed to a specific normative theory of good (Hausman and McPherson, 1996; Ch. 1 and 8). That theory says that what is socially desirable maximises the gains from trade. What does this mean?
Let us return to the excess demand example mentioned above. Imagine that at the initial market price, purchasers of houses are “rationed” – not everyone who wants to buy a house at the existing price can get one. It is simple to demonstrate that at this price, the increase in price needed to induce producers to build just one more house is strictlyless than what potential purchasers would be willing to pay a producer in order to build that house (Landsburg, 2002; ch.8). Given that this condition is satisfied, it is always possible for a mutually beneficial trade to occur between a potential buyer and a potential seller.
To illustrate this, imagine that a producer of houses (a builder, say) needs the price of houses to rise from ¿¡100,000 to ¿¡118,000 in order to find it profitable to build 11 houses as opposed to 10. If there is a situation of excess demand in the market whenever the price of a house is ¿¡100,000 then it is always possible to show that the maximum price someone would be willing to pay in order to induce the producer to build the additional house is strictly greater than ¿¡118,000. If that price is, for example, ¿¡150,000, then the two parties can trade to their mutual advantage. Imagine that the potential buyer offers the producer a price of ¿¡125,000 in order to build the house. This is a price the producer will happily accept. He or she would have built the house for ¿¡118,000 but instead gets ¿¡125,000 – the producer is better-off by ¿¡7000. Economists say that “producer surplus” rises by ¿¡7000 (Landsburg, 2002; Ch.8). Similarly, the buyer gets the house for ¿¡125,000 but was willing to pay ¿¡150,000 for it. The buyer is better-off by ¿¡25,000. Economists say that “consumer surplus” rises by ¿¡25,000 (Landsburg, 2002; Ch.8). An important insight from economics, as seen in this example, is that mutually advantageous trade is possible. Trade is not necessarily a zero-sum game.
How does this relate to the idea that the equilibrium price is the socially desirable one? It does so in the following way. As the excess demand in the market is gradually eliminated through upward movement in prices, the scope for mutually advantageous trade between buyers and sellers shrinks. Remarkably, when the excess demand for houses vanishes and the market is in equilibrium, no more mutually advantageous trades are possible. The price that would induce a producer to build an additional house is equal to the maximum price someone would be willing to pay for it – neither consumer surplus nor producer surplus can rise if this trade takes place. At the market equilibrium, all gains from trade have been realised and no more are possible. Economists refer to this state as one of “economic efficiency” or “Pareto efficiency”. (Landsburg, 2002; Ch.8).
The above analysis is the main reason why economists (admittedly with some caution) advocate the use of free markets. If a market is competitive then it will produce on its own devices an equilibrium that is socially desirable (if one accepts the principle of economic efficiency). Adam Smith referred to this general idea (albeit in a different context) as the “Invisible Hand”. He said
“Every individual...generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention” (Smith, 1776; p.243).
Smith’s idea is that people acting in their own self-interest may produce unintended consequences which, surprisingly, can serve the social good. In the example above, individuals through competition with one another push the market price towards its equilibrium value, and this value is socially desirable. However, to do this was not the intention of the individuals involved. They were just competing with one another and trading with sellers for their own private benefit.
How does this analysis help with the problem of “affordable housing”? From an economic point of view, affordability is a meaningless concept. It is simply not a social objective for things to be affordable, rather the government should seek to promote competition in the housing market and then leave the market to its own devices.
This conclusion of economics is striking and quite at odds with other perspectives on this problem. I will argue that affordability is an important problem, and that something fundamental is missing from the economic approach to housing. Within economics what is missing is some notion of “equity”, or a concern for how the gains from trade are distributed across different people. To illustrate this point, imagine that the equilibrium price of a house in a competitive housing market is ¿¡200,000. Then those who are willing to pay ¿¡200,000 or more for a property will get one, and the situation will be efficient from an economic point of view. However, this might not be the “ethically appropriate” way to allocate houses to people. The reason is fairly obvious. What someone is willing to pay for anything is constrained by their income. A rich person might be willing to pay more for a house than a poor person, but this does not mean that it is better that the rich person gets the house as opposed to the poor person. This is sometimes referred to in economics as the “equity-efficiency” trade-off. This is the idea that less efficiency is the price we have to pay sometimes if we want to ensure a more equitable distribution of goods across people (Landsburg, 2002; Ch.8). Policies designed to promote affordable housing fall into this category. The people who will gain the most from them are people on low income, who cannot guarantee that they will be allocated a house through the market mechanism.
3.1.c How is the Problem of Affordable Housing Addressed?
Various policy initiatives have been introduced to ameliorate the problem of affordable housing in London. These will be discussed in this section. These policies and whether they have a positive impact upon the community will also be evaluated in this section.
One such policy takes the form of Section 106 of the Town and Country Planning Act 1990 (which became operative in 1947 (Jackson, J., 1963; p.18 ), which seeks to address the problems which may arise in relation to affordable housing and the provision of local services (Monk, S. et al., 2005; p.24-27). Where a major developer wishes to obtain planning permission for a development in a given area, it is the case that such developments will put pressure on local services such as schools or hospitals this Act seeks to ensure that some of the cost of such developments are borne by the developers who wish to develop the area (Monk, S. et al., 2005; p.24-27). Section 106 of this statute therefore provides that agreements may be reached between local planning authorities and developers in relation to planning permission, where the developer is required to make financial contributions towards the local services in the areas where the planned developments are to be built (Monk, S. et al., 2005; p.24-27). However, this statute has been criticised, especially by Kate Barker (2006; p.11), as being in drastic need to reform to make it more simple and certain. The Barker Review also recommended in relation to Section 106, that it be 'scaled back' to address the direct impacts of developments (Barker, 2006; p.11).
Also, Housing Associations in London such as the Keystart Housing Association, Tower Homes, Metropolitan Home Ownership and London Strategic Housing and professionally affiliated Housing Associations such as the Teachers Housing Association are organisations which assist individuals who struggle to afford their own houses in London.
The Registered Social Landlord initiative, which applies to Registered Social Landlord properties built or transferred from a Local Authority, is a home owning subsidy scheme which finances Homebuy Schemes, Shared Ownership, Right to Acquire and Voluntary Purchase Schemes (http://www.communities.gov.uk)’.
Local Authorities also have statutory discretion to administer what is referred to as Cash Incentive Schemes (http://www.lda.gov.uk/server/show/) there is no guarantee that the scheme will be in place at all.
Another such scheme is referred to as the Key Worker Living scheme which was a proposal made through the Offices of the Deputy Prime Minister. This policy gives financial assistance relating to housing needs to the key workers (e.g. teachers and those working in the health and social services). Specifically the assistance takes the form of ‘equity loans’ of up to ¿¡50000 in some cases and this money makes it more affordable to buy houses in the open market (Greater London Authority, 2005). These houses however need to be built by registered social landlords (http://www.london.gov.uk/london-life/housing).
The key workers these services are aimed at are those working in jobs where recruitment proves difficult and where there are shortages of key workers due to retention difficulties (Greater London Authority, 2006; Sections 1-5.19). The geographical area which this scheme is aimed at in particular is London. Other areas such as the South East and the East of England are included in the scheme, but the problem of affordable housing is experienced most acutely in the London region (Greater London Authority, 2006; Section 5.19). This scheme also incorporates shared or co-ownership schemes where it is possible to purchase a percentage of the property and rent the rest of the property at a subsidised rate (http://www.lda.gov.uk/).
However, the question of whether this assistance is really of benefit to the community must be posed. One could ask, is the problem of affordable housing just a symptom of wider public policy issues (Greater London Authority, 2006; Section 5), such as inadequate salaries in the public sector for professions like teachers, nurses and social services employees which is ignored? To provide one example of this problem of inadequate salary among key workers, the writer can refer to her interview with Mr Samuel Commings, a police officer, who has to live with his parents, as his salary of ¿¡23,500 is not enough to allow him to live alone in Central London (Interview 2, 2006).
It may be argued therefore that the piecemeal contribution which affordable housing schemes make towards improving the overall standard of living of these groups just conceals the problem of low paid public sector workers in London. In any event, the problem of affordable housing is continuing to grow and the next section will look at why. Specifically, the next sections will attempt to explain, within a sociological and political framework, the reasons why affordable housing continues to pose major challenges in terms of policy and a potential solution (Greater London Authority, 2005; Sections 1-5 and Rugg, 1999; p19-20). This analysis will begin with a look at some relevant statistics.
3.1.d Statistics Associated with Affordable Housing in London
In spite of the above mentioned schemes problems associated with affordable housing continue to rise (Greater London Authority, 2006, Rugg, 1999). The issue of affordable housing and problems associated with it are intrinsically linked to the rapidly growing population (Greater London Authority, 2006; section 2.3) within London and associated demographic cleavages such as the fact that households are getting smaller (Greater London Authority, 2006; section 1.1) and London (and indeed the UK) has an increasingly ageing population (Greater London Authority, 2006; section 2.3).
The effects of an ageing population in London have been explained in the following way: ‘As the ageing population puts greater pressure on the financing of public services, pressure is also placed on the provision of services.….’ (Greater London Authority, 2006; pp. 13-14). London has a population of approximately 7.3 million, which is projected to rise to 8.1 million in 2016 (Greater London Authority, 2005; section 3.8). The London Plan has also estimated that there were 3.1 million households in London in 2001 (Greater London Authority, 2006, section 3.8), which is projected as rising to approximately 3.5 million in 2016 (Greater London Authority, 2005; sections 3.7 and 3.8). London, particularly the inner city is affected severely by unemployment (Greater London Authority, 2006; section 3.7) which stood at 7.1 % in 2003 (Greater London Authority, 2005; section 3.7). This (statistically) was the worst rate of unemployment among all regions in the United Kingdom (Greater London Authority, 2006; section 3.6).
In terms of ethnicity, London is the home for many differing cultures (Greater London Authority, 2006) and ethnicities (Rugg, 1999). White British people make up approximately 60% of the population in London (Greater London Authority, 2005). Other ethnic groupings, predominantly White Irish, Asian and Black Asian/Minority Ethnic make up the rest of the population of London (Greater London Authority, 2005, 2006; sections 3.13 and 3.14). London therefore is a very diverse City in terms of ethnicity, which means that it contains a huge proportion of the United Kingdom’s population of asylum seekers (the Home Office currently estimates that 85% of the UK’s asylum seekers are housed in London) (Greater London Authority, 2006; section 2.5). This has contributed to the problem of affordable housing since asylum seekers usually belong to those sectors within the population who rely on the government for housing and financial support (Rugg, 1999; p.20 and Greater London Authority, 2006; Section 5.16).
Young people who have traditionally formed the largest group of first time owner occupiers, have contributed to this trend of smaller households, since due to increased levels of affluence individuals tend to wish to branch out and form their own households at younger ages (Rugg, 1999; p.20). The ability to independently own a house has been thought to be an indicator of status, security and adulthood (Rugg, 1999; Ch.1). This led to the housing boom of the 1980s and the inception of the idea of ‘starter homes’, and the average age for first time home ownership has now been estimated at 34 (Greater London Authority, 2006; Sections 1-5). Poverty and unemployment are not the only factors which are tied to the problem of affordable housing (Rugg, 1999; p.19). The mentally ill are affected within the sphere of affordable housing problems and the next section will discuss why.
3.1.e Affordable Housing for Special Needs People
It has been estimated that in 2004-2006 approximately 500 care homes or supported accommodation facilities were available to house those in need of supervised and supported housing care (Greater London Authority, 2005; section 5.15). This figure represents 5% of the market for rental accommodation within London. These facilities have an annual budget of approximately ¿¡50 million. Yet, this figure is dwarfed when compared with other government expenditure such as the figure spent on health, which can be seen by examining Diagram 1.1, below. It can be seen therefore, from the high levels of homelessness among the mentally ill or physically disabled that affordable housing for these sectors of individuals is drastically under-resourced (Rugg, 1999; p.19).
Diagram 1.1 Where TaxPayers’ Money From the 2006 Budget is Spent
3..1.f Trends within London and the UK Housing Market
Demographic trends and the socio-economic environment which shapes them, as discussed above have had a great impact upon the problem of affordable housing in London (Greater London Authority, 2005; Sections 1-5). This has been responded to with greater levels of research being conducted into why affordable housing has become a problem and how problems associated with it may be addressed (Greater London Authority, 2005; Sections 1-10).
3.2 Conclusions and Recommendations
It has been concluded that the problem of affordable housing seems to affect certain disadvantaged groups within society, such as the poor and disabled disproportionately. Other conclusions and recommendations of this chapter are that the problem of affordable housing in London is multi-faceted and should be recognised as such. These facets include economic, sociological and political factors, and it follows that any proposed solution must take account of these overlaps and intersections. This point has been elucidated throughout the arguments and discussion section of this chapter. In particular the hypothesis that affordable housing must be examined in a holistic manner which refers to all of these factors has been made. This has been highlighted by the economic analysis of the problem of affordable housing, which argued that it is difficult to fully grasp the nature of and solutions to the affordable housing problem, without dealing with the notion of equity; an idea which generic economic analysis would perhaps overlook or regard as meaningless.
The next chapter will look at what the main policy recommendations the previously mentioned greater level of research into affordable housing has led to, and it will attempt to set out the prevailing understanding of affordable housing problems which has been reached by interested parties in the area of affordable housing (Greater London Authority, 2005; Sections 1-10). This will further reinforce the argument which has been made in this chapter that this issue must be approached in a holistic manner if the analysis is to be a credible one. The next chapter will also attempt to put the concept of affordable housing into an historical context, with a look at Thatcher’s ‘Right to Buy’ policy (Evans, 2004; p.20) and how the consequences of this policy in particular may be relevant to issues of affordable housing in contemporary terms. This analysis will come first. This analysis will ultimately allow a conclusion to be drawn in regards to the central question of this thesis which is ‘Who really wants affordable housing?’.
LITERATURE REVIEW PART TWO: AFFORDABLE HOUSING POLICY CONTEXTS
4.1.a Arguments and Discussions: Affordable Housing Policies
The ‘Right to Buy’ policy was introduced in 1980 (Evans, 2004; pp.20-22), under the Conservative Thatcher government (Geelhoed and Hobbs, 1992; p.2), in a wave of publicity and media attention. It was aimed at a problem similar in many ways to affordable housing, albeit it was not recognised as such (Evans, 2004; pp.1-20). The policy marked Thatcher’s commitment to reject the liberal approach to social housing (Rugg, 1999; p.19) which had been previously advocated by Keynes and endorsed by government in the spirit of the Beveridge conception of social justice (Geelhoed and Hobbs, 1992; p.2).
To provide a more holistic perspective on her approaches, Thatcher’s view of housing and economic and social policy, as well as the climate of social and economic Britain under has been examined in detail by Evans (2004). Evans (2004; p.22) has argued that poverty and the wider problems which have been linked with the idea of affordable housing, in the late 1970s and early 1980s caused much division within the Conservative party. These problems resonated at political, social and ideological levels. In particular, Evans (2004; p22) describes the unprecedented levels of violence including riots that took place in inner city locations, in particular the areas of London, Manchester and Liverpool. Thatcher believed that the root of this problem was that working class people had nothing to occupy their time with (Evans, 2004; p.22) .
Perhaps therefore Thatcher underestimated the effects that inadequate social housing can have on society at large. To tie this discussion to the aforementioned definitions of what affordable housing actually may be defined as, it is arguable that Thatcher merely construed the threads of the affordable housing problems too singularly. In any case, her perspective on these social problems was clearly deficient. Thatcher's rationalisation of the solution to the social instability that arose chiefly as a result of poverty and other social problems within inner cities from a purely economic perspective was not adequate to ameliorate them. It is arguable that this intransigence on the part of Thatcher has in some way contributed to the problems which exist in Britain today. The next sections will explain why, and the analysis will begin with a look at Thatcher's 'Right to Buy' policy which was aimed at addressing the problems which have been looked at by the writer above.
The ‘Right to Buy’ policy involved giving Council House tenants rights to purchase their Council Houses, and the right generally came into force if the tenant had three years tenancy (Evans, 2004; pp.2-22). As a policy, it profoundly influenced the ethos and character of public sector housing in London and throughout the UK (Rugg, 1999; p.19). It has produced various sociological (Geelhoed and Hobbs, 1992; p.2) and demographic cleavages and trends (Evans, 2004; pp.15-20) since its inception and these have important ramifications for the problem of affordable housing in London (Rugg, 1999; p.19, Evans, 2004; p.20). These factors will be analysed in this section.
‘Right to Buy’ involved the whole spectrum of public sector houses, from flats to houses (Evans, 2004; pp.20-21), and as a policy it has been revised and refined since its original inception in 1980 (Geelhoed and Hobbs, 1992; p.2). In terms of rationalising this theory in statistical terms, it has been conjectured that the right to buy policy has led to the sale of over two million houses to what had previously been tenants (Evans, 2004; pp.19-20). It is also believed that sales of houses under this scheme reached a high point in 1982 (Evans, 2004; p.59). In 1984 and again in 1986 increased discounts were introduced in the anticipation that more people would take advantage of the opportunity to buy (Geelhoed and Hobbs, 1992; p.2).
This produced a new surge in house sales under the scheme, however, the fervour which saw sales peak in 1982 was not rekindled by these policies and sales of Council houses under the scheme gradually declined again in the early 1990s and late 1980s (Midwinter and Monaghan, 1993; p.30). However, it has been estimated that 30% of people qualified to purchase under this scheme did so (Evans, 2004; p.59). It is clear therefore that when it was introduced, the ‘Right to Buy’ scheme was a popular policy which was driven by a desire among the electorate to own houses, rather than rent them (Evans, 2004; pp.20-21). This desire for affordable housing was popular among the economically deprived sectors of the electorate since these sectors were the ones most likely to own Council Housing stock.
In contemporary terms, little has changed. Concerns about affordable housing in London continue to be prevalent among those who are economically disadvantaged (Evans, 2004; p.20). In this sense, poorer people such as key workers, often employed in the Public Sector, the mentally ill and the unemployed are among the groups of people who may really want affordable housing (Greater London Authority, 2005; Section 6.2-6.10). In many ways however, failures of policy on the part of those politicians charged with the responsibility of solving problems associated with affordable housing fail to do so adequately, and so perhaps it is a more cogent argument to say that these groups wish to see policy relating to affordable housing which address the vast economic gaps there are between public and private sector workers and which address the long term problems which affordable housing may pose in a substantive way. An example of this sort of policy failure can be drawn in historical terms, in relation to the contemporary consequences of the ‘Right to Buy’ policy under Thatcher (Evans, 2004; pp.5-20).
The ‘Right to Buy’ Policy produced both positive and negative effects within areas with high concentrations of Council house stock (Rugg, 1999; p.19). We have seen some of the positive effects outlined above. This meant that in the areas where sales of Council houses were on average higher than the mean level of sales, the areas where this transfer of ownership occurred became demarcated by different attitudes to home ownership and the evolution of more economically diverse groupings of people (Rugg, 1999; p19). Therefore areas with high sales under the scheme regenerated more rapidly, attracting more affluent occupants and diversifying the social groupings concentrated within these areas (Rugg, 1999; p19).
Conversely however, areas where sales under the scheme were not widespread became more socially excluded, with ever increasing bands of society living in dilapidated and inadequate accommodation (Rugg, 1999; p19). In many ways therefore it can be argued that Thatcher’s ‘Right to Buy’ policy, while reducing the band of socially disadvantaged living in the Council Housing sector in aggregate terms, also widening the gaps between rich and poor and disenfranchised the poorer groupings who opted to continue to rent their Council houses (Midwinter and Monaghan, 1993; p.30) (Holt, R. and Pressman, S. (2001) Ch.1) and (Kavanagh, D. and Morris, P. (1994) Ch.1).
These gaps between rich and poor within UK society continue to widen today (Evans, 2004; p.20) (Keane, J. and Owens, J., 1986; Ch.1) (Coxall and Robins (1998): Ch.1) (to put this into perspective, in today’s terms, almost 50% of children in London live in poverty (Greater London Authority, 2005; Section 1-2.5) (Lowe, R., 1993; Ch.1) and these demographic cleavages can be seen in particular within London, especially within the inner city in London where unemployment is quite high. In fact, Pacione (1997) sees the problems which are linked to the affordable housing shortage as almost universal in nature:
‘The gulf between rich and poor in cities such as Manchester and Glasgow provided ample testimony to the fact that the process of urban development in capitalist societies is inherently problematic, being accompanied by socio-spatial division and conflict. More than one hundred years later, despite the social legislation of the twentieth century, Britain’s cities are still characterized by extreme variations in levels of living between different population groups and areas…’ (Pacione, 1997; p.8).
This problem of the concentration of affordable housing concerns among economically disadvantaged groups has been exacerbated by the fact that new developments within London are not being used as efficiently as they could be (Greater London Authority, 2005; sections 5.4-6.10). This contributing factor to the problem of affordable housing will be examined in the next section. The government’s proposed policy solutions which involve pinpointing ‘opportunity areas’ will also be outlined.
4.1.b New Builds in London and Research into Affordable Housing Problems
Housing developments in London have contributed to the problem of affordable housing in London (Greater London Authority, 2005; sections 5.4-6.10). Houses are not being built fast enough to cope with the levels of demand there is for houses within London (Greater London Authority, 2005; sections 5.4-6.10). The rate of new development building growth in London has remained virtually constant, which has not been sufficient to accommodate the amount of people who need to be housed (Pacione, 1997; p.7), the amount of whom, as we have seen above, continues to rise rapidly (Greater London Authority, 2005; sections 5.4-6.10).
One trend that has lessened the effects of this problem has been the trend within London for one and two bedroom properties to be built, which is hugely disproportionate to the numbers of larger housing which are constructed outside London (Greater London Authority, 2005; sections 5.4-6.10). Research into this area of the affordable housing problem in relation to developments has also proved instructive.
The Mayor of London has recently commissioned research into these problems and the ‘Housing Capacity Study’ is intended to build a greater understanding of the affordable housing problem in London (Greater London Authority, 2005; sections 5.4-6.10); potential solutions and what feasible goals for strategies linked to solving the problem of affordable housing in London are. This plan has formulated what are referred to as density matrices which aim to apportion denser populations to areas within London which are best equipped to service the needs in terms of transport and facilities of a denser population (Greater London Authority, 2005; sections 5.4-6.10).
This research has created a policy within London which involves using commercial sites for residential purposes (Greater London Authority, 2005; sections 5.4-6.10). Government has identified areas within London, what are referred to as ‘opportunity areas’ (Greater London Authority, 2005; sections 5.4-6.10). These are commercial sites which may be converted for residential housing redevelopment (Greater London Authority, 2005; sections 5.4-6.10). This has been combined with an approach which involves mixing commercial development sites with residential development projects, which are policies which ultimately make better use of space within built up areas for the purposes of residential housing development (Greater London Authority, 2005; sections 5.4-6.10). Other initiatives which have been aimed at this specific problem are redevelopment projects within urban areas (Pacione, 1997; p.7), specifically towns and urban areas with good access to public transport routes (Greater London Authority, 2005; sections 5.4-6.10).
Yet, the question of whether it is desirable for the community to form denser population cleavages (Pacione, 1997; p.7), in order to ameliorate the problem of affordable housing in London is a controversial one (Interviews 1 and 2, 2006; p.1 and p.1). It may be argued that this will simply further segregate poorer sectors within the population, and it may also be argued that artificially creating even denser populations within London may simply address the problems of affordable housing in a superficial way, providing a short term solution to a growing problem (Pacione, 1997; p.7) Mishra, R. (1984): Ch.1) and (Michie, J. and Smith, J. (1997): Ch. 1-2).
Further it is ironic that such short-term solutions may also heighten the problems such as social exclusion (Rugg, 1999; p.19-20), and poverty which are routinely associated with the continuing affordable housing crisis in London. In this sense it can be argued that current policy proposals aimed at addressing the problems associated with affordable housing may simply stunt the problem in the short-term, creating longer term problems similar to those created by Thatcher when she failed to address the situation of those economically disadvantaged groups who opted not to buy through the ‘Right to Buy’ policy (Rugg, 1999; p.19-20). This critique of government policy may be tied into the question of who really wants affordable housing in London, by arguing that the government may not want to create affordable housing in London, per se; they may merely wish to be seen to tackle the problem and make their rhetoric sound convincing.
On the other hand, however, it is easy to superficially denigrate the efforts to ameliorate a problem which has clearly been given due consideration by government actors charged with the responsibility to do so. Short-term solutions may be short-term; but they are still solutions. What matters is their plausibility. Therefore, the longevity of a solution to a particular problem should not represent, of itself grounds with which to dismiss these proposals to identify areas of London where more dense populations could be accommodated. Clearly, this is a well-thought out scheme, since the identification of these areas has been linked to identifying facilities such as transportation networks and other facilities which would be needed to support a denser population, and such a rationale is plausible, and likely to mitigate problems relating to affordable housing in London in some way.
Also worth considering in this context is the fact that the problem of affordable housing is of huge proportions (as has been elucidated through the writer's primary research and in the preceding sections where statistics and a case study of affordable housing were considered), and intertwined with issues of immense complexity. It is not reasonable to expect that the proposals to address problems with affordable housing will provide an overwhelmingly cogent solution to these issues and that this will in turn ensure that all parties to the issue will be convinced of their utility. What is reasonable is that pragmatic and sensible efforts will be made to identify where adverse effects may be lessened and it appears that while the government’s proposed solutions in respect of affordable housing in London may indeed be short-term, they are also plausible and should be considered, not merely in generic terms, by reference to generic characteristics (such as short-termness), but in terms of how sensible and cogent they appear.
Also, one might add that the short-term nature of a solution may not in essence be a negative aspect. As has been highlighted in preceding sections, the issues which are intertwined with affordable housing are malleable and changing over short-term periods. Therefore, it may very well be the case that a short-term solution could be the best solution presentable. This, of course, depends upon the nature of the economic climate at any given time.
However, to consider the converse of the argument, yet again; while it is possible to defend the veracity of short term solutions to the problem of affordable housing, it is not likely that one may be able to argue that long and short term solutions to the problem of affordable housing stand on an equal footing. Clearly a long term solution, or at least one which may be rationalised as a possible long term solution to the problem of affordable housing, will be preferable to a short term solution. This is because short-term solutions tend to be geared towards particular isolated problems, whereas long term solutions, by their very nature necessitate a wider scope and a more ‘root and branch’ approach to solving the problems which may be inter-related. Therefore, given these arguments, it is important not to assume that government actors do not want to create affordable housing in London, just because proposed policy solutions appear, on the surface to be deficient. Indeed, this would an overly cynical interpretation of the efforts and motivations of government actors in the area of affordable housing.
4.2 Affordable Housing Developments
In terms of affordable housing developments, one problem must not be underestimated. That is the possibility of local opposition to affordable housing schemes and the social conflicts which may arise through this. As we have seen recently in London with the affordable housing developments that have been constructed in the Helix Affordable Housing Development, in Notting Hill and the Dolphin Square Development in Westminister, London, there has been much opposition to affordable housing development, from local residents who believe that the developments will depreciate the value of their own properties. Objective research such as the Barker Review (2006) and a study carried out by Golland, A. et al (2004) has argued that these depreciation effects are particularly evident in areas of London such as Kensington and Chelsea and Westminster (Golland, A. et al. 2004; p.17). Frean, A. (2004) has given us an indication of how high feelings have run in relation to this issue, with reference to the Dolphin Square Development: 'Many residents believe that the sale represents a breach of trust by Westminster Council, which, they claim, has wanted for years to sell off the block and pocket the proceeds......(Frean, A., 2004; p.1)'.
Also the primary research done by the writer supports this view that feelings have run high amongst local residents about the possibility of more affordable housing developments, and the effects of affordable housing policy in general. Specifically Kate Bond who was interviewed, described her feelings in relation to affordable housing: 'Uneasy, its going to decrease the value of the properties in the area, and its going to lead to overcrowding of the good schools in the area...(Interview 1, 2006; p1)'.
Other concerns therefore abound such as the concern that local schools and facilities will be overcrowded. Specifically, the Helix development in London provides us with a specific example of this. The Helix site currently consists of 17 units (constructed on what used to be a 19th Century Estate), which includes family town houses, a maisonette, apartments (one, two and three bed-roomed) and a penthouse apartment, with disabled access for one householder (http://www.nottinghillhousing.org.uk/). The Dolphin Square housing development recently completed and it has now been sold for ¿¡200 million pounds to the American property fund Westbrook Partners, half of which was contributed to key workers and affordable housing schemes (Russells (2006) p.1).
It is obvious that prospective solutions to the problem of affordable housing will attract levels of criticism from some sectors within the community (Interviews 1 and 2, 2006; p.1 and p.1). For example, one such group could be the middle classes in London who are wealthy enough to have purchased their own houses but have expressed some hostility to the idea that supported accommodation is to be made available within their localities. The Helix development described above is a prime example. In situations like this there is no solution which will serve the interests of all concerned. The positions of the two competing groups are diametrically opposed; one group perhaps does not object necessarily to the concept of affordable housing, but nevertheless are affected by the 'not in my backyard' mentality, which makes them hostile to affordable housing developments in their communities, and the other group feels that the developments are necessary and that given their own circumstances, their needs should be ranked above those of the people objecting (i.e. middle classes who share the locality).
While instinct possibly could divert an officious by-stander to criticise the views of those affected by the 'not in my backyard' mentality, this is perhaps n
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