Guaranteed Rent Scheme | Global housing crisis: Australia, Canada and UK face common questions
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Western countries are tackling similar housing problems, but some have adapted to a new environment more easily
Toronto, Canada: the country shares common housing problems with the UK – but has found some effective answers. Photograph: Nathan Bergeron
Now is the deepest winter of discontent in UK housing for 30 years. Half a decade of recession and credit rationing have depressed housing values and reduced market investment to the lowest levels in half a century. Public investment has been slashed, and the flow of new housing, especially for the poorest households, has slowed to a trickle. The next half decade offers the prospect of continuing market sluggishness and deepening cuts in investment and welfare budgets.
Increased government investment is needed, but there is unlikely to be any fast return to large-scale public funds for housing, even as the economy recovers. With rising household numbers and stagnant incomes, the gap between provision and needs is growing alarmingly, and if austerity continues, so will the housing crisis.Badly designed housing policy exacerbates the effects of deep cuts. However, there is still hope for a better housing system in Britain.Guaranteed Rent Scheme
Over the last year the University of St Andrews has facilitated a conversation between Places for People and Glasgow Housing Association, and leading non-profit housing organisations in Norway, Australia and Canada. In the latter two countries, non-profit organisations have had to survive, even thrive, in tough times for more than a decade.
There are common opportunities as well as constraints. Housing providers are affected by budget cuts in both housing investment and welfare programmes in all the countries involved. This is not a new experience for providers in Canada and Australia. With reduced programmes of government support since the mid-1990s, they have evolved new organisational cultures and performance approaches.
The partners concluded that although the financial crisis may have been the trigger to change, there were already potential new opportunities emerging for the sector. New demographics, environmental change and patterns of increasing income inequality and growing income segregation create tough challenges but also potential new business lines.
Home-ownership still dominates provision and policy in all the countries. Rising overall rates of home ownership masked the falling rates for the under-35s in the partner countries since the mid-1990s. Overall growth in demand was mainly met in market rental housing, largely by mum and dad investors with inefficient financing, amateur management and temporary commitment.Guaranteed Rent Scheme
With growing numbers of younger households living longer in increasingly expensive market rental sectors ambitions for saving as well as ownership were eroded. The market failures in the sector are obvious, and there is a clear consensus on the imperative to develop an efficient, trusted, mid-market rental sector that could attract equity investment.
New demographics also mean growing proportions of older households with increased longevity. There are now complex and expensive pathways through housing, care and health provision in our later lives. Dignified moves along these pathways are hampered by market failures just as public resources are becoming constrained.
Pervasive market failures in housing markets and related service provision, as well as rising inequalities, define the new times. Non-profit organisations recognised that the subsidised activities of providing affordable, adequate housing for the poor and remaking poorer places will always be core business activities. They also agreed that notions of affordability had become muddled in policy design and that greater clarity was needed to highlight progress for the poor.
However, these providers also stressed that housing policy is not just about affordability and that shaping and unleashing institutions with capacities to deal with market failures should be a key concern. Governments have failed to fashion better housing systems in the rush to make cuts and turned a blind eye to new ways of doing old business.
Non-profit provision should not just be for the poor: prosperous parents with twentysomething children forced to live at home have an interest in better rental markets and housing savings routes; middle-aged children with parents in their eighties are seeking caring providers to help them manage the ageing of their parents.
While non-profits become no less social, they have to become more entrepreneurial. They can become more efficient and do more with less. Changes to government subsidies can encourage this process as they have become contestable, with private and non-profit providers competing directly for support. Housing providers have to seek partners (municipalities, charities, employers) with additional resources to support deeper subsidies for particular clients.
These pressures have made Canadian and Australian providers more effective than their UK counterparts in giving more attention to managing property portfolios with better developed disposal and leveraging skills. The best (often largest) housing providers in the UK have already recognised these challenges. Glasgow Housing Association, for example, is unrecognisable as the heir to Glasgow’s council housing department. Wider scope and bigger scale not only spread overhead costs but allow surpluses in market activities to fund subsidised activities.
Yet in this new world, smaller community-based providers should not be left moribund, hunkering down on historically accumulated grants. That way government will kill off the real “big society” where it actually exists and matters.
Where is the strategy for change? It does not exist, but it can be built. If a small academic discussion – unsupported by any government funding – could identify so many ideas for change, imagine what a larger discussion that includes government might accomplish? Surely this kind of co-operation would lead to a more effective housing system, stronger communities and better lives for those that share them. This discussion is just beginning.
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