Meeting housing needs within planetary boundaries requires opening the black box of housing “demand”

--

Daniil Korbut

By Stefan Horn

The primary policy response and cross-party consensus to both rents and homelessness reaching record highs in the last year, has been to build more houses. But this policy is unlikely to lead to affordable levels, while it would consume the entire UK carbon budget.

I have recently, with colleagues at the LSE, co-authored a paper that takes a different approach to the problem of meeting housing needs within planetary boundaries. We propose that rather than focussing on the supply of new homes, we look at the entire housing stock and how it is used. Both in terms of carbon emissions and in terms of available space, the existing housing stock is vastly larger than any new construction.

The fundamental premise of our analysis is that not all housing demand and use are equal. There is a fundamental difference between housing being demanded and used to meet a fundamental human need for shelter, and other uses, which in the extreme are closer to resource-intensive luxury consumption. Housing needs and wants compete for the same resources: our carbon budget and practical and political constraints to building more houses. If the goal of housing policy is to meet housing needs within planetary boundaries, then we have to open the black box of housing “demand” and prioritise meeting housing needs over expanding housing independent from use.

Human need for shelter can be identified and met. Housing want, on the other hand, is a positional good, demand for which is practically open-ended. Conflating housing needs with open-ended wants threatens ecological sustainability while needs remain unaddressed. If solving the housing crisis involved just building more homes, then we would not be having a housing crisis to begin with. Research by co-author Rebecca Tunstall shows that the large-scale, resource-intensive expansion of the UK housing stock since the 1980s has largely accrued in second and third spare bedrooms, rather than addressing persistent problems of overcrowding, homelessness and affordability.

The large scale and continued growth of the UK housing stock invariably leads to the question whether or not the existing stock is large enough to meet the housing needs of the UK population. In fact, if the goal of housing policy is to meet the housing needs of the population, the first logical step would arguably be to confirm if the required assets already exist. However, such analysis is rarely being done, leading to widespread claims that there is a severe lack of physical housing space in the UK. In our paper we performed such an analysis for England, using data from the English Housing Survey.

The first step was to confirm under which conditions housing need can be deemed met. After careful consideration we decided to use the established bedroom standard as one starting point. We assume that housing needs are met if a household has one bedroom per adult or couple and each child over 9 years, while up to two younger children share a bedroom. We also followed the bedroom standard assuming that one spare bedroom per household is normal comfort, while any additional spare bedrooms mean that a dwelling is under-occupied.

Based on this definition, we found that the English housing stock is large enough, by a significant margin, to meet the housing needs of England’s population. As shown in Figure 1 below, 56% of bedrooms in England are used to meet housing needs. Another 25% are first spare bedrooms. 17% of bedrooms in England are second and further spare bedrooms. Another 2% of bedrooms are in second and long-term empty homes.

A key finding is that under-occupied bedrooms vastly outstrip the number of bedrooms that would be required to meet housing needs of overcrowded and homeless households.

Under-occupied housing also has a significant ecological cost. Research has shown that housing space, as opposed to occupancy, is the best predictor of residential carbon emissions. In addition, we found the emission intensity (per sqm) of households with under-occupied bedrooms is 25% higher than the average.

Figure 1: Bedrooms by use. Own calculation based on EHS 2019–20

We then looked at the demographics of households with two or more spare bedrooms. We found that two particularly relevant variables are tenure and household type. Figure 2 below shows that the vast majority (90%) of two or more spare bedrooms is held in the owner-occupied sector, in particular owners who have paid off their mortgage. On the other hand, squeezed private tenants only account for a small share of under-occupied bedrooms. In local authority and non-profit housing, the phenomenon of under-occupation practically does not exist.

Figure 2: Households with 2+ spare bedrooms by tenure. Own calculation based on EHS 2019–20

Another important factor is household type. Figure 3 below shows that most under-occupied bedrooms are in dwellings occupied by older and smaller households. In combination with tenure, we found that nearly half of under-occupied bedrooms are in dwellings occupied by older owner-occupiers without a mortgage. Many of these are ‘empty-nester’ households, in which the children have moved out and the mortgage has been paid off.

Figure 3: Households with 2+ spare bedrooms by household type. Own calculation based on EHS 2019–20

There is another important dimension that we did not incorporate in the working paper. As a number of commentators have pointed out, it matters where spare bedrooms are located. It would be expected that under-occupied bedrooms will be located in places which lack jobs or other attractions, such as small towns in peripheral regions. However, this is only the case to a limited degree. With the exception of London, all English regions have comparable under-occupied bedrooms per capita. Figure 4 below shoes that under-occupied bedrooms largely follow the population. In London alone, there are nearly enough under-occupied bedrooms to meet the housing needs of all overcrowded and homeless households in England.

Figure 4: Under-occupied bedrooms and population by geographical location in England. Own calculation based on EHS 2019–20

We propose a range of policies that could help redirect use of the housing stock towards delivering the goal of meeting housing needs in planetary boundaries. One approach would be taxation. Examples of taxation by housing use already exist, such as council tax surcharges for empty homes in Wales. These could be extended to include under-occupied homes. Under-occupation is currently encouraged by preferential tax treatment of owner-occupied primary residences. Owners are effectively subsidised for treating spare bedrooms as an investment, rather than investing in productive activities. However, a limiting factor in taxing under-occupied bedrooms is that high-income households can afford to pay the tax and maintain under-occupied bedrooms, while lower-income households may be displaced if there are no adequate alternative dwellings available locally.

The problem of adequate alternatives is particularly salient given the scale of the “empty-nester” phenomenon. Smaller, older owner-occupiers account for a significant share of under-occupied bedrooms. However, in many neighbourhoods dominated by single family homes, there is a lack of accessible alternative dwellings for smaller, older households. Displacing these households from their communities is neither desirable nor realistic politically. A similar situation arises from the increasing number of single-person households. Single households are more space and resource-intensive as amenities are duplicated. But the solution cannot be to force single households into sharing with strangers in dwellings that were not designed for this purpose. It would have to involve designing and adapting dwellings to adequately and resource-efficiently meet the needs of single households.

A third policy dimension is shifting the housing stock towards tenures that more effectively deliver the goal of meeting housing needs within planetary boundaries. Our analysis suggests that public and non-profit tenures outperform tenures based on unconditional private property rights. A tenure shift could accelerate the delivery of affordable, resource-efficient and adequately designed dwellings to meet local housing needs, instead of maximising developer profits. An example is the extensive use of pre-emptive rights by the city of Paris. A tenure shift does not exclusively have to lead to council owned and operated housing stock. The city of Barcelona regularly leases land to third parties with specific mandates to deliver, not houses, but housing policy goals.

We argue that solving the UK housing crisis requires taking a step back and asking what the goal of housing policy is. We propose that the primary goal of UK housing policy should be to meet the housing needs of the population within planetary boundaries. The means that not all housing demand is equal. The distinction between housing need and wants sheds a very different light on the housing sector. While the majority of the housing stock does contribute to meeting housing needs, a large part of the English housing stock consumes significant resources and effectively limits our ability to solve the housing crisis.

--

--

UCL Institute for Innovation and Public Purpose
UCL IIPP Blog

Changing how the state is imagined, practiced and evaluated to tackle societal challenges | Director: Mariana Mazzucato