A new housing settlement

There is so much wrong with our housing system, from needless homelessness to spiralling costs (which have shut a generation out of housing) to over-mortgaged homeowners struggling financially to the sheer environmental inefficiency of much of the housing we build to the failure to build homes how and where communities need rather than where a developer can make most money.

It is almost politically impossible these days to say that we must control house price inflation – but we absolutely must control house price inflation. The best way to do this is to give people a high-quality, affordable alternative to the private market which is fuelling the rising house prices. Rather than seeing public rental housing as a solution to the ‘problem’ of people who can’t get on the housing ladder or a response to poverty we should see it as a positive choice for people to make. If we developed desirable new sites as public rental housing and built those houses to the highest quality and made them available for social rent, just as in many other European countries young people and families would chose to live in them because its the best option for them and not only because it is the only option.

Common Weal has produced an economic model for how to do this called Good Houses for All. First, we need to use Land Value Capture (explained in this report) so that the public can buy land at its value pre-planning permission (which after all is a right granted by the public in the public interest). Then by using long term patient finance supplied by the Scottish National Investment Bank it is possible to build houses to the very highest environmental standard without requiring any public subsidy. That means that the number of houses that could be built would be limited only by how many people wanted them. And rents would be slashed – the average two-bedroom house currently costs about £1,400 to rent, heat and maintain each month and yet these new, higher, quality ones would cost only a little over £800 a month. This could represent a revolution in Scotland’s housing system.

But there are other, more direct ways to impact on house prices. The existing Council Tax is grossly unfair, with people living in the least expensive houses paying something like five or six times as much tax proportionately as those living in the most expensive houses. Replacing this tax with one that taxed houses fairly based on their real value would mean that people who have benefited from rising house prices would pay their fair share. That’s why we propose a Property Tax to replace the Council Tax and to dampen down house price inflation.

In the Common Home Plan (our Green New Deal which you can read here) we explain how Scotland can improve the housing it has, bringing it up to the highest possible environmental standards without the homeowner having to pay. By replacing heating systems and properly retrofitting houses with insulation (which will be discussed in more detail in a forthcoming report), borrowing to fund it over a long period, connecting it to a proper industrial strategy so the supply chains for this are captured and by doing it all collectively as part of a Green New Deal we can generate more new public income than the work itself costs.

We have also published two visions for the kind of housing system Scotland should aspire to – House Keeping Scotland and the more economically-focussed Housing for a Better Nation. They cover everything from why we should repair rather than knock down existing buildings to why we should build our new buildings primarily from Scottish timber.

And as explained in our Big Idea on protecting tenants, we have also set out details of why Scotland needs rent controls, why the ones we have don’t work and what it would look like if they were done properly.

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