Despite the grim economic tidings and the ongoing horror story that is the housing crisis, there are plenty of reasons to be cheerful – no, really. Mark Cantrell reports

Britain’s housing crisis is a thing of macabre beauty, it must be said. The sheer misery of its dysfunction is an artful depiction of a dystopian social aesthetic; seriously, it should be on display in the Tate Modern if only it could be suitably represented in all its intricate glory. Granted, that’s a bizarre idea, but as time goes by and the reports and lamentations mount, it seems as good a thing as any to say about a crisis that is all but abolishing housing – or at least the concept of a stable, secure home (rented or otherwise) – for millions of ordinary Britons. Meanwhile, the arguments abound. The search for a solution continues high and low. there are recriminations, fists banged on tables, increasingly desperate appeals to deliver the homes the country needs; initiatives are launched, schemes are devised, promises are made, rhetoric flourishes, and still the answers remain elusive.

The summer months have continued to paint a devastating portrait, with a series of reports and studies picking over the bones of the nation’s housing dream. The IPPR, for instance, published ‘together at home’ in June, as part of its ongoing review of housing policy, and – surprise surprise – it found that the English housing system is “unfit for purpose”.

“Demand has heavily outstripped supply for decades, with the situation now getting worse, not better,” the report said. “Home ownership is too often out of reach, leaving many people’s aspiration to own their own home unfulfilled. Social housing is being residualised. The private rented sector largely unprofessional and insecure and those who live in it have too little control over the place where they live. Meanwhile, public expenditure on housing benefit soars at over £20 billion a year and rising. England remains one of the richest countries in the world, but it is failing properly to house its people. The result is a segregated system with insufficient mobility between sectors and social differentials that are entrenched rather than overcome.”

This theme of entrenched segregation turns up again in different guise in a report the same month published by the Joseph Rowntree Foundation (JRF), ‘Housing options and solutions for young people’. In this, it is warned that by 2020 there will have emerged a ‘three tier’ system in the race to find private rented homes, with an affluent ‘caste’ of people who can afford the rents, a ‘squeezed middle’ who will struggle to pay, and around 400,000 people who will form a layer of borderline ‘outcasts’ who risk being excluded from the private rental market altogether.

That begs the question of where they might live. One answer is that an extra half a million young people will be forced to stay at the parental home well into their 30s, bringing the total to 3.7 million by 2020. On current form, it must be said, they are unlikely to be living in a social home.

“Our badly functioning housing system will see those on the lowest incomes really struggling to compete in the competitive rental market of 2020,” said Kathleen Kelly, the JRF’s programme manager for place. “Renting is likely to be the only game in town and young people are facing fierce competition to secure a home in what is an already diminished supply of housing. With 400,000 vulnerable young people, including families, on the bottom rung of a three-tier private renting system we need to avoid turning a housing crisis into a homelessness disaster.”

The report’s lead author, David Clapham added: “With 1.5 million more young people no longer able to become homeowners by 2020, it’s vital we take the opportunity to make renting work better. To do this we need strong political leadership that is willing to work with both landlords and tenants to make it more affordable and stable for ‘generation rent’. Young people are at a double disadvantage – it takes longer to raise enough for a deposit and their wages are generally lower. But there are simply not enough homes and those we do have cost too much to rent or buy. While more housing would help address this, it may not come quick enough for young people forced into renting in eight years’ time.”

Given the growing numbers of people “locked out” of homeownership, and with all but the neediest (welfare reform issues notwithstanding) equally locked out of a residualised rump of social housing, private rental has already become what Shelter has called the “new normal”. this is adding its own peculiar bitterness to the wider housing crisis. In effect, home ownership is dead in the (stagnant) water.

The number of private renters has almost doubled over the last five years, according to the latest English Housing Survey, rising to 1.1 million families. Home ownership continues to decline. This means, suggests Shelter’s chief executive Campbell Robb, “that increasing numbers of children are growing up stuck on a merry-go-round of home after home, without the stability their own parents enjoyed when they were young”.

A report commissioned from Cambridge University by Shelter and the Resolution Foundation suggests that only a quarter of households will own a home with a mortgage by 2025, with record numbers pushed into private rental if woeful levels of housing delivery and economic stagnation continue. By 2025, the report suggested that private renting will be 22 per cent (up from seven per cent in 1994) of households, while owning a home with a mortgage will have declined from its 43 per cent peak in the early 90s to around 27 per cent of households.

Meanwhile, the latest from Shelter – a report commissioned from FTI Consulting – suggests that the housing market will never be able to supply the numbers of homes the country needs, meaning government has a long-term role to play in boosting supply.

At last month’s Westminster launch of ‘Understanding supply constraints in the housing market’, economist Vicky Price said: “This report found that for decades the supply of housing has fallen short of the level to meet demand... the report concludes there are fundamental issues about the nature of the house building industry and the housing market that raise questions about the appropriate role of the state in facilitating an economically and socially optimal level of supply.”

By any measure, then, housing in Britain is a mess, but maybe there is a silver lining in all of this, if not an actual silver bullet; some reasons to be cheerful if only we dare to think the unthinkable. Maybe it’s time for councils and housing associations to bite that bullet and embrace their core purpose – to force a little sanity into an insane market by providing decent homes, with secure tenancies, at genuinely affordable prices.

Some will no doubt scoff; for all the problems, Britain remains a nation of homeowners and some 80 per cent of people aspire to own their own home. Yes, but as the reports indicate, this cosy world-view is fast collapsing. Meanwhile, some 4.5 million people are knocking on social landlords’ doors for a social home – that’s quite a potential market. And it’s a market that can only grow as the housing dystopia tightens its grip.

The Shelter/Resolution report indicates that there is nothing ‘outmoded’ or ‘old fashioned’ about social housing. As it suggested within its findings, the tenure retains great social relevance: “Social renting continues to play a core role in provision, especially among those on low to middle incomes. Especially in the capital, social housing continues to house 46 per cent of low-income households. It supports lower paid workers in homes near their work, as well as providing housing for more vulnerable households...

“For families on low to middle incomes, private renting also becomes steadily more significant by 2025 if the economic recovery is weak, growing to 27 per cent in England by 2025. The rise of private renting is muted by the continued importance of social rented housing for this group, particularly in London where more than 50 per cent of low-to-middle-income families will still rent socially in 2025 if the tenure remains available to them.”

The report, and others, makes it clear that private renting is on course to become a significant tenure, whether we like it or not, but with demand exceeding supply it will be an expensive one pricing more and more households to seek social housing that – on current trends – won’t be there. Unless, that is, the sector actively challenges the historic residualisation of the tenure to open the way to the large-scale delivery of more new social-rented homes.

As the Human City Institute put it in the report ‘Beacons of Hope’: “In the new ‘age of austerity’ where social housing and those on low incomes and benefits are under attack, housing associations must resist the creeping commercialisation now under way and reverse the marketisation of the previous 20 years or so to rediscover their social purpose as campaigning, socially-driven organisations and as ‘Beacons of Hope’ to those communities that most need them.”

Battling to build new social homes is certainly one way of doing that. And in a context where that community of need is a fast-growing constituency, there’s a certain irony that it might demand a massive increase in the provision of socially-rented homes to rescue the ‘property owning democracy’ and provide the best means to help first-time buyers onto the property ladder. Nobody said it was ever going to be easy, addressing Britain’s housing crisis, but an effort of will is no doubt the most essential ingredient – all the rest is just problem solving. Well, given the worsening economic situation, the political mindset might be poised to change, with a little lobbying pressure, to provide the necessary willpower needed to finally make a difference.

As more and more voices are now saying, from senior politicians through economists and business leaders all the way to the International Monetary Fund (IMF), the UK’s economic situation is dire – and getting worse.

At the time of writing, Osborne’s capability – not to mention his position – as Chancellor is being called into question. The claims that austerity measures will heal the damaged economy are looking decidedly shaky, while the voices clamouring for the state to take a more interventionist, investment role in the economy are growing. House building on a mass scale is cited as a prime vehicle for delivering the jobs and the growth needed to drag the country’s economy out of the worst recession in half a century.

“The UK’s double dip recession is exacerbating the housing crisis, yet investment in housing could drive economic recovery and provide the homes needed by hard-working families who are locked out of the housing market,” said Gavin Smart, the CIH’s director of policy and practice. “Given [the latest GDP figures] it’s even more surprising that government has yet to make housing a priority in its growth plans. This needs to change and we urge government to recognise the role that housing investment could play in boosting economic growth.”

The balance of power could well be shifting, making this a pivotal moment for the sector to exploit. So, cheer up social housing. The future’s yours – if you really want it.