Charity researchers forecast that close to 600,000 people in United Kingdom will have no roof over their heads in the next two years. Further, it is predicted that these numbers would double in the next two decades. While this has mainly been attributed to the drastically changing economic times, a great percentage has been as a result of the continuous unavailability of affordable housing. That housing, let alone its presence and affordability, is critically important both in the establishment of economic success, as well as the improvement of social setting, is undeniable (Pelletiere, 2008). This paper evaluates the extents to which the government of the United Kingdom should intervene in the housing market to offset the rising disparity between available houses and the country’s population.
Some of the root causes of housing market failure
Empty housing
Among the primary causes of poor and inadequate housing within the United Kingdom sits the problem of under occupation or total inoccupation of several homes. While there exist a large number of property classified as derelict that are not considered inhabitable, it is important to note that there are several unoccupied homes and houses that are of particular interest as far as inadequate housing is concerned (Robert, 2011). Among the reasons why homes and houses continually remain empty across England include the critical need of repair on the property, contemplation of what to do with a previously rented out property, holding of property with the hope of a future rise in its market price, and the fact that various private investor may purchase such property with the hope of improving its condition, but in the process face financial constraints due to pressure from other projects. These, therefore, serve as the driving factors for continued incidences of empty houses in spite of the rising demand (Robert, 2011).
Figure 1 showing the proportion of households in relation to income in the UK (Retrieved from Robert, 2011)
Population growth and changing demographics
The population of the United Kingdom is one that has been on a continual rise, From 61.07 million citizens as at 2007 to 65.81 million in 2017. That the population would continue to rise is undeniable, given the advanced healthcare facilities in the modern world. Additionally, it is projected that a minimum of 250,000 homes would be needed in the coming years, a point that further intensifies the need for a proper and long-lasting solution to the continually worsening crisis (Julia, 2017).
Figure 2 showing the growth of human population within the UK (Retrieved from Julia, 2017).
Homelessness
With the rates of rise in Britain’s populations, that homelessness both in terms of human population and the consequent cost and burden to the economy stands as a real issue. In fact, homelessness costs an estimated amount of between 700 million and 1 billion Euros, both in extra costs and benefits. In fact, with the current policies of housing it is estimated that close to half a million people could possible become homeless within the coming twenty years, unless a drastic change is put in place. The pictures of citizens sleeping on the street pavements, within parks, and in various open places in the United Kingdom, London especially, continue to hit our newsrooms. Therefore, the necessity of government support to avert the crisis is inevitable.
Figure 3 showing the extents of homelessness within the UK categorized according to nature of accommodation. Predictions on the state of homeless are also shown (Retrieved from Julia, 2017).
Imperfect Information
The problem of inadequate housing within the United Kingdom has been worsened by the advanced extents of fraud within the sector. The housing free market has been greatly distorted by estate sales agents who not only continue to exploit home and estate seller, but also feed them with wrong information on the state of the market. This has contributed to an inherent fear to sell property. That it results in a large number of unoccupied homes is undeniable. Worse still is that this spread and use of imperfect information continues to render many homeless both with the fear to sell and acquire developed property.
Private and external costs
The cost of building of new homes not only within the United Kingdom, but also in other urbanized parts of the world is on a continuous rise. From the costs of acquiring land property to the costs of raw materials as well as human labour, the costs are barely favourable to low and medium class in the society. With the introduction of even more stringent regulations on the safety, these costs have gotten even higher (Pelletiere, 2008). The prices of acquiring proper housing continue to rise. At the same time however, the real wages across the United Kingdom remain fairly constant, with minimal rises that do not match the extents of rise in house pricing. The consequences of such factors on the state of the housing sector are palpable as many continue to languish in a state of homelessness, while others have to contend to with these high costs and strive to acquire homes at the expense of obtaining financial security.
Figure 4 showing the continuous rise in house prices within the UK (Retrieved from Pelletiere, 2008).
Analysis and Evaluation: Possible government interventions
Making available surplus public lands
An important step in solving the current crisis in the housing sector begins with the introduction of new home zones. The government should, therefore, critically help in unlocking new lands, and subsequently proceed to encourage, through provision of subsidies, medium and low class individuals to invest in building of new houses (Fischer and Sard, 2010). The process begins with empowering investors and various planning authorities in developing new estates in unconquered lands. This would help counter the continuous rise in population being witnessed.
Provision of incentives and loan guarantees to small home builders
The building of houses involves the services the small to major house builders. In the United Kingdom, the process is continually discouraged by the mere fact that many house builders, especially the small ones lack the required financial capacities to set up housing structures to house a large population. Therefore, to bridge this gap it is only prudent to continually mobilize small house builder through provision of incentives. That such small builders are short of proper financing is undeniable, and as such, the government should create a proper way of financing them to meet both the private and external costs (Ray et al., 2015).
Enforcement of land property utilization
While many continue to languish within poorly maintained houses, there still exist a huge proportion of lands that are unused yet lie within highly populated urban centres. That modern centres are already too densely populated to accommodate further development of housing facilities is false. As such, these unexploited lands could serve as important development grounds for thousands of proper houses (Fischer and Sard, 2010). However, private property owners are usually at liberty to use their lands, as well as empty houses, at their own will and time. Other citizens, in spite of the extents of housing crisis, cannot compel private property owners to develop their lands. The United Kingdom government should, hence, come in to ensure that all lands and housing property are fully utilized (Bolton et al., 2014).
Financing of local planning councils
The achievement of proper and adequate housing involves processes of inspection, planning, supervision and assessment of the setting of various urban centres. In the process availability and demand for proper and adequate housing, serve as critical determinants on the extents of expediency of the evaluation process. It, therefore, remains that the United Kingdom should fund local councils so as to ease the proper urban planning for the improvement of the state of housing (Ray et al., 2015).
Establishment of high density houses within the cities
Most governments own large portions of land in the free market (Lu and Toddler, 2016). Therefore, the government need to view it as a responsibility to create high density residential apartments that would serve to house a large population of homeless individuals. With the nature of modern markets where people prefer to rent rather than own, high density apartments would serve to promote settlement whether for a short or long duration (Ray et al., 2015).
Evaluation of government policy
Government policy in combating the growing problem of inadequate housing would involve several interventions. The entire process of realization of the proposed procedures are entirely based on the assumptions that it is either lack of financial support, inadequate private land property and poor planning of urban centres that result in the problem of inadequate housing. While government intervention intends to achieve mainly positive consequences, it is important to realize that the process would possibly result in a negative consequences on the private developers and investors in the housing market whose main aim usually entail making profit.
Additionally, that government intervention would possibly avert the state of affairs is an ascertained fact. The possibility of failure exists since not all government intervention provides permanent solutions. The provision of incentives and guarantees to house developers, for example, would possibly fail as people have a shown a negative tendency towards loans and mortgages (Tanvi, 2017). Finally, of the outlined possible plots of intervention, the process of making available surplus government lands, provision of incentives and guarantees, as well as the enforcement of proper utilization of land and empty houses by the owners would serve as the most important actions for implementation, since they stem from critical and leading causes of inadequate housing in the United Kingdom.