“Investing in housing is a form of preventative expenditure”

What will the housing market look like in 2040? If there was someone who can reply to this question, then this would definitely be Mark Stephens. With more than 20 years of experience in research and policy analysis, he has been following very closely and he has been documenting developments related to housing and poverty as well as housing and mortgage market instability.

Currently a Professor of Public Policy at Heriot-Watt University of Edinburgh Stephens has played a leading role in a number of large-scale evaluations, including the EU Study on Housing and Exclusion (European Commission, 2010), the Joseph Rowntree Foundation Housing Market Taskforce (2011), and the Evaluation of English Housing Policy (Office of the Deputy Prime Minister, 2005). He is a member of the European Network for Housing Research Co-ordination Committee, a co-ordinator of its working group on Comparative Housing Policy and an Editor of Urban Studies.

His recent and current projects include an international study of social security entitlements of young people, a study of housing and poverty over the life course, replacing the Council Tax with a fair system of property tax, and devolving Housing Benefit and social security to the Scottish Parliament.

Based in Lanark, Scotland, Mark combines his academic role with field work as he is a Director of New Lanark Homes and Chair of Save Our Landscapes, a community-based campaign that has been fighting to save the New Lanark/ Falls of Clyde landscape from being destroyed by a quarry since 2011.  

How has crisis changed the balances in Europe regarding the housing markets? What could be a convincing argument for governments to finance social housing in times of austerity? And finally, is there a city that focuses on its people’s needs that could pave the way for others? Professor Mark Stephens responds…

You have focused your research in housing and poverty and you have been running stress tests of the housing markets. How has crisis changed the balances in Europe?

One of the key questions that I have attempted to address over the past 15 years is whether housing reduces, amplifies or merely replicates income inequalities. In theory it could do any of these things. The evidence suggests that the same system can do all three. For example, social housing, housing allowances and owner occupied houses owned by poorer people without a mortgage can help to weaken the link between being income poor and living in poor housing.

However, if people living on low incomes are trapped in market rental housing then the link between being income poor and living in inadequate or unaffordable housing is strengthened. And when high income people are able to acquire housing assets, and these increase in value, then we really do see housing acting as an engine of inequality.

Overall in Europe the tendency has probably been for housing overall to weaken the link between income poverty and housing poverty. But that is changing, partly as a result of the crisis. We are seeing less emphasis placed on social housing in many countries, and more emphasis placed on the market. Whilst mortgage markets have been relatively subdued since the crisis, it is not clear that governments have really tackled the underlying causes of the instability that hit the housing markets in Spain, Ireland and the UK.

Such instability exposes many people to risk, but of course it is the poorest who are most exposed and suffer the most. Meanwhile the low interest rate policies operated by the ECB and other non-Euro central banks have aided those people who are able to borrow to acquire assets.

During Housing Europe's thematic session on July 2nd you'll address an audience of practitioners from the social, cooperative and public housing sector around the theme 'Why and how to finance social housing in times of crisis?'. What do you think is the most convincing argument for housing providers nowadays in their struggle to attract funding?

When money is short, governments find it easiest to cut capital expenditure. It doesn’t involve taking money away from anyone directly, and the effect is felt in the future. Indeed we have seen instances where governments see healthy balance sheets in the independent social landlord sector and see these as a tempting target. I think we’ve seen this in recent years in Denmark, the Netherlands and the UK. We need powerful arguments to counter the opportunistic downgrading of housing.

One of the strongest arguments that can be used is that investing in housing is a form of preventative expenditure. Good housing improves physical health and wellbeing, it provides kids with a warm and secure environment in which they can prepare their schoolwork, security can give people who have become marginalised the confidence to re-enter the labour market. If these things are neglected, they will cost governments far more in terms of health spending and unemployment benefits down the line.

But I also think that social landlords need to do more to reconnect with the communities that they serve. Europe now has some very large landlords which are often justified on the ground that they can access the financial markets. There is a danger that they become remote from their tenants, and the communities that they serve.  I very much support the idea of “housing plus” – social landlords taking on wider role activities and becoming “community anchors.”

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