Can other countries show us how to solve Britain’s housing crisis?

Helsinki

The problems are well known: house prices are more than six times the average salary, private rents are up more than six per cent in the last 12 months, while homelessness rose by 14 per cent in the year to December 2023. The Centre for Cities think tank estimates there is a shortfall of 4.3m homes from the national housing market.

The solutions, however, could be a little less familiar. They might even come from overseas. From a tried-and-tested battle plan against rough sleeping, to a city-wide public housing scheme and – yes – planning reforms, The House takes a look at how other countries have approached the problem, to see if the United Kingdom could learn a thing or two.

Finland: Housing the homeless

Finland has come as close as any country to eradicating homelessness, having gone from about 20,000 homeless individuals in the mid-1980s to a little under 4,000 in 2021. For that it can thank its strict, decades-long adherence to Housing First, a strategy which prioritises giving homeless people secure housing above all else. 

Sanna Vesikansa, who was deputy mayor of Helsinki from 2017 to 2021, says: “We cannot wait for people to solve their mental health or social problems before providing housing. The lack of housing often causes a lot of those problems. We have to start by giving them a place to live.”

The UK is already trying to learn from the Finnish model, and has run pilots in Greater Manchester, Liverpool and the West Midlands since 2019. More than 1,200 people were being supported across the three areas by 2022. According to an update published in January, 92 per cent of participants were living in long-term, largely social rented accommodation a year after entering the scheme.

The idea is that alongside moving into a tenancy comes long-term, tailored social care support. Of the people housed in the UK pilots, 71 per cent have experience of drug use, 75 per cent spent time in prison, and 61 per cent report a long-standing illness or disability. “The social security aspect is very much attached,” Vesikansa says. “Housing First doesn’t work without that.” 

But you can’t move people into housing if there aren’t enough homes, says Christian Hilber, professor of economic geography at the London School of Economics (LSE). “That is much easier in Finland, where there is much more availability of land and a different planning system. Helsinki is not like London, which is already very densely populated in the central parts.”

Indeed, the government’s interim report on its three Housing First pilots from September 2022 notes: “The acquisition of sufficient quantities of suitable properties is widely regarded as the greatest challenge and ongoing risk to scaling up Housing First.”

Hilber adds: “If you were to somehow force local authorities to provide the spaces to build those housing units – or if you allowed people to build on parts of the green belt – then yes, it would work. But nobody is currently willing to do that.”

Vienna: A tenant’s paradise

The Austrian capital consistently ranks top in The Economist’s index of the world’s most liveable cities, in no small part because it is affordable. Rents in Vienna are, on average, about one-third of those in London, Paris or Dublin, according to accounting firm Deloitte. The reason for that is simple: the city owns most of the housing.

An enormous and sustained public building programme over the last century has left Vienna with 220,000 socially rented homes, and another 200,000 owned by non-profit housing associations. About 60 per cent of its 1.8 million people live in these Gemeindebauten, or “communal buildings”.

The complexes range from elaborate early 20th-century blocks with names such as Karl Marx-hof, reflecting the city’s socialist government of the day, to more modern schemes. They share an emphasis on quality and maintenance, intended to make them suitable for people of most incomes and to make social housing something that does not come with a stigma. Austria’s federal law also bans no-fault evictions across both the public and private housing markets. 

“There is a different attitude to social housing in Vienna to other cities,” says Kurt Hofstetter, head of strategic projects for the city’s housing department. “Here, it is not just housing for poor people, but for everyone to live together as a mix. That is why, for the most part, you can’t judge anything about the income of a person by looking at their address.”

Some cities in the UK were once in a position to replicate Vienna’s public housing strategy, says LSE’s Hilber, until it sold 1.5m units of social housing under Margaret Thatcher’s right to buy scheme. Now, the localised nature of the UK’s planning system and scarcity of land to build on make it a mammoth task to start from the ground up, he says. 

Hofstetter says he sometimes speaks to officials from German cities which also sold much of their social housing stock, and comes to the same conclusion. “‘You cannot just start again,’” he warns them. “It’s really difficult.”

New Zealand: Planning for the future

A solution, therefore, could lie with a more familiar concept: planning reform. New Zealand has more space and fewer people than the UK, but an even worse ratio of house prices to income, exacerbated by planning rules which only allow new detached houses across much of the country. In 2016, its biggest city, Auckland, changed the rules to allow for more density, allowing new semi-detached, terraced and small apartment buildings to be built on the same plots.

By 2021, Auckland was reaping the rewards, with five per cent more homes than projected on its previous trend. Rents fell two per cent on average, and six per cent for people on low incomes. House prices still grew, but by only 20 per cent compared to 70 per cent across the rest of the country.

New Zealand already had a zoning system, whereby land is divided into areas with different building rules for each – Auckland’s reforms involved ‘upzoning’, in which planning guidelines are changed to allow denser development by right. The UK, meanwhile, makes planning decisions on a discretionary, case-by-case basis in each local council. Anthony Breach, a senior analyst at the Centre for Cities, says this is causing a “bottleneck” in addressing the shortage of homes. 

The good news, he says, is that Britain is slowly moving towards a more efficient, more rules-based planning system, similar to zoning. The Department for Levelling Up, Housing and Communities published a revised National Planning Policy Framework in December, designed to pressure councils to swiftly process building applications. Critics argue the revision gives local authorities scope to build fewer homes than official calculations suggest are needed. 

More needs to be done, says Breach, as more global markets revamp their own planning systems and threaten to show Britain a clean pair of heels. Various countries in Europe, along with Canada and some American states including California, Minnesota and Texas, to name a few, have pushed ahead with zoning-based reforms in recent years.

Finland also has a zoning system, which is “absolutely” a contributor to why it was able to implement Housing First, says Breach. Finland’s number of homes per person roughly matched the UK’s in 1980. By 2015 it was 123 per cent of it, such is the scale of new housebuilding made possible by the system. 

The lesson? The UK might be a very different country – but perhaps more radical reforms could help it make up the housing shortfall, and unlock new possibilities akin to the success stories abroad. “The rest of the world is really changing on this,” says Breach. “If we don’t do anything about it, we’re going to get left behind.”

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