The UK housing crisis: a problem for businesses?
The UK is in the midst of a housing crisis. But should businesses care? And what, if anything, can they do about it?
Businesses are taking an increasing interest in the state of the housing market, particularly in London. London-based businesses pay the price for the housing crisis in a number of ways. The first is in cold, hard cash. An independent study by the Centre for Economics and Business Research found that London businesses paid an aggregate wage premium of £5.4bn in 2015 to attract and retain workers. The same study suggests that the rising cost of housing wiped out £2.7bn of consumer spending in the capital in 2015.
Another growing problem area is recruitment. The London director of the CBI, Lucy Haynes, said that the failure to build enough homes for London's workers is "eating away at firms' potential to grow and create jobs" and predicted that talented, skilled workers would increasingly overlook the capital for other cities, nationally and internationally. The September 2015 CBI London Business Survey found that 57% of firms cite housing costs and availability as negatively affecting their ability to recruit entry level staff, 45% for mid-level managerial staff and 24% for senior staff. One third of respondents stated that employees are leaving their jobs because their housing costs are too high.
There is also the harder to quantify cost of employees living in inappropriate accommodation - whether it's too cramped, too squalid, or too far away from work. Such workers are likely to be less productive, more stressed and more likely to take time off.
Whilst the roots of the housing crisis lie in decades of short-sighted government policy - and the country can only pull itself out of the mire with massive investment to boost supply - businesses are not powerless to make a positive difference.
Firms can use their influence to call for investment in housing across the UK, either independently or through organisations like the CBI. Housing is set to be the defining issue of the London mayoral election in May 2016 and in elections for the foreseeable future, and businesses should not hold back from demanding action on affordable housing.
But businesses don't need to wait around for government to respond. Many firms offer their employees interest free loans to assist with rent deposits and travel cards. Some firms, such as A&O, have folded bonuses into salaries, enabling employees to secure more favourable mortgage terms. Deloitte is helping its new graduate intake find housing in London by reserving flats for 85 employees in the former Olympic Athletes' Village, exempting them from credit checks, references, agency fees and the first two weeks of rent. Linklaters recently followed suit, albeit with only one employee taking up the offer so far.
There is huge scope for businesses to use their capital, flexibility and ingenuity to improve their employees' living situations. Those businesses which rise to the challenge could find themselves at a major advantage in terms of recruiting, and retaining, happy employees.