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How vested interests are prolonging the housing crisis

HousingThe hurling of paint at the Cereal Killer Café was, when everyone had finished either condemning or cheering it, profoundly depressing.

With good reason, no-one likes to be priced out of their town – especially when their replacements are comfortably middle-class, sell cereal and coffee at £4 a pop and indulge in fatuous and expensive pastimes. (With equally good reason, no-one likes seeing their cafe get a guerilla paint job.)

Yet many of those dubbed ‘hipsters’ represent more than anything else the proletarianisation of the middle class, eking out an edgy but ultimately impoverished existence in the creative or cultural sectors, crammed into flats that they are only slightly more able to afford than those who have been displaced. Even the money-making side of the cultural sector is under attack.

So a part-class war with loud overtones of culture war helps no-one, because hipsters were never the shock troops of gentrification. The old Docklands was razed in the 1980s while toy trains were built to hurtle bankers through Canary Wharf. The colonists built their prefab castles and threw up gates around them. By the time novelty beards and start-up offices in treehouses had arrived, they were merely the last colonists who’d missed out on the Gold Rush. Something much more serious than paint-throwing has to prevent the forced break-up of communities and spaces.

Planning

Five minutes away from Cereal Killer is Norton Folgate – a villagey array of attractive Georgian townhouses. A popular resident-led campaign to save it from levelling and redevelopment that managed to get all political parties on Tower Hamlets Council to agree that British Land’s plans for the Folgate should be thrown out. And yet…

Years ago, deputy PM John Prescott stampeded over local government to get the Vauxhall Tower thrown up. Those kind of powers are now enjoyed by the Mayor of London, who has taken the Folgate decision out of the council’s hands. He did the same at Mount Pleasant, at the same time as his billion-pound links to Chinese property investment were called into question. Boris exerts a suffocating grip  – but it’s not just him.

Half the Labour mayoral candidates took cash from developers for their campaigns. Town hall leaders across parties are wined and dined to the tune of thousands by the development market, and local politicians of all stripes are guests at MIPIM, the annual developers’ love-in that decides what parts of the city are due to be carved up next. Already large parts of London are corporate fiefdoms – Ballymore owns half of Blackwall, Land Securities the area around Victoria, Lend Lease has Elephant and Castle, and so on.

Since the introduction of the Town and Country Planning Act, the key to successful demands for on-site affordable housing, or a surgery or community space on a new development is a ‘viability assessment.’ Developers can rely on the resources of multi-million pound law firms to tell everyone exactly why affordable housing isn’t ‘viable’, whereas councils rely on overworked planning officers on lower salaries than their private counterparts.

Section 106 of the Act provides for money to go from developers to councils for additional affordable housing or infrastructure – which on the surface sounds fine. However since the cuts began, Section 106 money has been counted towards maintaining vital services.

Thus we have developers bragging in their brochures about killing off housing, poor doors and darkly comical planning stitch-ups, such as the Walkie-Talkie building, on top of which a public park was promised. We got some shrubs and expensive restaurants at the top of the building that residents have to book a week in advance to see.

The Conservatives want to worsen this situation by removing the requirement for developers to build affordable homes for rent, and lowering local business rates so councils have to compete to offer the sweetest deals to the private sector, meaning even less money available for investment.

Green belts and braces

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We need to build and building in the green belt should be something left and right can agree on. Only 2.27% of land in the UK is built on. Of the built-on land, thousands of homes lie empty due to mismanagement or oligarchs using them as assets. And so it is that homes in Britain are 40% more unaffordable than in the Netherlands, which is much more densely populated.

Reducing the green belt by half a mile would allow us to build 800,000 new homes. When people hear the phrase ‘Green Belt’ it immediately conjures up images of England’s green and pleasant land but it actually looks more like motorways, golf courses and commercial farms.

In 2012/13 England had one of the lowest house building rates since 1923; in the last 40 years the average house price to salary ratio has almost doubled while social housing waiting lists have almost doubled in the last 10 years.

Homeowners and their offspring benefit from keeping house prices high, and they are a demographic which not only vote in much higher numbers than the rest of the population, but are also more than twice as likely to vote Conservative (47% of them did in the last election.) It pays for the Conservatives to keep wealthy homeowners on side.

Central government caters to this with policies like the recently announced ‘Starter Home’ initiative. Local councils, overwhelmingly controlled by Conservative councillors in green belt areas, are catering to the same constituency. Fewer people vote in local elections, so the sway held by NIMBYs is much greater. As such, the number of homes built by these councils has been paltry in recent years, with housebuilding increasingly concentrated in the hands of a few large companies.

In other words, a coalition of Conservative MPs, councillors and homeowners has captured the planning system to prevent an expansion of the housing supply, inflating the values of their and their constituents’ homes, with huge negative externalities. Meanwhile not enough people are trained in the kind of skills necessary to build necessary new homes (partly because we haven’t been building many) and providing people with skills takes time.

The case for Corbynite modernisation of industry has never been stronger.

Landlords

So keen are the Conservatives to promote landlords’ interests at all costs that two of their MPs wrecked a debate on a bill containing the modest proposal to not allow landlords to boot tenants out on a whim. There are other avenues for landlord petty vengeance, including egregious cases such as that of Mike from Shadwell, whose rent was nearly doubled after he reported hazards in his flat.

Then there are simply unscrupulous rent rises, such as the richest Conservative MP in the country deciding to hike up rent on an estate he owned beyond what residents could afford.

Substandard living conditions run rampant across our cities now, creating problems from poor public health to educational disadvantage. Councils have powers under the 2004 Housing Act to regulate the private rented sector over poor conditions. Only a few English authorities avail themselves of such powers. More could, and the law could be amended to allow rent controls to be introduced by local authorities to curb anti-competitive renting practices if necessary. And whilst we wait for new social and private-rented houses to be built, a national cap on rent increases should be implemented to curb costs. Already such measures have mass public support.

Public landlords can be criticised too – Newham council went down in infamy for the eviction of several dozen homeless single mothers last year, while Barnet’s Conservative cabinet member for housing believes social cleansing is a good thing. The mayor censured for his treatment of the mothers his council evicted, and the Southwark councillors that saw helicopters and riot dogs sent to combat a peaceful occupation of an estate earmarked for demolition are among those that could be held to account, especially by their local Labour parties.

Margins

Unsurprisingly, the poorest are the hardest hit. The housing benefit cap has thrown thousands out of many London boroughs already. Local government cuts have removed infrastructure, advice, community centres, libraries and lifelines for those that remain. The soaring costs of transport, energy and utilities pile further pressure on renters. The bedroom tax (which has utterly failed in its stated aim of raising money) continues to deliver a trickle of already suffering people to the courtrooms, whilst panic rooms are classified as ‘spare rooms.’

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The ongoing shortage of social housing leaves hundreds of thousands languishing on waiting lists, in overcrowded, substandard or otherwise inappropriate locations. And young people are barred from housing benefit altogether now – a punitive measure that most affects those without the security of a family home.

Homelessness continues to creep up. There are 1900 homeless families in one East London borough alone, by Shelter’s figures. Some councils are cracking down on rough sleeping and cutting other services aimed at homeless people. But remember ‘your kindness could kill’. So don’t give them any money. Too often, their town halls often won’t.

The property-owning plutocracy

The Conservatives genuinely believe that the whole mess can be fixed with ownership. This is despite the fact that Right to Buy, Thatcher’s most popular policy, has been an unmitigated disaster. It fuelled a housing bubble and buy-to-let homes. It undermined social cohesion and mobility and made social housing exclusively for the ‘underclass’. It fuelled organised crime. And to top the lot, it helped decrease home ownership!

Their new ‘Help to Buy’ plan has helped fewer than five people in most London constituencies, and zero in twenty of them. Their plans for ownership at the moment include forcing housing associations to sell property in a move that benefits only the tiny few social tenants that can afford to buy. They also want to force councils to flog even more social housing.

The cherry on the top is Cameron’s newest starter homes plan. The starter home initiative will provide first-time buyers with a 20% discount on homes valued up to £250,000 outside of London, and those up to £450,000 within the capital. So, if you were going to buy a house worth £350,000 in London, it will now cost you £280,000 – a substantial decrease, but still out of the reach of many. By 2020, the median house price in 80 local authorities, even with the 20% discount, won’t come under the £250,000/£450,000 threshold.

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In other words, there aren’t enough homes worth less than £250,000 in many places for the subsidy to even have an impact. In fact, in the most overcrowded areas house prices increase by 20% every year – so the discount will only put first time buyers back to where they were a year ago. Those on the living wage would be priced out in 98% of local authorities. So maybe demand will increase, but only for those people who could already afford a house – i.e. not a lot of people. A second question is whether supply will increase to meet this demand – if not, we will just see house prices rising further. Cameron is banking on the fact that the discount will act as a subsidy to builders, who can now sell £250,000 houses at the rate they would usually sell those worth £200,000.

However without planning reform there isn’t a great deal housebuilders can do to build homes that people actually want in the numbers that they are needed.

The right to buy one’s council home should not disappear, but we see no reason why social tenants who have benefitted from social rents should be given huge discounts, or why councils should be banned by central government from reinvesting Right to Buy earnings in new social housing.

Homes to call our own

Right to Buy was popular in the first place because the state was an inefficient manager of social housing as well. Poor building quality, corrupt council landlords, incomplete repairs and petty restrictions on what colours you could paint the walls blossomed. So it was no surprise that when people were offered the chance at ownership, they snapped it up.

Any new approach would have to fit in with modernised nationalisation – public, rather than state control. Tenants’ and Residents Associations, housing campaigns and renters’ groups must be given a proper seat at the table, rather than de-recognised when they say the ‘wrong’ thing. Planning and regeneration should be a collective and democratic process informed by residents’ wishes. And in the here and now, our TRAs and renters’ groups should be strengthened and linked up with grassroots campaigns like Focus E15 through political channels like the new Momentum movement.

On substantive policy, the way forward is clear. Planning needs to be planned – taken out of the hands of runaway developers and put into those of democratic bodies and genuine housing experts. Housebuilding needs to actually build – and build products that people need rather than products that look good in manifestoes. An (un)affordable starter home to get on the property ladder is a lovely idea, but what people actually need are places to live, in sizes, types, payment models and places that provide security, safety and happiness tailored to the residents. Social housing needs to be social – community-based, not necessarily just for the poor and expanded to accommodate all those who need it. We need to encourage fair play and responsibility among landlords and penalise those that refuse.

Central government can undoubtedly play a role in overcoming the collective action problem of NIMBYism and taking on vested interests. From hipsters to homeless people, more of us are being edged out of the housing market to protect vested interests and it won’t be long before we realise it.

The solutions we offer here are credible, profitable and ultimately unavoidable. But with our homes, communities and even the freedom to walk our cities slowly slipping from our nation’s grasp, they require nothing short of a housing revolution.

This post first appeared on Leaders of the Opposition.

2 Comments

  1. Jim says:

    Most of Scotland is uninhabitable and comprises a large portion (for now) of the geographical area of the UK. Your population density comparison with the Nederlands is thereby deeply flawed and opens up the rest of this article to ridicule. This is a shame as there are fundamental problems with housing that need addressing. Spinning the facts is a distressing Blairite tendency that should be dropped. The housing crisis will resolve itself when the rich realise that the poor can’t afford, first to live, and then to travel to work in these areas to service their lifestyles. Labour had loads of time to address this situation – and did nothing

  2. Bazza says:

    Interesting how Neo-Liberal Cheap Labour is now coming for the professions.
    The Tories have carved up Probation, are taking on the Legal Profession and have been eroding the pay, conditions plus pensions of University and College Lecturers and now it seems it is the turn of doctors with round one with Junior Doctors.
    There was a very moving junior doctors rally in my area last night (about 2,500 attended including supporters) and wonderful to see that the junior doctors are not passive citizens and are willing to fight to exercise their democratic rights against the Tory Government re pay, conditions and patient safety,and to save the NHS.
    Labour needs to appeal to the working class, the progressive middle class, the 19.5m of non-voters, and to try to politicise the general middle class who are socialised by the Tories to support them (including by the Tory papers).
    Hopefully the times they are a changing.

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