Socialist Worker

How Tories let the market bring chaos to our homes

by Ken Olende
Issue No. 2367

Tenants and campaigners from across the country rallying in London against government attacks on housing.

Tenants and campaigners from across the country rallying in London against government attacks on housing.


Once more we are being told that the market can sort out the housing crisis and that rising house prices are a sign of better things to come. 

The truth is that the disastrous policy of letting the neoliberal market rip through housing has created the crisis. It won’t end until planning is brought back.

House prices have kept rising while wages have been held down—something that has become worse since the recession. 

The crisis was engineered through Margaret Thatcher’s right-to-buy policy, introduced in 1980 to destroy council housing. 

Over two million council houses were sold off at up to 60 percent of market value. Councils were banned from spending even this reduced amount on building more housing.

Multi-millionaire Charles Gow and his wife now own at least 40 ex-council flats on one estate in Wandsworth, south London.

His father, Ian Gow was Thatcher’s housing minister at the peak of right-to-buy. 

Almost half of ex-council properties in the borough are now sub let to tenants, a survey by the GMB union has found. 

Council

Of the 15,875 council homes sold by Wandsworth Council under right-to-buy—6,180 are now privately rented.

This is the reality of Thatcher’s promised “property owning democracy”.

In many areas racists complain that there is no council housing available because of immigration.

The truth is it is not available because it was sold off and never replaced.

Meanwhile people who rent privately have had their tenancy rights reduced (see below).

Nine million people rent from private landlords in Britain, many in overpriced, substandard homes with insecure tenancies. 

The supposed solution of buying a home is out of reach for an growing section of the population and becomes part of the problem not a solution.

And the recent upsurge in house prices that has excited the Tories so much has economists worried that Britain faces a new housing bubble.

The free market has not encouraged new building of affordable homes because it only sees profit at the luxury end of the market. 

Even the government’s own figures show that there are 810,000 privately owned vacant homes in England.

The most recent English Housing Survey, published in July, says that for private renters, rent averages at  41 percent of their income.

And for people in social housing it is 30 percent. Owner occupiers typically spent 19 percent of their income on mortgage payments. 

But even if people with mortgages aren’t as badly off as renters, we would all be better off with a planned, rational housing policy. 

So what does Labour plan to do about it? Shamefully, Ed Miliband said in a 2011 speech, “Some of what happened in the 1980s was right. It was right to let people buy their council houses.”


We need council housing

The rise and fall of social renting—largely council housing—was dramatic. 

In 1918 just one percent of households rented social housing. 

Public housing was introduced after the First World War to counter the chaos caused by the market. 

It grew massively after the Second World War, peaking at 31 percent of households in 1981. 

It was never intended just as a safety net for the very poor.

Labour minister Aneurin Bevan said in 1949, “the working man, the doctor and the clergyman will live in close proximity to each other”.

The vast majority of people would be better off if we returned to mass council house building. 

It exercised control over the worst of private renting while  promoting tenants’ rights and rent controls. 

But the current trend away from house buying is not a sign of a return to a fairer system of council housing but to the unregulated private rental market.


Bloodsuckers who buy to let

The Tories have always loathed Rent Acts which protected private tenants from eviction, claiming they discouraged private landlords from letting.

The 1988 Housing Act removed security for private tenants, and created the Assured Shorthold Tenancy, which allows landlords to evict tenants. 

At a stroke private rentals became easier and more profitable for landlords and harder and more stressful for tenants. 

Then buy to let mortgages were introduced in the 1990s to make it easier for middle class people to become landlords. 

The past decade has seen an 8 percent increase in the number of private tenants.

This encouraged house prices to rise. Landlords gambled on profits made from selling houses at a greater price after their mortgage had been paid by tenants.

With little encouragement to new building, buy-to-let speculators just compete with people buying houses to live in. 

The speculators have the advantage of easier loans and government tax breaks. 

And while ordinary people are priced out of buying, private rents are unaffordable to people with average incomes in more than half the country. 


The symptom—not the cause

 Rich investors from overseas also take advantage of the market that benefits landlords, but they did not create the problem.

These people are buying property as a secure investment, not to provide homes.

Many have luxury properties as holiday homes in the wealthier parts of London such as Mayfair, which are kept empty for most of the year. This pushes up the price of housing. 

But it’s a symptom of the disease, not a cause. The blame lies with the Tories—not “foreign sheikhs” and “oligarchs”.


House prices keep rising

Usually mortgage companies lend three times a buyer’s annual salary. 

But house prices now average more than five times people’s income. And the situation is much worse in cities like London.

People who do get a mortgage are saddled with debt. 

But the level of home ownership has started to go down because more and more people can’t afford a mortgage.

Home ownership peaked at 69 percent in 2001, but has fallen to 64 percent.


Struggling to keep a home

Housing charity Shelter says that over two million people struggle to pay their rent or mortgage or are falling behind with payments. 

Second home ownership is pricing local people out of many rural areas.

Over 1.7 million households are now waiting for social housing.

Some homeless households—often with children—wait for years in temporary accommodation.

Families renting privately on low incomes often suffer poor living conditions and little security.

 


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