Some 800,000 people in London are waiting for council homes, and rocketing private rents take up an unprecedented proportion of people’s income. The city’s most expensive house recently sold for £300 million and its most expensive flat for £65 million—not counting sales carried out secretly through shell companies.
Much of the political debate has focused on a need to build more houses. But in his provocative new book All That Is Solid, Danny Dorling argues that while some building is necessary, the main problem is inequality.
“I was shocked at the amount of money being charged for rooms,” he told Socialist Worker. “In some places often whole families are having to rent one room, with four families in a house. Even very well paid people are finding it hard to pay the rent.
“But it’s not that we’ve suddenly demolished a load of property and there isn’t enough space. And although we’ve had an increase in population it hasn’t been that big.”
Dorling points out that even in inner London, there are more bedrooms than people. “In fact the number of people living in the rich areas has been going down and down, so affluent people are using more and more housing.”
The average price of a flat in Kensington and Chelsea recently passed the £1 million point, but the borough’s population is decreasing. “People are being shoved in to tiny amounts of space, in effect so that other people can have giant mansions,” said Dorling.
“Most people are becoming poorer, and people in the bottom half of society a lot poorer. But the people at the top have seen their incomes going up and that means they can afford higher prices.
“This inequality is leading to a rise in prices and rents. It also means they can afford to become landlords more often. We’re seeing an increasing number of people becoming landlords and existing landlords buying more properties.”
Dorling points to research showing just how much of Britain’s housing has been snapped up by landlords. In five years the value of homes held by mortgage holders in Britain has fallen by £169 billion, while that of those rented out by landlords rose by £245 billion.
Just 2 percent of the population are landlords—but 25 percent of MPs.
In one embarrassing incident David Cameron couldn’t even remember how many houses he owned. The answer was four—and Tony Blair owns more than that. So Dorling says it’s no surprise that governments keep boosting landlords.
“The government had a series of policies shortly after coming into office in 2010 to underwrite landlords. It meant they could borrow more money from banks to build or buy up more houses. It continues with all the tax relief to landlords, such as on mortgage interest.”
Much of the problem can be traced back to Margaret Thatcher, starting with her flagship Right to Buy programme that bribed council tenants to buy their homes. “Right to Buy was, initially, the biggest ever transfer of wealth to the poor that’s happened in Britain,” Dorling argues. “But then the houses are sold again, and often sold to landlords, so in the end it’s the private sector that owns them.”
Within three decades almost half of Britain’s council housing had been sold off. Thatcher also scrapped rent controls, allowing landlords to charge as much as they could get away with. But “by far the most important” change, according to Dorling, was housing benefit, which “began under Margaret Thatcher as a direct transfer of wealth to landlords”.
Despite the constant demonisation of people who claim benefits, housing benefit is the most expensive working age benefit—and not one penny of it goes to claimants.
The housing benefit bill has gone up by a third under the coalition, to £35 billion a year. Some 85 percent of the rise in claims since 2009 has been from households where someone is in work
“There’s lots of this that began under Thatcher, was continued under John Major, and was not reversed by New Labour,” said Dorling. “So we’re really seeing a continuation of policies that are very similar and moving in one general direction.
“It’s resulted in a system where now one in four kids in England live in a house owned by a landlord.”
Dorling makes a number of suggestions for how the situation could be improved. He wants to see laws enforced against landlords, and tenants given new rights such as five-year tenancies. “In the US, which is hardly a progressive country, they have land taxes and property taxes to encourage people to use housing more efficiently,” he points out. “Anything that would dampen down landlords’ fever to buy would help.”
All this is the opposite of what the government is currently pursuing.
“I support building homes,” said Dorling. “I hope more people will want to live in this country in the future, so there will need to be building so that they have somewhere to live too.
“But at the current population we could have enough housing for everyone just with a bit of redistribution. When politicians talk about building, it’s partly trying to distract people from asking why can’t we share out what we’ve got in a better way.”
Many regions of Britain have a housing crisis that is the exact opposite of London’s. In Hull the average home costs £70,000 and falling in 2013. In Dorling’s former home city, Sheffield, council tower blocks have been demolished and the private ones that replaced them stand empty as no one can afford the rent.
“The government has a tacit policy to let the south east and London grow as fast as possible and not to worry if that means there are fewer jobs created in other parts of the country,” he said.
Dorling points out that regions outside London have borne the brunt of the government’s civil service job cull. “That’s even direct government action driving it, moving jobs and work into the most overheated part of the country.”
The madness of the capitalist system is that ordinary people lose out whether house values go up or down. “The situation makes it really hard to live in London,” said Dorling. “People campaign for a living wage, but there’s no living rent.
“And at the same time in the poorer parts of the country you’re looking at demolition of properties, at values going down and down, communities slowly dying. Life is getting worse for most people both in the south and the north.”
When the bubble bursts
Even Tory chancellor George Osborne has acknowledged the danger that his policies could be feeding a housing bubble.
“Now the government has this Help to Buy scheme that should be called Homes for Votes,” said Dorling. “It is a stupid scheme whose only purpose is to keep house prices up until the election. The quicker it goes the better.”
This new bubble in house prices is creating much of what appears to be economic recovery. By 2013, Dorling writes, one in every three new jobs in Britain were new (often temporary) employment as an estate agent.
“The most likely way this situation is going to change is if it reverses itself,” Dorling warns. “Sooner or later there will be a crash.
“For instance if rich Russians decide they are a bit unsure about owning property in London given what’s happening in Ukraine, that’s all it would take to begin a crash at the top end of the market.
“Or longer term, think about the young people who are getting into very large debts to go to university, and then when they get work, tending to get less well-paid. But houses cost an average of half a million pounds in many parts of London and they’re going up fast. So who’s going to be able to buy this house in ten years time?
“Things are boiling up and brewing there, and we’d be stupid to be surprised by it. We need to look forward and ask, is there a way to deal with it?”
Dorling warns that the wrong policies could lead to repeats of the housing market crashes in other countries. “We should be worrying about mass evictions like they’ve had in Spain and the US. So many families have been put out on the street because things have gone wrong.
“In Ireland you’ve had a halving of house values. We shouldn’t imagine that what’s happened there could not happen here.”
Dorling argues for a “Right to Sell”—the opposite of the Right to Buy, where instead of being evicted people who fall behind on their mortgages would have the right to stay in their home as council tenants.
Bedroom tax aimed at poor
Dorling is furious about the bedroom tax. “It’s like bringing in a poll tax but only applying it to the people who have least,” he said. “It’s going to cause an enormous amount of misery and strife—and it’s not going to get us more bedrooms.
“We’ve never had more spare rooms per person and we’ve never had so much empty space. As many as half our bedrooms or rooms that could be bedrooms are currently not slept in every night.
“But the part of housing that has got the least spare rooms is in social housing—council housing and housing associations. They’ve gone for the part with the least spare bedrooms and imposed a tax on people with one spare or two spare bedrooms.”
After a massive rise in 2011, the richest 10 percent of people in Britain have five times as many rooms per person as the poorest 10 percent. And in London, the Evening Standard newspaper reported that 700 “ghost mansions” worth £3 billion lie empty and unused.
“I would start at the opposite end to the bedroom tax,” said Dorling.
“Instead of stopping at H or I, divide the top council tax band into bands that went all the way up to M and N. If you’re in a large property worth a lot of money you’ll be paying a large amount. That would encourage people in the largest and most expensive properties to downsize.”