Housing

 

Left to right: Betiel Mahari, Helen McDonald and a fellow south London resident at the Loughborough Park Estate near Brixton. (Photo © London Intelligence, 2015)

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Homes and neighbourhoods can provide a solid foundation for family and community life.

A profound human right to housing in London means every Londoner would enjoy a decent and genuinely affordable home. This unequivocal right would reflect a civilised society – where everyone wants everybody else to enjoy a reasonable home. Freed from housing pressure and stress, Londoners would be able to live within secure neighbourhoods and contribute to a thriving community life.

But 21st century London housing oppresses rather than liberates. Housing in London is not valued as vital infrastructure necessary for a decent and civilised society. Instead, housing is priced as a ‘real estate’ commodity to be bought and sold for profit. Average house prices in London rose by 3.7% during 2017 to reach £486,000, compared to £205,937 across England and Wales. Many London homes are now global commodities – often left uninhabited and treated as ‘golden brick’ investment vessels. Developers selling newly built homes to cash-rich overseas buyers continue to drive up prices – as do homes sold to companies based in tax havens. Both deprive working Londoners who need genuinely affordable homes for their families.

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Global commodity

Housing in London therefore is not simply technical or economic but deeply ideological and political. Housing is subject to the dominant trends of London’s political economy – just as much as land, labour and other capital assets – and, in 21st century London housing remains a plaything of market forces. Even state-funded public housing is now a private commodity, described by estate agents as ‘ex-local authority’ homes.

This market domination of the distribution and cost of the city’s housing is the product of a deeper neo-liberal free market ideology that has defined London’s political economy since the mid-1970s. London’s ‘real estate’ market hyper-commodifies housing, and the land on which that housing can be built, dictating where housing is built and for whom.

This would not be a problem if the swollen tide of hyper-commodified real estate ‘lifted all boats’ or created a ‘trickle down’ of wealth that could be invested in new homes for Londoners living in the real economy. But London’s hyper-commodified real estate market fails to provide a sufficient supply of new and older homes to meet this rising demand. Millions of Londoners on stagnant average and lower incomes struggle to secure a genuinely affordable home for themselves and their families. The overall result in London is that hyper-commodified housing liberates capital but oppresses labour.

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Rent

London’s rental market is also broken – at least as far as working Londoners are concerned. Rent rises for one million New York apartments are legally stablilised. Berlin landlords cannot raise rents more than 10% above a local average. But London’s growing housing rental market remains uncontrolled.

Prime Minister Margaret Thatcher abolished rent controls via the 1988 Housing Act. Landlords and property agents then constantly charged increasingly higher rents for smaller properties. Average market rents in London rose to 62% of average household income by 2016, standing at £1,246 per month in December 2016, slightly down on the previous year but expected to rise in 2017.

‘Assured shorthold tenancies’ dominate London lettings. This one-year contract usually comes with an eight-week ‘get out’ clause for both landlord and tenant. However, in practice, a significant minority of landlords and agents subject tenants to rising rents and provide poor maintenance and repair.

In 2017, Londoners voice increased support for rent control measures, such as rent indexing, stabilisation, longer and more secure tenancies, and of a ‘London living rent’ where rent could be capped at one-third of average incomes.

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The state and housing

The dual oppression of labour and liberation of capital arises from London housing that is based on profit rather than need – even though everyone needs a decent, genuinely affordable home with a secure tenure. Politicians routinely prohibit the state from providing Londoners with genuinely affordable housing at subsidised prices, controlled rents, and with secure tenures. Indeed, politicians and media focus eagerly on house price increases but turn a blind eye to the social cost of London’s booming real estate market. They routinely denigrate and diminish the potential role of the local state to provide new genuinely affordable public housing.

The right to buy, established by Prime Minister Margaret Thatcher in the 1980s, allows tenants to buy – and sell at a profit – their rented council homes from their local councils. Buyers are aided by an enticement in the shape of a sizeable discount. This ‘right’ might have had neutral consequences but politicians refused to give local councils the right to use sales receipts to replace the tens of thousands of council homes lost to the market.

Many London local authorities – including those controlled by social democratic Labour politicians – also sell public land cheaply to developers who then profit by building expensive luxury homes in so-called ‘regeneration’  developments. Developers then use profit viability assessments to renege on previously agreed levels of so-called ‘affordable’ new homes for Londoners on average and lower incomes. Many of these Orwellian ‘affordable’ homes, some even provided by housing associations, are simply beyond the means of Londoners on average and lower incomes.

Furthermore, many developer-led ‘regeneration’ schemes involve the demolition of large council estates and the destruction of established communities. Tenants and leaseholders find their homes are subject to compulsory purchase orders. These householders are ‘displaced’ to other distant parts of their boroughs and even out of London altogether. Developer-led ‘regeneration’ schemes, sanctioned by elected local politicians, effectively shunt people from their neighbourhoods and tear them away from their family, social and community ties. Many Londoners call this process ‘social cleansing’.

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The market state

In these ways, the hyper-commodification of London housing tears the established fabric of London community life and radically alters the city’s demographics. London increasingly becomes a city primarily for more affluent people. Wealthy ‘high net worth’ people still enjoy their almost traditional run of areas like Mayfair, Knightsbridge and Hampstead. But London’s overheating housing – or real estate – market means the more affluent and ubër wealthy now colonise parts of London, such as Shoreditch, Brixton, Elephant and Castle and London’ docklands, areas where working class people used to live in reasonable security often in public housing.

This displacement becomes so widespread that Londoners believe elected local politicians and appointed officers are colluding with corporate developers on developer-led ‘regeneration’ schemes. They see local politicians and officers making ‘behind closed door’ deals over public land and homes at real estate market conventions and ‘forums’. The public also see ‘revolving doors’ where council planning officers who work in housing and ‘regeneration’ are later recruited by property developers for their insider knowledge.  This further blurs the line separating the local state and the market. In some areas, the line blurs to the extent that it appears that a de facto market state has arisen in many parts of London.

A small clutch of local authorities in London, saddled with a chronic shortage of genuinely affordable housing, even form their own private companies in 2016-17. These councils use their companies to sell or rent market homes to generate income that the councils can later use to deliver more subsidised homes elsewhere. But these efforts by sections of London’s local state to ape the market remain limited and patchy – and income generation still depends on overall housing market values remaining overheated. The government also says homes built by these local council development companies might also be subject to the right to buy.

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Financial violence

Similarly, market forces dominate and diminish housing association provision of subsidised housing for Londoners on average and lower incomes. In the first decade of the 21st century, housing associations let go much of their original philanthropic aims, opting to become more like profit-hungry market landlords and private developers. In 2016, politicians marketise housing associations even further – by legislating that they must sell their stock to individual tenants who want to exercise a new ‘right to buy’. Worse still, the subsidy for these homes must come from money taken from local authorities that are required to sell off their most valuable council homes. Council homes are once again lost to the private market – this time, to allow housing association tenants to buy their rented homes. Housing associations wilt in the face of this pressure and agree to pilot the scheme in 2017.

This domination of housing in London by an overheating real estate market means many Londoners simply cannot afford to sustainably buy or rent a home. Londoners are stressed by this oppressive denial of genuinely affordable housing. The state of housing in London involves a level of financial violence that cramps the lives of Londoners and limits what Londoners’ children can become in the future.

Market forces did not always prevail over London’s housing supply. Local councils built hundreds of thousands of new publicly funded homes to meet the needs of Londoners in the two decades after World War II. The supply of new homes to meet demand requires political will – like any other form of social provision.

But political will to build enough new genuinely affordable homes is in short supply in the first two decades of the 21st century. Indeed, the dearth of genuinely affordable homes is described as a ‘housing crisis’.

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Boom for the few, crisis for the many

Of course, London’s housing crisis for the many is a by-product of London’s housing boom for a few. The wealthy few, plus London’s ‘real estate’ industry, enhance their wealth by enjoying profits from rising houses values and rents. Capital, meanwhile, including London’s indigenous wealthier class and a vast wave of new foreign investors, benefits enormously from perpetuating this boom and crisis.

Housing in London – hyper-commodified as real estate – is now seen as a magnetic safe haven for profit-seeking global capital fleeing from economic and political turmoil, and war. Housing, as a primarily financialised product, requires interest-bearing loans, commissions and fees to a plethora of lenders, surveyors and agents.

And, of course, hyper-commodification also needs householders to think of themselves as individuals with a consumers’ right to buy a home rather than as citizens within a society where everyone has a human right to a decent home. Hence, politicians and media routinely seduce and socialise people and housing providers into obsessively pursuing home ownership.

For instance, the survival, revival and extension of ‘right to buy’ in the second decade of the 2lst century shows how a free market ideology continues to dilute state provision of public housing at a time when people need it most.

In this way, the capital’s housing crisis reflects wider and deepening inequalities within London society and its everyday life.

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© Paul Coleman, London Intelligence, London 2017