No easy fix for UK housing crisis
As a chorus of smug voices love to remind you, if you dare to complain about the state of the London housing market, owning a home in the British capital is not a God-given right. Which is just as well, really, given that it’s unlikely to ever be a possibility for most people.
A new report by the National Housing Federation has confirmed what anyone who’s spent much time idly browsing online property listings already knew: no matter how diligently you save, buying a home in inner London is a pipe dream unless you’re earning the kind of income most people will only ever dream of.
To purchase the average London property by 2021, we are told, you need to start putting away £2,300 (101,000 baht) per month now. That’s more than the entire take-home pay of someone on the city’s median salary of £34,000.
Meanwhile, extortionate rents and incremental rises to other basic living costs such as food and council tax mean that even people earning double that average might still struggle to save the necessary cash to put down a deposit. In fact, the National Housing Federation estimates that a prospective buyer would need an enviable household income of almost £130,000 a year to make it a viable option.
Of course, the fact that even the middle classes are now affected by rising housing costs is the reason this issue is now receiving so much attention. There has been much discussion about Theresa May’s decision to abandon the Thatcherite commitment to a “home-owning democracy”; that is, to policies which assume that owning property should be an ambition for everyone and treat renting as a temporary solution.
The recent Housing White Paper from the government does include new ideas to deliver more affordable and secure rental agreements, and to threaten tougher penalties for rogue landlords.
Even after the shift towards majority owner occupancy in the 1980s, a significant minority of people were still renting for their entire lives, but before the London housing bubble overinflated, they tended to be poor and working class — a group that most politicians found easy to ignore. Now that many relatively well-paid professionals are also struggling with dodgy landlords and insecure tenancies, suddenly it’s being taken seriously.
Renting in the UK has been a poor experience for some decades. We have some of the worst tenants’ rights in Europe, which means comparing the situation in London with cities such as Berlin or Amsterdam is a futile exercise. Of course tenants are more content to rent on the continent: in Germany, for example, leases are granted for an unlimited period of time and landlords can only evict for a handful of specific reasons, such as multiple months’ unpaid rent or significant damage to the property. Even then they must give tenants between three and nine months’ notice to leave. There are also protections against excessive rent hikes.
The government’s decision to boost tenants’ rights is welcome, but I’m sceptical that these measures will go far enough. The fact that 39% of Conservative MPs are also private landlords seems to me to have a distorting impact on housing policy.
As damaging as the notion of a “home-owning democracy” has been, the relationship between landlord and tenant is an intrinsic part of our housing problem. Countries such as Germany do suggest how the situation in Britain might be improved with stringent legal protections, but an important question remains: should a need as basic as shelter, a human right, be subject to profit extraction from wealthy third parties?
Given the unequal power balance between tenant and landlord, is it actually possible to totally eradicate exploitative arrangements? Treating housing as an investment commodity drives up costs for renters and encourages landlords to maximise financial gains. If people need accommodation but can’t afford to buy, wouldn’t it be better if the revenue went to the state and was used to fund the building of more state-built, state-managed affordable housing?
In 2017, asking these sorts of questions is political anathema, yet just five decades ago this was a mainstream housing policy. Given the severity of the problems in our current system, now is the time for a radical rethink on the wisdom of the past.