Housing in crisis: Bankers rob people

A QUARTER of all households - in owned or rented accommodation - say that worry over housing costs is causing them stress or depression, says a survey by housing charity Shelter.

Keith Richardson

Working class people are being asked to pay the bill for bailing out the banks. But the banks still behave the same way. Last year they repossessed 46,000 homes of people in financial difficulty - a 14 year high - and that figure is projected to reach 53,000 this year. The banks claimed that they would obey 'new protocols' but subprime lenders still charge exorbitant fees to borrowers who fall into arrears, flouting Financial Services Agency guidelines.

Shelter's magazine 'Roof' reports that one borrower was taken to court by Southern Pacific, her lender, for arrears of almost £2,000. Three quarters of that arrears was charges that a judge ruled to be unfairly levied. Fees, including over £1,000 for 'litigation management' and £250 for 'arrears management', were imposed even though the borrower was never more than two months behind on her payments.

The banks should be fully nationalised and run democratically to support a housing plan based on need. They should stop paying massive bonuses and offer cheap loans to support a programme of building good quality homes, upgrading existing stock and a massive expansion of council housing.

At the last count, the government's mortgage rescue scheme had helped just six people! It should be massively expanded to stop banks creating more homelessness. If you can no longer pay the mortgage you should be able to stay put as a tenant.

Failed market solutions

ALL THREE main capitalist parties advocate market solutions in housing even though this is what led to the financial crisis. Housebuilding is now at the lowest peacetime level since 1922. Shelter says that 98% of councils are failing to deliver enough homes to meet need. They comment:

""With 1.8 million households on housing waiting lists and more than one million children living in overcrowded homes it is unacceptable that only eight councils have produced enough homes to meet social need."

The main parties still see home ownership and the market as the way forward. But the average age of a first time buyer is now 37. Young people are priced out - the image of home ownership starting a smooth escalator of increasing wealth and better housing is a mirage.

Given the lack of new social housing (and the need to improve existing social housing) and the problems of the private rented sector, this causes massive discontent.

Between 1997 and 2007, house prices rose 200% although earnings went up just 52% - that was part of the property bubble that led to the credit crunch. House price rises create no new real wealth, but redistribute wealth to people who own property from those that don't. Some people exploit this even further by owning property they can trade (ie not just your own home). The more you own, the more you make.

Some blog sites reflect the problems of millions whose aspirations are frustrated by the housing market. The 'Renter girl' blog describes life surviving in insecure and often badly managed private rented accommodation. None of the big parties can respond to this.

The 'Priced out' website campaigns for the 1.2 million first time buyers "denied their own home because government policy gives billions in tax breaks to property speculators" and talks of improving tenants' rights for the "87% of renters who are, predominantly, priced out first time buyers, to improve their security of housing."

Socialists call for improved tenants' rights and proper regulation of the private rented sector as well as a clampdown on tax perks that drive up house prices. We oppose cuts in legal aid that make it harder for tenants to defend themselves against bad landlords.

Nationalise banks

We also support calls for tighter regulation of the banks, but the real answer is to fully nationalise them and run them for people not profit. Trade unions need to take up this issue which will hit their younger members.

It is only possible to do so by opposing New Labour. In this election, that means supporting Trade Unionist and Socialist Coalition candidates where they are standing. It will mean building a mass movement against the profit-making banks, against public sector cuts and for a housing policy based on need not profit or speculation.

An alternative to despair

BARKING AND Dagenham borough has London's lowest house prices. But you still need a £60,000 annual household income and a deposit of around £20,000 to buy a family home, putting buying far out of reach of most people locally. Since 1980 the council has sold off 17,523 council houses and its housing stock is now half what it was 30 years ago.

A local Labour MP, Jon Cruddas, identifies a need for more housing in Inside Housing magazine (5 March). But Cruddas offers as his basis for hope Barking Riverside, part of the Thames Gateway development which will create 11,000 homes at a cost of £3.1 billion.

Most homes will be for sale, and 14% of these will be "affordable", which just means a little cheaper than the market rate. Many people will stretch themselves to get one because of the lack of alternatives, but many locals will find this out of reach.

The remaining 'social housing' will not be council controlled and will have less security of tenure than council housing. Much of the 'for sale' housing could end up in private landlords' hands. No doubt banks, landlords and Bellway Homes (the major builder involved) are pleased. Working class people may be less hopeful!

Another local Labour MP, Margaret Hodge, who faces an electoral challenge from the leader of the far-right racist BNP, acknowledges that more houses should have been built. The local council has commissioned just 63 new properties. But she says: "There won't be a return to the 1960s and 70s when we saw mass building of council houses." Jon Cruddas doesn't put a different position.

Many people struggling to find a decent home, or make rent or mortgage payments, may drift into despair and groups such as the BNP feed on despair. The workers' movement must pose the alternative of fundamental socialist change that can meet people's clear need for affordable public-sector housing.