Jack Jeffrey, Sheffield Socialist Party
The mini-budget calamity has accelerated the already developing economic crisis in Britain. Prices for food, energy and fuel keep rising, and now mortgage repayments can be added to the long list. Looking to maximise their income, landlords are expected to ratchet up rent increases too.
The UK’s housing market, kept going by historically low interest rates since the 2008 financial crash, has seen property prices rise by over 200% in the last ten years. According to research by Nationwide, last month mortgages already took up 30% of homeowners’ income in the UK, with this rising to a massive 50% for homeowners in London. This was based on a market where last year it was possible to get mortgage rates around 1%. This year they have already tripled to over 3% and are predicted to reach 6% in 2023!
Mortgage hikes
An increase from 2% to a 6% rate on a £200k mortgage with a 25-year repayment plan will increase payments by around £400 a month. This will price even more people out of buying a home and force many to sell. Analysts at Credit Suisse expect a 10-15% fall in house prices over the next 18 months.
Interest rate rises “are likely to leave landlords with little choice but to pass on at least some of the costs” to tenants, according to the National Residential Landlords Association. With rents already over 12% higher than in June 2020, and with tenants having scant legal protection, many will struggle to afford to stay in their homes.
Rent control
The Scottish government has announced a planned temporary rent freeze and moratorium on evictions. This is a start, and could be emulated by willing Labour councils and the Labour-run Welsh government. But a temporary freeze at unfordable levels is not enough. We need a permanent reduction in rents to a level democratically determined by elected representatives from working-class communities and trade unions.
The argument will be made by some, including buy-to-let landlords and developers, that rent controls will disincentivise investment, restricting supply and driving up prices. But a mass council house building programme, employing thousands of workers on trade union rates of pay, would boost supply and provide good-quality affordable homes. The chaos of the capitalist market continues to mean disaster for the working-class and middle-class majority, including the threat of home repossession and eviction. Only by treating decent housing as a right available to all, and not a commodity to be speculated on, can we resolve the housing crisis in the UK.
