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From The Socialist newspaper, 7 October 2015

The housing crisis - a crisis of the profit system

11,000 families in England and Wales were thrown out of their homes in the first three months of this year - a 51% increase compared to six years ago.

The ever-dwindling numbers of affordable homes to buy or rent is behind the deepening housing crisis in the UK.

Homeless charity Shelter found that 80% of homes nationally are unaffordable to the average income family, with only 43 properties deemed genuinely affordable in London.

But Tory government policies mean that one group of people - private landlords - are profiting from this misery.

The 2015 Housing Bill, by extending social housing privatisation, will make matters worse. Unite the union housing branch chair and Socialist Party member Paul Kershaw, explains what policies are necessary to solve this crisis.


A roof over your head - or a mattress under the stairs?

Fancy a mattress in a cupboard under the stairs in Clapham for 500 per month? Media reports like this one regularly grab the headlines. And if you did want that cupboard you would also need to find 60 a month for bills.

Whatever the veracity of this story, behind these headlines tenants are being forced to live in worse conditions than they would have accepted in the past and to pay more for their housing.

Three in ten privately rented homes are considered 'non-decent' and one in six are actually physically unsafe - even though councils have a legal obligation to correct hazards in the home.

New legislation does give some formal protection against 'revenge evictions' when tenants complain. But landlords will use insecure tenancies to disguise revenge evictions.

And the lack of alternatives on the market for tenants will make it hard for them to insist on better conditions. Of course council cuts reduce resources to help.

As renters are forced to pay more of their income on rent a new study has shown that up to half of people in London who rent their homes are living in poverty.

Rising house prices and insecure work have put the hope of owning a home out of reach - half of those renting in the UK despair of ever being able to afford a home of their own, according to a recent survey.

This is not surprising when the proportion of 25 to 34 year olds who own their homes has plummeted from 59% to 36% in less than a decade.

The gap between income and house prices has increased so much in the last 20 years that even in the most affordable regions of England and Wales buyers are forced to spend six times their income, according to analysis of Land Registry figures.

The situation is most dire in the capital, where the median house now costs 12 times the median London income.

The government's so called 'help to buy' policy has simply pushed up prices by helping banks to make loans; according to research it has added 8,250 to the price of an average house.

Over the past year one in five working adults aged 20 to 34 has moved back in with their parents. A further 15% of this group has never moved out according to Shelter.

The crisis has hit young people hardest but increasingly it is not just young people who are locked in to the private rented sector living in insecure flat shares.

Between 2009 and 2014, the number of flat sharers aged between 35 and 44 rose by 186%, according to Spareroom, the flat share website, while the number of sharers aged 45 to 54 went up by 300%.


'Right to buy' and Housing Association privatisation

Housing minister Greg Clarke has made housing associations, (HAs) an offer they can't refuse: they had to 'voluntarily' agree to 'right to buy' in exchange for which they escape the fate of nationalisation followed by privatisation.

HAs house one in ten British households. They have built up huge assets with the help of years of public investment but are controlled by unelected boards whose minutes are normally secret.

The deadline for this acquiescence was just six working days from Clarke's announcement. No time for consulting tenants and communities, and actually not enough time for their boards to consider the full implications. But the deal was brokered by their trade body, the National Housing Federation.

The full implications are still emerging but it seems they will get greater 'freedom' from regulation, greater ability to choose their own tenants rather than taking tenants from needs-based local authority waiting lists, and more freedom to behave as fully commercial operations.

Nationalisation?

But how did a Conservative government come to be threatening nationalisation?

The immediate cause was the policy of extending 'right to buy' to officially independent organisations. This triggered a review of the status of housing associations and their debts by the Office for National Statistics.

At the first Prime Minister's Questions with Jeremy Corbyn, Cameron was referring to associations as part of the public sector. That would mean that their outstanding debt of 60 billion would be added to the Public Sector Borrowing Requirement (the size of the government's deficit).

The 'most obvious' solution according to the Policy Exchange think tank was to nationalise the housing association sector and then sell it off.

In countries such as the Netherlands, Germany and Spain private equity funds such as 'Terra Firma' have created a whole new 'asset class' of former social rented housing. No doubt they would love to expand their UK investments.

The National Housing Federation claims this deal as a triumph because it preserves the independence of associations. But it is at the price of collaborating in dismantling social housing.

Associations are fighting for their right to manage the run down of social housing rather than let the private equity vultures do it directly.

What right do HA boards have to agree to sell off assets accumulated over the years by public investment? The 'right to buy' is to be funded by the forced sale of high value council homes on the open market. They are likely to be sold to existing landlords in high value areas.

According to Shelter, in the top 20 council areas that are going to be forced to sell most homes, almost 160,000 households are currently waiting for a council home and over 22,000 children are homeless in temporary accommodation.

'Affordable'

You might think there is a case for more social housing for them but the plan is for there to be less. There is a pledge for one-to-one replacement - although so far, despite earlier pledges, 'right to buy' has only had 10% replacement at most.

But there is no pledge to replace social housing in the same high value areas and the replacement does not have to be like for like. Rather than social rented housing it can be the much more expensive and miss named 'affordable' housing, which can include housing for sale.

Housing developments given per-mission by local authorities on the basis that they were socially balanced with an agreed percentage of social rent will be transformed by the right to buy extension - and if associations are granted freedom to pick their own tenants that process can be exacerbated.

Last year, Genesis Housing (a big London-based HA) sponsored a report calling for the creation of 'free' associations; effectively fully privatising and deregulating associations. The report was compiled with the assistance of CEOs of other unnamed associations under 'Chatham House rules' (ie the source of that information may not be explicitly or implicitly identified).

This year Genesis announced they were pulling out of the development of social housing and reviewing the tenure of their existing stock. Other associations have announced that they are considering similar steps. When the Genesis boss was asked what would happen to the vulnerable he replied that it wasn't his problem.

The Labour front bench and local authority groups have opposed these steps and are looking at legal action. All legal routes should be explored but this should be firmly linked to a mass public campaign for more social housing and against profit driven landlordism.

Pay to stay

Households with earnings of over 30,000, or 40,000 in London will be forced to pay market rents for their social housing - or take up the 'right to buy'. This policy will further reduce the stock of social housing and present families with impossible choices.

340,000 council tenants could be forced out of their homes under Chancellor Osborne's plan.

Savills estimate 60.1% of the 27,108 affected households in London will neither be able to afford market rent or be able to buy their house under the right to buy. In the East, South East and South West regions of England the figure is 49.1%, 43.4% and 26.6% respectively.


A programme to build the homes we need

Labour leader Jeremy Corbyn has promised a break with the housing polices of the establishment parties in recent years. He calls for more house building; rightly stating that there is no solution to the housing crisis that doesn't start with a big programme of building council homes.

He has promised rent control and an end to regeneration schemes that contribute to 'social cleansing' ie reducing social housing and pushing out working class people.

The policy document he produced on housing during the leadership campaign is strikingly different from Labour's previous polices. It is similar to the policies of Unite, which were endorsed by Trade Unionist and Socialist Coalition (TUSC) in the general election campaign earlier this year.

Change

The hope for a change in housing conditions was an important factor mobilising people previously alienated from politics behind Corbyn's leadership campaign.

What a contrast with what went before. The previous Labour leader Ed Miliband shrank from a commitment to reverse cuts in the social housing grant (cut from an inadequate 2.3 billion to 1.1 billion by the last government), let alone advocate a massive council house building programme.

Instead, Miliband offered only the weakest measures to address sky-rocketing private rents. Yet, after the election, Labour MPs drew the conclusion that Miliband had actually been too radical!

Chris Leslie, briefly shadow chancellor, rushed to say Labour would not support any form of rent control. He said it would make Labour look 'anti-business'.

MPs like him still sit on Labour's back benches and even in the shadow cabinet. They are stunned by Corbyn's victory and seek to undermine his polices.

Therefore we need a mass movement of trade unions, tenants' groups and young people to fight for socialist housing polices.

Labour's current commitment to build 100,000 social homes is an improvement on the recent past, though still not high in historic terms. Labour is right to say that investing in new homes would pay for itself over the long term. In fact it's the lack of investment in house building behind the rise in house prices and rents.

Shadow housing minister, John Healey, is reported as refusing to be drawn on commitments to build social rented housing. But he is right to describe the "affordable rent product" - at up to 80% of market rents - as a "linguistic con trick".

He points out that government spending on housing benefit will be 120 billion over the next five years, almost 50 billion of which goes to private landlords. Meanwhile, investment funding in grants for building new affordable homes over the next five years will be little more than 5 billion.

We need real rent control that keeps rents at affordable levels, not just a control on the rate of increase as is sometimes suggested.

Private tenants should get proper security and councils should start now by using the powers they have to stop dangerous conditions and profiteering.

Investment

Corbyn has suggested measures such as 'People's Quantitative Easing' (QE) to fund investment in housing and other pressing infrastructure projects. However, other Labour leadership candidates joined with the Tories in scaremongering, denouncing this idea as 'mad and dangerous money printing'.

In fact, successive Labour, Coalition and Tory governments have carried out massive QE to rescue the banks and capitalism. But instead of investing in socially useful projects the money remains locked up in the financial system.

This lack in investment in infrastructure meant that in 2012-13 there was the lowest number of new housing starts since the 1920s!

Meanwhile the banks, et al, continue to play casino-like games and pay huge bonuses to their top executives.

In contrast, millions of working class people are paying the price of this generosity to the capitalists through austerity, struggling to pay for a roof over their heads.

Therefore any future pro-working class government would be obliged to nationalise the banks to channel investment into housing and socially useful projects.

Indeed, planning to meet the needs of the overwhelming majority in the country, and not the money making interests of the super-rich, requires major public ownership - including the giant construction companies - and democratic control of the main economic levers in society.


Having a safe, secure and comfortable roof over your head should be a fundamental human right. But this is not the case for the majority under capitalism. The Socialist Party is campaigning now for the following policies:

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In The Socialist 7 October 2015:


Socialist Party news and analysis

'No time to lose' to organise against austerity

Kick out the Tories!

Back our doctors and nurses

NHS cutters pay doctors not to refer sick patients to hospitals

Tories: let pensioners freeze to death, they can't vote us out then

Them & Us


Socialist Party feature

The housing crisis - a crisis of the profit system


International socialist news and analysis

Catalonia

International news in brief


Workplace news and analysis

Emotional and inspiring strikers secure victory

Junior doctors campaign

RMT president election: back Sean Hoyle

Steely anger in Redcar as plant is mothballed

No wage cuts! Fund equal pay in Derby

Workplace news in brief


Socialist Party reports and campaigns

100,000 march against Tory cuts

Kick out the Tory entryists

Anger after violent youth deaths in south London

Enthusiasm for socialism at freshers fairs

Leeds to get 'ethical' letting agency

Cuts to school crossing supervision in Derbyshire


 

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