The questions we were posed for possible discussion on this panel, even if I were qualified to try and answer them all, would take up the rest of this day at least. So I want to focus on just one question, which I think is coming into sharper focus in the UK, and which relates most closely to what have been ASH’s attempts to propose alternatives to London’s estate regeneration programme. This question is:
‘Why does capitalism appear to produce a housing crisis? And can it be solved in capitalism?’
I chose this question, first, because by proposing that our current housing crisis has been produced it refuses the discourse of ‘crisis’ by which we have been paralysed, and which has made us accept, uncritically and without question, the ‘solutions’ proposed to solve this ‘crisis’, rather than challenging the ends to which it has been produced. One only has to recall that the same terminology has been applied to the financial crisis, the deficit crisis, the benefits crisis, the NHS crisis, the education crisis, the population crisis and (the mother of all crises) the environmental crisis to understand something about how this discourse acts as an instrument of privatisation.
But I also chose this question because it questions the extent to which the so-called solutions to the housing ‘crisis’ are in fact producing and reproducing the very crisis they have been proposed in order to ‘solve’, and in doing so understands our housing crisis not as a failure of capitalism at this particular instant of that seemingly eternally recurring crisis to which it has been doomed almost since its inception, but rather as the instrument of capitalism’s latest colonisation of what housing activists inaccurately describe as a ‘human right’. Indeed, if we wish to understand the mutation capitalism is undergoing as it shifts on its global axis, we could do worse than examine London’s housing ‘crisis’.
The first thing I’d say in answer, then – and which I first wrote in an article on ‘The London Clearances’ in 2015 – is that there is no housing crisis, if by ‘crisis’ we mean something that is out of our control. On the contrary, the shortage of housing and the corresponding boom in UK house prices and rents has been carefully prepared and legislated for over a number of years to serve the interests and fill the pockets of those who have the most to gain from it, both politically and economically. There is – in actuality rather than in the ideology of our society – a class war being waged through housing, and so far it is all going to plan. Far from being out of control, the housing crisis is well in hand.
The question of why capitalism produces a housing crisis (there is no ‘appear’ about it) I won’t answer, as in its essentials it has already been answered in the series of articles on ‘The Housing Question’ published between 1872-73 by Friedrich Engels, whose observations on the inconvenient trajectory of capitalism I understand suggested its name to The Platypus Society. So accurately do these articles describe not only the causes of our current housing ‘crisis’ but also the false solutions proposed to solve it, that in 2016 ASH published excerpts on our blog illustrated with photographs of some of the effects of these solutions. And in this text, which I recommend to anyone interested in the housing crisis, Engels is unequivocal about its causes. ‘The real answer to this question’, he writes, ‘is that capital does not want to abolish the housing shortage, even if it could’. If I may, I’d go further and say that capitalism needs the housing shortage. This is nowhere more true today than in the UK.
The estimated total value of the UK housing stock in January 2017 was £6.8 trillion, having increased by £1.5 trillion in the previous three years alone. Equivalent to 3.7 times our gross domestic product, and nearly 60 per cent of the UK’s entire net wealth, the housing market now constitutes an economy in itself, larger than the GDP of many European countries. Nobody will be surprised to hear that £1.7 trillion of that housing stock is in London. According to the 2016 Sunday Times Rich List, 26 of the 100 wealthiest people in the UK listed property as a major source of their wealth; while among the richest 1000 people in the UK there are 164 property moguls with a combined wealth of £143.7 billion. As for where that property wealth is coming from, the pre-tax profits of the four largest builders in the UK, Persimmon Homes, Taylor Wimpey, Barratt Homes and the Berkeley Group, rose from just under £419 million in 2011 to over £2.6 billion in 2016, a more than six-fold increase in just five years. And we’ve all heard about the CEO of Persimmon being paid a £110 million bonus this year.
Hardly surprisingly, London house prices have risen by 86 per cent since 2009, and at an average asking price of over £600,000 now cost more than seventeen times the average London salary of £35,000. In Inner London that price rises to around £970,000. Home ownership in the UK, which peaked at 71 per cent in 2003, has been declining ever since and now stands at 63 per cent, with only 40 per cent of Londoners predicted to own their own home by 2025.
Meanwhile, rents on London’s private market, which 20 per cent of British households now live in, have risen to an average of £1,532 per month for a 2-bedroom home, more than twice the national average. The total rent paid by UK tenants last year rose to £51.6 billion, more than double the £22.6 billion paid in 2007. Millennials, born between 1977 and 1995, paid £30.2 billion of that rent, which is more than three times the £9.7 billion they spent in 2007. The Joseph Rowntree Foundation has predicted that over the next quarter of a century rents will rise at twice the rate of incomes, and renters will be twice as likely to live in poverty.
As a result of this huge escalation in the cost of housing, at the end of last year the charity Shelter estimated that there are now 307,000 people in Britain who are homeless – meaning accommodated in temporary housing, bed & breakfasts and homeless hostels or sleeping rough. That’s one in every 208 of the UK population. In London, where 165,000 of those people are homeless, that figure rises to 1 in every 59. These numbers, however, don’t include the hidden homeless, with an estimated 1 in 5 people under the age of 25 having couch-surfed over the past year, a quarter of a million of them in London. This trend is predicted to increase, with Shelter warning that more than a million UK households are at risk of becoming homeless by 2020. Across Britain the homes of 41 percent of semi-skilled and unskilled workers, and 31 per cent of skilled workers, fail to meet the criterion of affordability under Shelter’s new Living Home Standard. While in London that figure rises to 56 per cent of all homes. The housing crisis, in other words, is a crisis not of supply but of affordability.
Which brings me to the second part of the question, which is whether the housing crisis can be ‘solved’ under capitalism. Even within the fine gradations of neo-liberalism that differentiate the major political parties in the UK, at the last General Election the manifesto pledges on housing published by the Conservative, Labour and Liberal Democrat parties shared a remarkable consensus that the solution to the housing crisis was a massive programme of new-build housing developments. In fact there was nothing remarkable about it, given that all three drew on the same reports produced by the same think-tanks headed by the same directors of the same housing associations under the sponsorship of the same building companies and estate agents. And what they all promised was that if elected to the government of the UK they would build 1 million new homes over the next parliament. By doing so, they all agreed, they would not only provide the homes Londoners present and future need but also, according to oft-quoted ‘law’ of supply and demand, drive the price of that housing down.
The trouble with this programme – which industry professionals have all agreed is impossible to meet anyway – is that while the law of supply and demand describes a capitalist myth of competitive markets responding to human needs, London’s financialised housing market, flooded by global capital, is driven by profit margins. More than 100,000 UK land titles are registered to anonymous companies in British oversees territories such as the Virgin Islands. Transparency International has been unable to identify the real owners of more than half of the 44,000 land titles registered to oversees companies, but 9 out of 10 of the properties were bought through tax havens. An extraordinary 30 percent of properties sold in London last year were bought by overseas investors. At the high end of the market that increases to over 50 per cent. Building more properties for capital investment and buy to let has pushed, and will continue to push, house and rental prices up, and yet that is precisely what the councils, housing associations, property developers, estate agents, architects and builders given the task of solving the housing crisis are doing.
59 per cent of demand in London is for lower-mainstream properties (up to £450 per square foot or below £315,000) and properties for sub-market rent; but only a quarter of the roughly 38,500 properties currently being built will go on sale for this price. Instead, last year builders started work on 1,900 properties priced at more than £1,500 per square foot, more than three times as much, only 900 of which had sold by 2018. And as of January this year, there are an additional 14,000 unsold lower-prime properties on the market for between £1,000-£1,500 per square foot. By contrast, in the year ending March 2016, just 6,550 homes for social rent were built across the whole of England; and not a single such home was built in London in the year up to October 2017.
So, even though he was writing about a housing market that is now a century-and-a-half old, Engels has already answered this question for us. ‘Capitalists have only one method of settling the housing question’, he writes: ‘after their fashion – which is to say, by settling it in such a way that the solution continually reposes the question.’
From the refusal to see in this perpetual recreation of cause and effect the systemic recreation of capitalism by itself comes all the moralistic explanations of the housing crisis that try to explain it away by references to the ‘greed’ of a few capitalists and the ‘cruelty’ of the government. We have no shortage of such explanations today from the mouths of so-called left-wing politicians who sell something they call capitalism ‘for the many not the few’, and whose proposed solutions to the housing crisis are in practice reproducing and multiplying its effects. The estate regeneration programme, which is the basis of the housing policies of both the Labour and the Conservative parties, and which is systematically replacing the UK’s council and social housing with properties built and priced according to the demands of the market, is the primary instrument of this reproduction.
According to our own research, as of September 2017 there were 237 London housing estates that have recently undergone, are currently undergoing or are under threat of regeneration, demolition or privatisation with the resulting loss of homes for social rent. 195 of these estates are in Labour-run boroughs. To give you an idea of the numbers being lost, a net loss of 4,275 homes for social rent has resulted so far from Southwark Labour council’s estate regeneration programme. However, the 3,168 demolished homes for social rent the council has promised to rebuild are in the process of being turned into ‘affordable’ rent, at up to 80 per cent of market rate, bringing the actual loss of homes for social rent to 7,442. In addition, the Greater London Authority has estimated that Southwark will lose an additional 2,051 homes for social rent as a direct result of regeneration schemes the council is currently proposing on the Old Kent Road opportunity area, making the loss of homes for social rent closer to 9,500. That’s in just one London borough. Every one of London’s 32 boroughs has an estate regeneration programme.
In response to the larger question, then, which this panel was convened to discuss – ‘Housing crisis or capitalist crisis?’ – my answer is: neither. The housing poverty and homelessness into which increasing numbers of the UK population are being driven are the products of the success of capitalism, not the symptoms of its failure.
Architects for Social Housing