11 Myths about London’s Housing Crisis

Part 1 of ASH’s presentation at the conference on Housing Justice, held at the Centre for Alternative Technology as part of the Small is Beautiful festival in Machynlleth, Wales, 8-11 June, 2017.

One of the biggest obstacles to coming up with sustainable solutions to the housing crisis is that almost everything said about the crisis by the people charged with solving it – knowingly or otherwise – is wrong. On Friday night one of the performers sang a folk song about the poverty of weavers, and I was reminded that I’d recently read that by the early Twentieth Century the English cotton industry produced enough cloth to make a suit of clothes for every man, woman and child on the planet – yet England itself didn’t grow cotton. The raw material came from plantations in the United States of America – a legacy of the trans-Atlantic slave trade – was woven into cloth by Lancashire weavers, then exported across the world to colonial markets. Yet the only people to make a profit from the cotton’s circulation in what was already a global economy were the British capitalists – the one link in this chain that did none of the labour to produce it. And against the use-value of the clothes as a product, the scale of its production meant its exchange-value as a commodity allowed British capital to undercut and ultimately destroy thousands of local textile industries across the globe. This is an example of the genius of monopoly capitalism, which today has become almost universally accepted as a universal good. It should remind us that capitalism does not only produce markets and goods, it also produces myths about itself. In proposing solutions to the housing crisis, therefore, it’s important to understand and dispel its myths, which as products of our neo-liberal ideology are not deviations from the truth, not misunderstandings of the truth, but deliberate productions of the opposite of the truth. Here are eleven myths about London’s housing crisis.

MYTH 1. London has a housing crisis

There is no housing crisis, if by ‘crisis’ we mean something that is out of our control. The shortage of housing and the corresponding boom in UK house prices and rents has been carefully prepared and legislated 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. Part of a wider discourse of crisis by which we are paralysed – including 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 – 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 so-called ‘housing crisis’ is well in hand.

FACTS. The estimated total value of the housing stock in England in January 2017 was £6.8 trillion, having increased by £1.5 trillion in the last three years alone. Equivalent to 3.7 times the gross domestic product of the UK, and nearly 60 per cent of the UK’s entire net wealth, the housing market now constitutes an economy in itself. £1.7 trillion of that housing stock is in London. According to this year’s 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. More than 100,000 UK land titles are registered to anonymous companies in British oversees territories like the Virgin Islands. Transparency International has been unable to identify the real owners of more than half of the more than 44,000 land titles registered to oversees companies, but 9 out of 10 of the properties were bought through tax havens. As an example of which, in 1 St. George (above), part of the Vauxhall, Nine Elms and Battersea opportunity area, 131 of the 210 apartments are owned by foreign investors, with a quarter held through offshore companies based in tax havens. Nobody is registered to vote in 184 of the properties.

MYTH 2. We need to build more homes to meet housing demand

The housing shortage is a crisis not of supply but of affordability. 56 per cent of London homes failing to meet this criterion in Shelter’s new Living Home Standard. In a survey published in the Guardian in February 2014, it is the high cost of housing, the lack of council housing and the excessive rents charged by private landlords that are the three biggest concerns for residents.

FACTS. London house prices have risen by 86 per cent since 2009, and at an average price of nearly £491,000 in January 2017 now cost fourteen-and-a-half times the average London salary of £33,720. In Inner London that price rises to £970,000. Home ownership in the UK peaked at 71 per cent in 2003 and has been declining ever since, with only 40 per cent of Londoners predicted to own their own home by 2025. Rents on London’s private market have risen by 9.6 per cent in the past two years alone to an average of £2,216 per month for a 2-bedroom home, double the national average. The Joseph Rowntree Foundation have 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 of September 2016, a total of 73,000 households in England, including 115,000 children, were living in temporary accommodation. In London alone, 250,000 households are currently on housing waiting lists, 240,000 households with 320,000 children are living in overcrowded accommodation, and 53,000 households with 78,000 children are homeless and living in temporary accommodation.

MYTH 3. Building more homes will push prices down

Building more homes does not push house and rental prices down. In May 2016 a study of US cities that increased their housing density showed that, rather than reducing demand and with it prices, it actually increased both. While the law of supply and demand describes competitive markets responding to human needs, London’s financialised housing market, flooded by global capital, is driven by profit margins. Building more properties for home ownership, Buy to Let and capital investment will only push house and rental prices up. Despite this, all the major political parties are agreed that a massive increase in house building is the solution to the housing crisis, with both the Conservative and Labour parties outbidding each other in their promises to build 1 million new homes over the next five years.

FACTS. According to the British Property Federation, 61 per cent of all new homes sold in London in 2013 were bought solely as an investment. Estimates by real estate firm Savills of London’s housing forecast over the next five years shows that for lower-prime properties (£1,320,000) there is a demand for 4,000 units and a supply of 6,500; for upper mainstream properties (£850,000) there is a demand for 7,000 and a supply of 9,000; for mid-mainstream properties (£490,000) there is a demand for 14,500 and a supply of 13,250; for lower mainstream properties (£315,000) there is a demand for 17,000 and a supply of just 100; and for sub-market rent properties there is a demand for 20,000 and a supply of 5,700, a shortfall of 14,300.

MYTH 4. There is a lack of land on which to build new homes

Far from there being a lack of land to build on, in December 2016 the top ten house builders in the UK were sitting on land with planning permission sufficient to build over 404,000 new properties, and held option agreements with landowners on enough land to build at least another 480,000. Land, not materials or labour, determines the value of property, and the less there is of it the more it costs, and the higher the price of the properties built on it.

FACTS. Contrary to what we’re constantly told, the UK is anything but crowded. 10 per cent of England’s land is classified as urban; just 2.27 per cent of that land is built upon, and only 1.1 per cent is used for homes. Twice as much land, nearly 2 per cent of England, is taken up by golf courses as by housing. Persimmon Homes, currently sitting on land for 92,400 homes, built just 5,171 new properties in 2016, yet its pre-tax profits have risen from £144 million in 2011 to £774.8 million in 2016. Taylor Wimpey, sitting on land for 77,805 homes, built 14,112 properties last year, and its pre-tax profits have risen from just £89.9 million in 2011 to £732.9 million in 2016. The Barratt Group, sitting on land for 71,351 homes, built just 7,180 properties in 2016, yet its pre-tax profits have risen from £42.7 million in 2011 to £565 million in 2016. And the Berkeley Group, sitting on land for 42,125 homes, built a mere 3,350 properties in 2016, yet its pre-tax profits have risen from £136.2 million in 2011 to £530.9 million in 2016. In total, the pre-tax profits of the four largest builders in the UK – who are also the four largest land-bankers – were over £2.6 billion in 2016, a more than six-fold increase in just five years; yet between them they built less than 30,000 homes in the UK last year.

MYTH 5. Council estates are breeding grounds for crime

There is no causal relationship between the architecture of post-war council estates and anti-social behaviour, drug dealing, crime or rioting, as both central government and local authorities claim as justification for their demolition and redevelopment. Housing poverty, cuts to benefits, lack of maintenance, closure of amenities, aggressive and racist policing and stereotypes propagated by our press and media are the cause of social problems on estates – not architecture.

FACTS. Crime rates on council estates are consistently lower than in the surrounding area. Since its regeneration after the 1985 riots, Broadwater Farm estate in Tottenham has had one of the lowest crime rates of any urban area in the UK. In a survey of the estate’s residents in 2003, only 2 per cent said they considered the area unsafe, the lowest percentage for any area in London. The estate also has the lowest rent arrears of any part of the borough of Haringey. As the Indices of Deprivation 2015 interactive map shows (above), crime rates on the estate are in fact far lower than in surrounding areas where terraced housing predominates. Not only are estates not ‘breeding grounds’ for anti-social behaviour, crime and drug-dealing, but the close-knit communities that form within them significantly reduce crime rates. Yet Broadwater Farm has been targeted for demolition in the government’s Estate Regeneration National Strategy because of its proximity to the 2011 riots, and together with the Northumberland Park and Sky City estates it is to be redeveloped as part of the £2 billion ‘regeneration’ deal Haringey Labour council has made with international property developer Lendlease.

MYTH 6. Social housing is subsidised by the state

Far from being subsidised by the state, the rents on most post-war estates paid off the cost of their construction and debt interest years ago, and are in fact making a profit for councils and housing associations. It is the Right to Buy council homes, the Help to Buy shared ownership properties, the Housing Benefit paid to private landlords, the Homes and Community Agency and Greater London Authority grants for housing associations to build so-called affordable housing, the local authority funding for estate regeneration schemes, and the transfer of public land into private ownership that is being subsidised by public money – not council estates.

FACTS. 25 per cent of the nearly 2 million council homes purchased under the Right to Buy are now being rented out for significantly higher rents by private landlords. A report released in January 2013 revealed that in London 36 per cent of such homes were being rented back from private landlords by local authorities trying to house their ever increasing numbers of homeless constituents. A quarter of the people renting in the UK now rely on housing benefit to meet the cost of their accommodation, and in the year 2015-16 £20.9 billion of public money was spent on housing benefit in England alone. But with 20 per cent of homes now being privately rented compared to just 17 per cent social rented, and with private rents now double social rents in Britain, the bulk of that money goes straight into the pockets of private landlords. Meanwhile, over the next five years the Homes and Communities Agency has promised £4.1 billion for the Help to Buy 135,000 shared ownership homes on estate redevelopments like Woodberry Down (above). These subsidies are available to any household with an income up to £90,000 in London, or £80,000 in the rest of the UK. A further £350 million has been allocated for Rent to Buy. Nothing is available for homes for social rent.

MYTH 7. We need to build more affordable housing

So-called ‘affordable housing’ is unaffordable to the estate residents whose homes for social rent, at around 30 per cent of market rate, are being demolished to make way for it. Yet the election manifestos of the Conservative, Labour, Liberal Democrat and Green parties are all agreed that ‘affordable’ housing is the solution to the housing crisis. Not one manifesto mentions either building housing for social rent or stopping the loss of homes for social rent through estate demolition.

FACTS. Targeted by the London Mayor at 35 per cent of new developments, affordable housing now includes 25 per cent shared ownership on properties which in Inner London are selling for around £700,000 for a 2-bedroom home; rent at up to 80 per cent of market rate; and London Living rent at a third of the borough’s average household income with the additional obligation to save for a mortgage. This Living Rent equates to £680 per month per person in the borough of Haringey, £770 in Hackney, £895 in Lambeth, £950 in Southwark, and £1,170 in Tower Hamlets. Even then, not a single London borough met its affordable housing quotas in 2015, with just 13 per cent of new homes approved as such – a 24-year low – largely due to builders and developers claiming anything higher was ‘financially unviable’. In the year ending March 2016, just 6,550 homes for social rent were built in the whole of England.

MYTH 8. New-build developments are better quality

Far from being high quality, new developments are increasingly of significantly poorer quality than the estates demolished to make way for them. And rather than improving their living standards, studies show that estate redevelopment consistently has a negative effect on the mental, physical and economic well being of residents, with housing costs dramatically increased for those who are re-housed, and communities increasingly socially cleansed from developments they cannot afford either to rent or buy.

FACTS. Solomon’s Passage in Peckham, built by Wandle, a housing association supported by the London Mayor, is being pulled down after only six years due to water damage. Orchard Village in Rainham, still being built on the demolished Mardyke estate by the Clarion Housing Group, is already facing demands by residents to be demolished because of its numerous failings. Portobello Square in Notting Hill is facing the same. And Oval Quarter in Brixton (above), where 503 properties for private sale and shared ownership were built on 305 demolished council homes on the Myatts Field North estate, has had residents complaining of numerous problems, including noise pollution, rodent infestation, faulty wiring, water leaks, a lack of hot water, a lack of internet and phone access, a lack of servicing that has been contracted out to private providers, a lack of facilities for residents with disabilities, numerous breaches of health and safety regulations, as well as being locked into 45 year contracts with private power company E.ON that has driven many of them into fuel poverty. While leaseholders offered on average £144,500 for their demolished homes have been unable to return to the new development, this month a 2-bedroom apartment in Oval Quarter was being advertised for £595,000.

MYTH 9. Estate refurbishment is financially unviable

Far from being financially unviable, the refurbishment of estates has repeatedly been demonstrated to cost a fraction of their redevelopment, with none of the damage to the environment caused by their demolition. Local authorities have not been forced to demolish estates because cuts to their budgets by central government mean they can’t afford to maintain them. Like austerity, London’s programme of estate demolition is a political choice, not an economic necessity.

FACTS. In the report commissioned by Southwark Labour council but not presented to the Cabinet in 2005, Levitt Bernstein Architects showed that, at around £186 million, the cost of refurbishing the Aylesbury estate in Camberwell up to the Decent Homes Standard was between 41 and 58 per cent that of the estimated cost of its demolition and redevelopment (above). Since then Southwark council has spent £46.8 million to acquire, demolish and redevelop a mere 112 of the estate’s 2,700 homes at a cost of £417,000 per home. This compares with the £20,260 per home the council has spent refurbishing 611 homes up to the Decent Homes Standard elsewhere on the estate.

MYTH 10. Estate regeneration is the solution to the housing crisis

Estate regeneration is not a solution to the housing crisis, it is producing that crisis. The motivation for demolishing and redeveloping estates is not the housing of London’s rising population at higher densities in more and better homes, but to provide investment opportunities for global capital and the enormous profits to be made from building high-value properties on some of the most valuable land in the world. Not only is there no housing crisis, but it’s not about housing.

FACTS. On the Silwood, Bermondsey Spa, Elmington, Wood Dene, Heygate, North Peckham and Aylesbury estates a net loss of 4,275 homes for social rent has resulted from Southwark Labour council’s regeneration programme. However, the 3,168 demolished homes for social rent it has promised to rebuild are in the process of being turned into ‘affordable’ rent, 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. According to our own research, as of June 2017 there are 155 London housing estates that are under threat of demolition, privatisation or social cleansing by Labour councils alone (above).

MYTH 11. To increase their housing capacity estates must be demolished

Estates do not have to be demolished to increase their housing capacity. Through our design alternatives for infill and roof extensions on Knight’s Walk, West Kensington, Gibbs Green, Northwold and Central Hill estates, Architects for Social Housing has shown that we can increase their housing capacity by up to 45 per cent without demolishing a single existing home or evicting a single resident, while at the same time generating the funds from the rent or sale of new builds to pay for the neglected refurbishment of the estate.

FACTS. Details of some of ASH’s design alternatives to demolition are discussed in the second part of our presentation, ‘Sustainable Estates’.

Architects for Social Housing

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