The great fire sale of London housing

March for Homes

On 17 March, around 2,300 people gathered in central London to hear Britain’s politicians address an event styling itself the ‘biggest-ever rally for social housing’ in the country. In reality, it was nothing of the sort – not simply because the organisers, Homes for Britain, deliberately ignored the 5,000-strong March for Homes at the end of January, but because it had nothing to do with social housing. Homes for Britain is a coalition of housing associations, private landlords, builders and other housing professionals; like the pledges made by politicians with an eye on the general election to ‘end the housing crisis within a generation’, the whole charade was as full of hot air as the house-shaped balloon floated above Parliament Hill. The event was not about ending the housing crisis, but about managing it. Under pressure from real grassroots campaigns emerging in working class communities that are fighting to save council housing and challenging the diktats of the profit-driven housing bonanza, the Homes for Britain rally was an attempt to both sideline and stifle any real movement for change. Cat Alison reports.

A tale of two cities

‘When I arrived in the job in the 1980s, the big banks were in control of London. But now it’s the big housebuilders. We’ve gone from being ruled by Barclay’s Bank to being controlled by Berkeley Homes.’ (Peter Reeves, former City of London chief planner, quoted in The Guardian 17 September 2014)

The housing crisis is most acutely felt in London, where a quarter of all UK property wealth – some £1.2 trillion – is held. It is a crisis where obscene wealth is being created out of the housing market, fuelled by greedy developers and overseas investors from Qatar, China and Malaysia, while poor and working class people are increasingly unable to afford a roof over their heads. According to the Financial Times (15 March 2015), 14 years’ supply of luxury housing is being constructed in the capital, despite falling demand, and new glistening towers of steel and glass proliferate on the London skyline. Writing in The Guardian (17 November 2014), Olly Wainwright described a city of privatised enclaves, mimicking the fiefdoms of Britain’s aristocracy:

‘The landed families of Grosvenor, Portman and Cadogan have been joined by a breed of corporate giants like Lend Lease, CapCo and Ballymore. The latter is overseeing the £2bn transformation of Nine Elms into a high-security zone of luxury flats around the new US embassy, that will apparently “draw inspiration from the attractive residential and commercial estates which evolved over time in cities like New York and Boston”. CapCo is building its £8bn kingdom across a 30-hectare swathe of Earls Court, while Lend Lease is ruling Elephant and Castle, Argent is reshaping King’s Cross, and most of Victoria is now controlled by Land Securities. The list goes on.’

Yet figures from the British Property Federation show that in 2013 44% of these new builds were bought by investors; within the most exclusive central London areas, nearly half were snapped up by overseas residents as long-term investments, usually to be left empty, resulting in ghost towns. Luxury developments like the Heygate estate in Southwark, sold off by the council at a knock-down price to Lend Lease with a loss of more than 1,000 council homes, have been marketed in the Far East before the foundations have even been laid.

Meanwhile, the working class is being driven out of the capital by a combination of the destruction of council housing and soaring private sector rents. Average rents in London have risen to £1,000 a month for a so-called ‘affordable’ new-build two-bedroom flat. Unsurprisingly, the proportion of working households now needing to claim Housing Benefit has doubled over five years (from 7% to 14%). Discretionary Housing Payment, which helps people meet shortfalls in their rent, is to be slashed in 2015/2016 by £40m to £125m. The heaviest cuts will be in London, where councils face an average reduction of 33%. Evictions for rent arrears reached an all-time high last year following the introduction of the benefit cap and the bedroom tax. Homelessness is on the rise; around 400,000 households are on housing waiting lists. The process of social cleansing is accelerated as London local authorities increasingly place homeless households in out-of-borough – and indeed out-of-London – accommodation

This social cleansing is part and parcel of capitalist housing policy, a 21st-century land grab aimed at privatising publicly-owned land and homes. Housing associations and councils are eagerly participating in the scramble for a slice of the profits. Key to this has been the redefining of what constitutes ‘social housing’.

‘Affordable’ housing: neither social nor affordable

The ConDem coalition has presided over an unprecedented drop in the construction of social rented housing. Government statistics for England show that a mere 10,800 such homes were built in 2013-2014 (compared to 35,000 social rented homes in 2009-2010). Instead, 19,700 homes were built for misleadingly-called ‘affordable’ rent – which can be up to 80% of market rent. Social rent, meanwhile, is determined by a regulatory framework and relates to income. A recent survey for Inside Housing showed households across much of London would need an average income of £40,000 a year to rent an ‘affordable’ two-bedroom flat, rising to more than £80,000 in the most expensive boroughs.

In addition, in order to build these ‘affordable homes’, social landlords (councils and housing associations) must also convert a certain number of existing social rented homes into ‘affordable’ rent – resulting in a net loss of 60,000 such units in the past two years (UK Housing Review).

Alongside this has gone a deliberate attempt by private housing developers to get around their obligations – known as Section 106 – to provide a percentage of affordable – including social – housing in any new development. This is easily done by arguing – once the deal is signed – that to do so would not be viable (ie would cut into their 20% profit margin), leading to ever more developments with zero affordable or social housing. London councils have been willing participants in this scam, with some development companies now funding a dedicated post on a council’s planning team to help wave through their applications.

Increasingly, housing associations are adopting the same sleight-of-hand. ‘Let’s all stand up for more social housing’, said Kate Davies of the Notting Hill Housing Trust (NHHT) – the largest housing association in London – at the Homes for Britain rally. A fine sentiment from a housing association that has a blanket policy of converting all its existing social rented properties to ‘affordable’ rents as tenancies expire. NHHT is involved in similar shenanigans over its purchase of the Aylesbury Estate (see article); it reneged on its promise to build a proportion of social rent properties. In reality, housing associations have become little more than bloated private companies. Indeed, in England they are classed as private registered landlords; 39% of their net surplus now comes from sales. Last year L&Q, one of the largest housing associations in London and the southeast, became the first to pass the £100m barrier with an annual surplus of £118m. Its chief executive was paid £246,000. The Conservatives plan to extend Right to Buy, which has decimated council housing stock, to housing associations if they win at the general election.

The great council giveaway

The Conservatives have also promised to double the number of discounted homes they would make available to first-time buyers under Help to Buy. The 20% discount will be paid for by waiving the fees paid to local authorities under Section 106. Labour’s Shadow Chancellor Ed Balls may airily promise that a Labour government would build 200,000 new homes a year by 2020, but in fact housing does not even make it onto the party’s five-point election pledge card.

A clearer insight into Labour thinking on housing is revealed by one of its most senior politicians, Lord Adonis. In a report for the Institute of Public Policy Research, the Labour peer called for the demolition of council estates across London, to be replaced by what he describes as ‘market-priced rent developments’. ‘There are particularly large concentrations of council-owned land in inner London, and this is some of the highest-priced land in the world’. In its own self-serving report into ‘regeneration’, leading property agents Savills gleefully concurred that London’s council estates ‘represent valuable reservoirs of increasingly scarce land in a global city’. In his introduction to the Savills report, government minister Eric Pickles disparagingly dismissed the homes of thousands of working class people as ‘brownfield estates’ ripe for redevelopment into something more ‘attractive’ – and, crucially, more lucrative – housing more (richer) people. The like-minded Lord Adonis estimates that some 3,500 council estates could be up for grabs.

The reality is that the so-called ‘regeneration’ of 50 London housing estates carried out in the last decade has resulted in the net loss of more than 8,000 social homes. According to a report by the London Assembly’s Housing Committee, these projects have almost doubled overall housing density, and seen huge increases in rent. The report notes the number of affordable and social homes on the estates affected has dropped by a fifth, with social rented homes falling from 30,431 to 22,135.

The intensification of the housing crisis, particularly in London, has sparked some of the most dynamic resistance to austerity in Britain today. In the face of the accelerated pace of evictions and social cleansing, soaring rents and increasing homelessness, grassroots campaigns have sprung up across the capital as working class communities fight to defend their homes. The Guardian contrasted the ‘new level of slickness in housing campaigning’ represented by the Homes for Britain rally with what it called ‘raucous grassroots movements’. But it is precisely these grassroots campaigns, from Sweets Way in north London to the Aylesbury Estate in the south, from Focus E15 in the east end to West Hendon, that show the way forward.

A recent YouGov survey revealed that 77% of people do not believe any of the mainstream parties will deal effectively with the housing crisis. They are quite right. Working class people fighting for council housing, for decent, genuinely affordable homes and secure tenancies, are in the frontline of tackling the housing crisis. The RCG stands with them.

Fight Racism! Fight Imperialism! 244 April/May 2015


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