2021 saw a huge boom in corporate investment in so-called Build to Rent (BtR), £4.1bn, up £500m on the previous year. The figures for 2022 look like being even higher. BtR is the purpose building on a mass scale of generally high-quality, high-rent flats owned and managed by companies or their agents rather than smaller private landlords. It is being driven by a housing crisis that means young middle-class people can no longer afford to buy their own homes. As Engels put it 150 years ago, ‘What is meant today by housing shortage is the peculiar intensification of the bad housing conditions of the workers as the result of the sudden rush of population to the big towns; a colossal increase in rents, a still further aggravation of overcrowding in the individual houses, and, for some, the impossibility of finding a place to live in at all. And this housing shortage gets talked of so much only because it does not limit itself to the working class but has affected the petty bourgeoisie also’.
Posh and pricey pads for professionals
The accountancy company PwC predicts that by 2025, 60% of Londoners will be living in private rented property; nationally, two thirds of young adults will be renting privately and only 26% will own their own homes. This means that young professionals and better-off sections of the working class are increasingly dependent on a housing sector that is precarious, poorly regulated and offers little flexibility or choice. Increasingly vocal and organised, through groups like Generation Rent, this is a sector that is electorally significant and there is a pressing need on political parties to address its concerns. Build to Rent is designed to assuage the concerns of those who can afford it and global capital is flooding into what it sees as a high-yield, low risk sector that shows no signs of going away. Some of the major companies getting in on the act include Goldman Sachs and the vast US property developer Greystar and asset manager Blackstone; the Australian bank Macquarie and Germany’s Patrizia. In Britain, Legal and General has already established itself as a major UK property owner and is now joined by the John Lewis shopping empire and Lloyds Banking Group, which plans to build 50,000 rented homes by 2030 (Financial Times, 6 January 2022). BtR now accounts for 20% of all new housing in England, and 40% in London (The Guardian, 22 January 2022).
Typically, these vast blocks of purpose-built flats are built in high-demand cities such as London, Glasgow, Manchester, Liverpool, Birming-ham and Bath. Most have concierge services and may have workspaces, roof gardens and gyms, and allow pets. Crucially, they offer longer-term leases and greater security than are found in the traditional private sector, as well as on-demand repair and maintenance. Inevitably, all this comes at a premium. At Wembley Park in northwest London, for example – the biggest BtR complex in Britain – rent for a small room starts at £1,770 per month (plus £200 utilities charge). Fizzy Living – the build-to-rent operation of Metropolitan Thames Valley housing association sold off last year for £400m – has developments all across central London. It does not accept households earning less than £50,000 a year – unaffordable for most single people.
Increasingly, the private rented sector business is becoming concentrated in the hands of multinationals, with traditional ‘small’ landlords (so-called ‘Buy to Let’) being squeezed out by new tax and regulatory measures. In its report on Buy to Let for the last quarter of 2021, the global property agents Savills cited local councils reporting that 76% of private landlords had either sold up or converted their properties to Air BnB.
Slums for the poor
Clearly, BtR can in no way meet the housing needs of the working class. On the contrary, it drives up local rents and siphons off public authority land for development, while the number of even ‘affordable’ homes, let alone housing at social rent, fall year on year. As the housing charity Shelter has pointed out, ‘temporary accommodation’ has replaced social housing for many impoverished working-class families as housing associations increasingly wash their hands of the poor and destitute. At the end of September 2021, there were 96,060 households living in temporary accommodation in England, including over 120,000 children – an increase of 96% in the last ten years. In London, Local Housing Allowance does not cover the bottom 30% of rents anywhere in London; much of it, according to Shelter, does not even cover the bottom 10%. What is paid is creamed off by landlords – a direct transfer of public money into private pockets, while families go hungry or sell possessions to meet the shortfall. In the face of soaring levels of homelessness, more and more families are being placed in hostels, bed and breakfasts or tiny, poor-quality flats leased nightly at inflated rates from private landlords. 27% are being housed outside the local authority area because councils claim they cannot find suitable accommodation locally. Councils in Ealing, in west London, Bristol, Brighton and Cardiff – all of them Labour – have placed families in repurposed shipping containers. Many councils also use converted office blocks often on industrial estates. Here units as small as 13 sq m, more than six times smaller than the average house, ares designated as homes for entire families, costing the council £800 per month per flat in rent. Permitted Development Rights allow the conversion of offices into residential premises without planning permission or minimum size requirements. One such slum landlord – Caridon – received nearly £8m in housing benefit receipts from London councils in 2017 (‘The scandal of Britain’s homeless families’, FRFI 272, October/November 2019).
At both ends of the private rented tenure, profits are being extracted on a huge scale. Capitalism cannot solve the housing crisis for the mass of the working class – it has no interest in doing so. We have to fight for the provision of publicly-owned, low-rent, decent and permanent homes for all.
Cat Wiener
Fight Racism! Fight Imperialism! No 287, April/May 2022
