Britain: London's housing crisis

Converted garden sheds, industrial outbuildings and domestic garages are now common features in London's housing market. They are the symptoms of London's housing crisis, demonstrating that capitalism exploits every angle and turns a profit out of the most soulless conditions.

The capital needs 40,000 new houses each year to keep pace with demand, yet less than half that number are being produced. In 1997 house prices in London were five times earnings, but a mortgage was relatively easy to obtain.

Today prices are ten times the median wage and mortgages scarce. This increase is partly explained by the world-wide housing bubble prior to 2008. However, despite the crash London prices are higher still.

Credit has dried up everywhere, making a mortgage extremely difficult to obtain. The increase in unemployment, casualisation and general public sector wage freezes has caused people to eat into their savings to make ends meet, diminishing their prospects of obtaining a deposit for a mortgage.

As a result private sector rentals as part of the housing market are up from 15 to 25% over the past five years, leaving a larger proportion of workers and their families subject to the whims of landlords able to evict with little notice.

This drop in purchasing power has meant a drop in affordable new builds. The construction sector remains 10% below its pre-crisis peak, yet house building firms such as Barratt and Taylor Wimpey are recording record profits thanks to the government schemes such as "Help to Buy", which has stimulated some demand but without bringing down prices.

Slum landlords

Meanwhile, slum landlords are "making hay while the sun shines". On June 5th, The Guardian reported the example of Munira and Assad, a young couple with a new-born baby who has spent the first 8 months of her life in a converted garage. Their space is entirely taken up with a double bed, a fridge and tiny kitchen. The garage roof leaks when it rains and the ceiling is cracked and patched with mildew. They are charged £580 per month for the pleasure. Such illegal "hidden homes", mushrooming throughout the city, are death traps - in the last year London firefighters have been called to 36 blazes at similar locations.

The same paper on June 3rd reported a "shoe box studio flat" with literally enough room for a mattress and sink, snapped up within 16 hours for £737 per month. In that period of time over 20 emails and many more calls were received chasing after the property, illustrating the desperation of Londoners trying to find a home.

The article went on to show that for the same price in Co. Durham a 4-bedroom farmhouse could be obtained; in Leeds a two-bedroom apartment in the city center; and in Belfast a 4-story seafront house. The website rentonomy.com recently ran an article claiming, ironically, that the affordability crisis might be good for love, as couples literally could not afford to break up and rent on their own. It was a tongue-in-cheek remark that actually reveals how "free-market capitalism" in reality opposes personal freedom.

Evictions are at a five-year peak and over 22,000 Londoners are currently without homes, according to the charity Shelter - a 20% increase on the previous year. Yet at the same time, just shy of 60,000 homes stand empty in London. As an object of speculation, 1/3 of the mansions of North London's "Billionaires Row" - worth a reported £350m - stand empty. Making it one of the world’s 'most expensive wastelands.

Homelessness spikes

Anti-homeless spikesIn recent weeks homelessness has seen the scandal phenomenon of "anti-homeless spikes" (similar to the spikes you may have seen on the top of statues and buildings in order to stop pigeons landing on top) making appearances throughout London. Culprits such as Tesco and the owner of a block of flats in Southwark were forced to take them down.

Yet these were only the most brazen example of other measures such as "sleep-prevention benches" which have been around for years. Like the pigeons, the unfortunate victims of capitalism's indifference are treated like vermin in an attempt to sweep them under the carpet.

World-wide overproduction means that trillions of pounds of capital struggles to find profitable investments, and in crisis-ridden economies such as Greece, huge sums equal to the state debt have flown out of the country seeking a safe haven. Consequently, foreign capital accounts for 75% of inner-London purchases, and half of £1m-plus houses.
Of course it is not the foreign nature of the capital that is the problem, but rather reveals the international nature of the crisis from which no country can escape.

Landlords big and small have rushed to exploit the situation, buying up properties for rental. In student housing, where costs and regulation are small, pension funds and investment portfolios have weighed in, buying up large chunks of the market, sending rents rocketing

Unsurprisingly, Mayor of London Boris Johnson and the Tories answer is to "let the market rip". For example, in opposition to Camden council who are demanding 50% affordable housing for the new development in Mount Pleasant, the Mayor argues "It's not so much a question of the type [of housing] but the quantity. We must deliver more homes, all told.... Let's be clear - what we're doing is allowing development to go ahead that would otherwise have been stalled. You cannot get these developers to move unless they have the funds coming in, and that very often means having market housing leading the project - that, I'm afraid, is a fact of life."

Johnson is correct - it is a fact of capitalist life. Developers want to invest in lucrative projects with the best rate of return, not affordable housing. Without this they will not invest. As always profit is the bosses guiding concern to which social need is subordinated, as has already been demonstrated with the Tory caps on housing benefits and the notorious "bedroom tax," designed to hit the most vulnerable and exacerbating the crisis for the poorest.

London's housing crisis reveals once again the impasse capitalism finds itself in. We have builders without jobs, houses without occupants, people without homes. Only the profit system stands in the way in solving these problems.