While the cost of housing has exploded, wages simply haven’t kept up. Curtis Daly explains how we got into the current housing crisis and what we could do to solve it.
Video transcript
Do you ever get the feeling that things aren’t as fair as they used to be?
Well, you’re not wrong, because we are in a housing crisis and most of us are completely screwed.
Since 1970, houses have become 65 times more expensive than they were then, but wages are only 36 times higher. So while the cost of housing has exploded, wages simply haven’t kept up.
It begs the question… is there any way out of this?
In the last 16 years, the cost of a house has increased on average by £100,000 pounds! Today, it sits at a staggering 256,000.
But that’s okay, because wages are also higher now, right? Uh, well the average wage across the country is only thirty thousand (£30,056) annually. To put that into context, had the average wage increased at the same rate as housing since the 70’s, it would currently be £87,720.
On average, rent in the UK now sits at a record of just over a thousand pounds (£1,007) per month, up 7% from 2019. The average monthly mortgage payment is around £723.
‘So renters pay more than those who have a mortgage, yet can’t get on the property ladder.’? Seems fair….
So people can’t afford to save up a deposit because rent is too high, and they also can’t afford a mortgage with a low deposit because then the monthly payments increase, forever forcing those without a pot of cash to pay their landlord’s mortgage, and it’s making my head explode!
What’s more, pre-pandemic 495,000 households reported they owned a second home, with some deciding to rent them on airbnb, which is a cash grabbing, profit making, skullduggery! All while 200,000 people are homeless.
On a wider scale, foreign oligarchs are purchasing houses and leaving them empty in the hope that prices increase so they can be sold for a profit in the future.
Statistics show that homeownership overall has fallen. In 2020, homeownership was at 65% in England, down from 71% in 2003, with the young being most affected.
The other, and arguably the biggest cause of the current crisis, is ‘right to buy’.
Right To Buy
Many people think that Thatcher was the architect of ‘right to buy’. However, according to Colin Jones and Alan Murie, this idea had been around since the 1920s with legislation calling for council homes to be sold within 10 years of being built.
Colin Jones, who’s a professor in the Urban Institute at Heriot-Watt Uni in Edinburgh, explained there was inequality ingrained in the policy. “If you were in a good house, you’d got the opportunity to buy a really good home at a very low price. Whereas if you’re living in a poor area, it wasn’t very good value at all. So, there was a huge unfairness built into it all”.
Right to buy was seen as a positive for those who wanted to own their own home. We are in a home owning democracy, purchasing a house in this country essentially gives you a life long asset and security. Problem is, there was no social housing that was built to replace the ones that were sold, meaning homelessness increased.
After the war, 32% of homes were public housing, but this fell to 8% by 2018, with 4.5 million being lost since 1979.
Right to buy essentially ended up being exploited, as some were rented after being purchased. It became a profit making machine with up to two-thirds of them now in the private rental sector.
So, what is the solution? Abolish predatory landlords!
As well as the obvious, here’s what we need to do…
As we know, council houses have gone to the private sector, and no government has had the backbone to come up with a radical policy. We need to build at least 100,000 council houses per year.
According to the Local Government Association, this initiative could bring in £320bn in revenue over 50 years. This would also save £780 in Housing Benefit a year per social home built.
We additionally need to immediately introduce rent controls, because the cost is getting out of hand with those at the bottom struggling.
Following a referendum in Berlin, the government will debate in parliament whether to seize property from big time landlords. Those with over 3,000 properties could see them taken away and put into social housing, socialising an incredible 240,000 apartments. If this happens, we would have a real instance where the government implements a transformative policy.
We also need to look at legislation to prevent oligarchs from purchasing property solely as financial investments.
And finally, extend ‘right to buy’ to the private sector. The discounts applied to those that purchased council houses should also be the same with private renting. In a way, it’s a reversal of housing that was transferred to the private sector over the years.
These are not radical policies. People need a home; what’s radical is stopping people from having a roof over their head.
