Our housing crisis has been building for years

The current housing crisis began more than 100 years ago in the First World War. In order to put a stop to the continuing increase in rental levels faced by returning soldiers, an increase that had begun almost as soon as war commenced, the government imposed a control on rents. And that control continued in some form or other until the Conservative Party’s Rent Act of 1957.  

Between the rent controls of the First World War years and 1957, rents stayed low. The 1957 Act brought in a novelty: once the property was vacated, a new market rent could be imposed on the new tenant. This opened up the working-class housing market to changes that had not happened for almost half a century.

With rents artificially low as inflation increased gradually through the decades, landlords failed to address repairs and improvements. After the Second World War, 90% of working-class housing – representing three-quarters of the population – was sub-standard. The keeping down of rents had taken value out of property owning, so landlords were not investing their income in repairs.  

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The 1957 Act led to landlords like Peter Rachman starting to drive tenants out by removing front doors or filling rooms with West Indians (this is in Notting Hill). Rachman claimed he was providing for the Windrush generation, but did so by dislodging white locals from their cheap, run-down flats and charging higher rents to these new tenants.  Slum landlordism contributed to an appetite developing in the Labour Party – who were in opposition – to do something about this new displacement of tenants by unscrupulous means.  

Labour came into power in 1964 and their 1965 Rent Act introduced rent tribunals. This meant any person could refuse to pay rent until a tribunal had decided a fair rent, which sent shockwaves through the landlords’ world and resulted in the removal of much housing from the rented sector. Landlords started to sell the at-times ridiculously cheap properties largely to middle-class people, who suddenly found the opportunity of living in houses they could gradually redevelop into valuable properties, creating a bigger, in fact a vast, so-called property-owning democracy. The gentrification process came into being.  

The effect on local authority housing was immense. The call for more social housing pushed the councils into raising the bar for tenants higher and higher, meaning tenants had to show increased levels of desperation in order to be housed. The creation of what became called sink estates, where only the most destitute were housed, became a pattern throughout the UK. The creation of housing associations beginning in the 1960s created a social battleground out of social housing; for with a smaller private-rented sector – the provider of 70% of working-class housing previously – demand greatly outstripped supply in the social housing sector.  

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Home ownership became a bigger and bigger ambition among a larger section of the community. Estate agents blossomed, the building society sector expanded, banking business became more and more about mortgages, and the debt that people acquired increased fivefold. Margaret Thatcher took over a Labour government initiative to sell social housing to tenants, meaning working-class tenants could participate in the property-owning democracy. But the ‘right to buy’ was weighed down with a strange adjunct once it had passed from a Labour idea to a Tory reality: any income local authorities got from the sale of their housing stock to tenants could not be used to build new social housing. Thatcher’s social engineering impoverished the chance of increasing the stock of new social housing. A crisis became more of a crisis. And all of this was like a cocktail that took over 100 years to mix.  

There are so many other factors that come into the current housing crisis: second homes, the ease of purchases by overseas buyers, the inability of banks to invest in new business rather than the buying and selling of property, which by some measures represents 80% of their business; the reluctance of government to commit to mass socially mixed housing, etc. Even the low level of investment allocated to getting us out of a low-wage economy adds to the chemistry of our current housing malaise.  

The prohibitive cost of a growing housing market is also made worse by the vast cost of land. House building is often the smallest part of the cost of a house. It’s purchasing the land that pushes costs through the roof.  

Added to all this are the speculative players at work, where land banking – buying land and getting planning permission but not building – has increased, with speculators awaiting a bigger market price for their land and building rights. The recent easing of constraints on land being turned to housebuilding seems to be at the expense of the environment: this contradiction seems inevitable unless pollution and river protection are addressed at one and the same time.  

Is there anything vigorous being planned to counter this crisis? Certainly, house building builds up pollution and carbon emissions. There seems very little evidence that government is planning anything joined up at the moment. The vast increase in commercial properties and expensive flats in our cities hides the fact that we are often building the wrong thing. And that until we take this distortion of value out of land, all new housing will be unaffordable.  

John Bird is the founder and editor in chief of The Big Issue. Read more of his words here

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