All That Is Solid: The Great Housing Disaster · Affordable housing London Chapter 6: Slump Small rooms Housing finance Super-rich Lending slowdown. ... Figure 10. Maximum weekly

DannyDorling

ALL THAT I S SOLID

TheGreatHousingDisaster

Contents

Listoffiguresandtables

Chapter1:Crisis

‘GenerationRent’

DisasterCapitalism

Recentinequality

Chapter2:Planning

Housingdemand

Avariceandignorance

Hopeandfreedom

Chapter3:Foundations

Hometruths

Theapproachingdisaster

Chapter4:Building

Landandmigrants

Renovationandreality

Location,location

Housingandrace

Chapter5:Buying

Homeownership

TheBedroomTax

Skimmingprofits

Affordablehousing

London

Chapter6:Slump

Smallrooms

Housingfinance

Super-rich

Lendingslowdown

Chapter7:Speculation

Debtandarrears

Healthandeviction

Negativeequity

Homelessness

Squattingandrefurbishment

Chapter8:Solutions

Therightnottoberippedoff

Therightnottobestupid

Conclusions

Notes

Acknowledgements

FollowPenguin

ALSOBYDANNYDORLING

Population10Billion

The32Stops:LivesonLondon’sCentralLine

UnequalHealth:TheScandalofOurTimes

ThePopulationoftheUK

TheVisualizationofSocialSpatialStructure

TheNo-nonsenseGuidetoEquality

FairPlay:AReaderonSocialJustice

Injustice:WhySocialInequalityPersists

TheAtlasoftheRealWorld(withMarkNewmanandAnna

Barford)

SoYouThinkYouKnowAboutBritain?

IdentityinBritain:ACradle-to-GraveAtlas

(withBethanThomas)

ToStacy–forfourdecadesoffriendship

Listoffiguresandtables

FIGURES

Figure1.Dreamhome:6,000-square-foothouse,frontelevationsandfloorplans,UnitedStates,2001.(Source:redrawnfromR.Frank,‘Fallingbehind:howrisinginequalityharmsthemiddleclass’,lecturepresentedtotheseventhAaronWildavskyForumforPublicPolicy,RichardandRhodaGoldmanSchoolofPublicPolicy,UniversityofCaliforniaatBerkeley,18–19October2001.)

Figure2.AveragenumberofdaystocompleteaforeclosureintheUSby

state,2007–12.(Source:RealtyTrac–reportedinturninSusanSaulny,‘Whenlivinginlimboavoidslivingonthestreet’,NewYorkTimes,3March2012.)

Figure3.Privatehouse-buildingandmortgagelendingintheUK,1920–38.(Source:redrawnfromG.Speight,‘Thelendingfrenzyofthe1930s’,presentationmadeattheAshmolean,Oxford,2010.)

Figure4.InterestratesintheUKbytypeofloanandTreasuryBills,1925–39.(Source:redrawnfromG.Speight,‘Thelendingfrenzyofthe1930s’,presentationmadeattheAshmolean,Oxford,2010.)

Figure5.BuildingsocietyDirectorfeesintheUK,1895–1940.(Source:archivalrecordsofsixbuildingsocietiesin:L.Samy,‘“Theparadoxofsuccess”:theeffectofgrowth,competitionandmanagerialself-interestonbuildingsocietyrisk-takingandmarketstructure,c.1880–1939’,DiscussionPapersinEconomicandSocialHistoryNo.86,UniversityofOxford,January2011,Figure14.)

Figure6.UKaveragelandpricesandhouseprices,1983–2009.(Source:M.Griffith,Wemustfixit:deliveringreformofthebuildingsectortomeettheUK’shousingandeconomicchallenges,London:InstituteforPublicPolicyResearch,2011,p.7.)

Figure7.ThemodernLondonKensingtonmansion,anartist’simpression,2012.(Source:redrawnfromBenHasler’soriginalimageofaKensingtonmansion,O.Wainwright,‘Billionaires’basements:theluxurybunkersmakingholesinLondonstreets’,Guardian,9November2012.http://www.guardian.co.uk/artanddesign/2012/nov/09/billionaires-basements-london-houses-architecture)

Figure8.Proportionofresidentsreceivingcashallowancesforrentalcosts,byOECDcountry,2009.(Source:OECD,giveninA.HullandG.Cooke,‘Togetherathome:anewstrategyforhousing’,InstituteforPublicPolicyResearch,report,21June2012,p.53.

http://www.guardian.co.uk/artanddesign/2012/nov/09/billionaires-basements-london-houses-architecture

http://www.ippr.org/publication/55/9279/together-at-home-a-new-strategy-for-housing)

Figure9.IncomechangesintheUK.(Source:Oxfam,Theperfectstorm:economicstagnation,therisingcostofliving,publicspendingcutsandtheimpactonUKpoverty,Oxford:Oxfam,2012.)

Figure10.MaximumweeklylocalhousingallowancepermittedafterApril2013,EnglandandWales.(Source:R.Ramesh,‘CamdenCouncilplanstomove761poorfamiliesfromLondon’,Guardian,13February2013.http://www.guardian.co.uk/uk/2013/feb/13/london-council-relocation-benefits-cap)

http://www.ippr.org/publication/55/9279/together-at-home-a-new-strategy-for-housing

http://www.guardian.co.uk/uk/2013/feb/13/london-council-relocation-benefits-cap

Figure11.Three-monthonthree-monthhousingpricechange,1983–2012,UK,andtrendlines.(Source:HalifaxHousePriceIndex,allbuyers,seasonallyadjusteddata,analysisbyauthor,trendsadded.)

Figure12.ThevalueofpropertyinBritainbyurbanarea,2012,totalequity(£billion).(Source:analysisbyHometrack,areasdefinedbythe‘Stateofthecities’report,P.Collinson,‘Houseprices:guidetopropertyhotspots’,Guardian,30March2012.http://www.guardian.co.uk/money/2012/mar/30/house-prices-guide-property-hotspots#)

Figure13.RoomsperpersoninhousinginBritain,1911–2011.(Source:CentreforHousingPolicy,

http://www.guardian.co.uk/money/2012/mar/30/house-prices-guide-property-hotspots

UniversityofYork,and2011censusdata.SeeR.Tunstall,‘Whatshouldweworryaboutwhenweworryabouthousingproblems?’,inaugurallecture,UniversityofYork,2012.http://www.york.ac.uk/chp/news/2012/inaugural/(2011censusdataaddedsincethatlecture,personalcommunication2013).)

Figure14.Numberofbuildingsover256metreshighbuiltperyear,worldwide,1930–2012.(Source:http://www.emporis.com/statistics/worlds-tallest-buildings.Analysisbyauthor.Note:graphisofbuildingsstillstandingin2013.)

Figure15.Buildingsover70metrestallconstructedinNewYork,1890–2009.(Source:redrawnfromW.N.

http://www.york.ac.uk/chp/news/2012/inaugural/

http://www.emporis.com/statistics/worlds-tallest-buildings

GoetzmannandF.Newman,‘Securitizationinthe1920s’,NationalBureauofEconomicResearchWorkingPaperNo.15650,January2010.http://www.nber.org/papers/w15650)

Figure16.PrimecentralLondonpropertylocationsandnationalpreferences,2012.(Source:J.KolleweandR.Neate,‘LondonpropertyoffersstableinvestmentforwealthyEuropeans’,Guardian,1June2012.)

Figure17.MonthlyapprovalsofloanssecuredondwellingsintheUK,2007–12.(Source:BankofEngland,‘Trendsinlending:seasonallyadjustednetofcancellations’,January2013.)

http://www.nber.org/papers/w15650

Figure18.Additionaldebtaddedannuallybysector,UnitedStates,1979–2012.(Source:analysisbyauthor,FederalReservespreadsheet‘D.2creditmarketborrowing’,latestfigures,January2013.)

Figure19.UnitedKingdommortgagearrearsandpossessionrates,1990–2015.(Source:BankofEngland,‘Trendsinlending:estimatesandprojections’,January2013.)

Figure20.RepossessionsandforeclosuresintheUnitedStates,2000–2011.(Source:StatisticBrain,‘Homeforeclosuresstatistics’.http://www.statisticbrain.com/home-foreclosure-statistics/RelyinginturnondatareleasedbyRealtyTrac,the

http://www.statisticbrain.com/home-foreclosure-statistics/

FederalReserveandEquifax,15October2012.)

Figure21.WallStreetJournaldepictionofUKinflationtrends,October2011toOctober2012.(Source:J.DouglasandI.Billington,‘UniversityfeesstokeUKinflation’,WallStreetJournal,13November2012.)

Figure22.TheeffectofspendingcutsonpeopleinBritain,2010–16.(Source:Oxfam,Theperfectstorm:economicstagnation,therisingcostofliving,publicspendingcutsandtheimpactonUKpoverty,Oxford:Oxfam,2012.)

TABLES

Table1.Shareofnationalincomeofthebest-offfractionsintheUK,1911–2009.(Source:D.Dorling,‘FairnessandthechangingfortunesofpeopleinBritain’,JournaloftheRoyalStatisticalSociety(A),Vol.176,No.1(2013),pp.97–128.)

Table2.Notableprivaterentalpracticesinothercountries.(Source:collatedfromnumeroussourcesin2011and2012.SeeA.HullandG.Cooke,‘Togetherathome:anewstrategyforhousing’,InstituteforPublicPolicyResearch,report,21June2012,p.53.http://www.ippr.org/publication/55/9279/together-at-home-a-new-strategy-for-housing)


1

Crisis

Ifpeoplehoardedfoodonthebasisthatitsvaluewassuretogoupwhenothersbegantostarveandwouldpayanything,wewouldstoptheirhoarding.Buthoardingisnowhappeningwithshelterinthemostunequalandaffluentpartsoftheworld.Increasinglyitisthefinancingofhousingthatisourbiggestproblem:themortgageorrent,thebillsandtheinequitabletaxes.Whenwetalkaboutourhousing

andwealth,ultimatelywhatwearetalkingaboutisourfreedom.Whena

greatdisasterloomsinhousingso,potentially,doesadisastrouslossoffreedom.Webecomelessfreeoffearofthefuture.Webecomelessfreeinourabilitytochoosewherewelive,andlessfreethanthoseincountriesnotsufferingahousingcrisis.Lackofaccesstohousing,a

growingsenseofinsecurityoverhowwearetobehoused,islackofaccesstothefreedomtofeelsecure;itconstitutesagrowingrestrictionontherightofthemajoritytobefreetoliveagoodandsafelife.InthepastintheUKwehad

greaterfreedomoverwherewecouldlive.Fewerareasweretooexpensivetolivein,andtherewerefewerareasthatyouwoulddesperatelytrytoavoidlivingin.Farlessofourincomewasspentonhousing,and

wedidnotneedtorelyonourhomestoprovideuswithfinancialsecurityinouroldage.Inthelastfiveyearsour

dependenceonhousingforoureconomicsurvivalhasbecomestarklyapparent.Ournationaleconomicwell-beingappearssotightlyentwinedwiththehousingmarketthattheChancelloroftheExchequerdevotedthemajorityofnewfinancialcommitmentsinhisMarch2013budgettomeasuresintendedtoboostthehousingmarket,tryingashardashecouldtosustainhighandrisingpricesinthesouthofEngland.AlmosteverywhereinBritain

rentsarerising,butinmanyplacesoutsideofthesouthofEnglandhousingvaluesarecontinuingtofall.

Housinghasbecomeaproblemforeveryone.WhileitisanacuteprobleminEnglandasawhole,itisespeciallysointhesouth-eastandsouth-westforthosewhodonotown,whowanttorentorwhoaretryingtobuybutthenhavetopaybackhugemortgages.Housingisanationalobsessionin

theUKbecausehousingequityrepresentsasmuchas61%ofEngland’snetworth,oraround£4trillion.1Thatmayevenbeanunderestimate.Accordingtoalternativeestimates,ifWalesandScotlandareincludedandnon-mortgagedebtsecuredonhousingisexcluded,thisfigurerisesto£5.5trillion.2Theexactvalueofourhousingstockdependsuponwhenyouvalueit;whetheryousubtract

thevalueofadditionalloanssecuredonproperty(i.e.loansotherthanprimarymortgages);andwhetheraccountismadeofdepreciation.But,whicheverwayyoumeasureit,61%ormoreisanastonishingproportionoftheUK’snationalwealth.Howdidhousingcometo

representsuchahugepercentageoftheUK’snetworth?Isthefactthatthemajorityofoursavingsaretiedupinourhomespreciselywhygovernmentsfeelunabletotackletheinequitiesofthehousingmarket?HowdidtheBritishcometohavesolittleintheirpensionpots,solittleintheirsavingsaccounts,suchmiserlystatepensionsandhence,formany,somuchfinancialinteresttiedupintheirhomes?Andwhatfutureisthereforallthosewhohaven’t

boughtorwhoaren’tplanningtobuyhousing,fortherenters–alargeandgrowingmajorityofyoungadults–andfortheequallylargeandgrowinggroupofthosewhoareprecariouspurchasers?Thislastcategoryincludespeoplewhohavetriedtobuywithamortgagebutatsomepointhavebeenforcedtogiveupandmovebackintorentingorlivingwithfamilyorfriends;amongthemareincreasingnumbersofhoodwinked‘consumers’who,overthecourseoftheirlives,takeoutseveralmortgagesbutnevercompletepaymentsonany.Over-relianceonhousingfor

financialsecurityintheUKaccountsfortheobsessionofournewspaperswithhousing.Therearemanyexaggeratedmediaresponsestoeven

thesmallestriseortheslightestdipinhouseprices.In2010thisobsessionresultedinsmalldipsinhousingpricesgeneratingheadlinessuchas‘UK“value”fallsby£94billion’.During2009theapparentfallinthevalueofBritain’shomesaccountedformostofalargedeclineinnationalwealth,adeclineequivalenttotheannualcostsofrunningtheNHS.3

Thedeclineinnationalwealthwasapparent,becausemostpotentialsellerssimplydidnottrytosellatlowerprices.Transactionsontheopenmarkethalvedintheyearsfollowing2008.Itwasalsoonlyapparentbecausethereislittleotherthanmarketconfidence,politicalintransigenceandplanningtraditionholdingpricesupatall.Hadthe

journalistinvolvedconsultedanothersource,hecouldhavereportedUK‘value’fallingbyover£1trillionayearearlier!Thefallinnationalwealthofover

£1trillionwasintheyearto2008,andmostofthathugedeclinewasduetothefallingvalueofresidentialhousing.4Over£1trillionisatentimeslargercollapsethan£94billion,butformuchofthepressabignumberissimplyabignumber.Thebignumberscanalsospoilallthosestoriesaboutsmallfluctuations,concentrationonwhichaddscredencetothemyththatpricesarerelativelystableandthatwhathashappenedrecentlytotheBritishhousingandrentalmarketsisunusual,localandwillnotberepeatedorprotracted.

Whenthehousingmarketstalledin2008,privatebuilderslargelystoppedbuilding.Governmentthensteppedinwithschemestotrytoboostthesupplyofnewhousing.However,by2012figuresforgovernment-assistedhome-buildingrevealedthatthenumberofwhatwerecalled‘affordablehousingstarts’for2011–12hadresultedinjust15,698propertiesbeingbuiltnationallyinanentirefinancialyear.Thisrepresenteda68%fallonthefiguresreleasedforthepreviousyear.5

Byearly2013thehousingstartsfigureshadworsenedstillfurther.ButthedropinsubsidizedbuildingbecameevidentonlyafterAndrewDilnot,theChairoftheUKStatisticsAuthority,castigatedthecoalition

governmentforitsearliermisrepresentationofhousingstatisticsanddemandedthatclearerstatisticsshouldbepresented.6

Bytheendofsummer2013thesatiricalmagazinePrivateEyewasnotinghowGrantShapps,theConservativePartyChairmanandrecentMinisterofStateforHousing,appearedtobestrangelyquietaboutthepossiblebenefitsfromhousepricesonceagainrisinginthesouthofthecountry.Themagazine’swriternotedthatin2011Shappshadsuggestedthatpricestabilityshouldbetheaimofgovernmentpolicy,bywhichShappsmeantpricesrisingby2%lessthanearnings.In2012and2013,asaverage

earningsfell,nationalaveragehousingpricesrose.Shapps’s2011

suggestionthatpeopleshould‘seetheirhomesasplacestoliveratherthanasinvestments’7begantoringhollow.Landlordsandtheveryrichwereinvestingagain,especiallyinthesouthofEngland.Shappshadhardlyexpandedthesocialrentedsectoratall;hardlyanyaffordablehomeshadbeenbuilt.Butthiswasn’tsomemistakeoracock-up:whenthelastfewyearswereexaminedafresh,itbecameclearjustwhohadtakenadvantageofothers,whattheyhadwantedtoachieve,andwhohadaidedthemintheirefforts.

‘GENERATIONRENT’

Thestarkdropinyoungerpeopleowningahomepresentsalong-termchallengeforallpoliticalpartiesbutespeciallytheConservatives.

ResearchshowsthatprivaterentersandpeoplelivinginsocialhousingarelesslikelytovoteTory.

–NickFaith,PolicyExchange

researcher,20138

By2013ithadbecomeevidentthatwhattheUKgovernmenthadplannedwasnotanexpansionofsocialhousingconstruction.Whatithadwanted,andgot,wasamassiveexpansionoftheprivaterentedsector.Thiswasachievednotthroughnewbuilding,butthroughprivatelandlordsbuyinghomesthathadrecentlybeenvacated.Inmanypartsofthesouth-eastofEnglandprivatelandlordsnowownthemajorityofhousesonstreetsthatuntilrecentlywerehometofamilieswithmortgages.Inautumn2013thePrimeMinistercounteredcriticism

ofthisveryrecenttrend,sayingthathewouldensureitbecameeasierforordinaryfamilieswhowererentingtotakeoutmassive95%mortgages,buthedidnotexplainhowtheywouldeverbeabletopaybacktheborrowedmoney.9

Thecoalitiongovernmentappearedunawareofthelong-termpoliticalimplicationsofitspolicies,notleastofhowthiswouldinfluencethewaypeoplemightinfuturevote.Governmentappearedmoreinterestedinupholdingitscoresupporters’short-termfinancialintereststhaninthinkingaboutthelongterm.Thepolicyshiftthatencouraged‘GenerationRent’togrowbecameapparentindribsanddrabsduring2012andwasthen

madeformalinthebudgetofspring2013.Take,forexample,theresponseto

areportGrantShappscommissionedfromSirAdrianMontague,Chairmanofthemultinationalprivateequityandventurecapitalcompany3i,thatwaspublishedinAugust2012.10AlthoughthecoalitionhadnotofficiallyacceptedtherecommendationsofSirAdrian’sreport,itquietlyagreed–tofallinwithhisreport’srecommendations–towaiveamandatoryquotaofaffordablehomesinnewhousingdevelopments.Thatwaiving,SirAdriansuggested,‘wouldallowdeveloperstocreatemorepropertiesforlettingtoboosttheprivaterentedmarket’.Thus,althoughtheministertalkedaboutmoreaffordablesocial

housingbeingmadeavailable,whatheactuallydidwastoboosttheprivaterentedmarket.Healsopromisedtotrytoreducewhathesawasthe‘excessiveregulation’onthissector–astatementthatshouldhaveresultedinmorecriticismthanitdidbecauseBritainhasoneoftheleastregulatedprivaterentedsectorsinEurope.WhenoneoftheUK’smainTV

newschannels,ITN,firstrantheAdrianMontaguestoryonitswebsite,itwastitled‘Reportoffers“blueprint”toexpandprivaterentedsector’–atitlethatwasquicklychangedto‘Demandforhomesdoublestheratehousesarebuilt’.Thewebaddressofthestorypreservestheoriginalheadline.MaybeasubeditoratITN

sympathetictothegovernmentchangedtheheadline;ormaybeITNwereleanton?Wewillprobablyneverknow.Theletters‘ITN’standforIndependentTelevisionNews,butthatdoesnottellyouwhattheirnewsissupposedtobeindependentof.11

ElevenmonthsaftertheITNstoryran,eventhegovernment’scritics,includingthoseonthepoliticalfringe,appearedtoforgetthatthecoalitiononcehadaplantoboostthesocialhousingsupply.Bysummer2013thedetailsofanew‘help-to-buy’scheme–usingamassive£12billionoftaxpayers’moneytoguaranteeupto£130billion12ofnewmortgagelending–wasannounced.13InitiallyitwassettorunfromJanuary2014,and

mortgagelenderswouldhavetocollectadeclarationfromanybuyerusingtheschemestatingthattheydidnotalreadyownproperty.However,eachmemberofacouplecouldeasilyfinanceapropertythroughtheschemeandthenrentoneout,transferthattoonepartnerandtheotherpartnerbuyathirdandsoonandon.Thecoalitiongovernmentsaysitisuptolenderstoensurethatsuchtransgressionsdonottakeplace,butitgavethemlittletimetoprepare.Then,attheendofSeptember2013,thePrimeMinisterbroughtforwardthestartdateof‘help-to-buy’tothefirstweekofOctober.HewantedtobeabletotellConservativePartymembersathisannualconferencespeechthatthegovernmentwasdoingallitcouldto

boostthehousingmarkethigherandhigher.14TheOctober2013‘help-to-buy’schemegrewoutofanearlier‘funding-for-lending’scheme,butwasmuchlargerandfarriskier.Thegovernment’s‘funding-for-

lending’schemehadbeenaimedatbusinessenterpriseingeneral,butendedupfuellingabuyingspreebylandlords.Ithelpedgrow‘GenerationRent’.Whenitwasintroduced,fewrealizedwhothemoneywasmostlygoingto,butscepticswerewarnedbyitsintroductiontolookmorecarefullyatfutureschemes.Theproposed£12billion‘help-to-

buy’schemehitstonygroundwhenannounced,andmanythoughtitwouldnotmakeits2014implementation.Ithadvocalcritics

rangingfromtheInternationalMonetaryFundtotheOfficeforBudgetResponsibilityandeventheBankofEngland.Thecriticismwasthatthisschemewouldnotreallyhelprentersbecomebuyers.Insteaditwouldsimplyleadtopricesgoinghigherandhigher,asafewmorepeopleboughtusingmassiveloans,manyofwhomwouldsoonrentoutthesepropertiesandchargethemortgageplusaprofittonewrenters.Criticismfromsuchheavyweightscouldnotbeignoredbythemainstreammedia,butitwasatfirstonlygrudginglyreported,evenwhentheheadofstrategyatthebankSociétéGénéraledescribedthepolicyasbeing‘moronic’.15ButeventhatdidnotstopthefirstphasestartinginApril2013,orthe

bringingforwardtoOctober2013ofthesupposedmain2014‘help-to-buy’initiatives.When‘help-to-buy’beganinApril

2013ithadbeentargetedsolelyatnew-buildpropertybuyers.Italloweduptoafifthofthemortgagesofbuyersofnew-buildpropertiestobeprovidedbygovernment,thusensuringthatgovernment,andhencewecollectively,wouldtakethefirsthitwerethepriceofnew-buildhousingtofall.Bankswerethenwillingtolendmortgageswhenjusta5%depositwasputdown,safeintheknowledgethattheywouldnotloseoutevenifpricesfellby25%:thegovernment(i.e.allofus)wouldpayupinstead.Thatthesegovernmentloansareinterest-freeforthefirst

fiveyearsaddstothecollectivehittakenbytaxpayers.Whenbuyersareletoffpayinginterest,everyoneelseispayingtohelpprivatehome-builderssellhousesathigherpricesthanthemarketsaystheyareworth;thesubsidies,ineffect,arecausingpeopletobuytheirhomesatinflatedprices.Ifhousingpricesthendofall,

governmentspendingwillhavetorisetocoversomeoftheverylargemortgagedefaults.Theonesavinggraceoftheoriginalpolicyisthat,intheory,itshouldhaveencouragednewhouse-building,whichcanbeusefulwheremorehomesareneeded,butdoesnothelpinotherareasofthecountry.Furthermore,givencurrenttrends,manyofthehomesbeingbuiltarelikelytoend

upinlandlords’handsoncetheyaresold,aspreviouslymentioned,sowhatpurportstobea‘help-to-buy’schememaywellendupbeingnosuchthing.ManypeoplemayfindthattheApril2013schemewillhelpthemtobuyanew-buildpropertyandtoliveinitforashorttime.But,ifanyofthefollowinghappenstothebuyerortheirpartner,theymaybeforcedtosell:losingtheirjob;beingdemoted;salariesfallingbehindinflation;becomingill;splittingup;orsufferingariseininterestrates.Moreoftenthannottheywillbesellingatalosstoalandlord.What,though,ofthesecondstage

ofGeorgeOsborne’spolicy:theextensionoftheguaranteetolargepartsofallmortgagestakenouton

propertyvaluedupto£600,000?Thiswasplannedtobethegreateststateinterventionintheprivatepropertymarketeverundertaken.TheformerGovernoroftheBankofEngland,LordKing,hassaidtheschemeis‘toocloseforcomforttoageneralschemetoguaranteeallmortgages’.16Thesecondstagenowappliestoallexistingdwellingsvaluedupto£600,000,notjustnew-build.Itsaimisobvious:simplytoholdupandpossiblyfurtherincreaseprices;itisnotdesignedtoboostsupply.17Holdinguphousingpricesalsoallowsrentstoremainhigh.Thepolicymayevendampendemandfornewlybuiltproperties,asnowthegovernmentwillsubsidizeyouwhenyoubuyanyolderproperty.Whyriskbuyinganoftenmoreexpensive

newlybuiltpropertywhosevaluehasnotyetbeendeterminedbythemarket?Ifthereistobeasurgeinnew

home-buildinginBritainintheyearstocome,itwillmostlybebuildingonbehalfoftheprivatebuyingandprivaterentalmarket,whilemuchmorepublicsectormoneywillflowtoboththelandlordsandthebanks,andhugesumswillbemadeavailableforunderwritingmanyoftheirrisksintheeventofanyfallinprices.Theprofitswillbeprivatizedandtheriskswillbenationalized,atrendthatbeganunderNewLabourandisacceleratingundercoalitionrule.HousingintheUKhasbecomeso

unstablethatgovernmentnowfeelsithastopropuptheprivatemarket

withthesemassivesubsidiestogivetheimpressionofstability.However,thereisagrowingrealizationthatthisisapolicyonlyfortheshortterm,onethatcouldworkupuntilthenextgeneralelection,butthatmightnotworkoncepeoplerecognizehowmuchthehousingmarketisbeingmanipulated.Ifnewpotentialbuyersbegintogetcoldfeet,ifpeopletrytoliveatparents’orfriends’homesevenlongerthantheycurrentlydobeforetheyrent,ifconfidencebeginstoquiver–whatthen?PlanAisforgovernmenttoboosttheprivatemarketsothathousevaluesriseandriseasaverageincomesfall,withtheresultthatdebtgrowstoo.ThecoalitionhasnoPlanB.Whenhousescosttoomuchfor

mostpeopletobuy,moreandmorehavetorent.Alreadyundermanyexisting

coalitiongovernmentschemesmoretaxpayers’moneythaneverbeforeisbeingusedtounderwritelandlords’riskswhentheybuynewpropertytorent.From2012,£10billioninloanguaranteeshasbeenonoffertotheselandlordsbygovernment.InOctober2012thethennewHousingMinister,MarkPrisk,announced,‘We'reoffering£10billioninloanguaranteestoprovideupto15,000newhomesforrent,putting£19.5billioninpublicandprivatefundingintoanaffordablehomesprogramme.’18Markwasshuffledoutofthehousingjobayearlater,inOctober2013.NoMPeverseemstostayforlongasHousingMinister;

and,perhapsforthisreason,evenmoremoneythanthat,andmuchmorethaneverbefore,alsoflowsinlandlords’directionfromanotherpot:thehousingbenefitbill,whichhasrisenmassivelysince2009.Thehousingbenefitbillrises

becauseeverincreasingnumbersofhouseholdscannotaffordtheirrisingrentcosts.Oftheriseinclaimssince2009,85%hasbeenfromhouseholdswhereatleastonememberisinwork.19Theoriginalexpansionofhousingbenefitpaymentsgoingtoprivatelandlords,which,by1989,hadrisento£5billionayear,hasrecentlybeendescribedas‘Brilliantlyevilinretrospect’.20Thatsamegovernmentsubsidyforlandlords,butfortheperiod2012–14,hasnowrisento£35billion.This

hugebillrosebymorethanathirdsincethecoalitiontookpower.21

And,asmoreandmorepeopleareforcedtorent,itwillcontinuetorise,evenasthegovernmentinsiststhebillwillbereduced.Theseareallmoniesthatgodirectlytolandlords.The£35billionhousingbenefit

billthatkeepsrentshighbyactuallypayingthosehighrents;the£10billionunderwriteofthefuturerisksoflargeprivatelandlordswhoarecurrentlybuildingnewhousingtorentoutatgreatprofit;theOctober2013extra‘help-to-buy’underwriteofthelending‘risk’ofbanksandothermortgagelenderstothetuneof£12billion–factorinallofthese,andyoubegintoseeastaggeringamountofgovernmentmoneygoingintothehandsofsomeoftherichest

‘players’intheprivatehousingmarket.Allthiskeepsrentsandpriceshigh.Allthisputsmoreandmorepeopleintoevergreaterdebt.Governmentmaysaythattheir

massivecurrentunderwritingofriskwillprobablyneverhavetoberealized,butthatwillhappenonlyifhousingremainsprohibitivelyexpensive–soexpensive,infact,thatmostpeoplewillfinditincreasinglydifficulttoworkoutjusthowtogethoused,withouthavingtoexposethemselvestolevelsofdebttheirparentswouldneverhavebelievedpossible,letalonecountenanced,orwithouthavingtorelyonthestatetopayatleastpartoftheirrent.Thecoalitiongovernmentin

Britainpresentsstatesupportforthe

privaterentingandbuyingsectorsasanalternativetobuildingmoresocialhousing.Thesuggestionisthattheprivatesectorisbetteratbuildingandmanaginghomesthanthestate,andalsobetterthancharitiessuchashousingassociations;itisjustthattheprivatesectorneedsalittleencouragement.ButwhatiftheunderlyingproblemofhousinginBritainisnottoofewhomes,buttoomanyhomestoopoorlysharedout?Andfartoomanyhomespricedfartoohighly?Expandingtheprivatesectortendsnottoreduceinequalitiesinprovision.ItcouldresultinmoresecondhomesbeingbuiltinandaroundLondon,notmorefirsthomesforpeoplecurrentlylivingincrowdedconditions,those

livingwithotherfamilies,unabletogetsomespace.TherentalsectorinBritainisnot

aslargeasinmanyotherEuropeancountries,andagoodcasecanbemadeforexpandingit.Buttheunregulatedrapidexpansionwehaveseeninrecentyearswillresultinevergreaterprofitsforlandlordsandevergreaterprecariousnessfortenants.Intheyearto2013medianrentsinLondonroseby9%,whilemedianLondonearningsrosebyonly2%;andthetypicalyoungrenterhasbeenforcedtomoveout(onaverage)everytwelvemonthsbyhisorherlandlordtoenablethatlandlordtofindanewtenanttopaythehigherrent.22

Thenew-buildsforrentarechieflydesignedforpoorerpeople,forthose

whocannotaffordthehighestorevenaveragerents.Butwehavelearnedfromexperiencethatservicesdesignedforpoorpeopletendtobepoorservices.OneinthreeprivatelyrentedhomesinEnglandtodayisstillnotcurrentlyuptothegovernment’s‘decent’standard.Complaintsagainstlandlordsroseby27%inthethreeyearstoJuly2012,manyofwhichconcernedlandlordsallowinghazardsthatposedanimminentrisktothehealthoftenants.23

Servicesinitiallydesignedforawiderangeofpeoplethatlaterbecomeservicesforpoorpeoplealmostalwaysbecomepoorerservices.ThisiswhathappenedtoBritishcouncilhousing,asitwasresidualized,anditcouldbewhatis

happeningtotheprivaterentalsectornow.Servicesremaingoodservicesorimprovewhenthoseusingthemhaveclout,andespeciallywhentheyhaveachoiceoverwhethertousethemornot.WhenrentsareashighastheyareinBritaintoday,mostpeoplewhorentsimplyhavetochoosetheleastbadhometheyareoffered.Manylandlordsarenowreapinggreatprofitsbecausetheydevoteonlyatinyproportionoftherentmoneytomakingthesepropertiesgoodhomesinwhichtolive.Tenantssimplydon’thavethepowertoshoparoundandrejectwhat’snotgoodenough.AndBritishlandlordsknowthis.InmainlandEuropemuchofthe

privaterentalsectorworkssomuchbetterthanintheUK.Thisisnot

onlybecauseitisalargersectorthatspansmostoftheContinentalmainland,butalsobecauseitismaintainedtosupportafarwiderrangeoftenantsintermsofsocialbackgroundandage.Asaresult,governmentscontrolrentsandpreserverights.Rentedhomesarefarbetterinsulatedandsoundproofed,andalsotend,onaverage,tobelarger.WhentheprivatesectorinEuropeworkswellitisusuallybecauseofgoodgovernmentcontrol.Afterall,the‘market’wasoriginallyaplacewherelocalgovernmentcontrolledwhereandhowgoodscouldbetraded.Withoutthatcontrol,profitmaximizationinhousingleadstogrowinginefficiency.Satisfyingshort-termgoalsbyhikingpricesupleadstolong-termtrouble.

Whenitcomestoprivatesectorhouse-building,DavidRichie,theChiefExecutiveofBovis,oneofthelargestbuildingfirmsinBritain,explainsthat,followingwhathecallsthe‘severeslowdowninthenorthernhalfofthecountry’,itbecame‘financiallysafer’fordevelopers‘tobuildbelowalinedrawnfromCheltenhaminthewesttoCambridgeintheeast’.24Theprivatemarketwillalwaysgravitatetowhereverthemostmoneyistobemadeandwillact,build,buyandsellwhenandwhereverprofitcanbemaximized,nothingmore,andnothingless.Itdoesnotmaximizehappinessorutilitywhenlefttoitsowndevices.Itdoesnottrytobestarrangeourtransporttowork,nortoensurethatwepolluteaslittleas

possibleaswecommute.Itworksonlytosatisfyeachplayer’simmediatedesires,or,atmost,thedesiresofapairofplayers,abuyerandaseller.Inequalitiesareexacerbatedbythe

factthatafewpeoplehavefarbetterknowledgeofmarketsthanthemajority.Individualscanneverbecomeexperiencedconsumersofhousingunlesstheyhaveaterriblyunsettledlife,movingsooftenthattheybecomefamiliarwithawiderangeoftenures,mortgageoffersandlandlords,andsogettoknowwhenandwherethe‘bestdeals’comeup.Anylifelivedwithsuchanobsessionoverhousingisunlikelytobeespeciallyfulfilled.Governmentcan,andshould,actonbehalfofallofus,sothateachofusneednotbecomea

housingexpert.Butsometimesgovernmentactsmoreintheinterestsoflandlordsandbanksthanintheinterestsofmosthouseholdsandmostpeople.Itisnotnecessaryfora

governmenttobeMachiavellianforitsactionstoresultinalmostallvoters’personaleconomicpositionsbeingharmed.Itsimplyrequiresenoughmembersofparliamenttobelievethatwhatisbestforafewlandlords(andforevenfewerbankers)isbestforusall.Evenifthatconditionisnotmet,andmanypoliticianshavetheirdoubtsoverbankers,ifenoughbelievethatitisessentialthathousingprices(andhencealsorents)stayhigh,theresultswillbemuchthesame.They

maynotbeincahootswiththefinanciersbuttheymayaswellbe.

Therewerenostructuralproblemswiththesehouses,whicharecurrentlyboardedup.Theywereoncesoliddwellings,butarenowinthewrongcityand,evenmoreimportantly,inthe

wrongpartofthatcity.Thebuildingsshownhereareallthatremains,in2013,ofover130housesthatwerethesubjectsofcompulsorypurchase

ordersin2008.Therestweredemolished,andallbutthishalf-dozenarenownothingbutair.Theyweredemolishedbecausetheycametobeseenas

beinginthewrongplaceatthewrongtime,locatedinthepoorenclaveofFirVale,inSheffield.Theywerebuiltwhendifferent

industriesdominated.Hadthesesamehousesbeenbuiltelsewhere,itislikelythattheywouldhavebeenlovinglyrenovated.Inotherplaceswherethereisonceagainageinghousingthatisn’tbeinglookedafter,manyofthosehomescouldsufferasimilarfatetothese,shouldthemarketcrashagain,regardlessofhowmany

peoplebadlyneedhousing.

Government,andmanyinthepolicyworld,inthemediaandinacademia,maybelievethatactiontosupportandeventoincreasehighhousingpricesisessential,atleast

forthecoalitiontobevotedintoofficeinfuture.Thismayaccountfortheresistanceencounteredbythosewhomakesuggestionsforrealchange,aswellastherecentseriesofdesperatepoliciesofsubsidyandunderwritinginanefforttodelaytheinevitablereadjustment.Housingisofgreaterpolitical

consequencethanmostotherareasofgovernmentpolicy.It’sasnearasmostpeoplepersonallygettowhatiscalledthegreatereconomy.Employmentcomesaclosesecondtohousing,butmostpensioners,childrenandmanyothersarenotemployed,whereaseveryoneisdirectlyaffectedbyhousing,allofthetime.Conversely,manypeople,especiallythosewithoutyoungchildren,maynotcaremuchabout

whatishappeningtoeducation,andthosewhoarewellcaneasilypaylessattentiontochangestoourhealthservices.Mostpeoplearenotaffectedby

thelevelatwhichbenefitpaymentsareset,orbyhowtheminimumwageisdetermined.Cutbenefits,andcrimemayrise,butfewmakesuchlinksandoftenthosethatdosimplydemandmoreprisons.(PrisonshavebeentheonlyformofstatehousingthathasexpandedinrecentdecadesintheUK,butitisalsoaforminwhichratesofovercrowdingarerisingfasttoo,asmanycellsdesignedforonepersontosleepin,anduseatoilet,nowhousetwoorthree.)Thosewhoaremostadverselyaffectedbyhousingpolicybelieve

theyhavelittlepowertoalterpolitics.Andusuallytheyareright.Theyaretheleastpowerfulintheareaswheretheylive,sopoliticianscanreducesocialsecurityspendingonthepoorestwithoutlosingmuchpopularsupport.Politicianscanincreaseovercrowdinginprisons,insocialhousingandinmuchprivaterentinghousing;and,intheshortterm,theycangetawaywithit.However,astheirhousingpoliciesbegintoimpactonagreaterandgreatershareofthepopulation,andonthelargemajorityofyoungadults,itbecomeshardertosustainsuchpolicies.Butitalsobecomeshardertoendthem.Aparticularconstituencyhasbecomereliantonpricesremaininghighandrising.

Policyonhousingisdifferentfrompolicyonemployment,crime,defence,healthoreducation.Policyonhousingtoucheseveryone.Forexample,makerentinglessproblematicandyoureducetheincentivetobuy,sopoliciesthathelptenantsmightbeseentoharmtheinterestsofthosewhoownoutrightandaretryingtosellatahighprice.Weallneedahometogoto,

whetherweareofschoolageorofpensionableage,ingoodhealthorpoor,notpaid,badlypaidorwellpaid.Whenourhousingfeelsinsecure,wefeelinsecure.Thatinsecuritycanrangefromfeelingalittlebitlesswealthy,asatsomepointinthenearfuturethevalueofyourNottingHilltownhouse(oncesubdividedintoflats)falls,to

despairingaboutbeingforciblyrelocatedawayfromwhereyougrewupbecausethereisapparentlynolongeranyspaceforyouinNewham.Clearly,losingalittlewealthisfarlessofanissuethanhavingtoleaveyourhometownorborough,butthewealthymansionownermightbehappiertoseeyougoratherthanloseafractionofhisequity.Ifequalityweretogrow,hemighteventuallyhavetosubdividehispropertyagain,sothattherewouldbesomespaceforpeoplelikeyoutostayinpartofthatbuilding.Heknowsithappenedbefore.IftheforcesofConservatismdon’ttriumph,itcouldhappenagain.Manyofusworrythattheremay

notbeenoughhomestogoround.Weworrythatwecouldeasilybe

evictedwerewetobelatewiththerentormortgagepayment.Ifwearehomeowners,weworrythatthehomeweownoutrighthasamonetaryvaluethatisassolidasquicksandandthatthefuturewethoughtwassecurewillturnouttohavebeenapipedream.Fewpeoplefindreassurancethroughthewaysinwhichwehavecometoorganizehowwearehoused.Ofthosethathavewonoutinthe

housinglottery–unlesstheyhavenochildren,norelativesandcarefornofriendswhoareinsituationssomewhatdifferentfromtheirown–theytooshouldstillhaveworries.Ifwecarryonasweare,howwillsocietybeabletofunctioninawaythatallowspeopletorespecteach

other?Howwillallourchildrenbehoused?Howbigwilltheirdebtsbe?Housinghasbecomethedefining

economicissueofourtimesbecausehousingfinanceisattheheartofthecurrenteconomiccrisis.Somanyofusputsomuchmoneyandfaithintotheselittleindividualizedpocketsofrisk,atleastatonepointinourlives,thatwecaneasilybecomemoreconcernedaboutourhomeandneighbourhoodthanthewiderpicture.Whenweconcentrateourworry

onourhousing,weworrylessaboutthewidereconomybecomingdysfunctional.Worryabouthousingdistractsusfromthedisasterofmillionsofyoungadultshavingnowork,ofincomeinequalitiesrisingrelentlessly.Weworryaboutour

individualpropertyvalueorrentlevel;aboutpayingthemortgageeachmonth;aboutwhethertheprofitonoursalewillpaythenursinghomefees;oraboutwhywefailedtotrymuchhardertobuywhenwewereyounger.Ifhousingpricesarerisingand

youhaveboughtahome,noneoftheothertrendsappeartomatterthatmuch,becauseyou,andyourfamily,aredoingallright,evenifsocietyasawholeappearstobeinmoreofamessthanitwaswhenpeopledidnotoverwhelminglyprofitfromtherisingvalueoftheirbricksandmortarratherthanfromtheirlabour.

DISASTERCAPITALISM

Thereistheriskofaproperty-drivenboomintheUK…

–AntonyJenkins,ChiefExecutiveOfficer,

BarclaysBank,201325

Ourpersonalhousingexperiencesbothencapsulateandengendertheparticularkindofcapitalismthatwearecurrentlylivingthrough:DisasterCapitalism.Thatiswhatoccurswhenpeopleareallowedtoprofitoutofacrisis.ThetermwasfirstwidelyusedtodescribehowgreatprofitsweremadeintheaftermathofhurricaneKatrinahittingtheLouisianacoastlineoftheUnitedStatesin2005anddecimatingNewOrleans.26

IntheUnitedKingdomthebanksandlargerlandlordsarenowmakinghugeprofitsfromthehousingcrisis.Manyoftheirrisksarebeingcoveredbythetaxpayerthroughthenew

underwritingschemes.Furthermore,inboththeUKandtheUS,governmentcurrentlylendstobanks(ineffect,totheirshareholders)atnear-zerointerestrates,whilebanksstilllendtousatmuchhigherratesandverymuchhigherratesforthosedeemedtobemoreofarisk.Foreveryhiddensubsidytothe

richthatyoudiscover,thereappearstolurkbehinditanevengreatersumofmoneythatisbeinglent,riskedorraisedtotrytomaintainthecrookedstateofourhousingsystem.Afterall,itwasthehousingsubprimefinancialcrisisthattriggeredthetrillionsofpoundsanddollarsnowspenton‘quantitativeeasing’.Andwhatisitexactlythatthishugequantityofmoneyissupposedtoease?Everythingappearstobebeing

donetorestorethingstohowtheywere,tomaintainthegrossinequalities,topreventasubstantialreadjustment.Youmightthinkthissituationwill

notchange,butithasnotalwaysbeenlikethis.Todaythepoorlyandinsecurelyhousedarenotagroupthatcanbesidelined.Thisispartlybecausethehousingprecariathavebecomesuchalargegroup.27ThisbookfocusesontheUKhousingmarket,buttheUKisnottheonlysetofnationswheresomuchhasbeeninvested,bothfinanciallyandemotionally,inhousing.Acrossmuchoftherichworld,levelsofconfidenceinourindividualeconomiesare,toagreaterorlesserextent,nowmorereliantonthehousingmarketthantheyhaveever

been.Thisisnotsafe.Tryingtoreturntobusinessasusualfollowingthe2008crash,torelyingsogreatlyonhousingasafinancialstoreofwealth,isapolicythatwillexposeustoyetmoreinsecurityinthefuture.Whenthehousingmarketappears

buoyant,peoplespendmoreandtheeconomydoesbetteringeneral.Demandrises,notjustforgoodsrelatedtohousing,notjustforsalesofcarpetsandcurtains,butforholidaysandcinematrips.Itwouldbebetterifwemostlyreplacedcarpetsandcurtainsonlywhentheywerewornout,ifthecinemaswerecheaper,andifagoodholidaywasnotnecessarilyanexpensiveone.However,giventhecurrentwayinwhicheconomicgrowthismeasured,themorethatisspent,andthemore

frequentlyitisspent,andthequickerwethrowpossessionsawayandreplacethem,thebetteroffweareallsaidtobe.Lookingatthefinancialcrisis

throughtheprismofhousingleadsustothenubofwhat’sgonewrong.Andtowhatwillberequiredtomakeusbothbe,andfeel,moresecureagain.Neithershow-homesnorinsecurehomesmakeushappy.Weneedtoknowthatwearelivingonsolidground,thatourhomesaresafe.Weshouldnothavetolivewiththeperceivedneedtopresentourhometootherskittedoutlikeanewlyrefurbishedhotel.Weneedtoorganizehowwearehoused,sothatweneitherhavetofearforourbasicshelter,norbehaveasifthefabricofourhomesreflectedourstatusand

achievements.Currentlytoomanypeoplearetoopoorlyhousedandarichsubsetaretooexpensivelyhoused,overprovidedforattheexpenseofthemajority.Fundamentallyitisthelinkingof

housingtosocialstatusthatallowspricesandrentstobeincreasedbeyondwhatthecostofprovidingthedwellingmightbe,orbeyondwhatthevalueofthelandmightbeifitwereturnedtootherpurposes.ItwasKarlMarxandFriedrichEngelswhofirstwroteofhowahousecouldbemadetoappeartobeahovel,shouldamansionbebuiltnexttoit.ItwastheeconomistRobertH.Frankwhocametonoticethisoccurringagainover150yearslater,butinthecontemporaryUSratherthaninnineteenth-centuryEurope

(whereKarlandFriedrichfirstmadetheobservation).Toillustratetheissueofstatus,Frankincludedthefloor-planreproducedbelow,waybackin2001,toshowwhatwashappeningintheUSatthattime.Tounderstandthepointbeingmade,youneedtolookatthisfloor-planandthispictureofahouse,andthinkhowniceitwouldbetolivethere.Butpleaselookcarefully,andalsothinkaboutwhetheryoureallywouldneedathree-cargaragethathasbothwindowsandcurtains.Thisbookismainlyconcerned

withtheUKhousingmarket,buteventsoverseasbothdrivewhatoccursinBritainandalsoofferaportentforwhatmaysoonoccurhere.Inparticular,whathashappenedrecentlyintheUKbegan

tohappenearlierintheUS.PeopleatthetopintheUSbegantowantmore,muchmore,thantheyhad,andtheyfoundwaystotakeit.

Figure1.Dreamhome:6,000-square-foothouse,frontelevationsandfloorplans,United

States,2001.

Better-offindividualsintheUSrecentlybecamemuchbetteroff.Thetop1%nowtakeshomeafifthofallnationalincome,leavingjust80%fortheother99%.Toenvisagewhatthismeans,imaginegoingtoaschoolthatserves100childreninthreeclasses(or33,33and34childrenineach).Inoneofthoseclassesisasinglechildwhoreceives$20adayinpocketmoney.Theother99childrenintheschooleach,

onaverage,receivetheequivalentof80¢adayinpocketmoney,butnotevenly.Otherchildrenintherichboy’s

class,whichhappenstobetheclassof34children,receive,onaverage,$2aday.Inthenextclassaveragepocketmoneyisjust50¢aday.Butinthethirdclassitisalmostnothing.ThatishowunequaltheUShasbecomeintermsofincomeinequality,andthatgrowinginequalityinabilitytobuyhashadconsequencesaboutwhatpeoplesubsequentlywant.Everybody,understandably,wants

morewhentheyeachhavesolittleincomparisonwiththeirpeers.Thosewhohavealmostnothingwantmore;thosewhohavejust50¢wouldmuchprefer$2andcannotseewhatis

unreasonableaboutthat;andthosewhoreceive$2knowthisisonlyatenthofwhattherichestboyintheclasshas,sotheytoocanfeelpoor.Butitistherichboywhoismostisolated,whocannotseetheotherchildrenashispeers;theyarenot,ineffect,hispeers,soevenhedoesnothaveallhemightwant.AstherichintheUSbegantotake

agreaterandgreatersliceoftheAmericanpie,theyneedednewwaystoshowhowsuccessfultheywere.OneoptionwastopurchaseAmerican‘dreamhomes’.Thepictureandfloorplanoppositeshowsasmallversionofoneofthese,perhapsbuiltforsomeonewhohadonlyjustmadeitintothetop1%ofUSsocietyintheearly2000s.Itmaylooktoyoulikealargehome,

butthen(ifitdoes)youareprobablylikethosechildrenwhohave‘only’$2adaypocketmoneyeach:achildinthetopclassoutofthree,butnotintherichesthalfofthatclass.Whatdoyouknow?Itiseasytobeonabove-averageearnings(orpocketmoney)andfeelpoorwheninequalityissohighandpeoplearesosegregatedintheireducation,intheiremploymentorintheirresidentialneighbourhoods.IntheUKthetop1%donotyet

takehomeasmuchasafifthofallnationalincome,buttheirshareiscurrentlyrising.ThepictureandfloorplanabovemayappearevenmoreostentatioustoaUKreadership,asthereislesslandtobuildonintheUK,butifinequalitieswithintheUKcontinuetogrowthis

couldbecomeanexampleofanexpensivehomethatmoreoftheaffluentintheUKwillsoondesiretoonedayown,onethatsofewdoownnow.Whatmattersaboutthefloorplaniswhereitfirstappearedinprint.Thisisbecauseitspublicationillustratesthatalltheproblemsofhousingthathavebeendiscussedsofarinthisbookarewellknowntotheeliteandhavebeenunderstoodintheircirclesforsometime.Italsosuggeststhatjustbecausetheyarewellknowndoesnotmeantheyaremanageable.Theimageofadreamhomeand

floorplanistakenfromabookpublishedin2007,whichwasitselfbasedonanacademiclecturegivenin2001.28InthelecturetheUSeconomistRobertH.Frank

explainedhowafewpeoplewantingmoreandmoreendedupmakingeveryoneelselesshappy.Slowly,andatfirstmostclearlyfromtheexamplesetbytheUnitedStatesofAmerica,wearelearningthatdisasterunfoldsifyoufailtocurtailtheexcessesoftherich,ifyoufailtoregulatehousing,andifyoufailtoseeshelterasaright,notsomethingtobesoldfreelyandboughtbythehighestbiddertothedetrimentofthemajority.Atacertainageeverychildneedsalittlepocketmoney,butnochildneeds$20aday,especiallyif,likespaceforhousing,thatmoneyiscomingoutofafixedpot.RobertFrankisco-authorwith

BenBernankeofaseriesofmainstreameconomictextbookspublishedintheUS.Bernankewas

untilveryrecentlytheChairmanoftheUSFederalReserve,aposthehadheldsince2006,beforethecrash.ThoseintheeliteatthetopofUSsocietyknewtheyhadabubblelongbeforeitburst;theyjustdidn’tknowhowtodealwithit.Theyalsoknewtheyhadasevereproblemwithrisingeconomicinequalities.Buttheydidnotknowhowtoreducethem,oratleasthowtodosoinawaythattheycouldpresentasacceptableintheUSpoliticalclimateofthetime.ThoseatthetopofUKsociety

knewoftheproblemsrisinginequalitybringsalmostaswell.They’dhearditfromthehorse’smouth.InSeptember2006FrankexplainedallthisataseminarheldwithinNo.11DowningStreet,then

theofficeofGordonBrown,ChancelloroftheExchequer.Theslidesheshowedcanstillbeviewedontheweb.29TheyoungmenandwomenoftheTreasurywhowerelisteningfoundittobeaveryimpressivelecture.Theyknewgrowinginequalityinhousingwasbad,buttheyjustdidn’tknowwhattodoaboutit.

RECENTINEQUALITY

IfyouwanttheAmericanDream,gotoFinland.

–EdMiliband,201230

TheUnitedStatesisoneofthefewcountriesintherichworldwhereinequalitiesinincomebetweenhouseholdsareevengreaterthanthosefoundwithintheUK.Thebest-

offtenthofhouseholdsintheUSreceiveeachyear,onaverage,15.9timesasmuchtoliveonastheworst-offtenth.IntheUKthatratiois13.8to1;intheNetherlandsitis9.2to1;inDenmark8.1to1;inGermany6.9to1;andinFinland5.6to1.31AstheincomesofthoseatthetopinboththeUKandUSroseinrecentdecades,housingpricesandrentsatthetoprosetoo,butthoseincreasesdraggedthepricesandrentsofslightlycheaperpropertiesup–especiallycheaperpropertynearthemostexpensivehousing.Therisesinhousingpricesrippledout,and,althoughtherewaslessofahikelowerdownthehierarchy,therisewasalwayshigher,proportionately,thanthesalaryandwageincreasesreceivedbythepeoplefurtherdown.

Foratimethiscontinuedregardlessofthefactthatlesswell-offpeoplesoonsimplydidn’thavethemoneytopayfortheirhousing.Everyonejusthadtobeotherwisepoorer,oftengettingintogreaterdebt,tokeepup.IntheUK,forthepoor,thestatestumpedupmoreandmoreofthegrowingbill.IntheUS,trailerparksgrewlargerandmultiplied.Eventuallythegapbetween

housingcostsandearningsbecametoogreatformanypeopleinthemiddleoftheincomedistributionintheUS.Itwasnotsurprisingthatthehousingcrisisbeganthere.Itwas,andremains,themosteconomicallyunequalofrichcountries.Peoplehadbeentemptedintobuyingonthepretextthatifpricescarriedonbeingpulledup,theywouldbeforcedto

rentfortherestoftheirlivesiftheydidnotbuynow.Ifyoucansympathizewithsuchfears,thatmayhaveasmuchtodowithyourownhousinghistoryandwhatyouhaveexperienced,aswithyourgenerallevelsofempathy.Poorerfamiliesintheearly

noughtiesintheUSwereofferedmortgagesatinterestratesthatstartedcheapbutlaterrose–thoughwhatrealchoicedidtheyhave?Incontrast,inthosecountriesthataremoreequitable,rentingisconsideredtobeanacceptableoptionforpeoplehigherupthescaleandtheirrents,aswellaseveryoneelse’s,arelower.Therearealso,bydefinition,fewerpoorerhouseholdsinmoreequitablecountries,andthericharelessrich.

Acrossmostofthemoreequitablerichcountriesoftheworld,housingpricesarenotinflatingawayatthetop,becauseincomesarenotsoaringatthetop.Moresensibledecisionsoverwheretolivearepossibleinplacesotherthanthemostexpensivepartsoftheworld’sinequitablerichcountries.Incontrast,withintherichworld,insocietiessuchasthosefoundintheUSandtheUK,growinginequalitiesarehavinganincreasinginfluenceonbothresidentiallocationdecisionsandhousingprices.Forexample,itbecomesmoreandmoreimportanttoliveinagoodareaifyouwanttogetyourchildrenintoagoodschool.Thisisbecausewheneconomicallymixedneighbourhoodsbecomerarer,itishardertofindschoolswitha

mixedsocialintake.Growingincomeinequalities

allowpeopletosegregatemorethroughtheirhousingchoices,but,whenthishappens,choosingwheretolivebecomeslessofachoiceandmoreofaburden.Whereyouwanttolivealwaysseemsjustoutofreach.Everyonecanendupfeelingpoorerwhenafewgetricher,includingmanyofthosewhomateriallyappeartohavemuchmorethanothersaroundthem.Therearemanyeffectsofrising

incomeinequalitiesonhousingdecisions.Unequalincomesnecessarilyfuelthegrowthofbubblesinthehousingmarket,becauseindividuallyitmakessensetospendasmuchasyoucanonahomewheninequalitiesaregrowing.

Peopleworryaboutnotgettingontheladderandborrowwhatevertheycantoleapontoit.Asaresultpoorerareasbecomerelativelyevenpooreragain.Thenfolkask,‘Whowouldwanttolivethere?’–whichbecomesaself-fulfillingprophecy.Butsuchimparitiesmusteventuallyend.Thereisusuallynothingfundamentallywrongwiththelandinpoorerareas,andnothingparticularlyspecialaboutthelandinricherareas,otherthanthatricherpeoplelivethere.Leftunchecked,priceswillriseandrisewheretheystartoffhighest–untilalmostnoonecanaffordtolivethere–andthenwhowouldbefoolenoughtobuyorrentthere?Thisishowanewcycleofvolatilitybegins.

Itisnotjusthousingpricesthatriseasinequalitiesgrow;sotoodorents,andformuchthesamereason:becauseitbecomesincreasinglyimportanttoavoidpoorerareasandpoorerregionsasinequalitiesriseandthoseplacesthatstartedoffalittledisadvantagedbecomemoreevidentlypoor.Aprecariouslyhousedpopulation,onethatisalwaystemporarilyrenting,thengrows.Moreandmorepeoplehavenowayofknowingwhentheirlandlordmightdecidetheyhavetoleavetheirhome.Thehighertherentyoupay,thelesslikelyitisthatyouwillbemadetoleave,butitisstillnoguarantee.Precariouslivingisnotjustabout

precariousemployment;itisalsoaboutbeingprecariouslyhoused.

Theeffectsofconstantlyhavingtomovehome,notwhenyouchoosebutwhenyouareforcedto,areknowntobeworstforchildrenandtheelderly.Theyarethemostvulnerablemembersofpoorerhouseholds.They,andimpoverishedchildlessadults,havetheleastchoiceinhousing.Itisthemostmoney,notthemostneeds,thatgainsyouthemostspace.IntheUKoneresultofpayingas

higharentasyoucouldaffordto,andchargingasmuchasyoucouldgetawaywith,wasthatintheUKthehousingbenefitbillwasallowedtoballoon.Thiswasthemoneygovernmentwaspayingdirectlytolandlordsforpeoplewhocouldnotaffordtopaytherentthemselves.GovernmentintheUKisnowtrying

toreducethattaxpayersubsidytolandlords,butitisdoingsobyharmingtenants,casualtiesofthecoalition’scontinuingfundamentalbeliefthattheunfetteredmarketisthebestroutetoallocatinghousing.Tenantsarenowbeingharmedinmanyways:mostwellknowniswhentheyaretoldtheymustleavetheirhomebecauseithasoneroomtoomanyinrelationtothesizeoftheirfamily,buttherearenosmallerpropertiesforthem;leastwellknownisthegrowingillicitprivatemarketinrentingoutsingleroomstoentirefamilies,orevenunheatedgardensheds(suchisthegrowingdesperationforhousing).Toseewhatcanhappentothe

majorityofthepopulationwhenyouallowthehousingmarkettorunto

extremes,itisnecessarytolookoverseas.Andyoudon’thavetolookthatfar.Irelandshouldbecloseenoughtocausesomefear;orevenSpainandPortugal,ofwhichmorelater;buttoendthisintroductorychapteronthecurrentcrisislet’staketheUSandexaminewhathappenedtherewhenpricesandrentsroseastronomicallyandmedianwagesbegantofallinabsoluteterms,yearafteryear,withoutapparentend–eversincethelate1970s,infact.32

ManypeoplewhohadrecentlyboughtpropertyintheUSintheyearsupuntil2008didsoonwhatturnedouttobeunsustainablemortgages.Often,oncetheydefaultedonthemortgage,theywouldwalkoutoftheproperty,leavingthekeysbehindandtryingto

leavethedebtwiththehome.Otherswereevicted.Asmoreandmorepropertybecamevacant,vandalsmovedin.BecausethebottomhadfallenoutofthemarketinmanypartsoftheUS,whenthebankstriedtoauctiontheemptydwellings,inmanycasestheycouldfindnobuyers.Asaresultbanksstoppedauctioningmostpropertiesinmanystates.Thegraphbelowshowshow

quicklybanks’attitudeschangedtothehugenumbersofpeopleunabletomeettheirmortgagepaymentsfollowingthecrashof2008.USbankssimplygaveuptryingtoevictdefaultingmortgageesinmanyplaces,lettingpeopleremainintheirpropertylongaftertheyhadstopped

paying.Insomestatesthisappliedtothemajorityofdefaulters.33

Sobadlyhadthehousingmarketslumped,andsowidespreadwastheproblem,thatthebanksoftenfeltthatthegamejustwasn’tworththecandle.Thiswasjustacoupleofyearsago,remember,notthe1930softheGreatDepression.Therewerealsocampaignsagainsteviction,butthesewerelesseffectivethantheknock-oneffectsoftheevictionsthemselves:thebankssooncametorealizethatleavingpropertiesemptyreducedwhatlittlevaluewasleftinthemandsowasultimatelynotinthebanks’bestfinancialinterests.Bylate2012,acrossallofNew

YorkState,theaveragedefaultingborrowerwasbeingallowedtoremaininhisorherhomeforalmost

threeyears,rentandmortgagefree.IntheUSasawhole,theaveragetimefordefaultingmortgageesliving-for-freehadrisentooverayear(andhadmorethantripledsince2007,whenitwasnormaltoevictpeoplewithinaboutfourmonths).However,noneofthisapparentlyincreasedleniencywasenjoyableeitherfortheoverexposedlendersorforthebankruptborrowers,whofacedaprecariousfutureintheirnowbank-ownedproperties.Alltheseresidentscould,atanytime,beevictedandmadehomeless.

Figure2.AveragenumberofdaystocompleteaforeclosureintheUSbystate,2007–12.ThetimetocompleteaforeclosurehasnearlytripledintheUSnationwide,fromaboutfourmonthsin

2007tonearlyayearin2011.

Intheyearsfollowing2008somethingfundamentalchangedintheUS.Bothbanksandbuyerslearnedalessonthathadbeenforgottenfordecades:thatfreemarketmadnessleadstomisery.The

bottomcanfalloutofmarketswhenthosemarketsarelefttotheirowndevicesandwhenthevastmajorityofparticipantsinthemarketareill-informedincomparisonwithafewinsiders.Andevenmostofthoseinsiderswereburntintheprocess!Inhindsightjustafewofthefew,theinsiders’insiders,cameoutwithaprofit.ThevulturesofthisparticularDisasterCapitalismwerethosebanksandinvestorsthathadbetonthecrashoccurring.MaybetheyhadreadtherightbooksandlookedatthatpictureofadreamhomeinthesamewaythatRobertFrankhad.Maybetheyrealizedthatatsomepointitwouldallhavetoendandtheypositionedthemselveswelltotakeadvantageofthatending.

ManypeopleoutsideoftheUSareunawarethatnotonlyisanear-completehousingmarketcollapsepossible,butalsothatithasjusthappenedtoamarketaslargeandrichastheUS’s.TheEuropeanpressappearedaversetoreportingthesetrendsfromacrosstheAtlantic,despitebeinghappytotalkendlesslyofUScelebrities.YouhavetolooktotheUSpresstofindthereports.Perhapswritingonhousingmiserydoesnotsellnewspapers.PerhapsthecollectiveinterestsoftheEuropeanbanks,thepressmoguls,thepoliticiansandalltherestofthosewithmoneytiedupinthesystemweresogreatthatitwasthoughttobeabadideaforpeopletostartthinkingthathousingwasnotverysafe,thatitwasnolongera

solidinvestment.InIreland,Iceland,Portugal,Spain,ItalyandGreecepeoplearemorewary.IntheUKtheyarenot.Reportingjusthowbadafinancial

crisishasbecomemayappearasbothunpatrioticandasscaremongering;but,ifitisnotdone,thewayisopenedforsomethingworsetooccurinthenearfuture.ThisbooktellsthestorythathasbeenrepeatedlyignoredintheUKandsuggestswhatmightbedonetoeffectchangeforthebetter.Itbeginswiththischapteroncrisis,becauseweareincrisis,butitshouldberememberedtherearemanyroutesoutofacrisis.Notallisdoomandgloom,buttoseewherewemightgettorequiresaclearerpictureofwherewehavebeen.

Chapter2concernstheplanningandthinkingbehindhousing:howhousinghasonceagaincometoreflectsocloselyourclassstructureandsocialpolarization.Issuesoffreedomandgreed,efficiencyandinequality,arefirstdealtwithindetailhere.Lessonsfromthe(Roaring)1920sand(Depression)1930sareconsideredwithaviewtoseeingwhetherourbehaviourfollowingthe2008crashcouldhavebeenpredictedonthebasisofwhathappenedafter1929.Chapter3considersthe

foundationsofhousinginBritain:whatunderliesourhomes.Howhousingfinancebeganasaformofsavingsmallsumsforthosewhowerecareful,butthencametobeintricatelyboundupwithgenerating

wealthandwithgrowingeconomicinequality.Theclaimbeingmadehereisthatitwasashiftinvaluesandprioritiesthatledtoourcurrentmarketvolatility,butalsothatwhathappenedinthepastisnotnecessarilyasureguidetothefuture:thefailureofhistorytopreciselyrepeatitselfincreasesuncertainty.Chapter4concernsthebuilding

andupkeepofhousing.Throughthe1920stothe1970s,whenwewerebecomingmoreeconomicallyequal,housingforthepoorwasbeingbuilttobetterandbetterstandards,whilehousingfortherichwassubdividedor,attheotherextreme,turnedintoopenhomesforthepublictoview.WearenowrapidlymovingawayfromthattimeandbacktowardstheinequalitiesoftheRoaringTwenties.

Chapter5looksathowwearebuyinghousing:howwerentit;borrowtobuyit;trybutoftenfailtoensureourhomesareaffordable.ItisnotjustthatBritainbegantobecomemoreunequalafterthe1970s,butthatLondonbegantogrowinpopulationtermsagain;thecapitalcityhadbeenbecominglesscrowdedanditscitizensbetterhouseddecadeafterdecadefrom1911upuntilthen.Nowthenew,rapidlyregrowingLondonisEurope’sonlymega-city,aplaceinwhicheventheextremelywellpaidcanstruggletofindaone-bedroomflat.WhataretheimplicationsforhousinginBritainofcurrentattemptstotrytoclearthepoorfromLondon,ofallowingittogrowsorapidlyandsodifferentlyfrombefore?

Chapter6turnstothecurrentslumpinhousingandaskswhyitissaidthatthereisnotenoughhousingforall.Thisisworthquestioning,giventhat,inaggregateandpercapita,wehaveneverhadsomuchhousingavailabletobelivedin.Ifweneedtobuildgreatnumbersofnewhomes,whyissomuchoftheexistingstockempty?Whyaresomanyhomesleftemptyforpartoftheweekjustbecausetheyaresomeone’ssecondorthirdhome?Andwhyaresomanymorepeoplenow,asopposedtotenortwentyyearsago,occupyingsuchlargehomessoinefficientlyifwehaveanoverallshortageonsuchalargescale?Chapter7considershow

speculationinhousinghasgotus

intothismess:therentarrears,repossessionsandhomelessnessthatresultfromrampantspeculation.Changesinhowwearehousedcancausegreatchangesinsociety.Theycanfosterselfishnessandbeusedbythosewhowanttolabellargesectionsofthepopulationasfeckless.Growinghousinginsecurityhasbeenshowntocontributetorisingill-healthandtothedeep-rootedanxietyandinsecuritythatfeelingsofhelplessnessengender,especiallywhenpeopleareforcedtodeclarethemselveshomelessorbankrupt,ortosuccumbtomassiveborrowinginordertocope.34

Chapter8endsbyofferingupsolutions,suggestingthatextendingalreadyexistingbutlittleusedlegislationtoallowpeopletostayin

theirhomeswhentheyarethevictimsofspeculationcouldleadtoafuturewherethereisbothlessprofittobedrawnfromhousingforafew,andmoresecuritytobeenjoyedbythemany.Buttogettothatfuturewemustagainworktowardsseparatinghousingfromwealth.Throughoutthisbookgraphsand

chartsillustratingthecurrentcrisisareinterspersedwithphotographsofhousinginthecityofSheffield,wherethefirstdraftofthisbookwaswritten.Theimagesshouldserveasareminderthathousingisprimarilyaboutshelter,aboutourmostbasicneeds,notabouttheextremesofpovertyandaffluence.And,althoughLondonismentionedveryofteninthesepages,thisismostlyastoryofpeople’sstruggleoutsidethecapital.

ThefinaldraftwasfinishedinOxford,inSeptember2013,bythenthe‘mostunaffordablecityanywhereoutsideLondon’.35Writingabookonhousingwhilemovingbetweentwosuchdifferentcitieswillhavecolouredthepagesthatfollow.Inneithercitycanmostpeoplequitebelievehowpeoplearehousedintheotherplacewhenitisdescribedtothem.Bothcitieshaveacutehousingproblems:SheffieldhasthelongestsocialhousingwaitinglistintheUK,OxfordthehighestpricesoutsideofLondon.Housing,likesomuchelseinlife,isultimatelyaboutgeography–abouthowweallgettofitin.

Thisimagemaylookasifitisnothingunusual.Allitshowsisabedinacornerofaroom.Itisanoldbed;themattressiscoveredwithasinglefittedsheetandaduvetisthrown

acrossit.Thepillowstillshowstheimprintoftheheadofthepersonwhosleptinthebedlastnight,and,ifyoulookclosely,you’llseethatthewallsofthisbedroomhavebeenpaperedovercrudelybuteffectively.YourviewofthisbedmaychangeonceyouknowthatitisabedinahostelforhomelessyoungpeopleinSheffield.Aboveallelse,housingisaboutbedrooms,aboutaplaceinwhichtosleepandfeelsecure.Thisbedhas

recentlybeenhometodozensofyoungsters,allofwhomlacksecurehousing.Bedsinhostels,inprisons,inhospitalsandincommunalhallsandlodginghousesarenotincludedintheofficialstatisticsonhowmanybedsthereareinBritain.Behindthehousingstatisticstherearemissingnumbers,andbehindthemissingnumbers,andthebricks,mortar,plaster,wallpaper,bedsandbedding,therearestoriesabouthowpeoplefitintosociety–ornot.Ourhomesaretheslotswefitintoinspace.Ourfamiliesaretheslotswefitintointime.Makinghousinghardertocomebymakesbeingpartofsociety,evenbeingpartofa

family,allthehardertoachieve.

2

Planning

TheUKhasoneofthemostpersistentlyvolatilehousingmarkets,withfourboomandbustcyclessincethe1970s.Thesecyclesdistorthousingchoices,driveuparrearsandrepossessionrates,inhibithouse-buildingandheightenwealthinequalities.

–MarkStephens,ProfessorofEconomics

attheUniversityofGlasgow1

Superficially,thecurrenthousingcrisiscanappeartobeacrisisoflandandbuilding.TheleadinghousingcharityShelterclaimsthat‘The

ultimatesolutiontoEngland’shousingcrisisistobuildmorehomes.’2Thegovernment’sBusinessSecretary,VinceCable,firstcalledforan‘aggressiveprogramme’ofhouse-buildinginhisspeechatthe2012LiberalDemocrats’annualpartyconference,3asentimentthatwasechoedbythePrimeMinisterlaterthatyear.4

Atcertaintimesnotenoughlandappearstobeavailableonwhichtobuildhomesandnotenoughbuildersappearwillingtobuild,evenwhenthebigbuildingfirmshavecontrolofsomuchofthelandthatisactuallyavailable.Speculatorscanforceupthepriceoflandfarfasterthanthatofhousing.ProfessorMarkStephensisrightinsayingthatsomehouse-buildinghasbeeninhibitedbythe

volatilityoftheUKmarket.Attimesinthepast,andjustafterapricefall,itdoesnotappearworthwhiletobuildnewhomes,becausetheywillsellfortoolittle;atothertimesitappearsworthholdingontothelandandbuildinglater,becausepricesarerisingandrising.ButfundamentallyShelteriswrong:the‘ultimate’probleminrecentdecadeshasnotbeentoolittlebuilding,butgrowinginefficiencyinouruseofthehousingstockthatwehave.Growingincomeandwealth

inequalitiesmeanthathousingisbothchosenandallocatedlessandlessbyneedandmoreandmorebytaste.Andinadequatehousingisincreasinglyputupwithsimplyindesperation.AcouncilmaisonettethatwasbuiltinnorthernEnglandto

houseafamilyofthreeorfourmighttodaybeboughtbyasingleprofessionalinneedofsomewherecheap,someonewhofeelstheneedofastudy,asparebedroomandlotsoflivingspace(albeitpossiblyinanotverydesirablearea).Thefamilywhocouldhavelivedthereishousedbadlyelsewhere,butthereisn’tenoughmoneytoprovidefortheirgreaterneed.Morebetter-offpeoplearesingleforlonger;welivelonger;andwebreakupmorefrequentlyandtakelongertostartanotherseriousrelationshipthanweusedto–sowecaneasilycometooccupyhousinglessefficiently.Whenwemarriedyoungandstayedmarried,wefittedbetterintothehousingstock;butitisnotourchangingdemographicsthatarecausingtheshortageofhousing,

butratherthegrowinginequitiesinoureconomics.Familiestendtobemuchsmaller

thanintherecentpast,andpeoplestartthemfarlater.Intheory,twosmallhouseholdscouldshareonelargehome,butyouhardlyeverhearoftwolone-parentsingle-childhouseholds,agroupoffourpeople,sharingahome.Eveniftheywantedto,theyprobablycouldnotaffordit.Thatiswhatiskey.Gobacknottoolongagoin

historyandyouhearofhowcommonitwasforpeopletobepackedfarmoretightlyintohousing.I’mnotsuggestingweneedtodothat,butIamsuggestingthatweshouldstartworryingmuchmorethanwecurrentlydoabouthowmanyofourbuildingsareemptyforsomuchof

thetimeandofhowmanyroomsareunused,eveninbuildingsthatarenotvacant.Itisworthgoingbacktowhentherewasalmostnounusedhousing,in1929,andtolookathowthemarketcrashwasdealtwiththen,backwhenwhatwasnormalinBritainwastorent;andwhentherereallywerenotenoughhabitablehomestogoround.Thelasttimetherewasa

depressionasdeepandaslongastheonethatEuropeandmostoftherestoftherichworldarecurrentlyexperiencingtherewasaverydifferentresponsefromthehousingsector.Between1920and1938,Britainexperiencedaboominbothmortgagelendingandhouse-building.Thiswasdespitewagesbeingstagnantandunemployment

rising.AsFigure3belowshows,theboomstartedinthethreeyearsuptotheGeneralStrikeof1926,slowed,andthentookoffagainwithavengeancein1933and1934.Thefigurealsoshowsthatitwasfuelledbytheprovisionofadditionalmortgageadvances–bygreaterlendingandgrowingdebt.Somecommentatorsmightwellsuggestthatifitworkedthen,whycouldsuchahouse-buildingprogrammenotworknow?Theboomwasnotnecessarily

sustainable.Ifithadnotbeenforthestartofthewarin1939,theremayhavebeenafurthereconomiccrash.Butthisexampleneverthelessillustratesapopulationbecomingprogressivelybetterandmorefairlyhoused,eveninthemidstofagreat

economiccrisisandfear.Ithashappenedbefore;ithappenedthen.However,fromthe1920sto1939Britainwasalsobecomingamuchmoreequitablesociety.Halfofthefallinincomeinequalitythatoccurredbetween1918and1978occurredinjustthosetwentyyears.5

Slumswerebeginningtobedemolished.Thefirsthomesfor(modest)heroeswerebuiltattheendoftheFirstWorldWar;thelastnewstate-fundedhomeswerebuiltfortheirgrandchildrenattheendofthe1970s.Itisfortheirgreat-grandchildrenthatthecrisisisworse.Itcouldbearguedthatthe1920s

and1930saretoofarbackintimeforustolearnfrom,orthatthelessonsofthoseyearsarenotapplicablebecausewenevergotto

seethemfullyplayedout.ItiseasytocometobelievethattheSecondWorldWaralonepreventedafurthermarketcrash.(AnalternativetheoryisthattheUSNewDealandUKKeynesianequivalentsdidgetusoutofthehole,buttheywerepossibleonlybecausetheywerecoupledwithgrowingausterityfortherich.)However,whenwelookbacktohow,despitetheoverallgrowthinincomeequalitythen,thesalariesoffinancierswereallowedtogetoutofcontrolinthoseyears,ortohowlargethegapbetweenrichandpoorremained,despitethenarrowingofthatgap,therelevancetoourowntimebecomesclearer.Thustheyearsbetweentheworldwarsareworthconsideringinalittlemoredetail,beforewemoveforwardintime.

Figure3.Privatehouse-buildingandmortgagelendingintheUK,1920–38.

Today,advocatesofbuildingourwayoutofthecurrentcrisissaythatfiveyearsafterthe1929crashalmost

300,000homeswerebuiltintheUK,and,accordingtothegraphopposite,over£100millionofmortgageswerebeingissuedayear,ahugesumforthosetimes.6Themajorityofhousingmediapunditstodayappeartocallforasimilarlyaggressiveincreaseinlendingandhome-buildingnow.Butwhattheyalmostallignoreisthatinthe1920sand1930sthatbuildingwascoupledwithgrowingincomeequality.Simplybuildingnewhousinginisolationdidnotalleviatethehousingcrisisofthe1920sand1930s;moreandmorepeoplehadtocometobeabletoaffordtobuythathousing.Morehadtoseetheirwagesrise,andtoknowthattheywouldcontinuetoriseinthefuture,sothattheycouldtakeupdebtsandaffordtorepaythem.Most

people’swageswerestableandslowlyrisingbytheendofthe1930s,whiletheincomeandwealthoftherichwas,onaverage,fallingeveryyear7(thoughtherewereexceptionsintheworstyearsandintheworstareasofunemployment).Youhavetogobackevenfurthertoseehowtaxingtheveryrichmoreactuallybegan.In1894inheritancetaxwas

introducedintheUK,butonlyfortheverylargestestates,andonlyatarateof7.5%.By1930thatratehadrisentonearly40%.8Furthermore,incometaxeshadbeenraisedearlier,duringtheFirstWorldWar,andnotreducedmuchthereafter.Webuiltmorehomesforthepoorpartlybydeprivingtherichestofmuchoftheirrecentextravagance.Thus,bythe

1930s,greatwealthwasbeingseriouslytaxedforthefirsttimethroughthosehigherdeathduties.Incomesatthetopofthedistributionwerebeingcurtailed,partlythroughtaxationbutevenmoresothroughrestraint.Bythe1940shighratesoftaxation

deterredpeopleatthetopfromtryingtosecureexcessivepayrises.Whatwasthepoint?Theywouldreceiveonlyasmallfractionoftheextramoneywhentoptaxratesweretakenintoaccount.Toimaginewhatitwaslike,thinkofwhatthereintroductionofhighertaxationtodaymightmean.Achiefexecutivecouldreceiveaslittleas10%todayonearningsofover£500,000ayear,iftheycouldbetaxedat90%.Therewouldthereforebelittlepointaskingfor

payrisesonceyouwereon£500,000ayear.Doubleyourpayafterthat,toanominal£1millionayear,andyouwouldreceiveonlyanextra£50,000forallyoursupposedlyadditionalefforts.Whenthoseatthetoptakehomeless,theyhavelessmoneytospendtryingtobuyupmorehousing,andthelesswellpaidcouldreceivemore.Recentresearchhasdetermined

thathousingwasbecomingmoreequallysharedoutatthesametimeasmorewasbeingbuilt.Newcouncilhousingwasallocatedonthebasisofneed,andsowasfilledupwithfamiliesthatcouldusealltherooms.New-buildprivatesectorhousingwasboughtbecauseafamilyneededmorespaceorwasforminganewhouseholdasacouple,perhaps

afterlivingwithonepairoftheirparents.Nowtheycouldstartafamilyandnolongerhavetofittheirnewfamilywithintheoriginalfamilyhome.Thisrecentresearch,byProfessorRebeccaTunstalloftheUniversityofYork,hasshownthattheallocationofspaceinhousingbecamemuchmoreequitablebetweenthecensusesof1921and1931,and1931and19519–aconclusionthatshereachedbycomparingtheamountofspaceoccupiedbythebest-offtenthwiththatoftheworst-offtenthinEnglandandWalesusingthecensusrecords.Beforethat,from1911to1921,inequalitiesinallocationhadbeengrowing.Today,thesituationisvery

different.Whatlittlehousingisbeing

builtisbeingevenmoreunfairlysharedoutthanitwasadecade,ortwoorthreedecades,ago.Newhousingisnotgoingtothosemostinneed.Contrastthiswiththeperiodthroughoutthe1950sand1960s,andbetween1971and1981,whenhousingwasbecomingevermorefairlyallocated.Fairnessoverthecourseofthelastcenturycomesintoreliefwhenthedecadalpopulationandhousingcensusesareusedtomeasurehowmanyroomspeoplehad,howcrowdedtheywere.Censusdatatellsusthatintheperiod1921–81thehousingproblemwas,inaggregate,constantlybeingsuccessfullyaddressed.Itistruethatpartoftheendofthatrundidincludesystem-builthigh-riseflats.Mistakesweremadeinthepast.Butafter1981

differentmistakesbegantobemade,mistakeswehadnotseensincejustbeforethe1920s.Thosewhohadthemostwereonceagainallowedtotakemore.ProfessorTunstall’sresearch

showsthatbetween1981and1991thosewhostartedoffwithmorespaceendedup,onaverage,gainingmoreofanyadditionalspaceascomparedwithanyothergroupinsociety.Theyweremostlylikelytoextendtheirpropertyortomovehometoanevenlargerproperty,despitehavingstartedwithsomuch.Shortlybefore1981,atthepointatwhichwehadbecomemostequal,thebest-off10%ofhouseholdsstillhad3timesasmanyroomsintheirhomesperpersonastheworst-housedtenth;by2001thatratiohad

risento3.7times,thehighestinequalityrecordedpost-war.Risinginequalityinhousingprovisionmirrorsrisinginequalityinincomeandwealthoverall.10

Inthe1930s,therewas–asthereistoday–aperceivedchronicshortageofhousing.Yetthesituationwasverydifferent.Thentherewasanabsoluteshortageofhousing,notjustaverypoordistributionofalargeamountofhousing,asisthecasetoday;neitherwastheresuchavastamountofoftenunoccupiedhousing.Socialdivisionswereveryhigh,similarinextenttotoday.Thetop1%tookasimilarshareofincomein1936astheydidin2008,butbackin1936theyhadbeentakinglessandlesseachyearforthepasttwentyyears;andtheywould

continuetotakelessandlessforthenextforty.Bycontrast,theverybest-offtodayhavebeentakingmoreandmoreforatleastthelastthirtyyearsand,asyet,showfewsignsofslowingdowntheirland,housingandwealthgrab.11

InEnglandinthe1930s,thepromiseofa‘semiinthesuburbs’appearedtobeawayoutofpoverty,arouteawayfromtheslums.Theslumswereclearedbypublicspending,whiletheveryrichincreasinglyfoundthatdeathdutiesmeanttheyhadtodonatetheirlargesthomestotheNationalTrust,andtodownsize.GrandtownhousesinLondonwereconvertedintoflats.Butwhatworkedthenmaynotworknow.Housingcannotbeviewedinisolationfromothersocialtrends,

anditcouldbequicklyimprovedinthepastandbecomemoreaffordablebecausesocietyasawholewasthenbecomingmoreequitable.

CouncilmaisonettesinBatemoor,Sheffield,viewedfromachild’seye-line.Eachapartmentwasoriginallybuilttohouseasmallfamily.

Somehavenowbeensoldundertheright-to-buyschemethatwasbroughtinbyMargaret

Thatcher’sgovernmentduringthe1980s.Youcanperhapstellwheredifferentstylesofwindowhavebeenusedtoreplaceoldframes,orwherethestylesofthedoorpanelsdiffer.Thosearethe

signsofhomeownershipor,morelikelynowadays,ofprivaterentals.Whileitismainlystillfamiliesoffthewaitinglistwhoarehousedinthecouncil-ownedproperty,slightlymore

affluentsinglepeopleoftenbuythoseapartmentsthatareontheopenmarket.Whatwereoncefamilyhousingunitsarenowsometimessingleadulthomes.Laterontheymayrentthemouttoanotherpersonlikethemselves,ortoacouple,butrarelytoamiddle-classcouplewithchildren.Aseconomicinequalitygrows,fewerandfewerpeopleuseupmoreandmorehousingspaceand

land.

The1930swasthetimewhenlargenumbersofpeoplewerefirstabletoputdowndepositstoborrowmoneytobuytheirhomes.Someof

thesedepositswereaslowas5%ofthepropertyvalue.Andhouse-buildersoftenhelpedevenwiththosemodestdeposits,lendingorevengiftingthatsupposedly‘saved’moneytoprospectivepurchasers.Thiswastostimulategrowthinthehousingmarket,andinawayisverysimilartowhattheUKgovernmenthasbeendoingwithitsschemestohelppeoplebuynew-buildhomestoday.Butlendingtoomuchwasfrownedupon,boththenandnow,asitcouldinflatethemarketand,asboththenandnow,peoplewerelivingintheaftermathofaneconomiccrash.Thereareothersimilarities

betweenthe1930sandtoday.Mortgagerepaymentperiodslengthenedfrom20yearsto25or27

years,despitethemuchlowerlife-expectancyatthetime.In1930themedianageofdeathformenwas67andforwomenitwas71.By2010thesefigureswere82and85respectively.12Butbythenoughtiespeoplehadstartedtotakeoutmortgagesmuchlaterinlifeandalsoforlonger,sotheycouldagainbepayingbackthebankuntiltheiroldage.Thereareotherpossiblesimilaritiesbetweenthe1930sandnow.Backthenthelackofavailablehousingwaspartlyblamedforveryfewchildrenbeingborn,foradipinfertility.Insomequartersthesameissuggestedasbeingastrongpossibilitytoday,evenduringthecurrentmini-baby-boom.

HOUSINGDEMAND

Weareinahousingcrisisthatextendsfromthehomelessonthestreetwellintothemiddleclass.Wehavecouplesdecidingnottohavechildrenbecausetheydonothavethespacetohousethem.Wehavepeoplepayingextortionaterents,andthelowestrateofnewhomeconstructioninalmostacentury.Yetministersjustsittherelikegoutyoldmeninthe19thhole…

–NickCohen,Spectator13

Britainisnotundergoingamini-baby-boomwherethecostofhousingishighest.In2011thefertilityoftheUKwas1.91childrenbornperwoman,butthelowestnumberwasinLondon,at1.84children.14Furthermore,thereisextensiveout-migrationfromLondonoffamilieswithchildren.Nodoubtthenear-impossibility,formany,ofbeingabletoprovidetheir

childrenwithmuchspacewithinBritain’smostcrowdedcityisalargepartofthereasonfortheannualexodusofsomanychildrenfromthecapital.CentralLondoninparticularisnotchild-friendly,withbyfarthelargestannualnetmigrationofchildrenroutinelyrecordedasbeingfromthere.15However,thatannualout-migrationhasbeencurtailedsincethecrashof2008.Whenyoungfamilieswithverysmallchildrencan’tmoveoutofinnerLondon,thereissuddenlyahugeshortageofprimaryschoolplaces,soonsettoreach118,000places.16

Acenturyago,totrytoalleviatetheseverehousingproblemsandtopreventlandlordsfromprofiteeringduringandaftertheFirstWorldWar,thegovernmentimposedrent

control,from1914onwards.Atthattime,payingrentoflessthanathirdofyourincomewasgenerallya‘danger-signal’thatsomethingwasverywrongwiththerooms.17Therewasgreatagitationinsociety;revolutionhadjusttakenplaceinRussia.NevilleChamberlain,asHealthMinisterin1923,introducedaHousingActthatsubsidizedprivatesectorhouse-building.ThefirsteverLabourgovernmenttogainpowerwaselectedin1924,havingwonalmostenoughvotesin1923.Itpromisedmanythings,amongthemtheaddressingofthehousingproblemofthosetimes.ItintroducedtheHousing(FinancialProvisions)Act,nowknownastheWheatleyAct,whichencouragedhouse-buildingbylocalauthorities.Then,

exactlytenyearslater,in1934,theSpecialAreas(DevelopmentandImprovement)Actwasintroducedbythecoalitiongovernmenttoboostspendinginthemoredepressedindustrialregions.Next,intermsofmilestones,the1944coalitiongovernmentpledged‘aseparatehouseforeveryfamilythatwishestohaveone’.18TheLabourgovernmentof1945beganthebuildingneeded.Changetakestime.Theachievementofeachdecadewashardwon,andwouldoftenhaveappearednearlyimpossibletoimaginejustagenerationearlier.Inretrospect,wecanseethatthe

periodfrom1918throughto1945wasoneofevergreaterinterventionintheprovisionofhousingbythestate.Theperiodthatfollowed,from

1945to1970,isnowfamousforalternatingLabourandConservativeadministrationsvyingtodemonstratewhichcouldbuildthemoststatehousing.Therewasaboominprivatesectorbuildingtoo.Thepopulationbecameincreasinglywellhoused.Althoughthe1971censusstillrecordedwhetherahomehadhotrunningwaterornot,itdidsotohelplocalauthoritiesdeterminewheremostimprovementsinhousingstockwereneeded.Greatplansweremadebythelate

1960sLabourgovernmentstoimprovehousingevenfurther,culminatinginthecensusof1971,whichwasthemostdetailedsurveyofthenation’shousingevermade.However,bytheearly1970s,Britainwaslurchingthroughaseriesof

financialcrises,andtheaspirationthateveryfamilythatwishedtohaveaseparatehomeshouldbeabletohaveonesufferedasetback.Inflationwassoaring,andtherewasasqueezeontheprovisionofmortgagesasinterestratesroseandrose,beingwellover10%ayearformanyyearstocome.Partofthereasontherewasapolicyturnaroundby1981wasbecauseofpublicdisquietoverthesecrises–adisquietthatallowedagroupofpoliticianstocometopowerin1979andinstigatepoliciesthatbenefitedthebest-offinsociety.Indoingsotheysowedtheseedsofourcurrentcrisis.Again,acomparisonwiththe

1920sand1930sshowsthat,followingtheeconomiccrashesof1929and2008,interestrateswere

keptlow.(Thefinancialcrisesofthe1970swereminor,andverydifferentincomparisonwitheitherofthesecrashes:interestratesroseratherthanfellasinflationrose,buttheywereseizedonbytherichasanopportunitytoalloweconomicinequalitiestogrowagain,and,insodoing,tostokeupgreaterinequityinhousing.)Theeconomiccrashof2008andtheensuingslumpwasuncannilysimilartothatof1929.Inresponsetothelatter,theUKgovernmenttriedtocreateahousingboombyloweringinterestratesinawayverysimilartowhattheBankofEnglanddidpost-2008,andhascontinuedtodountilatleast2014.Wheninterestratesaresetverylow,theincentivetoborrow,includingpossiblyborrowingto

build,isveryhigh.Butthiscanbeariskifinstitutionsandpeoplefinditdifficultlatertopaybackthecostofthatborrowingwheninterestratesrise.Takealookatthegraphbelow,

whichshowshow,in1929,thethree-monthTreasuryBillrateplummetedalongwiththeBankofEnglandbaserate.TreasuryBills,knownassovereignbonds,areshort-terminvestmentsthatcanbeboughtfromthegovernment,whichpayswhatis,ineffect,interestata‘rate’advertisedwhentheyaresold,butreceivedonlywhenthebondsmature.Thebaserateisnormallylowerthanthis,beingtherateatwhichtheBankofEnglandwilllendtootherbanks.

In1932thebaseratefellto2%,bringingdowninterestratesforborrowerstoo,notquitetothehistoricallylowratesoftoday,butstilltosomeofthelowestbaserateseverrecorded.Notealsohowflatthetrendshowninthegraphbelowwasfiveyearsafterthecrash(from1934onwards,throughto1939).ThatisverysimilartowhatthenewGovernoroftheBankofEngland,MarkCarney,suggestswillhappenfrom2013to2018,althoughmanydonotbelievehim.19Hesayshewillkeeptherateslowuntilunemploymentfallsbelow7%.Hemay,buttheofficialrateofunemploymentwasnotmuchhigherthan7%whenhesaidthis,andtheofficialratecaneasilycomedownifmorepeopleareforcedtotakeafew

hoursofverylow-paidpart-timework(dockedbenefitswouldbetheresultiftheyfailtoaccepttheworkonoffer,nomatterhowunsuitable).Backinthe1930stherewasfarlesspart-timework.Ajobwasajob,andtheresimplywerenotenoughjobstogoround.

Figure4.InterestratesintheUKbytypeofloanandTreasuryBills,1925–39.

Thegraphshownabovewasdrawnnotinthe1930sbutin2008,theyearthecurrentcrisisbegan,byGeorgeSpeight,thenSeniorManagerattheBankofEngland,responsiblefortheSystemicRiskReductionDivision.20Oneresultofthepoliciesofthe1930s,Speightremarkedin2010,wasthatthe‘housingmarketlookedincreasinglyunstable–[with]riskofaviciouscircleoffallingprices,risingrepossessions,financialpressureonbuildingsocieties,reductioninthesupplyofmortgagelending’.21

SpeightthoughtitworthcomparingwhatwasbeingplannedfortheUKafter2010withwhathadhappenedduringthe1930s.Asinglelifetimelater,andagain

thereareconcernsthatthehousing

marketisbecomingincreasinglyunstableandthatgovernmentpolicies–bycausingpricestoriseandbuildingupanewbubble–mayevenbefuellingthegrowinginstability.Duringsummer2013financialexpertsbegantocallforaturnaroundinpolicieswhenitappearedthatahousingpricebubblewasoncemoreforming.22Earlier,inhislectureattheAshmoleaninOxford,GeorgeSpeighthadsaidthatwehadnowayofnowknowingwhetherthelow-interest-rate-fuelledlendingfrenziesofthe1930swouldhavespiralledoutofcontrolandthatallthathadsavedthelendingsocietieswastheonsetofthewar.Heexplainedthatthecostofrearmamentincreasedpricesoverall,whichhelpedtoraisehouseprices

andhencetoreducethesizeofhousing-relateddebt.Then,duringwartime,thegovernmentitselfguaranteedmortgagepaymentsandtherewasfurtherinflation.Inotherwords,thelasttimethe

housingfinancesysteminBritainwasinasmuchofamessasitistoday,thesaviourprovedtobeacataclysmicevent–aworldwar.Themuchmorestableeconomyweenjoyedafterthewarwaspartlytheproductofthewar’seconomicconditions;andthecontinuedgrowthineconomicequalitywaspartlytheproductofthewar’spragmatismandsolidarity.Backthenitwasacceptedthateveryoneneededtobedecentlyhoused,andthatuntilthathadbeenachievednooneshouldhavetoomuch.Aftertheeraofrationing,

peopleunderstoodthatyoualldidbetterwhenyousharedoutbetterwhatyouhad.Partofwhatisdifferentthistime

isthatthereis,hopefully,noworldwarlooming.Butsubsequentlythereseemstobenothingtostopthecurrenthousingcrisisturningintoahousingdisaster.Duringwartime,housingrevertstowhatitshouldbe:shelter.Andbankerstowhattheyshouldbe:accountantsemployedtoprotectusfromgamblersandgambling.Todaythereisnocollectivememoryof‘allbeinginittogether’,ofsharingbyrationing.Rather,thereisawidespreadethosinstilledbyThatcherismthatyouneedtoputyourselffirst,togetintothetophalfofsocietyandthenyou’llbeOK;or,ifyouarealready

inthetophalf,togetintothetoptenth;and,ifyouareinthetoptenth,tobecomeoneofthebest-off1%.Thereisremarkablylittleunderstandingthatthe1%canonlyeverbe1%ofthepopulation.Butwhatisalsodifferentnow–

andwhyweshouldnotdrawtoomanyparallelswiththe1930sbuildingspree–isthatthenwehadfartoofewhomesforthenumberofpeoplelivinginBritain.In1931therewere,onaverage,4.2peopleforeverydwellingthatexisted.Todaythatfigureis2.3,butforthefirsttimesincethewaritisactuallyrisingslightly.23Orthodoxeconomictheorysuggeststhat,becauseofthis,housingpricescouldstarttorecoveroverallandbuildingresume,becausethereisnowanincreasingabsolute

demandtobemet,notademandlargelycreatedbyanincreasedinequalityinsupply.Butthatdemandhasverylittlemoneybehindit,andtheratioofpeopletohomeshasstillrisenbyonlyafraction.Whatismore,overcrowdingastraditionallymeasuredisrisingmostwherethereistheleastspacetobuild,inLondon.Overcrowdingcausedwhenyoung

adultsareunabletosetupontheirownisalsorising.Altogether,afifthofparentsinBritainwithchildrenagedtwenty-onetofortynowhaveatleastonelivingwiththemwhocannotaffordtomoveout;andatenthhaveonewho,theysay,couldjustaboutafforditbutwhochoosesnotto.24ThisisworsethanithasbeenrecentlyinBritain,butitdoesnotcomparewiththetimeofthose

children’sgreat-grandparents,inthe1930s,whentheresimplywasnotenoughhousingtogoround,evenaftersomanyofthebighousesweresubdivided.Morehadtobebuilt.Inthepresentday,asinthe1930s,

interestratesareverylowandtaxesneed,ineffect,toberaisedtopayforthedeficit.Or,putanotherwaybyProfessorNicholasCrafts:‘Theaspectofthe1930sthatisespeciallyrelevantfortodayisthatitrepresentstheonlyexperiencethattheUKhashadofattemptingfiscalconsolidationwhennominalinterestratesareclosetothelowerboundandreductionsininterestratescannotbeusedtooffsettheimpactoftighterfiscalpolicyonaggregatedemand.’25Althoughsomewhatofamouthful,academicthinkingsuchas

thishasledforrepeatedcallsinthebroadsheetpressforustolearnfromthe1930s,26andinsomewayswecan.Someaspectsofthepastarevery

familiar.Duringthelate1920sandintothe1930s,ratherlikethe1990sand2000s,thepayoftopmortgagefinanciersroserapidly.Backthenthesewerethedirectorsofthelargebuildingsocieties,suchastheAbbeyRoadBuildingSociety(ARBS,whichbecameAbbeyNational)andtheCo-operativePermanentBuildingSociety(CPBS,whichbecametheNationwide).TodaytheequivalentstothosehighlypaidbuildingsocietymenofthepastaretheCEOsofthebiggestbanks.Thegraphbelowshowsjusthowquicklytopfinanciers’payroseintheyearsupto

1940.27However,youwouldhavetomultiplytheseaveragesbyatleastonethousandtogettotherateofremunerationofeventhemostlowlyofcurrentfinancialdirectorstoday.Onlyasmallpartofthatincreaseisduetoinflation.Alargepartofthereasonwhythe

payof‘top’bankersissomuchhighernowisduetodifferencesbetweenthetimesthatprecededthecrashesof1929andof2008.Bankersbackthenwerelargelynotaristocrats;certainlythebuildingsocietydirectorswhosepayisbeingplottedherewerenot.Thelandedgentrywerefarricherthen,asweremanymerchantsandindustrialists,incomparisonwiththe‘Citymen’ofthattime.Buttodayitisthebankerswhorulethefinancialroost.

Industrialistsandmerchantsarepaidless,andmanyofthegentryhavesoldtheirmansionstoabankertomakeendsmeet.Contemporarytopfinanciershavebeenfargreedierthantheirequivalentswereeightyyearsago,butnotehowinallbutonecasetoppaystoppedrisingafter1929.TheoneexceptionwasthepayofthemaninchargeoftheWoolwichEquitableBuildingSociety.IronicallyitisnowownedbyBarclays,butthemanatthetopofthatbankin2008,BobDiamond,wasoutofhisjobafewyearsafterthecrashandwasnotreplacedbysomeonewhowasevenmoreexpensivethanhim.Todaytheequivalentsoftop

buildingsocietydirectorsofthe1930s,stillalmostexclusivelymen,

arethehighest-paidemployeesatBarclays,RBS,HSBCandLloyds.ThesearethemenwhoheadthefourmajorUKbanks.Eachofthesebankshasabalancesheetover£1billion.Thesearethefourbanksthatarealltoobigtofail.Theirsize,ithasbeenclaimed,guaranteesthema£34billionadvantagethroughwhatisineffectstateinsurance.28

Figure5.BuildingsocietyDirectorfeesintheUK,1895–1940.

Beingseenastoolargetofailhelpsthelargestbankstopaytheirexecutivessuchenormoussums.Banksarenowsoenormousandso

complex,theyargue,thatonlyafewpeopleintheworldarequalifiedtorunthem.Theseinstitutionshavecometobeofcrucialimportancetoallofusbecauseallofushavetobailthemoutiftheycrash.Intheory,bylaw,collectivelyweareinsuringalldepositsupto£85,000inallthesebanks.Allthetime!Wehavebeenherebefore,butthe

reasontoworrymorenowisthatthelasttimewewereinsuchamesswithourhousingwarcurtailedtheexcessesatthetop.Inthe1930sthecountrywasbecomingmoreequal,butthefinanciersweretakingmoreandmore.Nowwearebecominglessequal,partlybecausethefinanciersaretakingmoreandmore.Asthegraphaboveshows,thelasttimetopfinanciers’payroseasfast,

excessivepaywasslightlyheldincheckbytheeventsof1929,butitwasn’tfullycontrolleduntil1939.Andincomparisonwiththegreedoftoday,theboardroomexcessesofthe1930slooklikepeanuts.

AVARICEANDIGNORANCE

Pleasedon’tmakemesoundlikeapratfornotknowinghowmanyhousesI’vegot.

–DavidCameron,200929

In2009DavidCameronalmostcertainlyknewexactlyhowmanyhomeshiswifeandheowned,orhad‘got’–four–butheprobablydidnotwantallthosewhowereabouttovoteforhimtoknowthis.Whenyouownseveralhomes,younolongerownthemtolivein:youownthem

togenerateandmaintainwealth,alotofwealth.Thenumberofhouseholdsrenting

privatelyroseby1.1millionintheUKbetween2007and2011,to4.7million.Afurther4.9millionwererentingfromasociallandlord.30Thelasttimeasmanypeoplerentedwasinthe1960s,andbythentheproportionhadbeenfallingforatleasthalfacentury.Eventhoughwearenowsomuchbetterhoused,youhavetogobacktojustbeforetheFirstWorldWartofindatimewhenthetrendswereworseningastheyarenow.Backthen,asmanypeopleinBritainwereasinsecurelyhousedastheyaretoday,andfacedafutureofevengreaterinsecurity,inlargepartbecauseafewpeoplereliedontheirpropertyportfoliostomaintain

theirwealthandprivilege.Everyworking-classfamilyandmuchofthemiddleclassrented.Buttopincomescomingfromearningswerelowerthen;itwasincomesfromrentthatwerehigher.Thegreathousingdisasterofourtimesisthereturntosuchgreatfinancialinequality,nowsupposedlybasedonafewbeingworthsoverymuchnotforwhatassetstheyhaveinheritedbutforwhattheydo.Growingincomeinequalityinthe

UK,ledbybankers’payrisesattheverytop,makeshousingincreasinglyinsecureforthemajority,anditisintheinterestsofthebankersthatthisshouldbethecase.Themoretimespeoplestartnewmortgagesorfailtocompleteoldones;borrowmoneytobuybecausetheycannotaffordthe

rent;orborrowmoneytobuyhousestorentout–themoretimesallthathappens,themoremoneybanksmake.Stabilityandsecurityarebadforprofiteering.Whenwehadmorestability,we

hadbuildingsocietiesthatworkedascharities,madenoprofitforanyshareholdersand,after1939,controlledthepayoftheirstaffwell.Butalmostallofthebuildingsocietiesweresoldoffinthe1980sand1990s,whenthelawwaschangedtomakethatpossible.Thusithasbeentheplannedadvancementandgeneraltoleranceofrisingavaricethathasbroughtustowhereweare.Butthekeywordhereis‘planned’:thisdidnothappenbyaccident.Changesinlegislationoverrecentdecadeshaveactively

encouragedtheextremegreedofafewwhohavegainedwealththroughtheignoranceofalargemajorityofus.Rentcontrolshadbeenmaintained

intheUKallthewayfromtheFirstWorldWarto1977,whentheywereconsolidatedintheFairRentAct:thisensuredthatlandlordscouldincreasetherentonlyeverytwoyears,andonlyifrentsofsimilarpropertieswerebeingincreased.Theeffectofthislegislationwastomakeithardforlandlordstoprofitexcessivelyandeasierforpeopletocometoowntheirownhome,asbuildersbuilthomestoselltoindividualsratherthantolandlords.ThisstateofaffairsobtaineduntiltheFairRentActwas,ineffect,repealed,inthelate1980s.The

provisionsofthatpreviousActstillapply,butonlytothosewhoarestillalive,havenotmovedhomeandtookouttenanciesbefore1988.And,asonlyalandlord’ssolicitorcouldputit,‘Propertyinvestorsneedtobeawareofthis,asofteninvestmentpropertiesareavailableatlowpricesbecauseredevelopmentisnotpossible,asthetenantsareprotectedandcannotbeevicted.’31Youcanmakemoremoneyasaninvestorwhenyoucanevict.Thephrase‘propertyinvestor’has

nowenteredthelanguage.Estateagentswillaskpotentialbuyersofpropertywhethertheirinterestisin‘residential’or‘investment’–thelattermeanstobecomealandlord.Shelterestimatesthatnomorethanaround2%ofpeopleinBritainare

landlords.Thenumberoflandlordsdoesnotrisegreatlywhenmoreandmorepeoplehavetorentprivately:whathappensisthatafewpeopleandinstitutionsendupacquiringahugeamountofproperty.Theassuredshort-holdtenancybroughtinbythe1988HousingActallowedthisprocesstoslowlybegin,comingshortlyafterthebigbangof1986whentheCitywasderegulatedandtheoldbuildingsocieties,withtheirmodelsofresponsiblelending,weresubsumed.Thegreathousinginsecurityof

ourtimeshasbeenbroughtaboutbyaminoritybecomingthehoardersofproperty,andthishoardinghasbeenfacilitatedbysuccessivegovernments.Ithasnotalwaysbeenlikethisanditneednotcontinue,but

thehoardingwillgetworseifwedonotacknowledgeitandonceagainmakeitundesirableforafewtostockpilehousing.Wewillalsoneedtoaddresstheacuteinequalitiesinincomethathavearisensince1980andhavemadebuyinganextrapropertywithreadycashanoptionforatinybutveryinfluentialminority.Aspointedoutattheverystartof

thisbook,ifpeoplehoardedfoodonthebasisthatitsvaluewassuretogoupwhenothersbegantostarveandwouldpayanything,wewouldstoptheirhoarding.Buthoardingisnowhappeningagainwithshelterinthemostunequalpartsoftheaffluentworld.Becauseofthis,becauseoftheselfishactionsofafew,manyyoungerhouseholdersintheUKare

nowspending50%oftheirincomeonhousing,oftenjusttorentortocoverthemonthlypaymentsonaninterest-onlymortgage.TheaveragehousingcostsofallhouseholdsintheUKfellfrom21%to20%oftotalexpenditurebetween2008and2010,wheninterestratesfell.32Thisaverageincludesallthosehouseholdsthatownoutrightandhencehaveverylowhousingcosts.Excludetheoutrightownersanditrisestonearlyathirdoftotalexpenditureformost,andmorethanhalfforsome.Thisissimilartowhatwasrecordedformostfamiliesin1913.33

Thereisapointofviewthatsaysthatnoneofthismatters.Somepeoplesuggestthatinafreemarketpeoplearenotforcedtopaythe

priceshomesarebeingsoldfororrentedat;thattheycouldalwaysbuysomethingcheaper.Butitbecomesveryhardtofindsomewherecheaperthatyourfamilycanfitintowhenhousinggreedcascadesdownfromabovetodamageusall.Althoughcheappropertycanbefound,itisofteninareasofacutesocialdeprivationorinpartsofthecountrywherethere’snowork,inthoseplaceswherethecrisishasimpactedparticularlybadly.Rentinginareaswheretherearemorejobsisoftenmoreexpensivethanbuying.Highrentsthenforceuphomesaleprices,becausetheymakethosepriceslooklowincomparisonwithrentingwheninterestratesarelow,andtheyalsomaketheentiremarketmorevolatile.

Whenpeoplearebuyingpropertyatpricestheydonotthinkarereasonable,itdoesnottakemuchforsome,atsomepoint,justtoholdbackalittle.AllthatisunderpinningthehousingmarketinthesouthofEnglandrightnowisageneralfeelingofconfidencebasedonaperceivedlackofalternatives.InthosepartsofBritainwhere

unemploymenthasnotrisen,thereisnowalmostnothingleftontheopenmarketforthepeoplewho,inthepast,wouldhaveboughtthecheapestproperty,somanymorehavetorentthandidpreviously.Withmorepeoplerenting,morepropertyliesvacantbetweenlets.Findingsomewheretoliveasatenantbecomesmoredifficult,withtheresultthatmorepeopleresortto

hostels,moresleeprough,morehavetosquat,morestaywithparentsuntiltheirforties,moreareovercrowded.Itisnotthatthismighthappen:ithashappened.Thatisacrisis.Laterchaptersinthisbookgivethestatisticsonrisinghomelessness.Thosestatisticsneedtobeunderstoodinthecontextofwhylesshousingisavailableformostpeople,despiteourhavingmorehousinginBritain,perperson,thaneverbefore.Afewpeoplearebecomingvery

richbyspeculatingonhousing,owninghomestheydonotneed,oftenrentingthemouttogivethemselvesagreatprofit,butsometimesleavingthememptyforprolongedperiods.Whydopeople,especiallythosewithgreatassets,appeartobehavesoselfishly?And

whyistheirattitudesodifferentfromthatoftheirparents,whodidnotbehaveasbadly?Itappearstobethecasethattheentireculturearoundpropertyhaschangedinthelastthirtyyearsorso–thatwehaverecentlybeentaughttoadoptattitudestowardsitthatarenotthesameasthoseofourparents.Partoftheteachingissubconscious.Changingattitudestohousingmirrorgeneralchangesthatresultfromgrowinginequalitiesinsociety.Aswebecomemoreunequal,webegintothinkdifferently.Recentresearchhasshownthatasinequalityrises,richerpeoplebecomemoreselfish,34

poorerpeoplebecomemoreconfused,35andtheoverallattitudes,ingeneral,ofallofusshifttotheright,tobeinglesscollective,to

thinkingourfuturesdependlargelyonourindividualactions.36Infactourfuturesdependfarmoreonwhathappenstothepeopleallaroundusthanonthoseindividualactions.Howpeoplethinkisgreatly

influencedbytheirtimesaswellasbytheirpersonalcircumstances.InMay2013theright-wingeconomichistorianNiallFergusonclaimedthatthemanmostcreditedwithendingthelasthousingandeconomiccrisisassignificantastoday’s,JohnMaynardKeynes,thoughtashedidbecausehewasgayandchildless.37

ThiswasmeantasaninsulttoKeynes,whowasaLiberal,butwhowouldbeseenasleft-wingtoday.Fergusonlaterapologizedforimplyingthatbeinggayornothavingchildrenwassomekindof

limitation.38TheimplicationwasthatKeynescouldnotseethevalueofholdingontowealthwithinrichfamilies.ButperhapshispersonalcircumstancesdidhelpKeynestoviewtheworldwithalittlelessself-interestthanpeoplelikeNiallFerguson.Tobetterunderstandthemesswe

arecurrentlyinoverhowwearehoused,weneedtounderstandhowsomeoftheveryrichmightthink.Tocaricature:therichknowtheywilldie,butsomehopethattheirideals,theirstewardshipoftheworld,willcausethefuturetobeshapedinaparticularway,sotheirwayoflifecanliveon.Butthatisjustonepossibleexplanationforhoarding.Orperhapstheyarejustfrightenedfortheirchildren,iftheyhavechildren,

andareverymuchlessconcernedaboutthechildrenofothers.Coulditbethatsomeoftherich

amasshousingbecausetheybelievethatpassingongreatwealthtotheirchildrenwillprotectthem?Asinequalitiesgrowandthefuturelooksmoreprecarious,andmoreandmorefamiliesinsocietyareprecariouslyhoused,theincentivetohoardmaygrow.Coulditbeassimpleasthat?Butwithinthemoreselfishworldthattheyarecreating,theirchildrenmayalsohavelesssecurefutureseveniftheystartoffricher,becausetherewillbemoreopportunitiesforfailure.Risingeconomicinsecuritycouldleadwealthypeopletobecomeevengreedier.Theymightneedallthatmoney.Theyneverknow!

Aparticularlyastutesocialcommentator,OscarWilde,whodidnotlivelongenoughtoseethedownfallofVictoriansociety,suggestedin1891that:‘Selfishnessisnotlivingasonewishestolive,itisaskingotherstoliveasonewishes[them]tolive.Andunselfishnessislettingotherpeople’slivesalone.’39

Today,asweregainVictorianinequalities,selfishnessbecomesaskingotherstoliveinwaysthatsupportyourlifestylebutthatyouyourselfwouldnottolerate:incrampedconditions,indebtandanxious.Othersneedtolivelikethisifyouaretoliveasyouwishandhaveasmuchasyouwant,withsparehomesandmuchsparespaceinyourhomes,justincaseyoumightneedit.

Ithinkitischaritabletosuggestthat,becauseofincreasedvolatility,becauseallissuddenlynotsosolid,asmallgroupisagaindoingitsbesttoleaveahugeinheritance;andalargergroupmistakenlybelievesthattheyhavethemoralrighttodoso.Butbeforewearrivedatourcurrentlevelsofextremeinequality,wehadachievedmorestabletimes.However,therewereafewbackthenwhogrewuptohatethatstabilityandpredictability.Inequalitiesdidnotriseagainbyaccident;theyhadtobedrivenupwards.PerhapsweneedmorepeoplewhocanthinkasbroadlyandasunconventionallyasWildeandKeynesoncedid.Bubblesofavaricealwaysneedpricking,buteachbubbleisdifferentfromthelast.Wildegavetworeasonsastowhy

wekeeponrepeatingourpastmistakes:‘Theevolutionofmanisslow.Theinjusticeofmenisgreat.’40Theyremainapposite.Weallknowthatmanyofthenext

generationwilldothingsthattheirparentsdisapproveof.Weneedtorememberthatmostrichfamiliesinthepastsawtheirwealthfritteredawaybyoneorotheroftheirchildren,or,ifnotbythem,thenbytheirgrandchildren.Almostallcharitablefoundationsendupbeingwoundupwithinafewdecadesofthefounder’sdeath.Theirnamesdonotliveon.Almostallbuildingsnamedafterthegreatandthegoodgetrenamed.Goodideasandgooddeedsliveonfarlongerinthecollectivememorythandoesanydedicationofmoney.

ThissectionbeganbyquotingthePrimeMinisteronhowmanyhomesheowned,buthewaslastaskedthatquestionwhenhewasinopposition.DavidandSamanthaCameronwillonedayinheritagreatdealofmoney,morefromhersidethanhis.Theirwealth,eventhatamassedbeforetheirfullinheritanceisreceived,willallowthemtoownmanymorepropertiesinfuture,leavingasideallthefutureearningshemightmakeonthelecturecircuit,orshemightreceivefordesigningexpensivenotebooksforpeoplewithexpensivetastes.Manythoughtthatin2009,back

whenDavidsaid‘Pleasedon’tmakemesoundlikeaprat’,theirkindwereadyingbreed.Manythoughtthatpropertyownershipwasstill

spreadingtomoreandmorehouseholds,thatwealthcouldstillbediluted,especiallyintheaftermathoftheeconomiccrash.NowweneedtorealizethatowningjustfourhomesmaybealowpointforpeopleasrichasthePrimeMinisterandhiswife;infuturethewealthyaresettohavemore,butnotallofthewealthy.Consideringtoday’sextremely

affluentpeoplewetendtoseeonlytheirsuccesses.Weseeonlythosefamilieswhohavesuccessfullyshelteredtheirwealth,thosefamilieswhomarriedwithintheworldoftheaffluentanddidn’twaterdownthelegacy.Thesearethefamiliesandthetrustsandfoundationsthatarestillaround.Wedonotseethat,justasmoneycan’tbuyyoulove,itisalsonosureguarantorofthelong-

termsecurityofyourdescendants.Ifwesawwealthdifferently,wewouldhavefewerproblemsprovidinggoodhousingforall,becauseallofourdescendantscouldonedaydependonwhatwecollectivelyprovideandhowwecollectivelyact.Thisbookbeganwiththe

argumentthatiscentraltothecaseitmakes.Itconcernsourcurrentdilemma’sfoundation.Debatesaboutthearrangementofhousingandwealthareultimatelydebatesaboutfreedom.Thepointbeingmadehereisthatwhenthereisagreatdisasterloominginhousing,thereisalsothepotentialforadisastrouslossofwiderfreedoms.Whenallthatissolidaboutourhousingsystembecomesuncertain,ourfreedomtolivewithoutfearofthefuture

diminishes.Similarlyourfreedomtochoosewhereweliveiscurtailed.Wearelessfreetomovehome,toliveinotherplacesjustacrosstheothersideofourtown,letaloneacrossourcountry.Webecomefearfulofhowmuchfurtherourrighttobeshelteredwellwillbeimpacteduponbythosewhoalwayswantmore.Moreandmorepeoplebecomevictimsofapeculiartypeofmarketfailure,onethatdeprivesusoftherighttolivewheremanyofourparentsdid.

HOPEANDFREEDOM

Thisissuchanegregiousexampleofmarketfailure,andthreatenstotransformaoncesociallydiversecapitalintoanexclusiveplaygroundforthejet-setandacashcowforabsenteelandlords.It’stimewestart

thinkingaboutwhohastherighttothecity.

–GilesFraser,Priest-in-ChargeatStMary,Newington,by

theElephantandCastle(formerCanonChancellorof

StPaul’sCathedral,whoresignedin2011overthe

threattouseforcetoremovetheOccupy

protesters)41

Lackofaccesstodecenthousingandagrowingsenseofinsecurityabouthowwearetobehousedequatestoalackofaccesstofreedomandagrowingrestrictionontherightofthemajoritytoliveagoodandsafelife.Toensureourfreedomtobewellhoused,weshouldlooktowherethosefreedomsaremostcurtailedandbeconcernedfirstwiththosewhoaretheleastfreetochoose.Andwhenitcomestohousing,itisthehomelesswhoare

theleastfree.AsJeremyWaldron,ProfessorofLawandPhilosophyatNYU,42explainedintheaftermathofthehugeriseinhomelessnessthattookplaceintheUnitedStatesduringtheReaganyears(1980–88):

Ifhomelessnessraisesquestionseveninregardtothemostbasicprinciplesofliberty,itisanissuethatoughttopreoccupyliberaltheoristseverybitasmuchasmorefamiliarworriesabouttorture,thesuppressionofdissent,andotherviolationsofhumanrights.Thatthepartisansoflibertyinourlegalandphilosophicalculturehavenotalwaysbeenwillingtoseethis(orsayit)shouldbetakenasanindicationoftheconsistencyandgoodfaithwithwhichtheyespouse

andproclaimtheirprinciples.43

WhatProfessorWaldronwassaying,in1991,isthatpeoplewhotalkoffreedombutwhoarenotconcerned

abouthousing–andabouttheextremeofhomelessness–arenotreallyconcernedaboutfreedomatall.Theymightbeconcernedabouttheirpersonalfreedomtodowhattheylikeandliveastheylike,buttheyareapparentlylessconcernedthatothersshouldhavethemostbasicfreedomofhavingsomewheresafetolive.Oftenpeoplewhoadvocatewhattheythinkofasthegreatfreedomofthe‘freemarket’findithardtoconsiderthebasicfreedomsofothers.Youarelikelytobereadingthis

bookbecauseyoubelievethathousingisacrucialissueofourtimes.Youareveryunlikelytobehomelessoreventohavebeenhomeless.However,weallneedtobeconcerned,notonlyabout

homelessnessandthosewhoareveryinsecurelyhoused,butalsoabouttheveryrich,andtheaffluent,andtheaverage,andthemodest,andthepoorandotherminorities,ifwearetoensurethatthecurrentdeleterioushousingsituationimproves.Thewaytoguaranteegreaterfreedomistothinkmorewidelythanjustaboutourselvesandourfamilies.Ifthereistobeenoughgoodhousingforall,andifourfriendsandfamilyaretobewellhousedinthefuture,wecannotjustlookafterourownshort-terminterests.Itiswheneveryoneconcentrates

toomuchontheirownintereststhatthoseveryinterestsareharmed:wefindthatmostofusaresqueezedintotoolittlespacetobewellhoused,andthatthegrowingwealthofafew

affluentlandlordsandmultiplepropertyownerstranslatesintogrowinginsecurityandfinancialvolatilityforthemajority.Ultimately,whenthesuper-richareencouragedtospeculateonhousing,theyfuelapropertybubblethatgrowsexponentiallywiththeirwealthbeforeitbursts.Thosewhofindtheyhaveinvestedinwhateverisnextmostprofitable,oftenoutofluck,becomethenewrich.Buttheyknowtheirpositioncouldeasilybeusurped.Eachpersonactingpurelyfromself-interestcreatesafuturethatisinalmostnobody’sinterest.Itisinhowwellorhowbadlywearehousedthatthisbecomesmostevident,dayin,dayout.Therearewiderargumentsthan

greaterefficiencyfordemandingthat

webettermanageourhousing.Thewaywecurrentlyorganizehousingliterallymakesmanyofussickwithworry;itisagrosslyunfairallocationofscarceresources.Ultimatelywehavetorecognizethathousingisnotjustcentraltoourwell-beingbutalsotoourenvironment,andtoenvironmentalsustainability.Amoresociallydividedcountryseesitscitizensexperiencelongerandmorepollutingcommutestowork,alessefficientuseoflandandspaceoverall,morewastedbuilding,moreemptybuildings.Morebecomehomelessandfewerarewellhousedwhenafractionofthepopulationisencouragedtospeculateinwaysthatdomoreharmthangood–whenthey

areencouragedtotreatpropertyasafinancialinvestment.

3

Foundations

Weneedtoavoidturningahousingcrisisintoahomelessnessdisaster.

–KathleenKelly,JosephRowntree

Foundation,20121

Housingsellsnews.Itsellsmagazinesonhowtodoupyourhomeandkeepitlookinggood.Itkeepslocalnewspapersafloatfinanciallybyprovidinginsidepagesfullofpropertyadverts.ItgeneratesTVshowsandnewspaperarticlesof‘propertyporn’,imagesofwonderfuldreamhomesbeingrenovatedor

designedbydeterminedcouples–almostalwayscouples–coupleslocating,couplesrelocating,couplesbuyingasecondorholidayhome,coupleswithgrandplans.Housingbecomesentwinedwiththepromiseofsuccessfulpersonalrelationships,withsuccessincareers,inbusinessandinalmostallotheraspectsoflife.Oftenthestoriesaboutbeautifulhomes(andbeautifulpeople)sitsidebysidewithtalesofhousingwoe:thecouplethatcannotgetontheladder,thefamilybeingevictedwhocannolongerpaytherent,andtheunsuccessful,theless‘beautifulpeople’.Everyyearbookslikethisoneare

publishedcomplainingabouthowwehousesomanypeoplesopoorly,evenincountriesasaffluentasthe

UK.Foreachbookthatispublished,thousandsofdisenchantednewspaperarticlesarewritten.Almostallofthesearticlesconsistofonelamentafteranother,concerninglackofsupply,highprices,extortionaterents,thepoorqualityofsomeofourhomes,ortheneedfortheextrahomeswewishwecouldlivein,thehomeswewishcouldbebuilt.Housingcreatescontroversyandconcern.Andwhenournestsappeartobeunderthreat,whenouroffspringstruggletosecuretheirownhome,thereseemstobeoneobviousanswer:buildmore.Thisbookisdifferent:itisabook

abouthousing,butitdoesnotadvocatebuildingmanymorehomes.Thisbookdoesnotaddsupporttomanyoftheusual

solutionsoffered.Itdoesnotsuggestthatso-calledaffordablehousingschemesaregood,orthatwenecessarilyneedthousandsofnew‘councilhomes’tobebuilt.Itdoessuggestthatthehousingproblemrequiresamoreserioussolutionthanmerelybuildingmorehomes.Thisconclusionhasresultedpartlyfromconcernsaboutthenear-future,notaboutthepresent.Solutionssuchashome-building,whichlookasiftheymightsolvesomeofourpresentwoes,maynotbethepanaceamanyimagineifwecontinuetoallowafewtogetricherandricherthroughexploitationofwhatthehousingsystemhasbecome.Buildingmoremayresultinthewealthyowningevenmorehouses,morefamiliesrentingsomeofthosehomes,but

morebeingemptyatanyonetimeandingreaterfutureinequality,unlessweaddressrisinginequalitiesinhowhousingissharedout.Wearecurrentlysowingtheseeds

ofahousingdisaster,adisasterthatisyettocome.Itwillhappenifthoseinaffluentcountriescarryonhousingthemselvesthroughthevehicleofaccruedwealth,whenpropertyownershipbecomesjustanotherinvestment,amoneyspinner.Weneedtolookatwhereweareheading,givenwhatwearecurrentlydoing.IsuggestthatBritainpresentsanextremecase,inwhichthedisasterhasalreadyloomedintoview,andthatthecommonlysuggestedsolutionshavesofarbeeninadequateforthelongterm.

Manysuggestionshavebeenmadeabouthowthehousingdisastercouldbeaverted,apartfrommoremasshome-building:fromreintroducingrentcontrolstobringingincompletelynewlandtaxes,fromrationingbedroomsinsocialhousingtoself-buildingnewgreenhomes.Butwhatneedstobestressedisthatnoneofthesesolutionswillworkifwecontinuetotoleratetherisingpolarizationinwealth.Thismessagemaysoundrepetitive,buttheunderlyingcauseofourproblemsisrepetitive,andourfailuretounderstanditmeansthatsolutionshavebeenproposedthatwouldmaketheproblemofinequalityworse.Whyrationroomsinsocialhousingevenmorewhenthatisalreadythemostcrampedsectorandthose

concernedarenotsittingonahomesimplytoseetheirwealthgrow?Themajorityofournationalwealthisheldintheformofhousing,andthatwealthisbecomingmoreunevenlysharedoutasourincomesbecomemoreunequalyearafteryear.Polarizationinhousepricetrendsexacerbatesthedividesbegunbygrowingincomeinequalities.Isitanywonderwehaveahousingcrisis?Currentlyfartoomanyofthevery

affluentbelievethat,iftheyneglecttopassonalittlewealthtotheirfriendsorfamily,theywillimpoverishthem,thattheywillhavefailed.Somefeeltheyneedtobuytheirsonsanddaughtershouseswhentheyareuniversitystudentssothattheyhavean‘investment’.The

grandchildrenoftheveryrichestinsocietyalsoneedsomepropertypurchasedintheirnames,justtobesecureinfuture.Suchbehaviourwillnotnecessarilyprotecttherelativesoftherich,butitwillcertainlyensurethatanotherfamilydoesnotgettosecureamortgageonthehomethatispartofatoddler’spropertyportfolio.Fortheveryaffluent,transfersof

money,oftenavoidingtaxation,tohelpwith‘grandchildren’sschoolfees,highereducationcosts2andthedepositonafirsthome’3aretriflingsums,amountstohelpwitheverydaycosts,writtenaboutasifGranddadwerelendingatenner.However,itisnotnormaltopayschoolfees:only7%ofchildrenattendprivateschool.Itisnotnormaltohaveyour

universityfeespaidforbyrichrelatives:itisnormaltogetintodebt.Anditisnotnormalforgrandparentstoberichenoughtogivetheirgrandchildrenlargeamountsofmoney,evenontheirdeath.Whenforasmallgroupallthesethingsbecomenormal,theybecomeunconcernedwithissuessuchasthequalityofstateschools,risingstudentdebtorthehousingcrisis.Somemayevenseeitasbeingintheirgrandchildren’scompetitiveinterestsforthelivesofthosewhomtheyareby-passingtobemadeworse.Thechildrenoftherichmightfinditeasiertowininaracewhentheschoolsofthemajorityareunderfunded.Abovetheaffluentgroupbeing

consideredherearepeoplesorich

thatnoneoftheseissuesmatterforthem.Forthem,evenveryexpensivehousingisjustaminorexpense.Becauseoftheexistenceofthisveryrichgroupabovethem,theaffluentoftendonotthinkofthemselvesasrichorfortunate.Theythinkofthemselvesasnormal,havingtoworryaboutwheretheschoolfeesmightcomefrom.Whentheyputpropertyintrust,forinstance,onbehalfofatoddler,theyseetheirbehaviourascareful,goodandmoral.Theymayevenseethemselvesas‘averagepeople’,orasaverageamongthosewhomtheyconsidertobehardworkingandable,‘peoplelikeus’,astheymightsay.InBritain,by2008–10,atenthof

householdshadnetassetsworthat

least£970,000.Mostinthattenthhadfarmorethanthat;and,during2013,thecriterionforentryintotherichesttenthofhouseholdsexceeded£1millionaspropertypricesinLondonrose.Contrastthattenthwiththebottomtenth,where,in2008–10,thosehouseholdshadonly£13,000inassets,mosthavingfarlessandmanywithpracticallynoassetsatall.4And,again,thegapwillhavebeenwideningsincethoserecentyears.Thebest-offofthepoorestwillnowhaveless.TherichesttenthofchildrenbyhouseholdinBritainaregrowingupinfamilieswithwelloveronehundredtimesasmuchwealthasthepooresttenth.5AsaresultrichandpoorchildreninBritaincurrentlyleadparallellives,theirpathsrarelycross,andtheir

perceptionsofwhatisnormalareeasilydistorted.Thepoorbelievethattherichmustbehappy;therichbelievethatthepoormustbedangerous.InBritishsocietytoday,fartoo

manybelievethattheyhavetobecomemoreaffluentforthepurposeofjustlookingaftertheirfamily’sfuturewell-being,especiallytheirhousing.Iftheywerejustalittlebetteroff,allwouldbefine,peoplesay.However,oncetheygetintothatbetter-offgroup,theyquicklyacclimatizetothenormsofthatgroup.Itisveryhardnottoacclimatize.Whoareyoutodisagreewiththemajorityofthenewgroupyouhavejoined?‘Don’tbeskinflints’,youmayhear.You‘havetolookafteryourself,asnobodyelse

will’.Inaway,solongasgrowingnumbersthinklikethat,theymayberight.Toomanyoftheaffluentbelieve

thatyoumustbuythebiggesthomeyoucantoensureyouaresafeinfuture,orholdmorethanonehomeinaportfolioof‘investments’.Thatkindofthinkingmakesusallbadlyoffandall,inonewayoranother,badlyhoused.Anditalsomakeshousingasawholeextremelyvolatile.Itisalsonotnecessarilyagoodidea(socially,psychologicallyorpolitically)fortheveryaffluenttobecorralledinafewareasofexpensivehousing,nearthefee-payingschoolswheretheysendtheirchildren.Andformanyoftheveryrichthereisalwaysthefearthattheirtaxdodgingwillbefoundout,orthat

theirlegaltaxavoidancewillberedefinedastaxevasion.Taxesmayrise,sharemarketsmayfail.Thewealththeythinkissonecessarytotheirwell-beingisatargetformanyothers,andthatcanbefrightening.Nomatterwhoyouare–

multimillionairelandlordorin-debttenant–youcanhavelittlefirmideaofwhatthefuturemayholdwhenitcomestohousing.Butmillionsofpeoplearestartingtorelyonhousingasasourceoffinance,andnotjusthopingforanuncertainwindfall.Already,twomillionexistingpensionersplantoselltheirhometoboosttheirpension.6However,evenifyouaremildlywelloffyoucannotnecessarilyrelyonyourhometopayforyourretirement.In1995themedianfifty-year-oldinBritainhad

netwealthof£66,000.By2005thathadrisento£187,000becauseofthehousingboom,butthenpricesfell.7

PricescannotriseasgreatlyagainwithoutaninfluxofhundredsofthousandsofincrediblywealthyimmigrantsspreadingoutfromcentralLondon.Ifyouarehopingthattherisingvalueofyourhomewillbeyourpension,thatimmigrationiswhatyouarehopingfor.Furthermorethataveragegainof£121,000didnotcomeoutoftheether:itwasatransferfromyoungtoold.8Theyoungergenerationisnowpayingthepriceoftheoldergeneration’shousepriceinflationwindfall.Thisiswidelyrecognized,evenonthepoliticalright.9

Supposeyouarericherthanthemedianbutnotquiteinthetop10%.

YoumightthinkyouwouldthenbeOKrelyingonyourhousing‘investment’,but,evenifyouownpropertyoutrightina‘good’area,itmightplungeinvaluejustatthepointwhenyouneeditsvalue.Mostpeopletaketheirhomeoffthemarketatthatpoint,butyoumightnothavethatchoice.Youcan’tchoosewhenyoubecomeillorredundant,ornecessarilyhavemuchcontroloverwhenyourrelationshipbreaksdown.Housingisbecomingacasinoinvestment.Eventhemodern-daylandlordmayfindhimselfwithagreatliabilityonhishandsinfuture.Whatiffewerpeoplegotouniversityinthefutureandmoreofthosewhodochoosetostayathome?Sothemarketinstudentletsfalls.Whateverhappens,therewillbewinnersand

losers,andtheyneednotbethesamegenerations,groupsorplacesasbefore;timeschange.Themessageofthiseraofgreed

is:trytomakeasmuchmoneyasyoucanoutofhousingassoonasyoucan,andgiveuprentingifyoupossiblycan.Ifyoucan’t–thenyou’realoser.Ifyoubuyorsellatthewrongtime,you’realoser.Ifyoudon’texploitothers,you’realoser.Ifyouspendmoneymaintainingyourproperty,itmaynotincreaseitsvalue,butcosmeticchangesjustbeforeyoucometosellcanboostitsprice–justquicklypaintovertherottingwoodwork.Pricesarerising;andprospective

buyerswillbetoldbyestateagentshowunlikelytheyaretofall.AsonefundanalystputitinAugust2013:

‘Wearebackinatimewhere,asMrGekkosaid,“greedisgood”.And,onceagain,inoneformoranother,itwouldappear“it’slegal”.’10Itisinmanypeople’slegalintereststocajoleothersintostayinginthecasino.Itisintheinterestsofmortgagebrokersandofestateagents;eventheTreasurydoeswell,asitcollectsstampdutyonsales.Buteventuallyalmosteveryoneinacasinoendsupaloser.ItisnotjustintheUKthatthere

aretheseproblems.IntheWestingeneral,housingisincrisis–andallpartsofsocietyareatrisk.PeoplewhothinkofthemselvesasbeingofmodestmeansintheWestare,whenviewedfromaworldwideperspective,amongtherichestonearth.Whensortedbyincome,most

oftheworld’s1%richestpeopleliveinwhatareoftendescribedas‘modesthomes’worth$200,000to$400,000.Itisbecausethesecanfallinvaluejustatthewrongtimefortheirretirement,orforajobchange,orfortheendofarelationship,thatevenpeoplethiswelloffdonotthinkofthemselvesaswelloff.11

Oftenthechildrenofthebest-offtenthofeachaffluentsocietyintheworld(thetop1%oftheworldincomeparade)finditveryhardtogetonthehousingladder,andtheyaretheluckyones.By2013theaveragedepositrequiredbyafirst-timebuyerinLondonwas£64,000!12Nowonderpeoplepanicaboutamassingwealthtotrytohelptheirkids.Theirchildrenwillhardlyhavetoliveinslums,buttheywill

beborrowingvastsumsjusttobuywhatisusuallyaverypokyflat,andputtingdown£64,000forthe‘privilege’.And,whatismore,hardlyanyofthemwillevercompletethatmortgage.Mostdon’texpectto.Theseare‘starterhomes’.Theywillsellitontoanotheryoungperson,whowill,inturn,havetoborrowgreatlyandpayhugeamountsofmoneyininterest,eveniftheratesarehistorically‘low’,justfortheprivilegeofhavingsomewheretosleep.Iftheymovebacktorenting,theymayhavetopayapenaltyfeeforredeemingthemortgageearly.Ifpricesfallatall,itistheir£64,000thatwillbelostfirst.Itisbecausetheverywell-off

sufferaswellastheverypoorthathousingiseveryone’sproblem.The

well-offsufferless,buttheystillhavetheirlivesmadeworse,moreinsecure,bythewayweallocatehousinginBritain,incomparisonwiththewell-offinmoreequitablecountries.Inmoreequitableaffluentcountriesthewell-offhaveasmallershareofnationalwealth,buttheytendtodobetterthantheirrichercounterpartsinmoreinequitablecountriesintermsoftheirmentalhealth;theyalsoreceiveother,lessimmediatebenefitsfromlivinginamuchmoresocialenvironment.Crimeratesarelowerinmoreequitablecountries,sotherichneedfearrobberyandburglaryless;schoolingischeaper,withfarfewerprivateschoolsandmuchloweruniversityfees;andawiderrangeofjobsiswellpaidinmoreequitable

countries,allowingtherichtoexpandbeyondanarrowgroupofoccupations.13

TheUKisagoodexampleforstudy,betterthanmanyothers,ifyouwanttoseejustwhataproblemhousingcanbecomewheneconomicinequalitiesrise.SittingeconomicallybetweentheUSandmainlandEurope,theUKcombinestheexcessesofAnglo-Saxoncapitalismwithroyalistattitudestowardsthesanctityofaccumulatedwealth.IntheUKsuccessive

governments,bothinfluencedbyandinfluencingchangesinculture,haveturnedthehousingmarket,andthefinancialsectorthatreliesonit,intooneofthefewremainingpropsoftheUKeconomy.Thateconomyhas

nowbecomesoreliantonthehousingmarket‘doingwell’thatmuchelseissubordinatedtoit.Interestratesarekeptlowinpartbecauseraisingthemwouldimmediatelythrowhugenumbersofhomeownersintonegativeequity.Thevalueoftheirpropertieswouldfallbecausepotentialbuyers’abilitytopaywouldbereduced.Bykeepinginterestratesaslowastheyarenow,thegovernment(viatheBankofEngland)isineffectlendingbanksmoneyatalmostnocost.(Whenbanksgivepeoplemortgages,almostalltheinterestispaidtothebanks;onlyatinyfractionneedbepaidbacktotheBankofEngland.)GeorgeOsborne’sverylopsided

2013budgetannouncements,hisveryweakautumnstatementofthat

year,MarkCarney’stentativewinterinterventions,andalltheargumentsthatfollowed(aboutwhetherhewasblowingupabubbleorpreventingacrash),aretheresultofmanylonger-termchangesthatmadehousingpivotaltoUKeconomics.Thedisaster,inthisrespect,istheincrediblyunbalancedeconomy:itiswhathappenswhenthesouth-eastbubblepopsandhousepricesfallintolinewiththerestofthecountry;or,perhapsequallydisastrously,whathappenswhentheydon’tandaneconomicapartheidopensupbetweennorthandsouth.Whentryingtodeterminewhat

shouldbedone,theUKiswellplacedtolearnfromitsneighbours.However,whenitcomestohousing,commentatorsoftensuggestthatthe

islandofBritainissomehowinsulatedfromeventsoverseas,bothnearandfaraway.ButBritainhasneverbeeninsulated.JustbecausehousinghasbecomeanationalobsessioninBritaindoesnotmeanthathousingworkscompletelydifferentlyherefromhowitdoesinsimilarcountries.Therearedifferences,buttheydonotmeanthatlessonscannotbelearnedfromnearby.Infact,withintheUK,housingworksverydifferentlyinNorthernIrelandcomparedtoScotlandandWales,andthegreatestdifferencesarefoundwithinEngland.HousinginMiddlesbrough,

Mexborough,MaidenheadandMertonmightaswellbehousinginfourdifferentcountries.Pricesand

rentallevelsvarygreatlywhenyoucomparethesefourplaces,andthegapsinhousingcostsandexpectationsarewideningallthetime.Thepriceofapalaceinthepoorestdistrictwillbarelybuyyouagarageintherichest.Thedefinitionofdecentqualityisalsowildlydivergentinplacesasdisparateasthese.Fittingsandfixturesinthepoorestdistrictsremindvisitorsfromtherichestareasofhowhomesusedtobekittedoutaquarterofacenturyago.IntherichestquartersofEnglandhomesarenowsoexpensive,andrentssohigh,thatbuyersthinknothingoffurnishingtheirdwellingslikefour-starhotels;tenantspayingafortuneinrentexpecttobestunnedbythe‘quality’ofthebathroom.Eventhemostbasic

ofbathroomswasnottoolongagoconsideredaluxury;havingsomewhereinsidethehometogotothetoiletwasrareinmygrandparents’youth,beforetheSecondWorldWar.Nowbathroomsinexpensiveareasareroutinelybeingremodelledasafashionitem.Inthemostexpensiveofhomesitmaybeasignthatsomethingisamissifoneofthemanybathroomshasnotbeenredecoratedwithinthelastthreeorfouryears.Perhapspeoplerestylingtheir

fixturesandfittings,toiletsandtowelrails,shouldbetakenasasignthatsomethinghasgoneverywrong.Renovationaccelerationoccurswhenlocalhousingmarketsbegintooverheat.Oftentheselocalbuyingfrenzieswerefuelledbymuchthe

samecheapmoneyasthatwhichfuelledsubprimeUSmortgagegrowth.Duringthisperiod,whenhousingpricesrosequickly,rentscouldrisequicklytoo:highrentslooklessridiculoussetagainstasupposedlyhighhousingpriceforwhatwereonce‘normal’homes.TheUKhasnothadtheworst

housingcrisisintherichworld,butithasbeenbadlyhitbythecrisisbecausesomuchoftheUKeconomyisreliantonhousing.InEuropethehousingcrashhasbeenmostabruptinSpainandIreland.TheblameforthecrashinIrelandispartlyassignedtothegovernment,whichmadethedecisiontobailoutthebanks,butitisalsolaidatthedoorsofthebanksthemselves.

TheIrishhousingbubblewasinitiallyinflatedthroughthegreedofbankers,buildersanddevelopers;leftuncheckedbygovernment,itgraduallyinfectedtheentirecountry,andtheCelticTigerwentfrombeingatermofpraisetoapejorativeterminamatterofjustafewyears.Althoughthebubblemayhavebeeninternallygenerated,itrequiredoverseasmoniestoblowituptothesizeiteventuallyreached.Muchofthismoneycamefromoverseasbanks.InMarch2013theveteranUSacademicNoamChomskyputitbluntly:‘thehousingbubblewhichwasfuelledbySpanishandindeedGermanbanks–youknowtheywerethelenders–wentwayoutandcausedagreatcrisisforwhichthepublicisnowpaying.’14

InternationalobserversuseIrelandtoillustratejusthowfastandhowfarahousingmarketcanfall.CommentatorsinIrelandappeartobemovingonfrompointingthefingerofblame,however,becausefixingtheproblemisfarharderthanidentifyingwhereitbegan.Theyallacceptitbeganwiththefartoocosyrelationshipsbetweenbanks,builders,developersandgovernment.Bycontrast,intheUK,blameforthelongeconomicrecessionisattributedbythecoalition(andbymanyontherightofthecommentariatincludingmostofthepress)toNewLabourgovernmentspending,nottothebankers.ThisisdespiteUKgrossdebtbeingverylowunderthatNewLabourgovernmentjustbeforethe

crisisbegan.In2007accumulatedgovernmentdebtwasjust47%ofGDP,incomparisonwiththethenOECDaverageof73%,andtheannualdeficitwasjust2.7%ofGDP.15ByMay2013,afterthebankshadbeenbailedoutandasthecostsoftherecessionweremounting,accumulateddebtwas75%ofGDP,or£1.2trillion.16Andtheannualdeficithadbecomethreetimesasbigasin2007.17Britainlostitstriple-AcreditratinginFebruary2013,thefirstsuchlosssince1978.18

ThewishofthoseontherighttoattributeBritain’scurrenthousingproblemstothelastgovernmentmayberesponsibleforareluctancebytheBritishpresstocoversimilarproblemswhentheyareseeninother

countries.PerhapsthisreluctanceisalsolinkedtoafearthatwhathashappenedtohousingpricesinSpain,Irelandandelsewherecouldstill,atleastpartly,happenintheUK.WetrynottotalkabouttheproblemsoccurringelsewherebecausewewanttothinkthattheBritishhousingmarketissomehowimmunetoevengreatervolatility.SomanypeopleinBritaindon’twanttothinkoftheconsequencesofthepricebubbleburstingthattheydon’tevenlooktotheirnearestneighbour,Ireland,tolearnfromthatcountry’sdebatesaboutwhoisnowgoingtoshoulderallthedebtincurredbythepropertybubbleoftheCelticTigeryears.19

HOMETRUTHS

Itdoesindeedatfirstsightseempossiblefortheearthtobecometheexclusivepossessionofindividualsbysomeprocessofequitabledistribution.‘Why,’itmaybeasked,‘shouldnotmenagreetoafairsubdivision?Ifallareco-heirs,whymaynottheestatebeequallyapportioned,andeachbeafterwardsperfectmasterofhisownshare?’

–HerbertSpencer,eugenicistandEconomistmagazine

subeditor,185120

Onehundredandfiftyyears,ortwolifetimes,ago,leadingthinkersspeculatedoverthepossibilityoflanddivision(SpencerintheUK),landtax(HenryGeorgeintheUS),nationalization,communism,andtheconceptofpropertybeingtheft.Housingwasslowlyimproved.Aroundseventy-fiveyears,oronelifetime,ago,acrossalmostallthe

richworld,wespentmuchlessofourannualincomesonhousing.Forexample,eveninNewYorkCity,thenfarmorecrowdedthanitistoday,householdsspent32%oftheirincomeonhousingin1933–4,includinglightingandheatingtheirhomes.By1950housingcostshadfallento28%ofhouseholdincome;butby2002–3thatcosthadrisenagain,to38%,21exceedingthecostsofthe1930s,justasincomeinequalityintheUSnowexceedstheveryhighlevelslastrecordedatthattimetoo.22Iwouldsuggestthatitispartlybecauseincomeinequalityisnowsohighthathousingagainconsumessomuchofmostpeople’sincomes.TheUKistheEuropeancountry

thathasfollowedtheUSpatternof

inequalities–risingabruptlysince1980andreachinghistoricallyhighlevelsinthepresentday–mostclosely.Asaresultpeopleonnear-averageincomescantodayfindtheyhaveverylittletogetbyon,despitebeinginthemiddle.TheBBCtooktheexampleofacouplewithachildlivingon£22,000ayear,aroundthemedianlevel,andfoundthatinathirdofEnglandtheywouldhavehadtopayoutatleast35%oftheirannualincomeonhousingcostsiftheyrented,evenfortheverycheapestrentalpropertyinthearea.Alternatively,iftheytookoutamortgage,afterhavingsavedorbeengiven£20,000,inalmost30%ofdistrictsinEnglandtheywouldnotbeabletoaffordeventhecheapestpropertyonthemarket.23

Today,inabadyear,foryoungeradultshousingcostscaneasilyconsumeoverhalftheirtake-homepay.Paytendstobemuchlowerfortheyoung,andthemajorityofthebestjobopportunitiesformanyyoungadultsareconcentratedinthemostexpensivepartsofthecountryinwhichtolive.Sadly,theyounghavebecomeusedtobeingexploited,takingonhugedebtandtryingnottothinktoofarintothefuture.Withoutthememoryofdifferent

times,theextremesoftodaycanappearnormal.Furtherdown,towardsthebottomofthehousing‘market’,afewlandlordsbecomeveryrichasthestateindirectlypaysthemwelltoprovidewhatisoftenashoddyservice.IntheUK,where

housingbenefitpaymentsendupwiththelandlordsandwhererentcontrolsremainalmostnon-existent,afewpeopleareprofitinggreatlyduetothemiseryofthemajority.Itisbecauseoftheseprofits,andtheintenseinterestincontinuingtosecurethemamongthemostpowerful,thattheclamourforchangethatalreadyexists,butthathasnofocus,isconsistentlyrejected,dampeneddownorignored.Whatishappeningisnotasimple

caseofdemandoutstrippinghousingsupply.Youjusthavetocounthowmanyhomesthereareinrelationtothenumberofhouseholds.Throughoutthedevelopedworldtherehasneverbeenmorehousingthanthereistoday:wehave–intheory–morebedrooms,more

squaremetresperperson,morespacetolivein.24Youhavetokeeponasking:ifthereisallthisspaceavailable,whydowehaveaproblem?Ihopeitisalreadyclearthatthis

bookis,ineffect,concernednotwithanabsolutelackofhousing,butwiththeproblemofhowthathousingisdistributed,andofhowtogetherwemightbegintosolvetheproblemofapparentlyeverincreasinginequality.Ultimatelyitisabouttheneedtocontrolgreed.Housinghasbeentransformedintoaverybadlyregulatedmarket,andthislackofregulationinevitablyallowssometotakeadvantage.Markets,whentheyhaveworked,havealwaysreliedonregulationinordertopreventthegreedyfromtakingundueadvantage.

IntheUKrecentgovernmentshavepromotedakindofwinner-takes-allcapitalism,proppedupbyaone-choice-then-you’re-outhousingallocationpolicyforthepoor.Mostsocialhousingtenantsaremadejustoneofferofhousingonatake-it-or-leave-itbasis,andthatappliesonlytothosefamilieswhomtheauthoritiesareforcedtohousebylaw,mostlythosewithchildren.InEnglandalonemillionsofpeopleareonthewaitinglistforsocialhousing.Inthe1990slessthanamillionhouseholdswerewaitingforthecounciltohousethem,butby2008thatfigurehadreached1.8million;thecountisnowabovetwomillion.25Onehouseholdhasbeenonthatlistforfifty-sevenyears.26IntheUKasawhole,therearean

estimated600,000peopleofficiallyregisteredashomeless,27whileatleast240,000peoplehavenowreliedonsquattinginoneformoranothersothattheycanavoidbecomingstreethomeless.28

Homelessnessisbecomingoneofthedefiningissuesoftheprotractedfinancialcrisis.StreethomelessnessintheUKroseby17%between2008,atthestartofthecrisis,andtheendof2011.29Totalhomelessnessthenroseby26%inthetwoyearsafterthat.30By2013itwasestimatedthat20,000to50,000peoplewerecurrentlysquattingintheUnitedKingdom,occupyingbetween2%and4%ofemptycommercialpropertiesandfarfewerofthe737,500emptyresidentialproperties.

Itisestimatedthattheseemptypropertiesalonecouldhousetwomillionpeopleiffullyoccupied.31

Manyofthesepropertiesareemptybecausethey’resimplybeingtradedforinvestmentpurposes,andnotforpurposesofactualuse.ItistruethatthereareworsestoriesfromafewplaceselsewhereinEurope,wheresquattinghasbecometheonlywaytoliveforfamiliesinsomeareas,32

butevenmoreshockingtalesemanatefromNorthAmerica,wheresomanyfamilieshavebeenevictedfromtheirhomesinrecentyears.

Buildingslabelledas‘anexclusivedevelopmentof2,3and4bedroomhomes’,

currentlyunderconstructioninSheffield.Home-buildingiscontinuingin2012–14,butatamuchslowerpacethanbefore.Homesarestillmainlybeingbuiltforsaleataprofitandarestillveryoftenbeingmarketedwiththesuggestionthatbuyingnewpropertywillhelpyoutoelevateyoursocialstatus.Theimplicationisthatby

movingtosomewhere‘exclusive’,youwillalsobecomemoreexclusive,moreposh.Theseapartmentsarestyledwithold-fashioned

chimneys,moreforeffectthanforuse.Manyaremarketedasinvestmentopportunitiesforbuy-to-letlandlords,torentouttowhoeveriswillingtopaythehighestrent.Again,thesupposedsocialcachetofhavingtherightaddressispresentedasajustificationforchargingthehigherrent.Suchschemescanappeargoodfortheindividual,butnotgoodforsocietyasawhole:theydevaluealltheareasthatarenot‘exclusive’,which(theadvertisingimplies)youshouldtrytoavoid

livinginifyoupossiblycan.

Akeyreasonwhythehomelessandsquattersreceivesolittleattentionisbecausesomany

politiciansownsomanyhomes.Oftentheyclaimtheyneedtobecauseoftheprecariousnatureoftheirjobs,butroutinelyminormembersofparliamentinBritain,andthecongressinAmerica,areembarrassedwhentheirhome-ownershiplevelsarerevealed.Becausethisbehaviouroftenspanspoliticaldivides,itcurtailsdebate.Toomanypoliticianshavea

vestedinterestinnotwantingtotalktoomuchabouttheirvestedinterests.InBritainthisproblemwaswidelydiscussedin2001whenthephrase‘TwelveHomesMeacher’,concerningtheproperty-buyinghabitsofaministerintheLabourgovernment,firstappeared.Hispropertyportfoliomaynotnumberexactlytwelve,ofcourse,because

‘MrMeacherdoesnotwanttocomecleanonexactlyhowmanyhomesheowns.Hisentryintheregisterofmembers’interestssaystersely“FlatsletinLondon”.’33Whenbothpoliticalpartiesarecursedbythisproblem,itbecomesclearthatitiswidespread.However,itisinAmericanexamplesthatwecanmostclearlyseehowbothprofiteeringandtheembarrassmentoverprofiteeringgorighttothepoliticaltop.Justasthehousingmarketcrash

wasbeginningtogainspeedintheUS,in2008,SenatorJohnMcCainwastheRepublicannomineeforPresident.SenatorMcCainmadeanerrorthatDavidCameronwouldrepeatintheUKtwoyearslater.UnlikeMrMeacher,however,neitherCameronnorMcCainwas

honestenoughsimplytosaythathedidnotwishtosay.Instead,whenasked,bothrepliedthattheycouldnotrecallhowmanyhomestheyhad.McCaincameoverasthemoreplausibleofthetwo,ashehadagreaternumberofhomestorememberthanCameron.TheDemocraticPartycandidate

forPresident,thethenobscureBarackObama,reporteditlikethis:

Thentherewasanotherinterview,wheresomebodyaskedJohnMcCain,‘Howmanyhousesdoyouhave?’Hesaid,‘I’mnotsure,I’llhavetocheckwithmystaff.’Truequote!Sotheyaskedhisstaffandtheysaid,‘Atleastfour.’Bytheway,theansweris,John

McCainhassevenhomes.34

UnfortunatelyforMcCain,sevenhomeswastoohighanumberforapresidentialcandidatein2008,ayear

inwhichmanyvotersfacedpossibleevictionintheaftermathofthecrash.Hedidnotappeartohaveanyconnectionwiththeordinaryvoter.What’smore,hisstaffhadbeeneconomicalwiththetruth.Obama–who,untilhemovedintotheWhiteHouse,hadhadonlyonehome–had,understandably,underestimatedMcCain’spropertyholdings.TheNewYorkTimeslistedtenpropertiesheldinMcCain’sname.35

WhenMcCainwasmakinghisgaffeabouthisgaffs,andclaimingtobeunsureaboutthenumberofhomeshehad,millionsofotherverydifferentAmericanswerebeingmadehomeless,oftenwithinonlyafewmonthsofdefaultingontheirmortgages.Thetermforbeingbehindonyourmortgagepayments

is‘mortgagedelinquency’intheUS;intheUKitis‘mortgagearrears’.TheUScrisisinhousingresultedinalegalconveyorbeltofrepossessionorders,whatcametobecalled‘anevictionmill’.Thenumbersofthosewhowereputthroughthatmill,aswellasthosewhofearedtheymightbe,roserapidlyintheyearsupto2013.Laterinthisbooksomeofthe

connectionsbetweenhousingandhealtharediscussed,butitisworthstatingherethatthestressofbasicissuesconcerninghousinghasgreatlydamagedpeople’shealthacrosstheUS.Indeed,overallUSlifeexpectancyfellin2008.Thatfallisnowthoughttobeasmuchrelatedtothe‘evictionmill’asitistoanyotheraspectsofthecrash.36Thereis

growingevidencethatthecrisisisverybadforhealthinmanyways,possiblyleadingtothefirstfallinlifeexpectancyintheUKtoberecordedsincethe1930s.Thisdoesn’tnormallyhappeninaffluentcountriesoutsideofwartime,37

furtherevidencethatthesearenotnormaltimes.Whatthehousingcrisisdoes,

morethananyothertypeofsocialcrisis,isaffectentireneighbourhoodsandcities.Hugenumbersofpeopleareharmed.Thisharmoccursbothwhenhousingbecomestooexpensivetoaffordandwhenitplummetsinvalue.Whenonehomeisabandoned,peoplelivingallarounditworryaboutwhatmighthappentotheirstreet.Whenastreetisabandoned,peopleworryaboutthe

neighbourhood.Whenaneighbourhoodappearslargelyabandoned,whennoonecansell,peopleworryaboutthetown.AndwhenatownaslargeasDetroitgoesbankrupt,peopleworryaboutothertowns.InJuly2013thatcitystoppedissuingdeathcertificatesbecauseitcouldnotaffordtobuythepapertoprintthemon.38Itreallyhadgonebankrupt.Atthetimeofwriting,nooneknowshowlongitwillbebeforeitissolventagain.Fromthesubprimelendingcrisis,

totheforeclosureepidemic,tothebankruptcyofentirecities–asthingshavegotworse,governmentshaveinsistedtheywouldsoongetbetter.TheoveralleconomicsituationdeterioratedintheUSbecauseafewsoughttomakeexcessiveprofits

fromlendingandreceivinginterest.Inthosecountrieswithintherichworldwherepeoplearebesthoused,thereareusuallyquitestrictcontrolspreventingthefewfrommakinghugeprofitsattheexpenseofthemany.Thesameistrueofthoseaffluentcountriesthathavethebestresultsintermsofoverallhealthandeducationaloutcomes.Ingeneral,itisnothowmuchis

spentonhealthoreducationorhousingthathasmostinfluenceonwhetherapopulationiswellcaredfor,orwelleducated,orwellhoused,buthowthatspendingisspreadaround.39Affluentcountriesreportbetterhealthandeducationoutcomeswhentheirresourcesaremoreevenlydistributed,andthesameistrueforhousing.

Oftentheevidencethathousingissuesareattheheartofmanysocialproblemsisonlycircumstantial,butratesofimprisonment,theproportionsofchildrengivenupforadoptionandmanyotherindicatorsofsocialstrifearehigherwhereitishardertobehoused.By2008,136,000childrenayearwerebeingadoptedintheUS,15%morethanin1990.40Over2.2millionpeoplewereimprisonedintheUSby2008,41upfrom1.1millionin1990.Thesefiguresdwarfthoseofothernations.Perperson,onlyRwandaimprisonsmorepeoplethantheUSandthenonlyifprisonersofwarareincluded.42

Ifwewanttofeelsecureaboutoursocieties,cities,neighbourhoodsand,moreprecisely,thehomeinwhich

welive,weneedsomebetterchoicesandgreateroverallfreedom.Weneedtobeabletorentwherewewanttolive,butalsotobeabletobuywhenandwherethatmakessense–butneverwiththeintentionofprofitingthroughtheownershipofbricks,mortarandland.Profitsmadeoutofsecuringessentiallivingstandardshaveatendencytoreduceoveralllivingstandards.Oneperson’shousingprofitis

another’scostandmisery.Theprofitwillbequicklyassimilatedandlargelyforgotten–quietlyacceptedlikeaccidentallyacquiredill-gottengains–butthemiserymaybefeltforalongtime.Thus,inaggregate,wearebetteroffwhenhousingismademorelikehealth,insteadofleftasanarenaforprofiteering.Perhapsmany

oftoday’sestateagentswillonedaybeviewedmuchasthewaywenowviewpeoplewhosoldsnakeoilorwhoperformedotherformsofquackeryinmedicineinthepast.Nodoubtthequackssaidtheywereprovidingavitalservice,andsomemayhavebelievedthattheywere,butmostpeopletodayagreethatwearebetteroffwithoutthem.Wewillalwaysneedpeopletohelparrangehowwearehoused.Butweneedpeoplewitheveryone’sbestinterestatheart,notwhatmightbestlinetheirortheirfirms’pockets.Whereverweliveweneedtosee

newrulesintroducedoroldonesrestoredintheinterestsofthevastmajoritywhodonotownmuchofthenationalwealth.Oldrulesthatworkedsowellinthepastandthat

stillworkwellelsewheretodayincluderentcontrols.Newrulesmightbetotaxlandonthebasisofitsvalue.Ifpeoplechoosetohoardit,theycan,buttheymustpayfortheprivilege.Mostimportantarerulesaboutwealthandfreedom.Rulesaboutfreedominvolvetheprotectionandintroductionofrights.Onerightsuggestedlaterinthisbookisthe‘right-to-sell’yourhomebutstayinitasatenant.Thiswouldbeacounterbalancetothe‘right-to-buy’andawayofreducingbothevictionsandthestigmaattachedtocertainareas.Ifyourneighbourscouldstayintheirhome,evenafterhavingcompletelydefaultedonamortgage,aslongastheypaidtheirrentuponbecomingtenantsinthesameproperty,woulditstillbeworthwhile

buyingina‘posh’area?Wouldposhareasstayasposhifpeopledidnothavetoleavesuchneighbourhoodssoquicklywhentheyfellonhardtimes?And,ifsuchareasbecamelessposh,wouldprospectivebuyersbequitesowillingtospendafortunetolivethere?

GleadlessValleytowerblocks,asseenfromMeersbrookAllotments,inSheffield.These

towerblockswerebuilttoreplaceslumhousing–afactthatisoftenforgottentodaybythosewhoviewthemasaneyesore.However,comparedtowhattheyreplaced,thetowerblockswereanimprovementinthelandscape.High-densitylivingallowsspacestobeleftopenandgreen,

andsuchbuildingsareoftenprizedinmanycitiesintheworld.Towerblocksbecomeaneyesorewhen,inapolarizingsociety,theyareviewedasthehomesofpeoplewiththeleastchoice.Towerblockssimilartothese,butoverlookingaparkin

centralLondon,areregardedasprimeinvestmentsontheworldwidehousingmarket.Housingbecomesgoodhousingwhentherearemoreopportunitiestoliveagoodlifeinthespacearoundthathousing.Homesmustbedamp-free,spaciousenough,wellsoundproofed,insulatedandletinenoughlight;buttheyalsoneedtositwithinaneighbourhoodinwhichchildrenfeelsafeandcanplay,inwhichadultsarehappytolive,andinwhichtheelderlyarenottrappedin

theirhomesthroughfearoftheoutside.

Thealternativetotheintroductionofsuchnewrights,totherestorationofsucholdfreedoms,isthehousing

disasterthatcomescloserandclosereveryday.

THEAPPROACHINGDISASTER

Housingisattheheartoftheeconomiccrisis,andgettinghousingrightwillbepartofitsanswer.Itisalsooneofthetoughestofpoliticalquandaries,onewhoseobviousanswerissounpalatablethatnogovernmenthashadthecouragetofaceit.Thequandaryisthis:housingcoststoomuch,butformillionsofpeople,securitydependsonthevalueoftheirbricksandmortar.

–Guardianeditorial,September201243

Formanypeople–speculators,landlordsorsimplyhomeownerswhohavebeenforcedtotakethegambleofgettingontothe‘propertyladder’–a‘housingdisaster’meansafallinpropertyprices.

InNovember2012theRoyalInstituteofCharteredSurveyors’annualassessmentofthePortuguesehousingmarketranwiththeheadlines:‘Pricesandrentscontinuetofall’;‘Confidenceindexremainsquitenegative’;‘Lettingsactivityindicatorsweaken’.44InSpain,justtwomonthslater,itwasreportedthattherewerestillanestimatedonemillionhousesonthemarket,mostofthemnew-builds,allunsold.Suchaglutmeantthatpriceswereexpectedtodropafurther20%.45

AroundthesametimetheratingsagencyFitchannouncedthatitexpectedhousepricesinIrelandtodeclinebyafurther20%fromcurrentlevels.46Allthesepredictionscastapalloverthosecountriesduring2013.Whateverslight

increasesinpricesdidoccurinanyareawereseenasachimera,astatisticalby-productofthelowvolumeofsales(justafewsalescouldberecordedasanindicationofapricerise),theresultofafewopulentpropertiesbeingsoldoffatlowprices.Andaspricescontinuedtofall,peoplewerelessandlesssurprised.ByAugust2013Spanishpriceshadfallenafurther9.3%,downnearly40%fromtheir2008peak.47

Noneofthishappenedoutoftheblue.Therewerewarnings,andgovernmentsdidtrytopreventhousingcrisesfromturningintosocialdisasters.Ireland’shousingmarketcrashwassaidbyonecommentatortohavebegunat10p.m.on2October2008,whenIrish

home-buyerswatchingthenightlynewssawanincoherentdisplayfromthechiefexecutiveoftheFinancialRegulator:‘theysawhimandsaid,Whothefuckwasthat???Isthatthefuckingguywhoisinchargeofthemoney???That’swheneveryonepanicked.’48Themanwastryingtoreassurethem.Thegovernmentthatheworkedforwantedtheproblemsorted,butitwastoolate.Othersourcesdisagreeabouttheprecisetiming:somesaypanickingbeganafewdaysearlier,on30September,whenthebankguaranteewasintroduced–butitalltookplacewithinjustafewdays.Acrisiscanbeginthatquickly.Therepercussionsfromthoseinitialattemptstoavertdisastertookagooddeallongertofullyemerge:fouryears,infact.

In2011MichaelLewis,writinginVanityFair,reportedeventsasanalmostcompletecapitulationtointernationalmoneymarketsinIreland.Hesuggestedthatwhathadmostobviouslychangedinthecountry’spoliticshadbeentherolethatbegantobeplayedbyforeigners.ForemostamongtheforeignerswastheTroikaoftheEuropeanCommission,theInternationalMonetaryFund(IMF)andtheEuropeanCentralBank(ECB),whichlaiddowntheausteritymeasuresIrelandhadtofollowifitwastoreceivebailoutfundingonceinternationalinvestorswerenolongerwillingtorisktheirmoneyfollowingthe2008crash.TheIrishgovernmentandIrishbanksby2011werecrawlingwithrepresentatives

oftheTroikaaswellasAmericaninvestmentbankersand,inMichael’swords,‘Australianmanagementconsultantsandfacelesseuro-officials,referredtoinsidetheDepartmentofFinancesimplyas“theGermans”.Walkthestreetsatnightand,throughrestaurantwindows,youseeimportant-lookingmeninsuits,diningalone,studyingimportant-lookingpapers.’49Itmaynothavebeenquiteasbleakasthat,butitcertainlyfeltthatbleak.ByApril2013theTroikahadsucceededingettingDublintopublishlegislationmakingiteasierforpropertytobeseizedandforresidentsinarrearswiththeirmortgagestobeevicted.50Ironically,justfourmonthsafterthat,Irishexperts(alongsidesomeofthose

nowreturnedmanagementconsultants)werewarningthatanAustralianmarketcrashmightbeimminent,givencurrentsigns.51

Nowhereiscompletelysafe.WhatoccurredinIrelandin2013

couldhavebeenverydifferent.Bylate2012theIrishseemedtohavetiredoftheforeigntechnocrats;somehadlookedacrosstheoceannorthwards,toIceland,andlearnedthattherewasanalternativetodoingwhatthebankerssayyoumustdo.Putinasimilarsituationbyaveryfewbankersandcolludinggovernmentofficials,Icelandhaddecidedtodefaultonitssovereigndebt.TodaymanyoftheheadquartersofIceland’sformerbanksremainemptyinthetinyBorgartúnquarterofReykjavik,and

therehasbeenapopularrevoltagainstthebankersthere.However,theoldIcelandicbankingfamiliesremainpowerful.Amemberofonewasreportedin2011(byjournalistandwriterPeterGeoghegan)tobeoverheardclaiming,atwhathethoughtwasaprivatedinner,thatitwasstillpossibletoturnReykjavikintoEurope’sHongKong.52Bynotdoingwhatthebankerssaid,Icelandhadavoidedtheworstaspectsofpossibleausterity:bynotpayingitsdebtstorichercreditorsoverseas,itwassayingthatbondholdershadtakenarisk,thatriskhadturnedbad,andIcelandwouldnowlookathowtorecoupinternally.Iceland’sexampleinspiredmuchdiscussionandsomeprogressinIreland,and,inthelongrun,itcouldstillprovide

inspirationtomanycountriesthroughouttheworld.InOctober2012theIrish

governmentannouncedthatitplannedtointroduceabillencouragingbankstocutsubstantiallytheamountthatborrowersowedontheirmortgages:aprogrammeofmassivemortgagewrite-downs,infact.TheIrishgovernmentsuggestedthatthiswasastepthatnoothermajorcountryhadsofarbeenwillingtotakeonsuchabroadscaletodealwiththecurrentcrisis.Theinitiativewasdesignedtolowereachborrower’smonthlypayments,therebypreventingatideofforeclosures,andremovingtheuncertaintythatwouldotherwisehangovertheIrishhousingmarketformanyyearstocome.TheNew

YorkTimessuggestedthat‘Ifitworks,theplancouldprovidearoadmapforothertroubledcountries.’53

Fromtheoutside,itbegantolookasiftheIrishwerebeginningtotakecontroloftheirownfate.Whatwaspossiblehad,itself,changed.Butthenthebankscounteredthatanyblanketdebtforgivenesswouldresultin‘strategicdefaultamongcustomerswhocouldaffordtopaytheirmortgages’,54andtheTroikahadthemeasuresreversed.Thisdevelopmentwaslessthanayearago,however,andwedonotknowhowthisstorywillend.WedoknowthatanentiregenerationinIreland,andtheirchildren,willnevertrustbankersanddevelopersagain.Itiswhenwhatispossible

changesthatrealchangebegins.Real

changeisnotchangewithinanexistingsetofparameters.Itisnottheraisingandloweringofinterestratesorthebuildingofafewstatesubsidizedhomes.Realchangecamewhenitfirstbecamethestate’sbusinesstobuildhomes.Itcamewhenpeoplefirststartedtogambleonpropertypricesrisingmoreandmore,andso,foratime,theydid.Itisthehousinglandscapeitselfthatwillchange,notjusttheseasonalfeatureswithinit.IftheIrishgovernmentdoesintroducealandtax,thiswillmakeasimilarfuturetaxintheUKmorerealizable.Alandtaxmeansthereislesseconomicsenseinonefamilyowningasmanyhomesandasmuchlandaspossible,asitbecomesmoreexpensivetoownmorethanyouneed.Afterthetax

hasbeenapplied,housingwillbevaluedmoreforits‘use’thanforits‘exchange’value.Itisanexampleofwhatoneeminentacademicgeographercalls‘apost-capitalistimagination’.55Itiswhatmanywouldcallcommonsense.Sadly,foreveryoptimisticturn

reportedinIcelandorIrelandorelsewhere,therealwaysappearstobesomebankersittinginthecornertryingtopreventitstakingplace.InIrelandthegovernmentdecidestoforgivemuchdebtandpreventevictions;theTroikastepsintodemandthelawischangedbackagain.InthecaseofIcelanditwastheoldrichfamiliesandthemanPeterGeogheganoverheardtalkingatthatdinneraboutturningReykjavikintoafinancecasinowho

aretryingtosubvertthewillofthemajority.InIrelandthebankers,thefirms

andtheoldrichfamiliestowhichtheyaremostcloselyconnectedarealsoresponsible,notjusttheTroikaandthecreditreferenceagencies.ProfessorRobKitchinandhiscolleaguesfromtheUniversityofMaynoothfoundthatthesegroupsweresubvertingattemptstorealigntheIrisheconomy.OncloserinspectionbythoseIrishacademics,someoftheIrishgovernment’srecentapparentboldnessappearstoproveillusory.Whatthegovernmenthasactuallydone,theresearchersfromtheNationalInstituteforRegionalandSpatialAnalysissuggest,istohavekeptmanydevelopersandspeculatorsin

business.Thesewerethepeoplewhohadbeenresponsibleforinflatingthepropertybubble.Alongwiththebankstheyhad‘blockedthegrowthofmoreresilientplayersornewstart-upsinthewakeofthecrash,whilstdoinglittletoprotecthomeownersandtenantsstrugglingtopaymortgagesandrent’.56Thusthereismuchscepticismaboutsomeofthelatestmovesbeingproposedandabouttheactualintentofmanyingovernment.Movestoallowborrowerstopaybackalittlelesswerepartlyseenasmoreofthesame,notyetasea-change.Butasea-changeispossible,andhere,possiblyanddespiterecentset-backs,Icelandstillleadstheway.Therewillalwaysbesmallcohortsofvestedintereststryingashardas

theycantoreturntobusinessasusual.Sometimestheywillsucceed.Butnowthereareincreasingnumbersofjournalists,writers,activistsandacademicslookingmoreandmoresceptically,inwaystheyhavenotlookedbefore,atanarea–housing–forsolongconsideredhumdrumandboring.Allthisattentionismakingitfarharderforthecorruptionofthepasttocontinueunchecked.InIceland,unlikeinIreland,the

governmentallowedthecountry’slargestbankstofailafter2008.Atthesametime,debtreliefwasawardedtohouseholdsindifficultieswiththeirmortgagesandlocalbusinessesfacingbankruptcy.Ascepticmightsaythatthisisjustkeepingafirmthatshouldfailtostay

inbusiness,buttimewilltellwhichpoliciesarebest.On8June2012twoformerbankingexecutivesoftheByrSavingsBank,JonThorsteinnJonssonandRagnarZophoniasGudjonsson,weresentencedtofourandahalfyearsinprisonbyIceland’sSupremeCourt,havingbeenfoundguiltyofcommittingfraud.ThiswasamajorstepforwardinEurope.However,theformerPrimeMinister,GeirHaarde,wasgivennopunishment,evenwhenfoundguiltyofhavingnotconvenedenoughcabinetmeetingstoproperlymonitorthesituation.57

ThereweredownsidesaswelltoIceland’spartialdefianceofourcurrentbankinghegemony.Inflationrecentlyreachedalmost20%inoneyearanditremainshigh,but

inflationusuallyreducestheinequalitybetweenthosewhohavenothingandthosewhohavethemostwealth.However,inflationcanalsoincreasethecostofhousingformany,bringitupandoutofproportionwithearnings.Thebestinflationisinflationinthepricesofthingsyoudonotneed,inthepricesofluxurygoodssuchasoverseasholidays,expensivejewelleryandfastcars.TherewerealsocostsforBritain

whenIcelandchosetobedeviant,whichcouldbeaportentofwhatmightoccurifanyofGeorgeOsborne’snewmultibillionpoundinternalUKloans,mortgageandbankdepositguaranteeseverhavetobecalledupon.TheBritishgovernmentbailedoutUK

speculatorsintheIcelandicbanks,whichincludedanumberofEnglishlocalauthoritiesthathad‘invested’theirdepositstotrytomaximizeincomes.TheBritishalsolentheavilytoIreland,toenablethegovernmenttoguaranteealldepositsheldinfailedbanksthere(thiswasinadditiontotheTroikabailout).In2010theBritishgovernmentlentIreland£3.2billion;in2011itcuttheinterestrateonthatloan;andinDecember2012thatcutwasmaderetrospective,sothatafurther£7.7millionlessinteresthadtobepaidbacktotheUKthatmonth.Noexplanationwasgivenastowhythiswasdone,otherthanthat‘Thelinksbetweenourfinancialsystems,particularlyinNorthernIreland,meanthatthereisastrongeconomic

casetoprovidefinancialassistancetoIreland.’58CouldIrelandreallynotaffordasumjustshortof€10million?Wasitthatclosetobeingbankrupt?InmanywaysBritainhasbeentryingveryhardtomaintainbusinessasusual,notjustwithintheUKbutalsonearby.Perhapsthiswaspartlyduetofearsoverthepound.Or,morelikely,duetofearofwhatagreaterbankingcollapseinIrelandmightmeanfortheUKhousingmarket.ThemarketinthesouthofEnglandwaslikeafragilehouseofcardsthatcouldbeupsetatanymomentbyanearbyhouse’sfall.IfIrelandhadcopiedtheIcelandic

responsetothecrisisearlyon–hadnotguaranteedallsavers’deposits,nomatterhowlarge,hadnotacceptedtheTroika’sintervention

andhadthen(wheneventhatwasnotenough)notacceptedadditionalloansfromtheBritishthathadtoberepaidby2020,albeitatlowerandlowerinterestrates–thegreateconomicchaosinthatcountrymightveryeasilyhavespreadovertheborderandacrosstheIrishSea.Ireland’sbeingwithintheeuromayhavemadeBritishsupporteasier.AttheendofthedayallthesupportthatwasextendedtoIreland–fromwithintheeurozone,fromtheTroikaand,eventually,fromtheBritish–didnot‘save’IrelandbutratherresultedinaveragehousepricesinIrelandfallingto60%oftheir2006valueby2013;inmostcasesthiswasunderhalfwhattheyhadbeensellingforattheir2008peak.ByNovember2013claimswere

increasinglybeingmadethattheIrishhousingmarkethadfinallybottomedout,butevidenceofstabilityhadyettobeamassed.59

EvenwhenIcelandichousingpricesaremeasuredineuros,thefallssincethepeakhavebeenlessinIcelandthanineitherIrelandorSpain.60

ItisremarkablethatSpain,IrelandandIcelandaresolittlediscussedinBritain,whentheyarenearbymodelsofthechaosthatcansoeasilycometohousingmarkets.Godirectlysouthin2013andpricesarestillfallinginSpain;godirectlywestandwecannotevenbesuretheyareyetflat-lininginIreland;gonorthandthefirstcountryyouhitisIceland,whoserecenttalestheUKalsodefiantlyignores.AlltheseexamplesshouldcausetheBritishtobemore

cautious;ifonlywewerenotsoinsular.Atseveralpointsduringthelast

fewyearstheIcelandickrónafellinvaluetoroughlyhalfitspreviouspeak.Thepoundhasfallenbyhalfthatamount,butacomparisonisnevermade,andwehearfewdiscussionstodayofpossiblerunsonthepound.WeneedtolooktoIcelandtoknowwhatthatwouldmean.InIcelandthecostofimportsconsequentlydoubledandcurrencycontrolshadtobeestablishedin2008,afterthecollapseofthekróna,tostopthewealthymovingtheirmoniesabroad.TheBritisheventriedtouseanti-terrorlegislationtogetsomeofitsownspeculators’moniesout!Whenthefullstoryofthecrisisisfinallyrevealed,Britain

maywellnotcomeoutofitwell,butmayinsteadbeseenasthecountrythatstoodmostsquarelybehindtheinterestsofthebanksandthosewhohadmosttolose:thewealthy.MeanwhilethepeopleofBritain

carriedonborrowinglargelyinignoranceofwhathadsorecentlybeenhappeningaroundthem.Theycouldseenoalternative.Britainissuchasociallydividedsocietyand,formost,theonlywayintothetophalfisthroughtryingtobuyahomeintherightplaceattherighttime.HomeownershipstatusandsocialclassarealmostoneandthesamethingintheUKtoday.Usuallythemiddleclassbuyandeventuallyown;theworkingclassrentorbuybutthenriskdefaulting.

NotalliswellinIceland,butatleastitisoneislandwheretheyareallinittogether.AsProfessorofEconomicsattheUniversityinReykjavik,ThorolfurMatthiasson,explains,theIcelandershavebeenlookingaftertheirown:‘Takingdownacompanywithpositivecashflowbutnegativeequitywouldinthegivencircumstanceshaveadominoeffect,causingotherwisesoundcompaniestocollapse…Forgivingdebtunderthosecircumstancescanbeprofitableforthefinancialinstitutionsandhelptheeconomyandreduceunemploymentaswell.’61

Incontrast,inBritain,firmsbegantogotothewallandmanyhousingprojectsstalledwhenthecrashcamein2008,andtherewaslittlesubsequentdebtforgiveness.

ItisnotjustIceland,Ireland,andSpainfromwherewecanlearnlessons.PortugalisthemostsimilarcountryinEuropetotheUKintermsofincomeinequalities,andtherethemarkethasalsocollapsed,sotheimpactonasimilarlysociallydividedsocietycanbeseenfromthatexample.HousingmarketsinItalyandGreecehavealsobeenthrownintochaosalongwiththerestoftheperipheralregionsofEurope.But,incontrast,andatexactlythesametime,althoughnowatEurope’score,itisreportedthatinfarmoresociallyequitableGermanyhousingpriceshaveincreasedsharplyoverthelasttwoyearsbecauseinvestorsarelookingforsolidreturnsandsafehavensinthemidstoftheeurocrisis,andthinktheywillfindthemthere;

but,indoingso,theymayjustbehelpingtobringaboutexactlythesituationtheyweretryingtoavoid.62

RisinghousingpriceswithinpartsofGermanyhavecaused‘somepeopletoworryabouttheformationofabubblethatcouldcollapseiftheGermaneconomyfalters’.63Theoldmodelsofspeculationandaccumulationappeartobefaltering,eveninwhatisseenasthesolidcoreofEurope.Thisisbeginningtospreaddisquietwhererecentlyallhadappearedmostsolid.InGermanywagesmayonaveragebehigher,butaquarternowliveonlowwages,and,thoughunemploymenthasfallen,temporaryemploymenthasincreased.64Divisionstherearerising.Buttheyhavealongwaytorise.Inequalitiesarenothinglike

theyareinBritain,wherepeoplearepaidfarlessinlargenumbersandunemploymentismuchhigher.InBritainin2013youcouldbuyaterracedhouseinarundownpartofStokeonTrentfor£1,whilethegrandestterraceinthelandwasbeingputonthemarketat£250,000,000.65AlmostnooneinBritainisshockedbysuchdivisionsanymore.Buttheyshouldbe,becausetheydonotbodewell.Thecontextweareintodayisone

inwhichthereislittlecertaintyandasenseofrisinginsecurity,evenattheheartofEurope.Attheperiphery–fromCyprustoMalta,throughGreece,Italy,Spain,Portugal,andupthroughIrelandtoIceland–thereismoreuncertaintythaneverbefore.Somefifteenpoliticalparties

contestedtheelectionsinIcelandinApril2013,twiceasmanyasatthepreviouselection.Thecentre-rightpartiesregainedcontrolbypromisingnottoseekshelterintheeuro,andthePiratePartywonitsfirstseatsinanynationalelectionanywhereintheworld.Icelandisstillinsomeobviousdisarrayandappearstobeoscillatingpoliticallyfromlefttorightagain.However,itisnowlookingatrelativelystablehousingpricesandrents.Theyareneitherrisingnorfallingbuthavesettled–notaslowasthefallselsewhereinEurope,butmuchlowerthananypricefallsrecordedsofarintheUK.ThecostoflivinginIcelandremainsexorbitantduetohighimportcosts,butmaybealessonhasbeenlearnedaboutspeculationthatwillnotbe

forgottenquickly,atleastnotforageneration.Perhapspartlyasaresultofwhat

hashappenedinIceland,itismainlyinthemostaffluentpartsofGermanywherehousingpriceshaverisenmostquicklyrecently,especiallywhere‘crisis-riddenGreeks,ItaliansandSpaniardsbuylikecrazy,the“concretegold”thatsomeGermanreal-estateisassumedtorepresent’.66Again,itisworthrestatingthatalessonontheerrorsofspeculationissoontobelearnedwhereitisleastexpected,intheveryheartofEurope.And,ifyouthinkthatistoomuchJeremiah-styledoom-saying,thenwhataboutLondonandthesouth-eastofEngland?

InmanywaysmoreakintoGermanythanIreland,partsofsouth-eastEnglandwereexperiencingwhatappearedtobearenewedpropertyboomasIwaswritingthisbookin2013.Toexperienceaboomyouhavetobelievethatacrashisnear-impossible,oratleastenoughpeopleneedtobelievethat.Butsimultaneously,alongsidepricesrisinginthesouth-east,theBritishperiphery,liketheEuropeanperiphery,continuedtoseemosthousingpricesfall.Somefallswereverylarge:14.6%intheyeartoJuly2013inPowysand2.2%forthewholeofWales.NorthernEnglandsufferedsimilarfallsinparticularlydepressedareas.67

PerhapspeopleinthesouththinktheynolongerliveinthesamecountryasthoseinNewcastle,LiverpoolorStoke?Orperhapstheyfeeltheyhavenochoicebuttobuyateverinflatingpricesandpraythattheyhavenotjustboughtatthewrongtime?Butdopeoplereallyhavenochoicebuttospendmostofwhatwouldotherwisebetheirdisposableincomeonrentormortgagerepayments,justtohaveagoodjob,ortoliveneartheirfamilyandfriends?WhatdoUKpoliticianshaveto

sayaboutthesituation?TakeonewithaseatinthenorthbutleadingapartywhosesupportismostlylocatedinthesouthofEngland.Duringtheleadershipdebatesintherun-uptothe2010UKgeneral

election,LiberalDemocratleaderNickCleggsaidthattheissuesmostpeopletalkedabouttodoor-steppingpoliticiansconcerned‘thecostandavailabilityofhousing’.68YetCleggsoonfollowedinthetime-honouredtraditionofMPs,who,aftergainingoffice,failtosuggestsolutionstotheproblemstheyacknowledgewhileinopposition.HousinginBritainisunlikelyto

begreatlyimprovedbyincrementaladjustmentstoexistingpolicies.Actingagainstanyminorbeneficialmeasuresaretheforcesofspeculationandaccumulation,ofafewtryingtogetrichquicklythroughproperty.IfyouthinktheremainingpowersofwealthyvestedinterestsinIcelandorIrelandareaproblem,justimaginewhatabrake

onprogresstheCityofLondonremains.Whenitcomestointernationalfinancialpolicy,itissurelytheCityofLondonthateggsontheUKgovernmenttoofferextraloanstoIreland,outsideoftheTroikaarrangements,tohelpitguaranteealldeposits,whichsuggestsitisfinetositbyasothercountriesstruggleandalsotoinvoketerroristlegislationagainstIcelandwhenitdoesdefault.TheUKtrendsarenotgood.

Pricesinthehousingmarketpolarizedfurtherduring2012andinto2013,andevenmorepeopleareworriedabouthousingnow,ascomparedwithwhenthecrisisfirsthit–howtogetit,howtokeepit,howtosellit,whentobuyit,whentosellit.Wheremost‘top’bankers

live,propertypricesarerising.OutsideofLondon,wheremostbankcustomerslive,theyarenot.Thefallshavebeengreatestsince2008inplaceswherethepropertypriceswerelowesttobeginwith,incitiessuchasHull,Belfast,GlasgowandSwansea.

NewlyrefurbishedflatsinSheffieldcanbeseentotheleft.TotherightoverthewalkwaysaretheoldParkHillflats,dwellingsthatare

currentlyundergoingredevelopment.Thegraffitionthewalkwayconnectingtheseblocksreads‘Iloveyou,willyoumarryme?’Itisnowbeingusedasanadvertisingslogantotrytoselltherefurbishedapartments,butasofspring2013

theyweresellingslowlyandthevastmajorityoftheblocksofflatsinthecomplexasawholewere

empty,awaitingredevelopmentmoniesthatappeartobeslowincoming.Theseiconic

buildingssitaboveSheffieldtrainstation,justtwohoursandfifteenminutes’journey-timefrom

theheartofLondon.IftheprivatehousingmarketrecoversinthenorthofEngland,theywillbetransformed.Ifitmovesonlyslowly,foryearsmostofthesepotentialhomesmayremainempty.Sheffieldhasaverylongwaitinglistforhousing.Thetaleofthemanwhosprayedthegraffitiandthewomanhepainteditfordidnotendhappily.ItfeaturedinaBBCRadio4play,broadcastafewyearsagotoentertainthe(mostly)middle-classlistenersofthatradiostation,thevery

peoplewhoarenowthetargetmarketforthoserefurbishedflats,flatsthatwereoncethe

crowningachievementofapasteraofslumclearance.Thewalkwaysweresowidethatthey

werecalledstreetsinthesky,andamilk-floatdrovealongthemeachmorningmaking

deliveriestotheoriginalworking-classtenants,whocouldnotbelievehowluckytheyweretolivethere.NowmosthomesinParkHillremain

derelict.

InFebruary2013theRoyalInstituteofCharteredSurveyorsannouncedacommissiontoinvestigatewhatevenitcalled‘theUKhousingcrisis’.69ThesurveyorsexplainedthatthefurtheryoutravelfromLondon,thelesspriceswereexpectedtoriseinfuture.Evenbeingoptimistic,‘InWales,priceswon’treturntotheiraveragepeakof£154,696until2021withthecurrentmarketvaluemorethan£20,000downtolessthan£132,000.’70Inrealterms,takingaccountofinflation,thisisapredictedpermanentfall.Many,includingthe

surveyors,considerahousing‘disaster’toconsistofafallingmarket,althoughsomealsowanttopreventhousingpricebubblesforming,sothatpeopledonotsufferintheconsequentfall.ThesurveyorswouldalsoliketoseetheestablishmentofsomeaffordableareastobuywithinLondon,where,bytheendof2013,increasesofupto30%werebeingreportedinthespaceofjustafewmonths.ButifpricesweretorisegreatlyinthepoorestpartsofLondonandinplacesthatarefurtherawayfromLondon,peopletherewouldhaveevenlesstospendthantheyalreadydo,followingtherecentfallsinaveragehouseholdincomes.71

Cheaperhousingcouldbebetter

housing,butnotbetterforspeculators.

Reactionwassurprisinglymutedwhen,inhisbudgetof21March2013,ChancellorGeorgeOsborne’smainannouncementsinvolvedonlythosenewpoliciestotrytoshoreupthehousingmarketdescribedinthefirstchapterofthisbook.Osbornewasfearfulofcontagion–theprospectoffallingpricesinthenorthofEngland,Wales,IrelandandScotlandspreadingsouthwards,threateningthestillbuoyanthousingmarketinthesouth-east.InresponsetoOsborne’sMarch

2013budget,AngelaBrady,thePresidentoftheRoyalInstituteofBritishArchitects,greetedtheChancellor’sannouncementby

saying:‘Theconstructionindustryshrankby8%lastyearandwearecontinuingtoseedisappointinglylowlevelsofhouse-building.’Andshecontinued:‘Althoughtheannouncementstodayforfurtherspendingonhousingandinfrastructurearetobewelcomed,it[sic]willbarelymakeadentinthedeliveryofthesustainablenewhomesandcommunitieswedesperatelyneed.’72NoonechallengedAngela.Nooneaskedwhyhomescouldnotbedeliveredatlowerprices,whyrisingpricesweresodesirabletoherandthevestedinterestssherepresented.Nooneappearedtopointouthowmuchitactuallycoststobuildahome:howmuchgoesinprofittoarchitects,tobuilders,tosurveyors’firmsand

theirbossesandshareholders–and,bycontrast,howmuchlessispaidtothelabourers,thepeopleontheground.And,asfarasIcantell,nooneinthemainstreammediarespondedtotheannouncementsbyaskingwhetherwemightnothaveagreatmanyhomesalready,homesthatarebeingunderused,andwhetherinatimeofausterityitmightbebettertotrytomakebetteruseofthemratherthanriskgovernmentmoneyontryingtoboostpricesintheprivatehousingmarket.As2013progressed,cynicismon

governmenthousingpolicygrew.PrivateEyenotedthatoneschemesetuptoencourage100,000newhomesaleshadonlyachieved1.5%ofthattargetnumber.73Thiswas

‘FirstBuy’,thecoalition’simmediatesuccessortoLabour’s‘HomeBuyDirect’scheme.Inbothschemes(andlaterin‘NewBuy’forallbuyers)governmentlentfirst-timebuyerswhowerenotontopincomesmostofthedepositonahome,sothattheycouldreallyoverextendthemselvesindebt.AlmostayearbeforePrivateEyeputthebootin,oneanalystremarked,‘Weshouldalsoquestiontheassertionthat,byencouragingfirst-timebuyers,thiswillsomehowhavealaxativeeffectonthecongestedmarket.Onceagain,thesearenew-builds,chain-freeproperties.’74Itwasperhapscriticismlikethis,suggestingthattheChancellor’sschemeswerehavinglittleinfluence,thatledOsbornetoboosttheschemesandtoofferto

underwritesomanymorebillionsfromJanuary2014onwards.TheChancellorknewhehadtodo

something.Astheeffectsoftheeconomiccrisisrippledout,housingacrossallsectorswasbeingimpactedoninnumerousdamagingways.Justashewaswritingthe2013budget,itbecameknownthatthenumberofstudentsgoingtouniversitieswasfalling,andaconglomerateofmajoruniversitystudentlandlordswasgoingbust.Oftenthesebankruptcieswerereportedasseparatelocalstories,soonlysomeonewithahousingobsessioncouldlinkthem.Forinstance,inNottingham,thelocalpressannouncedthat‘Aftersinking£48millionintothecomplextwomilesnorthofUniversityCampus,Opalhasgoneinto

administration.’75Butatleasttwentyverysimilarmajorlandlordssufferedthesamefateintheprecedingthreeweeks;thirteencompaniesinManchesteralonewentunderearlyin2013.76

Companiesthathadrecentlybuilthousing,inthiscaseuniversityhousing,werenotdoingwell.Enticementstobuildwhenmostfamiliesaregettingpoorer,byhelpingtoshoreupthelong-termdebtofthosefamilies,isunlikelytoaddmuchrealconfidencetothemarket,althoughitcaneasilyinjectashort-termboostbyhelpingthosewhoaredesperatetobuy–peoplewhocannotaffordtherepaymentsandwhowouldnormallyberejectedbythebanksforthatreason.Since2010throughto2013theaverage

hourlywageinBritainhasfallenby5.5%.ThisisoneofthelargestwagefallstobefoundacrossallofEurope.77OnlyinGreece,PortugalandtheNetherlandshavethefallsbeengreater,butinallofthosecountriestheaveragecostofhousingislower.Atthesametime,inLondon,morethan2,000bankersarepaidwelloveramillioneuroseachayear.InallofFranceonly162areonsuchsalaries,andinGermanyjust170,butthegoodnewsisthattherehavebeenslightfallsinthenumberofsuchhighlypaidLondonbankerssince2010,andtheiraveragesalarieshavefallento‘€1.44millionin2011,downfrom€2.3millionin2010’.78

Changeispossible,andithasinsomewaysbegun,butthosewhowanttoreturntotheoldwayshave

regroupedandareworkingveryhardtoholdbackthetide.Thatishardlysurprising,giventhat,ineffect,itiswhattheyarepaidtodo.Bankswillnotmakesuchgreatprofitsintheirgoodyearsinfutureifwedochangehowwebehavetowardshowwearehoused.Itisintheinterestsofthevast

majoritythatwechangehowwebehave–thatwechangethefoundationsofhowhousinghasbeenprovided,managed,exchanged,caredforandbuilt.Someofthatchangeisalreadybeginning.Fromself-buildschemestosquatting,asmallnumberofpeoplearehousingthemselvesdifferently,butgovernmentsarealsoslowlychanging.Theheadlinesaredominatedbythosetryingtokeep

theoldorderinplacejustalittlelonger,butawayfromtheheadlinespoliciesarebeginningtobeconsideredthatwouldtaxmansionsandotherexcessiveformsofhousingopulence.LegislationisalreadyinplaceinBritainthatallowsmortgageestostayintheirhomesandbecometenantstoavoideviction;itjustisn’tusedmuchanditneedsadapting,butitisthere.Therearealsoplansafootwithinsomepoliticalpartiestoincreasetenants’rights,79butthesemustbesetagainstplansbyotherstoreducetheirrights,increaseevictions,reintroducemassprivaterentingandletthealreadyrichgetevenricher.It’sabattlethattheminorityatthetopcurrentlyappearstobewinning.Toseehowtheyaredoingthat,we

needtoworkupfromthefoundationstoaskhowhousingisbuilt,financedandheld.

4

Building

HousesinLondonaresoexpensivethesedaysthatthemindsomewhatbogglesatthethoughtthatthereareactuallyenoughrichpeoplearoundtobuythemall.Andofcoursetherearen’t.It’salldebt.Thatspecialsortofdebtthatisperfectlyserviceableandsafejustsolongasnothingwhatsoeverchangesatall.Myexperience,though,is

everybody’sfuture.Housepricesaresoaringeverywhere,aidedbythelowinterestrateswecan’taffordtochangeandthegovernment’sbizarre,cynicalhelp-to-buyscheme.Homeownership,onceseenasaladderoutofpoverty,hasbecomeamillstoneofthemiddle.It’swhereallourmoneygoes,meaningthatitcan’tgo

anywhereelse,meaningthatwegroweverricheronpaper,butwithnothinglefttospend.Monetarysadhusweare,balancedprecariouslyonpilesofborrowedcash.

–HugoRifkind,Spectator,20131

WhenHugoRifkinddescribesthemiddleclassesofBritainassadhus–asceticmonkswhohaveleftbehindallmaterialattachments–becauseitcoststhemsomuchjusttopayforsomewheretosleep,heisperhapsexaggeratingalittle,butheisclearlyagitated.Rifkind,ahighlysuccessfulyoungjournalistfromafamilynotdevoidofmoneyandpower,isfindingithardtogetby.Housinghasbecomeeveryone’s

problem.Thisisyetanotherreasonwhythecurrentcrisisisleadingtoadisaster–oneinwhichcurrentacute

discomfortwithhowwearehousedturnsintodespair,assomanyofuscometoseethehousingelementinourcostoflivingriseevenhigher,oursecuritydeparting,ourlivingconditionsdeterioratingandevenourhealthsufferingif,asHugoputsit,wearebalancing‘precariouslyonpilesofborrowedcash’.Thisdisasterisdifferentfrompreviousnear-housingcrashes,evenfromthe1930sDepression.Atitsheartlienewextremesofavariceandignorance.Toseehowwegothere,goback

tobasics.Considerwhoholdsthelandonwhichmosthomesarebuilt,whytheydon’tbuildonallofit,andwhothebuildingisfor.Issuesofmigrationneedtobeconsidered.Ifimmigrationlevelsstaybuoyantand

emigrationlevelsdonotincrease,theneedfornewhousingtobebuiltinfuturewillcontinuetogrow.However,thetypeofhousingbeingbuiltandwhetheritisforrentoreventualownershipwillbestronglyinfluencedbywhethereconomicinequalitiesinBritainriseorfallinfuture.Greatereconomicequalityalsotendstocoincidewithhigher-qualityrentalpropertybeingmadeavailableatlowerpricesandwithlessprofitbeingdrawnoutofhousingsales.Similarly,theextenttowhichwebringemptypropertybackintouseandrenovateoldproperty,ratherthanbuildnew,willdependonchoicesyettobemade,andontheoverallpoliticaldirectionwewillcometotake.

InBritain,morethaninalmostanyotheraffluentcountry,thepreciselocationofpropertyisseentomattergreatly,because,increasingly,geographyrevealsthemostdetailaboutyourclass.Tenureisonlyaverycrudeclassdivider:owning/buyingorrenting/defaulting.Withinthehousingclasses,preciselywhereyoubuyorwhereyourentgivesawaymostoftherestofyourstatus.BecauseofthatwearenowcarefulnottodirectlyaskpeopleinBritainwheretheylivewhenwefirstmeetthem,justaswewereoncecarefulnottoaskdirectlyaboutanyreligiousbeliefs.Itusedtobewhetheryoulived

upstairsordownstairs,intheservants’quartersorthemaster’srooms,thatrevealedthemostabout

you.Then,aswebecamemoreequal,andboththeservantsandtheservant-keepingclassesdisappeared,suburbsbecamemoresimilar.Now,associalclassessegregateanew,whetherwebuildandwhatwebuildchangesagain.Sotherecentfateofdifferentgroups,fromthepoorestinLondontothesuperrich,alsohastobeconsidered.Towhatextentdoweputour

wealthintohousingbecauseourhousesdefineourstatusandsignalwhoweare?Agrowingpartofhousingisthematerialrealityandprojectionofthe‘profession’.Placeincreasinglyreflectstheperson,andeventhewaypeopledressnowreflectswheretheymostlikelylive.Putanotherway,mostpeoplecantellthatyouprobablyrentacheaper

propertyjustbylookingatyouroveralls.Conversely,ifthatsuitistailor-made,andthosearetherightkindofleathershoes,morelikelyyourmortgageisonadetachedhomeratherthanasemi,ifoutsideofLondon.InsidecentralLondon,someoneowningadetachedhousemightwelldressdown.Theyknowtheyarerich.Housingisintertwinedwithall

othersocial,economicandpoliticalissues.ConsiderhowattitudestoraceaffecthousingandeveninfluencehowmanyhomesarebuiltinBritain.Fearofnewcomersandalittleold-fashionedracismcanencouragegovernmentstorestrictlegalimmigrationevenfurther.WivesandhusbandsofBritishcitizensarenowlockedoutof

Britainunlesstheirincomeissubstantial.Governmentshavebeenknowntoencouragethefearofothers,asthisdistractsfromthestate’sownfailurestoprovideenoughschoolplaces,jobsandhomes.Itiseasytosuggestthattoofew

resourcesarethefaultofimmigrants.Apolicytofurtherreduceimmigration,ifeffective,wouldalsobeapolicytoreducetheneedfornewhome-buildingforanageingandshrinkingsociety.Butfurtherimmigrationcontrols,restrictingdemand,couldmakethehousingmarketevenmorevolatilethanitalreadyis.ThetopendoftheLondonhousingmarketisnowalmostcompletelyreliantonasteadystreamofnewrichimmigrant

‘investors’.Curtailtheirimmigration,tamperwiththeirnon-domstatusandpricesatthetopcouldcrash.ThebottomoftheprivaterentalmarketincitieslikeSheffieldissimilarlypartlyheldupbycontinuedimmigration,butinthiscaseofsomeofthepoorestpeopletoarrive.VolatilityinhousingpricesandrentsisnotnewtotheUK,butithasbeengrowinginmagnitudeinrecentdecades.Allkindsofsolutionshavebeensuggested.Manycommentatorstoday

advocatefewerplanningrestrictionsasonesolutiontotheproblemoftoofewhomes.Theywantmorebuildingonlanddesignatedasgreenbeltaswellastheliftingofotherrestrictions.TheypointtotheUSandtohowitshousingsector

survivedthelastdepression.ButintheUS,thegreatesteconomicbeneficiaryoftheSecondWorldWar,thestorywasdifferenttothatintheUK.There,the1930shouse-buildingboomwashelpedbythemotorcaropeningupwholenewswathesofgreenland–towhichvirtuallynogeographicalplanningrestrictionswereapplied.TheUKneverhadmuchopenspacebetweenitscities,sothetwocountries,inthisrespect,arenotcomparable.Financialrestrictionsonhousing

financewereputintoplaceinpost-DepressionAmerica,andtheirimpactwasalong-lastingone.In1933theGlass–SteagallActwaspassedbyCongresstostopbanksusingsavers’moneytogamblemadly.TheActpreventedbanks

fromsellingofftheirmortgageloansforotherstogamblewith;andbankshadtousesavers’moniestosupportthelendingtheydid.TheActhelpedtopreventarepeatofthewidespreadfraudthatoccurredintheyearsleadinguptothecrashof1929.Butitwasrepealedin1999followingextensivelobbyingbylargebanks.Thestoryofwhatfollowedisby

nowwellknown.Theeightyearsfollowing1999appearinhindsighttobeverymucharepeatoftheeightyearsleadingupto1929,theRoaringTwenties:‘Onceagain,banksoriginatedfraudulentloansandonceagaintheysoldthemtotheircustomersintheformofsecurities.Thebubblepeakedin2007andcollapsedin2008.’2

Between1933and1999therewere

nosimilargreatbankcrashesandnosimilarhousingmarketcrashesintheUnitedStates.Butthatdidnotmeanthatlessgeographicallyrestrictedhouse-buildingmeanthomesforeveryone.Itmeantmorehomes,andmorespaceinthosehomesformostpeople,untiltheearly1980s;butnothomesforall.Evenbeforewidespreadeconomic

inequalitiesroseagaintherewerespecificgroupswhowereclearlyverybadlyhousedinbothNorthAmericaandEurope.Post-war,USsuburbanizationcontinuedapacewithonlyoccasionalminordownturns,butitwassuburbanizationforthemajority.Bythe1970swhiteAmericanshadneverbeenbetterhoused.Thesamewastrueinthefarmorespatially

restrictedUK:bythe1970smostwhitepeoplehadalsoneverbeenbetterhoused.Butifyouwereblackitwasadifferentstory.Forexample,intheUSthegovernmentbackedloanstohomeownerstothetuneof$120billionbetween1934and1962,but98%ofthesewenttowhitepeople,despiteAfrican-Americansthenconstitutingatenthofthepopulation.3IntheUKitwasroutineinthe1970stoseesignsinlodging-roomandB&Bwindowssaying‘noblacks’.Allwasfarfromutopia,buttheroadtoutopiawasbeingwalked.IntheUK,planningrestrictions

werebroughtinaftertheSecondWorldWarthroughtheTownandCountryPlanningActof1947;asaresult,buildingbecameconcentratedinexistingurbanareas,and,initially,

mosthousingconstructionwasstate-plannedandstate-funded.Therewereafewexceptions,suchasthenewtowns,ofwhichthelargestwasMiltonKeynes,butlandsupplywasconsequentlystrictlycontrolledintheUK,unliketheUS.SomethinkthatthismayhavepreventedafallinhousepricesintheUKprivatesectorafter2008atatimewhenpricesintheUSwereplummeting,butitalsomeanslike-for-likehousingpricesareoftenhigherintheUKthanintheUS.IrelandandSpainfollowedtheUSmodelmoreclosely,allowingbuildingtotakeplacelargelyunfetteredbyplanning,and,possiblyasaconsequence,thosetwocountrieshavesofarexperiencedsomeofthegreatestdropsinhomepricesduringthehousingcrisis.

ItispossiblethatagreatfallinpricesfortheUKisyettocome,andthatthereadjustmenthasbeenpostponedonlybyextremegovernmentandBankofEnglandaction:thebailingoutofbanks;keepingthebankrateatnearzero;andthecreationofevermoreexpensiveschemestoencourageevergreaterprivateborrowing.ManybooksarecurrentlybeingpublishedsayingthatwhattheUSandUKgovernmentsaredoingisfolly.Whatismoststriking,however,ishowtheauthorsofthesebooksrangefromrevolutionariestoestateagents.Inonesuchbook,AndrewSmithers,aninvestmentmanager,suggeststhattheseattemptstoboostdemandwillnotwork,becausetherearelonger-termstructuralproblemsthatstretch

acrosstherichworld.4Totrytoworkoutwhichpointofviewismoreplausible–thatofthegovernment,orthatofitsmanyanddisparatecritics–weneedtolookatsomeofthebasicsofsupplyanddemand.

LANDANDMIGRANTS

Londonpropertypricesareracingaheadwithfigurestodayconfirmingthatthecityisskewingaveragesforthewholecountryhigher–butnotallareasofthecapitalarebooming.

–DailyMail,‘ThisisMoney’website,

17September20135

HousingpricesintheUKrosesixfoldfrom1983to2007,butlandpricesincreasedsixteenfold.6Similarpatternsarealwaysfoundwheneverandwhereverpeopleareallowedtohoardland,untaxed,andhousingis

allowedtobeaccruedasanassetratherthanbeingusedprimarilyforshelter.Whenhousingishoardedasanasset,whatiscalledits‘exchangevalue’,itsprice,startstoriseuntilthisfarexceedsits‘usevalue’,thepriceworthpayingjusttoliveinit.Ifahomeweresimplyworthwhatitcosttomaintainit,theprice-to-rentratiowouldbestable.Pricesrisemuchhigherwhenpeoplespeculateonthelikelihoodthattheywillriseevenhigherinthenearfuture.InMay2013theOrganisationfor

EconomicCo-operationandDevelopment(OECD)releasedareportsuggestingthataveragehousingpriceswerecurrentlyovervaluedby31%intheUKincomparisonwithrents,andby21%incomparisonwithincome.Put

simply,ourhousingpricesarehigherthancanbejustified,evenbyorthodoxeconomics.TheUKwasfoundnottobealoneinthelistofcountrieswherepropertywasnow,ingeneral,greatlyovervalued;but,accordingtotheOECD,inallthecountrieswheretherewereproblems,includingtheUK,‘thesecountriesareheavilyreliantontheirpropertymarketandhaveseenhouseholdsbuildupbigmortgagedebts.’7Inotherwordsthereiscontinuedwishfulthinkinggoingon.WhatisparticularlyinterestingaboutthisOECDreportisthatintheUKitwasgreetedwithoutscepticism,includingbynewspapersthatusuallyseektoboosthouseprices.ThequotefromthereportcitedabovewasreportedontheDailyMail’s

financialwebsite.Noweventhecommentariatontherightsaypricesaretoohigh.Agenerationofhomeownersis

delightedwiththeprofitstheyhaveapparentlymadesimplybyhavingsattightandwatchedthehousingmarketoverheat.Butnowtheyarebeginningtoworry.Somearebeginningtowonderwherethemoneyhascomefrom.Andsomeareconcludingthatithasbeenstolenfromthenextgeneration,whoarenowpayingforitthroughtheirhighrentsandhouseprices.Ifthenewspapersthatthemiddleclassreadalsoreaffirmthis,includingpapersonthepoliticalright,theuncertaintyoverwhetherhomesarereallyworththeircurrentpricetag

grows.Andhousepricefearspreadsintothegeneralpsyche.

Figure6.UKaveragelandpricesandhouseprices,1983–2009.

Somepeople‘generously’helptheirchildrenwiththeirdeposits.However,rarelyaretheamountsenoughforthenextgenerationtoacquireafirsthousethatisofthesamequalityastheoldergenerationhadenjoyed;noristhehelpusuallyenoughtoallowtheyoungergenerationtobuywithoutalsofirsthavingtosavemoneyoftheirown.Theaverageageoffirst-timebuyersisnowwidelyreportedtobepeopleintheirmid-thirties.Atwenty-five-yearmortgagemightnotbepaidoffuntilthebuyersreachtheirsixties,orlater.Insuchcircumstanceshousing‘consumers’begintoseethat,whenlandpricesrise,astheyhaverisenintheUK,someoneismakingamintoutofdoingnothingbutstartingoffrich.Onlythosewhostartoffrich

canowngreatquantitiesoflandandthenbuymore.Governmentministerspretendtheydisapproveofthis,buttheydolittleornothingtopreventit.Consider,forinstance,NickBoles,

theUKcoalitionPlanningMinister,who,in2012,said:‘Ithinkeveryonehastherighttolivesomewherethatisnotjustaffordablebutthatisbeautifulandhassomegreenspacenearby…abasicmoralright,likehealthcareandeducation.There’sarighttoahomewithalittlebitofgroundaroundittobringyourfamilyupin.’8Currently,however,thisvisionappearsalongwayoffformost.Maybeformostitismeanttoremainasavision,anaspiration,notareality,assomethingtospuronthosewhomightotherwisenotwork

hardenough.Thismaysoundabitharsh,butBolesmustknowthatforeveryonetohavesomegreenspacenearby,therichcannotbeallowedtocontinuetotakemoreandmoreofit.InBritainthelargeprivatehome-

buildersareknowntobehoardinglandforwhichplanningpermissiontobuildhasalreadybeenobtained.Theyarewaitinguntilitrisesinvalue.Thenthehomestheywillbuildonthatlandwillbeworthfarmore.Whatthebuilderslookatisevidencesuchasthegraphabove,showingthatUKland,by2007,wasworthsixteentimesmorethanitsvaluein1983.Evenaftertheadjustmentsfollowingthecrash,itwasstillworthatleasttentimesasmuchin2009asitwasintheearly1980s.Privatebuildersimaginethat

sucharisemighthappenagain,thatiftheysimplyholdontotheirlandandbuildononlyalittleofit,theymightmakeahundredfoldprofitonanearly1980sinvestment,ratherthanatenfoldprofitnow.Theybelieveanothertenfoldriseinfuturelandvalueswouldbringthisabout,buttheircalculationsdonottakeaccountofwhetheranyoneinthefuturewillbeabletoaffordtheseprices.Bysummer2013privatebuilders

hadsecuredplanningpermissiononenoughlandtobuild400,000homesinEngland,butnotoneofthosehomeshadbeenbuilt.ThatJunetheLabouroppositionleaderwasreportedassaying:‘Alloptionsshouldbeonthetable,includinggivinglocalauthoritiesrealpowerto

saytotheworstoffendersthattheyshouldeitherusetheland,orlosetheland.’9InresponsetheheadofoneofBritain’slargestbuilderssuggestedthat‘landisgenerallyinshortsupply.’10Theimplicationisthatsomeotherlandholdersarehoardingaswellasthebuilders,andthisencouragesthebuilderstohoardwhattheyholdtoo.Someofthelargestlandownersinthecountryarecomplicit,includingpensionfunds,utilitycompanies,theroyalfamily,theChurch,variouscharities,Oxbridgecolleges,membersofthearistocracyandotherrichlandowners.11Iflandisinshortsupply,itisonlybecauseweallowittobe;alandvaluetaxwouldencouragealltheseownersto

diversifyalittleoutofland,freeingmoretobebuiltupon.Onereasonwhylandroseinvalue

farfasterthanthehousingbuiltonitwasbecause,asincomesinBritainpolarized,therichgotsomuchricherfromtheveryearly1980sonwards.Therichsawlandasasafeinvestmentfortheirsurplusmoney.Theyjokeabouthowitisafixedresource;abouthownoonewillevermakemoreland.Thepriceoflandrosequicklyattimeswhenstockandshareswerenotgivingtherichsimilar‘returns’.Itwaspartlybecausetherichgotricherandspentmoreoftheirmoniesonlandthatthebuildersbegantowaitalittlelongerbeforebuildingtoreaptherewardsofinflation.Thereisnowoftenathree-orfour-yearperiodbetween

newlandpurchasesbybuildersandpropertyconstructionuponthatland.Buildingfastermighteasilylosethebuildingfirmanditsshareholdersmoneyifpricesarerising.Bywaitingforlandpricesand

hencetheapparentvalueofhomestorisefurther,thebuildersthemselvesarehelpingtoshoreupdemandandtocreatefurtherinflationinbothlandandhousingprices.Thisistheirjob.Theyareprivatebuilders.Theirjobistomakeasgreataprofitastheycan.Itisnotprimarilytobuildhomes.Ifitwere,theywouldbuildmore.Whathappenswhenbuildersdon’t

usethelandtheypossesstoincreasetheavailablehousingsupply?Onepossibility(butanunlikelyone)isthis:‘EmigrationfromtheUKrose,

upto353,000from336,000,withthenumberofpeopleleavingtheUKforadefinitejobupto127,000from108,000thepreviousyear.’12TheUKcouldbecomeamoreandmoreexpensiveplaceinwhichtolive.PeoplewhocannolongeraffordtoliveinsouthernEnglandmayhavetoleavetoliveincheapercountries,whilethoserichenoughtocomeinwillbeencouragedwithfurtherinducementstosettle.Itisunlikelythatfewermaymigrateinthanemigrateout,butthisiswhatthosewhowouldliketoseeBritaingothewayofSingaporeareactuallywishingfor.SingaporeisoneofthefewcountriesintherichworldwithhigherincomeinequalitiesthanthosetobefoundeitherintheUKorintheUS.Singaporemaintainsthisby

enticingwealthyincomersinwithtaxbreaksandensuringthatservantshiredfromoverseashavenorighttoremaininthecountryaftertheyarenolongerneededbythewealthy.EmigrationfromBritainrose

during2012whenratesofimmigrationtotheUKfell.Morepeoplewerestillcominginthangoingout,butthegapbetweenthosetwofigureswasfalling.Peoplemayleaveplacesifthereisnotenoughhousingthattheycanafford.TheymaylookatcheaperhousingpricesinmanypartsofboomingAustralia13

andinmostofNewZealandiftheywantmorespacefortheirmoney,moreroomsaswellasmoresunlight.Fewerthencometolivehere.Thereisacaseforbuildingmorehomes,ifjusttoreduceemigrationandaid

immigration,aninwardmovementoftheyoungandnottooexpensivelabourthatanageingBritainneeds.Manyelderlypeoplearesofrail

thattheyneedacarertovisitthemregularly.InJanuary2013GailFoster,anelderlywoman,diedwhenhercarerswerearrestedbytheUKBorderAgencyandsofailedtoturnuptofeedherforninedays.Theimmigrantswhohadbeenfeedingherweretobedeportedtohitgovernmenttargets.ItwasbecauseofthosetargetsthatMrsFoster,atageeighty-one,‘waslefttostarve’.14

Meanwhile,youngBritishpeoplearetoldthattheyneedtoaspiretothehighest-paidjobs,andmostknowtheywouldfindithardtosurvivelongonacarer’swage.Punditsoftensuggestthatgreaterimmigration

deprivesusofhousing,buttheyrarelyexplainhowgreaterimmigrationcanhelpuslivelongerandhappierlives.Wearealmostalwaysbetterhousedathomethaninahospitalbed.TheUKgovernmentwouldlike

peopleinBritaintoblamepoorerimmigrantsforthecostofhousingbeinghigh,notbankers,privatebuilders,landownersorspeculators.TheLabourPartytoyswithblamingimmigrationforvariouswoes,mostobviouslywhenittalksof‘BritishjobsforBritishworkers’:eventheGreenPartyhassomeelementswithinitthatseeimmigrationasaddingtogreenhouse-gasemissions.AndsomeLiberalDemocratsinTowerHamletshavedistributedleafletsthatlinkthearea’shousing

shortageswithblackandAsianpeople.15Puthousingandimmigrationtogetherandyougetatoxicmixinalmostanypolicyforum.Thecoalitiongovernmenthas

neverunderstoodthecaseforbuildinghomesforthegrowingnumbersofcompletelynewhouseholdsthatBritainshouldexpecttobehometointhenearfuture.Italsodoesnotunderstandthatanageingpopulationwouldbenefitfromaninfluxofyoungeradults.Instead,TheresaMay,theUKHomeSecretary,suggestedaroundChristmastime2012that‘Housepricescouldbe10%lowerovertwentyyearsifthegovernmentcutnetmigrationtozero.’Shesaidthiswithintwoweeksofthose

emigrationfiguresbeingreleased.16

ThestatisticswerethoseshowinganincreaseinthenumbersofpeopleleavingtheUK.Theyshowedthatalthoughnetimmigrationwasstillpositive,itwasfalling.Herimplicationwasthathousingpricesarehighnotbecauseofissuessuchasthehoardingoflandandtheloweringofmostpeople’sincomesduringausteritybutbecauseofimmigration.Shealsoassumesthattheelectorateshewantstoappealtoareinnumerateaswellasprejudiced.Areductionof10%overtwentyyears,ormuchlessthan0.5%ayear,isnegligible.LondonMayorBorisJohnson

rebuffedMay’scomment,sayingthat‘Idon’tthinkitissensibletosaythattokeepdownpropertyvalueswe

shouldkeeppeopleout,orinvestorsout,inordertoallowpropertyvaluestodecline.Thatwouldleadtoafallintheequityofeveryoneand,forthelifeofme,Icannotseethelogic.’17

WhenpeoplelikeBorisJohnson–orPlanningMinisterNickBolesforthatmatter–talkof‘everyone’,theydon’tmeantenants;orthoseabouttobuyatinflatedpricesinorderto‘getontothehousingladder’;orthosewhohavenoequity;orthoseincommunalestablishmentssuchasretirementhomes,prisons,militarybarracksorstudenthalls.Theymeanoutrightownersandpropertylandlords.Thetwogreateconomiccrashes

thatfollowedtheRoaringTwentiesandnever-had-it-so-goodnoughtieshavebeencomparedinsomedetail

earlierinthisbook.However,onegreatdifferencebetween1929andtheyearsafter2008intheUKisthat,whereasinthe1930stherewasagreatgrowthinhome-building,inthenoughties,sincethepeakyearof2006/7whenover192,000homeswerebuiltintheUK,therehasbeenacollapseinconstruction.Westillhavemorehomesandmoreroomsinhomesthanwehaveeverhad,butwearenowbuildingmoreslowlythanwehaveeverdone.Thesetwofactscould,ofcourse,berelated,butwearenotbuildingslowlybecauseeveryoneisnowwellhousedbutbecausebuildersarewaitingforthetimewhengreaterprofitsaretobemade.Theyhaveshareholderstosatisfyor,forthesmallerfirms,mouthstofeed.

By2011/12fewerthan110,000permanentdwellingswerebeingcompletedayearinBritain,andonly31%ofthosebyhousingassociationsforsocialrenting(socialrentingmeansdwellingstobereleasedforrentbelowsupposedlyfreemarketprices).Localauthorities,whichusedtobuildmorehousesthananyothersectorinsomeyears,builtjust2.7%ofallhomesinthe2011/12financialyear,fewerthan3,000intotalacrossalloftheUK,andathirdofthosewereinScotland!However,asfewas130councilhomeswerebuiltnationallyin2004/5,so,outofcontext,thisminusculeriseinbuildingcouldberepresentedasagreatincreasebyacynicalpolitician.18

Sometimestherecanbetoomanytoodramaticclaimsbeingmadeabouthowdirethecurrentsituationis.Thisbookhasprobablybeenguiltyofalittleofthat,andsoitisworthsteppingbackabit.Whenyouresearchissuesofhowmanyhomesarebeingbuiltyoucanquicklytireoftherepeatedclaimsthatrecentstatisticsaretheworstsincereliablerecordsbegan.Whatalmostnoonesaysisthat,evenwhileournew-buildratesslowed,thenumberofbedroomspotentiallyavailabletothepeopleofBritaincontinuedtoriseandrise.Wemaynotbebuildingthatmanymorenewdwellings,butwehaverapidlyaddedroomstowhatwealreadyhave.Extensionsweremostlybuiltto

turnthree-bedintofour-bedhomes,

atthesametimeasfamilysizescontinuedtofall.Oftenthoseextensionswerebuiltontohomesthathadbeenpurchasedthrough‘right-to-buy’,andnotontohomesthatremainedcouncilproperty.Preciseannualfiguresarehardtocomeby,butacomparisonofannualcensusreturnsforsmallareasshowsjusthowmanyroomshavebeenaddedoverthecourseofthelasttenyears.19Althoughitistruethatinparticularpartsofthecountryandwithinparticulartenures(say,smallercouncil-ownedproperty),overcrowdingrateshaveincreased,despitealltheroofconversionsandallthebuildingofbedroomsoverthegarage,thereare,nonetheless,morebedroomsoverallintheBritishhousingstocknowthantherewere

tenyearsago–moreperfamily,evenmoreperperson.Thosewhoargueforrenewed

home-buildingtendtoavoidlookingatwhysomuchoftheexistingstockofhousinginBritainissounderused,andhowmanypropertiescouldstillbeeasilyextended,shouldalittlemorespacebeneeded.Thosewhowouldliketoseemorebuildingnowareaverywidegroupofindividuals,rangingfromtheChancelloroftheExchequer,GeorgeOsborne,throughtotheBritishChambersofCommerce,theLabourPartyandthecharityShelter.20Butmostoftheseadvocatesofhouse-buildingprogrammestendtosaylittleaboutthewayexistinghousingstockisunderused–andverylittleabout

stockthatisn’tusedatall.Asonenewspaperfinancialeditorexplains:

Wefetishizetheideathatgranniesandgranddadsmuststayintheirfamilyhomesalltheirlife.Why?Sotheycancloseoffrooms,astheyaretooexpensivetoheat?It’sunderstandablethatpeoplehaveanemotionalattachmenttotheirhomes,andnoonecanorshouldbeforcedout.Theideaofspendingone’sfinalyearsinapokyone-bedflatwithnightmareneighbourshorrifiesmeasmuchasanybodyelse.Butadecent-sized,well-managedtwo-bedmansion-blockflat,alift,shopsandGPserviceswithinclosewalkingdistance?Nocartoworryabout,spaceforfamilytovisit,aparkclose

by?What’snottolike?21

There’squiteabitnottolikeaboutleaseholdmansionblocks:allmannerofhiddencostsinthewayofservicechargesandhugelumpsumsdemandedwithoutnoticefor

potentiallyfictitiousbuildingrepairs.Purchasingaleaseholdinsuchablockcanentailgreatinsecurity.ThisispartofthereasonwhymostofthesparehousingcapacityinBritainisnotheldinland-banks,norisitinboarded-uphomes.Oursparehousingcapacityis,infact,mostlyinhomesthatareonlyverypartiallyoccupied.LaterI’llprovidefigurestoshowthatmostbedroomsarenotsleptinmostnightsintheUK!Thisisnotbecausepeoplearesecretlysneakingoutoftheirbedroomandintosomeoneelse’sbed;itisbecausewehavesomanysparebedrooms.Wehaveenough,infact,toalloweveryfamilywithchildrenandeverychildlesscoupletohaveasparebedroom,withmanymoreleftspareafterthat.

Itisnotthatsingleelderlypeopleshouldbeforcedoutoflargerhomes.Almostallthatoccupysuchhomesownthemoutright.Butalmostanyencouragementtodownsizewouldhelpthesituationgreatly.Ifapersonforsomereasonwishestoliveinamansionfullofmanyemptybedroomsthatshouldbetheirright,butitwouldbefairiftheirlevelofcouncilorotherpropertytaxreflectedtheimpactthatexercisingthisrighthasoneveryoneelse.Atpresenttheyusuallyreceivea25%discountontheircounciltaxforbeingasingle-personhousehold.Thatdiscountdistortshowcounciltaxcouldbetterworkasanincentiveforeveryonetofitbetterintothestockwehave,buttherearemanyotherpoliciesthatareneededas

well.Ifmeasuresweretakentomoveeconomicactivity,governmentadministration,universitystudentplacesandmuchmoretowardsareaswithsurplushousing,andifunderoccupationwasdiscouragedbyrevisedpropertytaxation,everyoneinBritaincouldbeadequatelyhousedwithintheexistingstock.Theprinciplewouldbeakinto‘thepolluterpays’,butreplacetheword‘polluter’with‘hoarder’.Iamnotsayingthatmorehomes

beingbuiltwouldnothelp;Iamsayingthatmorehomesalonearenottheanswer.Thereisonescenario,alreadytoucheduponabove,whereitwouldmakesensetobeginagreathome-buildingprogramme,anditisascenariothatshouldnotbeignored,giventwocurrentglobaltrends:the

risingdominancebothoftheEnglishlanguageandofLondonasapointofattraction.IfmanymoremigrantsweretocometoBritain,muchmorehome-buildingwouldbeneeded.Shouldthegovernmentbeserious

aboutcurbingimmigration,orshouldtherestofEuropestarttouseEnglishfarmoreasthelanguageofbusinessinparticularcities,home-buildingintheUKwon’tsimplycease.Buildinghomesisalittlelikebuildingmotorwaysinanareawherepopulationgrowthhasbeenfalling.Ifyoubuildmoreroadsinsuchanarea,moreandmorepeoplewilldrivealone,andmorewilldrivefurtherandforlongertowork.HereinBritain,incontrastwithmoreequitableaffluentcountries,better-offcouplesoftenowntwohomes,

withonealmostalwaysempty.Thus,evenwithoutmorepeoplecoming,wecanfindusesformoredwellings,but,asourincomeandwealthinequalitiesgrow,theseareusuallynotveryefficientoroftenfairuses.Theanalogywithrisingsingle-

occupantcaruseisworththinkingaboutalittlelonger.Clearlyitisfarbettertohavefourpeopleinacarthanone.Alittlemorefuelisusedduetotheadditionalweight,butnotmuch,andmuchlessincomparisonwitheachofthosefourpeopledrivingtheirowncar.However,themorescatteredpeople’sjourneysbecome,andthemorereliantpeoplebecomeoncarsforotherpartsoftheirlives–toferrychildrentochildcareandlatertoandfromschool,forshoppingandfor

recreation–themorelikelyyouaretofindmorecars,oftenalmostallcars,withjustonepersoninthem.Thisiseventhecasewhenatsomepointstherearepassengersinthecaratthestartofthejourney.Oncetheschoolchildrenaredroppedoff,thedriverdrivesbackalone.Similarly,adwellingthatisjust

hometoonepersonisalmostasexpensivetoheatandlightasonebeingusedbyseveralpeople.Arowofsingle-occupanthomesresultsinarowofdustbinsallneedingtobeemptied,whilemanyseparatetelephoneandinternetconnectionsallneedtobemaintained.Separatewaterbills,aseparatesetofroofsandgutteringtobelookedafter:thecostperpersonoflow-densityoccupationisveryhigh.Noneof

thesepointsmeanthatitisnotpossibleformanypeopletolivealone,shouldtheywishto.Infact,itisinmoreequitableaffluentcountriesthatthehighestproportionsofsolo-dwellersarefound.Swedenhasthehighestproportionofanywhereintheworld:singleadultsoccupy47%ofallSwedishdwellings.InNorway,40%ofhouseholdshavejustoneresident,andinsimilarlyeconomicallyequitableJapanitis30%.22Butinallthosecountriesthisisachievedbynotwastingsomuchoftherestofthehousingstockthroughunderoccupancy,andbyhavinganincreasingproportionofdwellingsbeingbuiltfor(orconvertedfor)solo-use.23

BuildingmanymorehomeswithoutmanymorepeoplecomingintotheUKwillnotnecessarilyresultinreducedovercrowding.Alargepartofthereasonforthisisthat,aseconomicinequalitiesrise,poorerhouseholdsareforcedtocrowdintowhateverpropertytheycanget,allowingmoreaffluenthouseholdstospreadthemselvesoutamongstthestockthatisleft.Theaffluentarethenmorelikelytotrytoliveawayfromtheovercrowdedpoor,andsomovefurtherandfurtheroutoftown,ofteninnew-builthomes.Buttheystillneedtodriveortotakethetraintowork.Insuchcircumstances,toseewhathappensifweweretobuildmorehomesinsouthernEngland,say,itmayhelptolookatasurprisingsituationinan

ex-colony.ThistimeitisnotthetinyislandofSingapore,butthegiantcontinentalislandofAustralia.Australiashowswhatoccurswhen

therearefewrestrictionsonhome-building.Despitehavingarelativelylowpopulation,Australiahassomeofthelongestcommutetimesintheworld,becausethelackofplanningrestrictionshasresultedinverylow-densityhousingsprawl.What’smore,Sydneyhassomeofthehighesthousingpricesintheworld,becausetheprivatemarketwasallowedto‘finditslevel’,withoutmuchplanningorinterventiontoconsidertheaggregatenegativeeffectsofeveryindividualselfishaction.Onepersonchoosingtobuildahomewithalargegardendoesnotjustaffectthatoneperson.Everyone

whothenhastolivefurtheroutoftownhastodrivepastthatgarden.Multiplythisbymanythousandsofdreamone-acreplotsandyoueachspendthousandsofhoursofyourlifetimeinextraunnecessarydrivingpastalltheseenormousgardens,justtoalloweachofyoutogettospendafewhoursweedingyourverylargeshrubberies.Theconventionalwisdomin

housingresearchproposesthatthereisenoughpent-up‘demographic’demandtofillmorehomes,evenifnetimmigrationweretoreducetozero–especiallyintheoverheatedhousingmarketofsouth-eastEngland.Risingdemographicdemand–includingallthedivorcestocome,stayingsingleforeverandageing,whichwehopewewillgetto

enjoy–willcausehousingtobeusedupbythosewhocanaffordit.Aswelivelonger,therearemoreofusaroundtobehoused.Advocatesofthesimplisticfree-marketapproachsaythatrebalancinghousingsupply,asbuildersbuild,tomeetthislatentdemandshouldreducehouseprices,therebymakinghousingmoreaffordableandturninglatentdemandintoactualdemand;butthatworkswellonlywhenallconsumersareeconomicallymoreequal.Thetheorythatpriceswillfall

requiresanassumptionthat‘hoarders’ofvacanthousing,andofthespaceoccupiedbyverylargegardens(onwhichnewhousingcouldbebuilt),wouldputtheirstockandlandonthemarketiftheyfeltpriceswouldnotrisemuchfurtherin

future–thatis,ifnowwasexactlytherighttimetosellanddelaywouldmeanlosingout.ThispointoffallingpricesisrarelyachievedinBritainandusuallythenonlyfleetingly.However,thethreatofbeingtaxedinthenearfutureforhoardingspacewouldbeanevengreaterincentivetosellthanworryoverfallingfuturelandvalues;and,ofcourse,thethreatoflandtaxationshouldleadtolandvaluesfallinginfuture.Landuponwhichyoupayanannualtaxbecomesuneconomictoholdempty.Butamarketforsmallerhomes

forsmallerhouseholdsrequiresthosehouseholdstobeabletobuyandrentatlowerlevelsthannow–butnottoolow.Allthis,however,ignoreshowunevenlyincomeandwealth–andhenceeffectivedemand–isnow

distributedintheUK.Thegulfbetweenrichandpoorhasbecomesogreatthateitherincomesatthebottomhavetorise,orrentsandpriceshavetofallgreatly,beforetherecanbemuchreconciliation.Theusualsuggestiontothisquandaryissimplytoadvocatemorehome-building–muchmorebuilding.Civiccampaignstobuildareagain

growing.AtdifferenttimesintheUK’srecentandmoredistantpasttherehasbeenrisingandthenfallingpublicpressuretobuild.Todayonegroup,Audacity,arguesthatthereisaneedtobuildfivemillionhomeswithinthenexttenyears,whilealsodemolishingmanysubstandardhomesratherthanpatchingthemup.Audacitydoeshaveapoint:housing

doesn’tlastforever;itwearsout.AudacityseesinertiaastheresultofagreatcontractionintheUKhousingindustry.Itadvocatesareturntotheenergetichome-buildingthatwelasthadinthe1930s,1950sand1960s.Audacitysuggeststhatmost

peopleinBritainexpecttoowntheirhomesoncetheirmortgagesarepaidoff;orhopetogetonthehousingladder;orarealreadyoutrightowners.Thistrinityoftenuregroupsmakesupamajority,theyclaim,thatfavourssustainedhousepriceinflationsothattheycansubsequentlyraisecashbyreleasingequityintheirproperty.Theproblem,theysuggest,isthatamajoritythinktheywillbenefitfromtheladderitselfbeingraisedup.But

themajoritymaywellfindoutthattheyarewrong.Eventheveryphrase‘housing

ladder’entrenchestheideaofpropertyasaspeculation.ItimpliesthathousingisasuccessfulPonzischeme,oneinwhichearlierinvestors’profitscomedirectlyfromtheinputoflaterinvestors.Climbonboardandyoutoowilleventuallywinattheexpenseofsomesuckerbelowyou.ButallPonzischemeseventuallyfail.Everyonecannotgetrichquickattheexpenseoffuturepropertybuyers,especiallyaswehavebeenhavingfewerthantwochildrenpercoupleinBritainformanydecadesnow.Ponzischemesworkonlyforaslongasthereisareadyandeverlargersupplyofnewcustomerstobeduped.

Theyoungerhalfofthepopulationwillnotbenefitfromrisingrentsandhousingprices.Theyneedaffordableandcomfortablehomesforthemselvesnow,andvaluethisneedwayabovemakingafutureprofit.Butmanyyoungerpeoplecannotgeteventhat,whenamajorityoftheolderagegroup,andespeciallyafewmuchricherindividuals,areallowedtoprofitgreatly.Evenamongtheelderly,sustainedhousepriceinflationdividestherichpensioner,whocanleavetheirgrandchildrenafortune,fromthepoorpensionerswhorentandwillleaveverylittle.Theusualpatternofhousing

transitionsisthatpeopleendupstrugglingforhousingwhentheyareyoungandthenrattlearoundinoversizedpropertywhentheyare

old.However,fewerandfewerpeoplearenowaverageintheincometheyreceive;thispatternreliedonfarmorepredictableandfairlyrewardedemploymentthanwehavetoday,eveningouthousingfortunesoveralifetime.Itwillbemuchhardertosustainintothefuture.EvenifAudacityweretomanage

tocreateanenvironmentinwhichmanyhomescouldbebuiltquickly,ouremploymentprofilehaschangedsomuch,sorecently,thattheycouldnotsimplyallbeboughtbycouplesandindividualsbeinglentmoneyandpayingitbackinlargemonthlyinstalments(oftensome300suchpayments–twenty-fiveyearstimestwelvemonths)withoutfault!Youcannotjustbuildandexpectpeople

tobuy,reliably,whenyounolongeremploythemreliably.Furthermore,verylittlehousinginBritainissobadlydeterioratedthatitisattheendofitsfeasible‘life’.Wedon’tyethavetobuildthatmuchtoreplacewhathastobereplacedbecauseitcannotbemaintained.Onlysomereallybadly‘systembuilt’propertyfromthe1960sand1970sistooexpensivetorenovate.24

RENOVATIONANDREALITY

Full-scalerefurbishmentoftheentireUKhousingstockcouldsupport4.7millionjobsandadd£280billiontotheeconomy.

–Oxfam,201225

Itisoddthattodayithasbecomethejobofananti-povertycharitytorecognizehowrefurbishingproperty

tocreatebetterhousing,ratherthanbuildingsomuchanew,couldresultinabettersociety.TheUKgovernmentappearsunabletoseethelinks,letaloneact,promotingafewloft-insulationschemes,butnothingthatevenapproachesatenthofwhatOxfamsuggestsabove.Oxfam’sestimatesarederivedfromresearchcarriedoutbytheEnergySavingTrust,andOxfamitselfsaysamoremodestprogrammecouldalsobeimplemented.Thefullproposedprogrammeof

bringingexistingUKhousinguptoscratchwouldhavemassivelong-termbenefits,suchassaving£8.7billionayearondomesticenergybills,anditisestimatedthattheresultingcutsinCO2emissionswouldbe48milliontonnesayear.

Oxfamsuggeststhatinvestinginretrofittinghastheadvantageofcreatingjobsquickly;themoneyremainsintheUK,boostingtheeconomy;moreroomscouldbeaddedtopropertythatistoosmall;andtheenvironmentaldamagefromhugeamountsofnewbuildingisavoided.Reducingenvironmentaldamageisnotnecessarilyanabstractconcept.Forinstance,muchlandinthesouththatisn’tbuiltonisfloodplain.Itmakessensetoleaveitasthat,ifyouwishtoseefewerpropertiesfloodedeachyear.Governmentstendtobelievethat

property-ownersandproperty-buyers,landlordsandmortgagors,havesuchahugevestedinterestintheirpropertythattheywilllookafteritwell,buildingonlywhereitis

sensibletobuild,andmaintaininghousingtoagoodstandardtomaximizetheirrentorsaleprice.However,ifrenovatinghomesdoesnotincreasetheirsalevaluebymorethanthecostoftherenovation,theincentiveisnothigh,nomatterhowmuchsuchactionmightreduceenergyconsumptionandwasteinfuture.Forlandlordsthosearethetenants’problemsandcosts.Formortgagorsandoutrightowners,futuredifficultiesduetocurrentneglectaremostlytheproblemofthepeopletheywillbesellingonto.Asthehousingmarketinthesouth-eastofEnglandoverheatedinlatesummer2013,sellersdidnotevenbothertotidyuptheirpropertyforviewers,letalonepaintorplasterafewdodgywalls.Theyknewthey

couldsell,regardlessofhowtheirhomelooked,asbuyersweresoafraidofmissingtheboatwhenpricesrose.Justasindividualscannotbe

expectedtomaintaintheroadsurfaceoutsidetheirownhome,orworkouthowtomakeasewersystemoperatewell,sotoowecannotrelyonindividuals’self-interesttoensurethatweadequatelyrenewthehousingstock.Weneedtoensurethatwhatwehavelastsforlongerthanitotherwisewould,thatitisaswellinsulatedasitcanbe,andascomfortabletoliveinaspossible.Thathastobecoordinatedandproperlyplanned.Occasionallythereareschemessetuptohelplandlordsandpoorerhomeownerstorenovatetheirproperty,butastheystandthese

tendjusttosavelandlordsalittleexpense,andwhatwehavedonetodatehasnotresultedinveryhighstandardsofresidentialbuildingmaintenanceacrossthecountry.Peoplewhocometorentfromabroadareoftenshockedbythestateofwhattheyareoffered:byhowcoldmanyofourhomesare,howbadlysoundproofed,howbadlykeptup.Agovernmentwithadifferentset

ofprioritiescouldachieveagreatdeal.ImagineamoreenvironmentallyandsociallyawaregovernmentsimplycommittedtoachievingatenthoftheagendasuggestedbyOxfaminthequotationabove–generating470,000jobsinarefurbishmentprojectthatwouldsave‘just’£870millionayearon

energybills.Buttoactsosensibly,collectively,requiresbothlong-termplanningandpoliticalcourage,qualitiesthatcurrentlyappeartobeinshortsupply.Itrequirescouragebecausefinancialexpertsopposedtosuchcooperativeactionwillsayitiseconomicallyimpossible.‘Letthemarketfinditsownlevel’

istherepetitiverefrainoftheright,treatinghousingasifitwereacommodity,aconsumeritemthatshouldfinditscorrectprice,itsequilibriumlevel,throughtheapparent‘laws’ofsupplyanddemand.Thissupply-and-demandmechanismwill,sotheorthodoxargumentgoes,balanceoutpeopleandhousing.Shouldtherenotbeenoughhomesforpeople,theonlythingstoppingmorehomesbeing

builtmustbegovernmentregulationand,accordingtothiswayofthinking,lessregulationisthereforeneeded.Butthosecommentatorswhoconstantlycallforlessregulationignorethewaythatsomanyhomeswereprovidedinthepast:theywerebuiltbygovernment,orbuiltusingmonieslentorgiftedbygovernment.Theyalsoignorethefactthatpeopleareusuallybetterhousedinthoseaffluentcountriesthatpossesstightregulationandwell-plannedhousingarrangements.Theyignorethefailureofthemarketinthepasttosupplyenoughhousingofahighenoughquality,aswellasthepervasivenessofslumlandlordsandcowboybuilderswhenandwhereregulationisabsent.

ThisphotographshowsthefrontofaGeorgian-erahomeinSharrow,Sheffield,formerlyusedasasquat.Notehoweventhe

smallwindowabovethedoorhasbeenboardeduptomakere-entrymoredifficult.Whenwepasssuchhomesweneedtoaskwhytheyareboardedup.Theremaybemanysuperficialreasons,butunderlyingthoseishowwehavechosentoarrangeoureconomy.Themoreinequitably

incomeandwealtharedistributedinBritain,themorepeopletherewillbewhocannotaffordto

rentorbuy,andthemorehomeswillstandempty,waitingforsomeonewhocanaffordthem.

Squattingcanbeseenasanindicatorofahousingsystemincrisis.Theworsethenormalhousingsystemofallocatingpeopletohomesbecomes,themorepeoplewillsquat.Thenthemoredraconianwillbecomethedefencessetuptoprotectemptypropertyfrombeingusedby

squatters,untilthewholeexerciseceasestobeeconomicallysustainable.MillionsoffamiliesintheUnitedStatesare,ineffect,squatting:theynolongerpaythemortgage,butcontinuetolivein

theproperty.

Allthisbringsusbacktooneofthisbook’scentralpremises:thatthefundamentalprobleminBritain–

andinotherWesterncountries–isnotashortageofhomes.InJuly2012thepropertywebsiterightmove.co.ukrecordeda1.7%dropinhousepricesthatmonth,withtwofamiliestryingtosellforeveryfamilytryingtobuy.26Pricesfellbyafurther2.4%thefollowingmonth,andslightlyagaininSeptember;theynextroseby3.4%inOctober,butfellby2.6%inNovember,andthenbyafurther3.3%inDecember.Youmightthinkthatthiswasbecausethesummerisusuallyquieter,butbythenextsummer,thatof2013,priceswerereportedtoberisingagaininpartsofthesouth-eastandthosedropswereforgotten.Withinfivemonthsofhousingpricesfalling,therecordingofafewrisesinJulyandAugust2013resultedintalkofa

http://rightmove.co.uk

bubbleonceagainforming,talkreportedearlierinthepagesofthisbook.Then,September2013,fallswerereportedinpricesinWestminster(reportedbelowinthisbook),allofwhichfurtherillustratesjusthowvolatileisthetimethatwearelivingthrough.InJanuary2013nationalaverage

UKhousingpricesrosebyjust0.2%,buttheninFebruarylendingslumped‘bythebiggestmonthlyamountinmorethanfifteenyears’.27

Bothsalesandpricesweredown.IntheyeartoMarch2013therewasareported16%fallinthenumberofpropertiesbeingsoldatpricesofbetween£2millionand£3millioninLondon.28Threemonthslaterthesummernewspaperstalkedofeconomicrecoveryandthepricesof

fairlyaveragetwo-bedpropertiesincentralLondonsoonroutinelyexceeding£1million.29So,inMarch2013,wehadsupplyexceedingdemand,butbyAugustwehadfarmoredemandthansupplyformultimillion-poundLondonproperties.Theextremeendofthemarket

showsnicelyhowsimplesupplyanddemandbalancingdoesnotworkforgoodsasbulkyashousing.Itisnotpossibletoquicklyandeasilyproducemorehomeswhendemandrises,especiallywhenitcomestohomesinthecentreofLondon.Butthere,atleast,demandismoreaboutspeculationandinvestmentthanneed,althoughmanypeopledoneedtobeabletosleepclosetothecentreofthecapitaltodothejobstheydo.

Conversely,whenpricesfallitisnotsimplyamatterofstabilizingtheprice,especiallywhenpeoplehavetomovehomebetweencitiesforanewjob,retirementortohouseagrowingfamily.Realhousingdemandincreasesas

familiessplitup;asjobsarecreatedinanareaandpeoplemovein;asmorechildrenbecomeadultsandwanttoleavehometostarttheirownfamily.Whenasinglehouseholdiscreatedbythemergingofhouseholds,demandfalls,buttwohouseholdssqueezingintoonehomeisrare.Itcanoccurwhenseparatedparentsmeetnewpartnersandmoveinwiththem,bringingthechildrentogethertocreateanewmergedfamily,butthatrequiresmorespaceinitself.

Supplyisreducedwhenin-migrationtoanareaandthesplittingofhouseholdswithinitexceedthenumbersofpropertiesbecomingvacantduetoout-migrationfromanarea,movesintoretirementhomesorsimplythedeathsofoccupants.However,realhousingdemandisoftennotbackedbythefinanceneededtomakeit‘effective’demand.Partofthereasonthatwethinkwe

needmorehousingbuiltnowisthatsomanyfamiliesdivorceanddonotquicklyreconstituteintonewfamilies.Areconstitutedfamilyconsistsofacouple,wheresomeofthechildrenarehis,andsomearehers.Beforethereisanychanceofsuchreconstitutionofsplit-uphouseholdsintonewhouseholds,

moreandmorechildrenhaveabedroomatMum’s,andalsooneatDad’s.Familiessplittingupandnewfamiliesbeingformedmeanthatweneedmorespaceinourhousingsystemasawholetofacilitatethemusical-chairsgameofsortingourselvesintonewrelationships.Higherratesofseparationrequiremorespaceinhousing.Andpeoplearemorelikelytoseparateduringafinancialcrisis,whengreaterunemploymentandprecariousemploymentaddtoeveryone’sstress.Analternativejoined-uphousing

andemploymentpolicyshouldrecognizethattheincreaseinincomeinequalitysince1970meanswenowusehousesfarmoreinefficiently:notonlydivorcingcouples,butsecond-,

third-andfourth-homeowners;couples(andevensingleadults)withnochildrenbutlargedwellings;andthoseoccupyingprivate-sectorfamilyhouseswithmanysparebedrooms.Thegrowthofallthesenewhouseholdconfigurations,farmorethananincreaseinpopulation,contributesgreatlytoouroverallhousingshortage;thisisthenexacerbatedbyrichandsuper-richmultiple-homepurchasing;moreandmorepropertythatisoftenleftvacant.Alltheseproblemsareenhancedasmoreandmoreofthepopulationtriestofitintothesouth-eastofEngland,wherethereisthefewestnumberofhomesforsaleforthosewhoneedthemthemost.

Neweco-homesbuiltintheArbourthorneneighbourhoodinsouth-eastSheffield.Notethesolarpanelstiltingtothesunontheroofofthepropertyfurthestaway.InthenorthofEnglandyouneedmoreofanangularadvantagethaninthesouthtocatchenoughsunlight.Homesbuiltwiththelong-terminterestsofourenvironment

inmindareoftendismissedascostlyextravagances,butiftheextraeffortrequiredtoavoididentikitmodernboxesisqualifiedmainlyasanincreaseinlabourcosts,thenbuildingeco-homescancreatemorejobsperhomebuiltthanconventionalconstruction.Changinghowwebuildwilltaketime.Forhomeslikethistobe

builtingreaternumbersinplaceslikeArbourthorne,uponlandthathasbeenusedforbuildingonintherecentpast,thereneedtobe

morenewjobsinSheffieldandfewernewjobsinthesouthofEngland,wherealmostalltheexpansesofsparelandarenowgreenbelt.

Notethatthispointaboutunder-useoftheexistinghousinginBritainhasalmostnothingtodowiththeBedroomTaxbeingappliedtoworking-agesocialhousingtenants,

whoonaverageusehousingmostefficientlyofall.Itisaboutthepeoplewhohavelittleneedformuchofthespacetheyhave,notjustoneextrabedroom,butmuchmorethattheycanaffordtokeepvacant.AlmostalltheemptypropertyintheUKisownedbysomeonewhoknowsitisempty,justasmuchofthehousingindisrepairisownedbysomeonewhocouldrepairit,shouldtheychooseto.Ifalandlordclaimsthathedoesnothavethemoneyneededtorefurbishahome,asktowhatuseheputstherenthereceivesfromhisproperties.Maintainingagoodstockof

housingisnotjustaboutbuildingreplacementpropertiesforthoseworn-outoldhomes.Itisasmuchaboutrepairingandmaintaining

existingproperty;homescanberepairedandrefittedtoremainfitforpurposewellbeyondtheiroriginaldesigndate.Oftenpropertyisleftemptybecausetheownerhasnotbotheredtogetaroundtodecoratingittorentout.Butnewpolicyisnotencouragingthis.On15November2012theBritishgovernmentchangedthelawonemptyproperties,sothattheycouldbeleftemptybytheirownersforuptotwoyearsbeforeanyactionmightbetakenbyalocalauthority;previouslySection134(2)(a)oftheHousingAct2004,madelawbytheLabourgovernment,hadmandatedsixmonths.30

Governmentshavenotbeenentirelytoothlesswhenitcomestotheneedtotrytobringemptyandabandonedpropertybackintouse.

Butwhenonegovernmentfinallywasalittlebitinnovativeandintroducedalawgivinglocalauthoritiesthepowertointervene,thenextgovernmentquicklywatereddownthatlaw.Previouslytheauthoritieswereallowedtointerveneifnothingwasdonetowhatappearedtobeanabandoneddwellingspace,inanareawheretherewashousingneed.Thechangeinthislawwill,ofcourse,allowperfectlyrenovatedpropertytostandemptyforlongernow;theownercandeliberatelynotmarketthepropertyiftheysodesire.Thepointoftheprevioushalf-yearlimitwastoencouragethosewithemptypropertiestorentthemout,and,iftheyneededrenovationordecoration,todothatquickly,beforethelocalauthoritytookoverthe

property.Changingthetimelimittotwoyearsencourageslandlordstotaketheirtime.Itencouragesmorehoardingofemptyproperty.Itkeepsupthepriceofthatpropertyandmakeshousingintotalmoreexpensive.The‘useitorloseitaftersixmonths’policy,ifbetterenactedratherthansimplybeingrescinded,wouldhelppeopletolearnnottohoardandbringdownprices,withrentsthencomingdownasaconsequence.Clearly,ensuringthatemptyand

dilapidatedhousingisquicklybroughtuptoscratchisnotacurrentpolicypriority;governmentsdon’ttendtogetplauditsforensuringthatflimsysingleglazingisreplacedbydoubleglazing,encouraginginsulationofcavitywallsandroofs,

andsoon.Sociallandlordscannowgetgrantstoinsulate,fundedfromthegreenleviesonfuelbills,butsuchgrantswerebeingcuttowardstheendof2013,notlongaftertheywereintroduced.31Votersdonotappeartorecognizethatagovernmentthathelpedtoensurethatlesshousingwasemptywouldhelpeveryonefitinmoreeasily.This–theeverydayrealityoftheupkeep,fillingandmodernizingofourhousingstock–soundslikebureaucraticred-tapeandappearstobefarlessofaheadline-grabbinginitiativethan‘buildingnewhomes’.Yettheseareinitiativesthatgovernmentsmighteasilyimplementmorewidelyandthatallalreadyexistinalimitedform.

Itisunlikelythatthepartiesthatformthecurrentgovernmentthinktheywilllosemorevotesfromlandlordsthangainthemfromprospectivetenants.Therearemanymoretenantsandprospectivetenants,incomparisonwiththenumberoflandlords.Ithasbeensuggestedthatasfewas2%ofallpeopleinBritainarelandlords.32

Why,then,doesgovernmentallowsomuchpropertythatcouldberentedouttobeleftstandingemptyforsolong?Whydoesitfailtoensurethatprivatepropertyisbroughtuptoarentablestandardifthebuildingbecomesemptyformorethansixmonths?Itishardnottoconcludethatwhenministersincreasedthetimelimitbeforealocalauthoritycouldacttheydidso

becauseoflobbyingfromafewveryrichandverywell-connectedpeoplewithvestedinterests–thosewhowantedtobefreetokeepalotoftheirpropertyemptyuntilthemarketwasrightforthem,thosewhoownmorepropertythantheyneed.Whatotherreasoncouldtherebe?Whenonegenerationor

governmentneglectsthemaintenanceofhousing,therepairbillforthenextgrowsdisproportionately.Britain’sNewLabourgovernmentreceivedlittleacknowledgementforallthehomesitensuredweremadedecentwhileitheldoffice,housingthathadsuffereddecadesofneglect.True,itdidnotboastaboutthefigures,probablybecauseitdidnotwanttobeseentobeespeciallyfavouringLabour’s

moretraditionalsupporters,thosewhohavetheleast.However,Labourcouldhavemadewiderargumentstodefenditslargerepairprogrammeofsomuchsocialhousingbetweentheyears1997and2010.Keepinghousingingoodrepairisremarkablymoreenvironmentallyefficientincomparisonwithdemolitionandrebuilding.Concreteproductionisamongthemainsourcesofcarbonpollutionworldwide.Large-scalerefurbishment

schemesdofarmorethanimprovethestateofmanyindividualhouses.Theycanrevitalizesinkestates,ensuretheupkeepoflong-establishedroadsandsewersbuiltdecadesago,andavoidtheneedforbuildingongreenfieldsites.Wherethesituationisoneofextremedecay,

therefurbishmentsolutionscanbemoreradical.NarrowVictorianterracedhousingcanbeadaptedbyknockingdoorsthroughthewallsandconvertingtwotinypropertiesintoonedesirableone.ThishasbeendoneinseveralpartsofthenorthofEngland,whereotherwisetheterracesmayhavefaceddemolition.But,ofcourse,thequestionofrepairinghomesdependsnotonengineeringbutoneconomics.Duringtheslumclearancesofthe1960slargeswathesoftheLondonboroughofIslington–largelynineteenth-centuryurbandevelopment–wereearmarkedfordemolition.Protestersandlocalresidentsfoughtagainsttheplansandwon.Now,muchofthatoldhousing,oncedestinedfor

demolition,isamongsomeofthemostexpensiveintheworld.However,theeconomicsofpreservingandrenovatingnineteenth-centuryhousinginthenorthofEngland,Wales,NorthernIrelandandScotlandbecomeharderandhardertosustainasthecountrytipseconomicallyonitsaxis,weigheddownbythegrowingpaperwealthofthesouth.Thevalueofsomenorthernterracesisnowsolowthatknockingtwointoone,inplaceswheretherearefewerandfewerjobs,onlyproducesgood-sizedhousesinareaswherepeoplearenolongerabletolive.Agood-sizedhouseinthepoorestpartsofthenorthisnotworththatmuchinmonetaryterms,butitisworthalotassomewheretocallhome.

Decayingstockcanbemaintained–eventherustedironwall-tiesthatkeptthebrickworkofmanyveryoldhomesstraightinthepastandultimatelystopahousecollapsingcanbereplaced–ifthereisawill.But,ifyouleaveallthistothemarket,ratherthanlistentoprotestersandothersadvocatingadifferentpolicy,millionswillbespentonprivatelyretainingandgreatlyimprovingthedecorationofjustatinyproportionofthenationalstock–moneythatcouldhavebeenbetterspentspreadoverfarmoreproperties.Itisnotaneither/orsituation,butcurrentlyadisproportionateshareofthenations’buildersareworkingonmakeoversofmansionsthathavenotevenhadtimetobecomeslightlyshabbysince

theywerelastredecorated,ratherthanspreadingtheirworkovertheentirestock.Abetterpublic/privatemixofbuildingandrenovationisneeded.Bothprotestersandplannerscan

helptoimprovehousing.Protestershavehelpedbyprotectingdecentoldstockfromdemolition,asin1960sIslington;orbyhighlightingwhenoldcouncilestatesareturnedovertospeculatorswhowishtobuildofficeblocks;orbyspraypaintingthewindowsofestateagentsmovingintoanareatotrytogentrifyitbeyondthereachoflocals’budgets.Planningregulationsareoftenblamedforlimitinghousingsupply,buttheyalsoensurethathomesareproperlyproportionedsothat,forexample,theycanaccommodate

wheelchairs.Asanageingpopulation,farmoreofuswillbeinthosechairsinfuture.Farmoreofuswilllivelongenoughtospendourfinalyearssufferingfromdisabilities,includingoftenbecomingblind.Inwhatkindofahomedoyouwanttoliveandgrowold?Whenitcomestohowweare

housed,it’sworththinkingnotjustofthepropertywemightoccupy,butofthesortofneighbourhoodswherewemightwanttolive.Doyouwanttoenjoyonethathasbeenplannedandcaredfor;aplacewherepeoplehaveworkedtoensurethatthereareenoughjobs,enoughschoolsandenoughshopsnearby–orjustaneighbourhoodwherepeoplepoorerthanyoucannotaffordtolive,and

peoplericherthanyouwouldnotwanttolive?

LOCATION,LOCATION

MostinnerLondonboroughsarelikelytobecomealmostentirelyunaffordabletolow-incometenantsonLHA[LocalHousingAllowance]by2016…Theareaswhichremainaffordablearecharacterizedbyhighratesofmultipledeprivationandunemploymentamongtheexistingpopulation.Weconcludethatthereformswillintensifythespatialconcentrationofdisadvantageinthecity,andincreasethesegregationofpoorandbetter-offhouseholdswithinLondon.

–AlexFenton,CambridgeCentreforHousing

andPlanningResearch,201133

Thewayinwhichwechoosetoarrangeandchangeourhousingdeterminesthewayinwhichwelive.

IntheUKwearecurrentlychoosingpoliticianswhohaveatrackrecordofpickingpoliciesthatpolarizesociety.Itmaybetheprevailingpoliticalcultureofourtimes,ratherthantheindividualpoliticiansthemselves,buttheeffectofourrecentchoiceshasbeentorewardgreatselfishness,orwhattheymightcallaspiration,whichtheninturnmakesusallwanttoaspiretohavingmuchmore,ofwinningsomelottery.Thequoteaboveisfromthe

conclusionofafarsighted2011reportwrittenbyanacademicthenbasedattheUniversityofCambridge.ThepolarizationthatAlexFentontalksaboutisnotjustcurrentlyoccurringinLondon,orjustinthesouth-east,orevenjustintheUKmorebroadly.ButtheUK

situationisespeciallytelling,becauseitillustrateswhathappenswhensocietiesgrowincreasinglyunequal.Londonisaheadofthecurvewhenitcomestohousingpolicythatincreasesinequalities.ItisthemosteconomicallyunequalcityinBritain,and–bywealthdistribution–possiblythemostunequalintheentirerichworld.Withinlessthanayearofthe

coalitiongovernmentgainingpowerin2010,storieshadbeguntocirculatethatmanyofLondon’spoorweresoontoberehousedoutsidethecity.Thismostrecentattackonthepoor,whichbecameanissueofsegregation,happenedfirstandmostferociouslyinLondon,becauseitisinLondonthatmoreroomisrequiredforthemiddleandnew

upperclassesofthecountry,andwheretheyincreasinglyneedtobe.34

Overrecentdecadestheproportionofupper-classindividualslivingoutsideofthecapital,initscommutinghinterland,hasfallen.Itisnotjustthatpartsofthecapitalaregentrifying,butthatthecapitalasawholeisbecomingmuchposher.35

Forthistohappen,fewerofthosewithlesscanbeallowedtoremainthere.Perhapsthosewhocanstaywillsoonbetermed‘thedeservingfew’.TheimplicationofrecentnuancesinofficialdocumentsisthatinsomepartsofLondonpoorerpeoplewillhavetoworkharderfortheprivilegeofcontinuingtoliveintheirhomes,aprivilegethatcouldbereconsideredandrenewedannuallybycouncilofficers.Recentlya

documentleakedfromHammersmithandFulhamBoroughCouncilexplainedthatfromnowon‘Asocialhousingtenancywillneedtobeearnedanditsretentionworkedat.Itwillnolongernecessarilybepassedfromonegenerationtothenext.’36Inotherwords,ifyouareacouncilhometenantinthatborough,thegrown-upchildwithlearningdifficultieswhohaslivedwithyoufortheirentirelifemaybeevictedfromtheirhomewhenyou,thecurrenttenant,die.Evenbeforethatpoint,however,youtoomightbeevicted,togotoliveinamoredown-at-heelborough,ifyoudonotcontinuouslycomeuptoscratchinsomeway.Thesameisnottruefortheprivatesector,where,atleastoutsidemostofLondon,modest

homes–thosewhosevaluefallsbelowtheinheritancetaxthreshold(lessthan£325,000)–canbepassedontogrown-upchildrenwhoalsoresideonlyinthatpropertywithoutthefearthattheywillbeevictedupontheirparent’sdeath.Thenewedictsinplacessuchas

HammersmithandFulhamBoroughCouncilsuggestthatsocialhousinginBritainmaybebecomingagifttobebestowedonthosewhoinfuturedofftheircapswellenoughtoretaintheirhome.Iftheirchildrendonotshowsimilarrespect,donot(toparaphrasefromabove)‘earntheretentionoftheirhomebyworkingatit’,theywillhavetoleavetheparish(theborough).Workingatitmightmeanneverbreakingthelaw,gainingabetterjobtopaythehigherrent,

gettingcreditfromdoingabitofvoluntarycommunityservice.Thisisareturntoolder,poorersetsofrightsandlaws.TheleakedHammersmithandFulhamdocumentclaimedthatthesemeasureswereneededfor‘TacklingEconomicandSocialPolarization’.Inonewaytheywill.Aboroughbecomeslesspolarizedifyouevictthepoor.Asrentsrise,butthelocalhousingallowances,thehousingbenefitlevels,donotkeeppace,hundredsoffamilieswillberelocatedfromLondontotownssuchasStokeonTrent,Liverpool,Middlesbroughandfurthernorthandwest.Evenifthisdoesnothappendirectly,itwilloccurindirectly.

AterracedstreetintheSharrowneighbourhoodofSheffieldshowing,inthedistance,oneaddedskylight.Forgenerationsthewayinwhichwehavebuiltandadaptedhousinghasreflectedoursocialstructures.Mostofthehomesthatwerebuiltearlyinourhistorywerepeasanthovels,ofwhichlittleevidenceremains.Thenmoresolidhomeswerebuiltfortheworkingclasses,oftenslightlylargerpropertiesonstreetcornersfor

foremen’sfamilies.Todayhomeswherethefrontdooropensdirectlyontothestreetareseenaslessdesirable,whereasoncetheywerecoveted–

betterthanlivingupanalleyinarookery.However,placethehousespicturedaboveonastreetinLondon’sNottingHillandsuddenly,miraculously,theywouldagainbeseenas

wonderfulhomestolivein,especiallyfortheuppermiddleclassandtheupperclass,andtherewouldbemanymoreexpensiveloftconversionsandskylightsputin.Theextenttowhichallthisiscommonsensetoyou,orarevelation,dependsverymuchonwhereyoulive,inwhatkindofhousing,andhowoldyouare.Thelocationofapropertychangesthenatureofthatproperty.Whenhousingbecomessegregated,itisnot

becauseofthehousingbutratherbecauseofthechangesinsociety,theeconomyandthepoliticsintheplaceswherethathousinghappenstobe.

WithinBritain(andmuchoftherestofEurope)thedebateoversegregation,aboutwhodeservesandwishestobehousedwhere,isnotonlyaboutrichandpoor,butaboutblackandwhite.Inmanylocalitiesthisnowincreasinglytranslatesinto‘Muslim’and‘non-Muslim’.RespondingtocommentsbyTrevorKavanagh,politicaleditoroftheSun,oneacademicexplainedearlyin2013thatthereiswidespreadconfusionoverthecurrentdirectionofsegregationinhousinginBritaintoday.HepointedoutthatKavanagh’ssuggestionthatMuslimsinBritainweregeographicallysegregatedwasnot,ingeneral,happening;thatwhereitwashappeningitwasnotnecessarilybecauseofreligion;and,evenifit

wereduetothat,thatwouldnotnecessarilybeaproblem.He,RobFord,thenfinishedhisargumentbypointingoutthatKavanaghdidnotappeartobesuggestingasolutiontothestrawproblemthathehadcreated.Itisacomplexargumentbutworthfollowingup,becausethecurrentperniciousclaimthatMuslimsareleadingevermoreparallellivesintheUK,includingbecomingevermoresegregatedbywheretheylive,issodamaging.Thesesuggestionsofgrowingself-segregationandchoosingparallellivesarerepeatedlymadeandrestated.RobFordwentontoexplainthat:

Evenifsegregationwereaproblem(whichitgenerallyisnot),itisnotclearwhatwouldsatisfyKavanaghas

asolution.MaybeMuslimscouldintegratebymovingawayfromareaswheretheyareconcentratedtowardsmorehomogeneouslywhiteareas,somethingUniversityofManchestercensusanalystshaveshownallethnicminoritygroupshavebeendoing?Thiswon’tdoforKavanagh,whoattacksitasMuslims‘colonizingthesuburbs’.LeavingasidetheabsurdlabellingofpeopleoftenbornandraisedinBritainas‘colonizers’,itisnotobviouswhatMuslimscaughtinKavanagh’sIslamophobiccatch-22aresupposedtodo.Iftheystayintheinnercityareastowhichtheirfamiliesfirstmigrated,theyareattackedassettingupsegregated‘IslamicRepublics’.Iftheysetoutforthesuburbs,theyareattackedas‘colonizers’lookingtoimposetheir

valuesonothers.37

ThereisagroupthathascolonizedhousinginBritain.Itistrue.Buttheyare(mostly)notimmigrants,andhardlyanyofthemareMuslim.

Between2006and2009thechancesofpeopleagedoversixty-five,theaffluentelderly,inBritainbecomingafull(mortgagepaidoff)owner-occupierincreasedslightly,despitetheoverallproportionofhouseholdswithamortgageorbeingoutrightownersdecliningsinceatleast2002.38Butthereisasubgroupwithinthegroupofelderlyandmiddle-agedfamiliesthatdoesbetterthanthis:theveryrich,especiallythesuper-rich,whobuypropertiesthroughtheircompanies.Sometimesthesecompaniesare‘service’companies,setup(legally)forthepurposesoftaxavoidance.Housesarepurchasedbytheservicecompanyas‘assets’;andthecostsassociatedwithdoingthemupareoffsetas‘liabilities’.Theearningsof

thericharepaidintothecompanytoo,andsooftenverylittleornoincometaxispaidbytheseveryrichindividualsasaresultoftheirpropertypurchase,inwhichtheymight,ormightnot,choosetoreside.Thesuper-richdowellwhether

theyareyoungorold.Theyoftenpaynocapitalgainstaxaslongastheyuseanoffshore-basedcompany;theypaynoinheritancetaxiftheyclaim‘non-dom’(not‘domiciled’)status;and,iftheysetuptheirowncompany,nostampduty,astheyarenotbuyingorsellingahomebuttransferringsharesinacompany(aslongastheycanfindawayofclaimingthatthepropertyisnotaresidentialhome).Suchatransferwouldnormallyattracta0.5%tax,butnotforthesuper-rich;theyknow

whattheyaredoing.Manyuseanoffshoretrust,especiallyifbuyingpropertyworthover£2million,which,sinceMarch2012,shouldattract7%stampduty.Thecoalitiongovernmentsaysit

hasbeentryingtotackletheavoidanceofstampduty–butitsrateofprogresshasbeenextremelyslow.Forcertaincorporatebodiesthereareevenwaysaroundtheintroductionofanew15%top-endstampdutyrate.Thatrateshould,intheory,makeprimelocationincentralLondonalittlelessattractive,dampeningdownpricesandhelpingtoensureplacesfurtherafieldinthesouth-eastbecomeafractionmoreaffordable(assomeofthosedisplacedfromcentralLondonmovebackinwards).But,upuntilautumn

2013atleast,thathasnothappened.Perhapsthisisbecausethecontinuationofmanyotherloopholeswill‘enabletheresidentsofatotalof£760millionworthofproperty[ayear]toavoidBritishcapitalgainsandinheritancetax’.39Therichgetricher,thoseinthemiddlepaymortgageinterest,andthepoorcanonlydreamofdoingso.Asaproportionoftheirincome,thepoorarenowpayingthemostforthehousingtheyget.Thepoorpaythemosttobe

housedbecausetheyrent.Theynevergettoownthehomestheylivein.Theyalsoincreasinglyfrequentlysuffertheindignityofbeingpaidsuchlowwagesthattheirrentispaidforthembythestate,implyingthattheycannotpaytheirway,whilethe

factisthattheyaredenieddecentworkinawaytheirgrandparentswerenot.Inthe1950sthroughtotheendofthe1970stherewasfullemployment,averagewagesroseinrealtermsyearafteryear,andpeoplecouldpaytheirownrent.Rentswerealsomuchlowerthantoday,becausesomuchoftherentalsectorwasstateowned.Themiddleclasspaymorefor

theirhousingthantheirhousingisworth,muchmorethantheirparentsinabsoluteterms.Evenwheninterestratesarelow,morethanhalfofwhatispaidbackonatwenty-five-yearmortgagedoesn’tpayofftheloan;itpaysaprofittothelender.Themiddleclassoftenhopeonedaytoowntheirpropertyoutright.Manyofthemdo,butnotall.However,

becausehousingfinancehasbecomesoskew-whiff,itisincreasinglylikelythattheirgrown-upchildrenwillcometoviewpartoftheequityinthosehomesasthedown-paymentonanevenlargermortgageinfuture.Allthetimetheaggregatehousingdebtoftheaveragemiddle-classfamilyrisesandrises.Someonehastowinfromallof

this,anditisthoseattheverytop.Theydonotsimplyreceivethebulkofmortgageinterestpayments,profitsfrombuildingfirmsandrentsfromtenants;theyalsooftenliverentandmortgagefree,iftheyputtheirpropertiesinthehandsoftheirprivatecompanyortrust.Youmightsaythattheyhaveinsomewayworkedtoearnthemoneyfortheirhomes,butthereareonlytwenty-

fourhoursinaday.Howinthattimecansomeonedoenoughusefulworktoearnthemillionsneededtobuythemostexpensivehomesintheland?Inonewaytheextremelyrich

haveworkedhard:theyhaveworkedhardtoachievepolarizationinhousing.Theyofteninfluencepoliticsandcontrolnewspapers,inducingthelattertopeddlethelinethatindividualismtriumphs.Theypractisewhattheypreach,buyingandbuildingtheirnewhomesinwaysthatallowthemtoavoidtax.ForexampleLordRothermere,owneroftheDailyMail,wasapparentlynotcontenttolivejustinhisEatonSquarehomeinLondon’smostexpensivequarter,aplacewheregrandtownhouseshadbeen

builttoaccommodatemanyservantsinthepast.In2004anotherhome,thistimeaneo-Palladianhouse,hadtobebuiltforhiminalocationdescribedas‘deepintheDorsetcountryside’.ThepropertywascalledFerneHouseandwassaidtobeworth£40million.Itwasconstructedwithinthe220acresofitsownprivategrounds,buteventhatwasn’tgoodenoughforLordRothermere.In2006hehadneweastandwestwingsaddedtothehouse.Didhepayforthesehimself?No,apparentlythe‘moneycameintheformofbankloansforwhichRothermerepledgedeightmillionofhisDMGT[DailyMailandGeneralTrust]shares,wortharound£50million.Excepttheyweren’tlegallyhisshares.Theybelongedtothe

BermudancompanythroughwhichRothermerefamilytrustscontroltheMailempire.’40Inthisway,theextremelyrichbuildandbuymansionstax-freeinDorsetorKensington,whilethenewlyimpoverishedareexpelledtoStoke,LiverpoolorNewcastle;orcrowdedintoNewham,BarkingorDagenhamintransit.Recentlyitwasclaimedbythe

coalitiongovernmentthatChancellorGeorgeOsbornehadtriedtoclosesomeofthesecomplexpropertytaxloopholes,but,again,theattempttodosowasatbesthalf-hearted.Apropertydeveloperwassecretlyfilmedgivingadviceoverhowtoavoidtax,havingalreadyhelpedotherbuyersengineertheirwayfinanciallyaroundtheChancellor’s

newprovisions.Osborne’sincreaseinstampduty‘onlyaffectsnewpurchasesofhigh-valuehomesbycompanies,thosehousesalreadyownedinsuchaway[throughanoffshorecompany]–likethoseatCornwallTerrace[borderingLondon’sRegent’sPark]–arenotsubjecttothepunitivestampdutyrate’.41Thepurchaserbuystheservicecompanycreatedwiththeexpresspurposeofowningthatproperty,andasaresulttheregisteredownerofthepropertydoesnotchange:heypresto,nopropertysalehastakenplace,nostampduty.ThehousesinCornwallTerracelook,aboveground,alittleliketheoneshowninthepicturebelow.Justasthefinancesarewellhidden,sothereisnowayofknowingwhatso

muchpropertyofthiskindnowlookslikebelowground.Theextremelyrichhavefounda

newwaytohidetheirwealthandtoremaininconspicuousintheirconsumptionofit:throughtheircreationofthevast,subterraneandevelopmentscurrentlybeingbuiltundermanysquaremilesofLondon’sprimerealestate.Ownapropertyoutrightandyouownthelandunderneathit.So,ifmoneyisnoobject,butgoingsidewaysorupwardsisnotpossible,digdown.Alltheeffortthatgoesinto

makingneo-Georgianpropertylookasshinyasthedayitwasfirstbuilt,allthecarvingoutofsubterraneanplayrooms,poolsandservants’quarters,42couldbeeffortspentrenovatingandrepairingthehomes

thatthousandsofother,poorer,averagepeoplelivein.Thereareonlysomanybuilders,plasterers,painters,carpentersandjoiners.IfmoreareworkingdiggingundergroundinKensingtonoraroundRegent’sPark,therewillbefewertoundertakerenovationabovegroundinNewhamorNewcastle.Youmaysaythatthereareonlyso

manymansions,butin2011,2012and2013itwaseasytospendfarmorethanadaywalkingaroundLondon’smostopulentstreetswatchingbuildersatwork,astheinsidesofgrandtownhouseswereguttedandtheinnardssentthroughaseriesofchutesdownintoskipsonthestreet–skipsthatarequicklywhiskedawaytolandfilltokeeptheneighbourhoodlookingitsbest.New

interiorwallsarefitted,newstaircasesputin,acompleteredecorationundertakentoallowallthelatestfashionsofhomedécortobeaccommodated.Andallthatisbeforeyoudigdown,andbeforethenextpurchasermovesinandwantsitallchangedaroundagain.Perhapseverybedroomneedsawalk-inwardrobeaswellasanensuite.Loseastudyhereandabilliardroomthereanditcanallberejigged.Theoptionsareasendlessasthedepthofyourwallet.Thehousingcrisisisacrisisof

polarization:itillustratesinsharpreliefwhatoccurswhentherichgetricherandthepoorpoorer.43Almosteveryoneisunhappywithsomeaspectoftheirpositionalongthisspectrum:withhoweasythoseabove

themhaveit,andhoweasilytheythemselvescouldslipdowntoliveinwhat,forthem,isthesqualorofpeoplehousedinslightlyworsecircumstancesthanthemselves:‘Icouldn’tlivelikethat’,theymightsay.

Figure7.ThemodernLondonKensingtonmansion,anartist’simpression,2012.

ItisasthecrisisdeepensandtheriseinthepriceofprimepropertyacceleratesinLondon,whileoveraquarterofthehighstreetisclosedinBlackburn,44thattheissueofsegregationbeginstoraiseitsuglyheadagain.Thisisnotthesupposedchosensegregationofonegroupwishingtoliveawayfromanother;itistheenforcedsegregationthatoccurswhenpeoplewhohavebeenabandonedhavetomovetoplacesthat,increasingly,havealsobeenabandoned.Whenthisoccursitisnotjustrichandpoorwhobecomeevermoreseparated.Peoplecanthenbecomemoredividedbyraceandreligion–especiallyifthoselabelledasbeingofaparticularraceorreligionhappentobemuchbetteroff,orpoorer,thanthenorm.

Thefurtherawayyoumovefromasysteminwhichalargeproportionofhousingisallocatedbyneed(bygovernmentandhousingassociations),themoreyoureducepeople’schoices.Youwillgetrisingsocialsegregation,areastratificationalongclasslinesifpeoplecanbehousedonlywheretheycanpayhigh‘affordablerents’oratthewhimofprivatelandlordsiftheycanjustaboutpaytheirevenhigherrents.Fullyprivatizethehousingsystemandpolarizationbywealthhasthescopetogrowandthenmutateintosegregationbyrace.Peoplemixmorewithinand

betweenareasinthosecountrieswherethereislessdifferentiationinthecostofhousingbetweenareas.However,therelationshipbetween

pricesandsegregationisnotsimple.WhenpricesinLondonfirstrose,theeffectmayhavebeentoreduceracialsegregationinthatcity.Peopleincreasinglyhadtolivewheretheycouldaffordtolive.Theycouldnotbethatchoosyoverwhomtheirneighbourswere.Butoncethestockofpubliclyownedhousingbegantodryupthesituationchanged.PrivatelandlordsinalmostanypartofLondonandthesouth-eastwerenolongerinterestedinpeoplewhocouldnotmatchmarketrents,resultinginlessspaceforpoorernon-whitegroups–lessspacenotjustinbutalsonearexpensiveareasofthecapital.Byautumn2013theBBCrevealedthatlettingagenciesinLondonroutinelytoldpotentialtenantsthatpropertywasnolonger

availabletorentifthetenantswereAfrican-Caribbean.45Thatishowsegregationcomestoincrease.

HOUSINGANDRACE

Britishsocietyappearstobegoingbackwards.Politicsandtheprofessionsaredominatedbyan‘OldBoys’Network’…andeventhoughthereisamorediversepopulationthaneverbefore,Britainisstill‘organizedandshaped’byrace.

–DoreenLawrence,motherofStephen

Lawrence,201346

In2010theUKgovernmentintroducedmeasuresthatitsaidwereaimedtosave£1billionbyspring2015.Thesavingwouldcomefromreducingthecostofprovidinghousingbenefitpayments,withpoorerLondonersasawholethoughttobethemostseriouslyaffected.

However,in2011,analysiscarriedoutonbehalfoftheRaceEqualityFoundationrevealedthatthe‘reductionandcappingofLocalHousingAllowancewillimpactdisproportionatelyonblackandminorityethniccommunitiesasmanyliveinareastargetedbythecutsandwilloftenneedlargeraccommodationduetofamilysize’.47

Justasourhistorichousingstockreflectsourclassstructureandourpastpoliticaldecisions,socurrentchangesinhousingalwaysreflecttheparticularprejudicesofmanyinpowerthroughtheimpacttheyhaveondifferentethnicandreligiousminorities.Theimpactisoftenobviousinretrospect.Take,forexample,therookeriesadaptedfor

thepoorestofIrishandruralimmigrantstoLondoninthenineteenthcentury.Housingreformaidedthosegroupsinparticular;lackofreformleftthemmoredestitute.Similarly,thelackofactiontodaytoimprovethehousingsituationimpactsonsomegroupsmorethanonothers.AsRaquelRolnik,theUNSpecial

RapporteuronHousing,putit,recentcutsinhousingbenefitneededtobescrappedbecausetheywereashockingbreachofhumanrights,harming‘themostvulnerable,themostfragile,thepeopleonthefringesofcopingwitheverydaylife’.Thegovernmentchosetoignoreher,withformerHousingMinisterGrantsShappsaskingwhyweshouldlistentotheviewsofsomeonefrom

Brazil.48Atleasthedidn’talsopointoutthatshewasfemaleassomeotherreasonforignoringher.ButitissurprisingthathethinkstheUKissowelloff,givenhowmanypeoplearestrugglingtosurvive.IntheUK,tenantswhoaresopoor

thattheycannotaffordtopaytheirrenthaveupto100%oftherentpaidtotheirlandlordbythestatethroughhousingbenefits.Itisimportanttostressthatthetenantneverseesanyoftheserentsubsidies,which–outsideofthemostexpensivepartofthecountry–areoftenatfullmarketrates.Thesubsidiesarepaiddirectlytothelandlordbythestate.Sooninsomeareastheywillnotbe.Itwillbepaidtothetenants,whowillthenhavetohanditovertolandlords.Themoneyisstillasumoverwhichthe

householditselfhasnocontrol.Thisisimportantbecausethemediaandthegovernmentoftentacitlyencouragethemisapprehensionthattenantsarepocketingtheserents,whileitisthelandlordswhodothepocketing.Itisalsoimportanttounderstandthatsince2010,forthefirsttimeindecades,formanyfamilieseventhesebenefitsarenowbeingcut,thoughnotallfamiliesareequallyaffected.Whenthecoalitiongovernment

introduceditscomplexcaponhousingbenefitin2013,49despiteethnicminoritiesmakinguplessthanafifthofhousingbenefitrecipients,roughlyathirdofallhouseholdsaffectedbythebenefitcapcontainedatleastonepersonfromanethnicminoritybackground.Thesuperficial

reasonforthiswasbecauseoftheconcentrationofpeopleofminoritybackgroundsinLondonandbecauserentsarehigherinLondon.Thedeeperreasonwasthelackofanyconcentrationofpeopleinsuchcircumstancesamongcoalitionmembersofparliament,oramongthemajorityoftheirconstituents.But,despitetheirignorance,theincreaseinthenumberofevictionsamongpeoplewhoareblackandAsianwasneitherunforeseennorunforewarned.Onceintroduced,itwascriticizedatthehighestinternationallevel,astheUNSpecialRapporteur’sinterventionmadeclear.Itwasobviouswhenthehousing

benefitchangeswerefirstmootedthattheywouldhurtsomeethnic

groupsmorethanothers.EvenLondonMayorBorisJohnsonrealizedtheimplicationofwhattheUKgovernmentwasplanningandpromisedthat‘Kosovo-stylesocialcleansing’inLondon…wouldnothappen‘onmywatch.’50TwoyearslateralandlordexplainedwhatwashappeningonBoris’swatchasaresultofevictions:‘Thesocialcostisimmeasurable.Livesarebeingwrecked…Idon’tlikeethniccleansing,andthatiswhatishappening.’HedescribedthetenantshewasintheprocessofevictinginLondonas‘exclusivelynon-white’.51

Despitehispledge,andinthefaceofmoreandmoreevidencesuchasthis,BorisJohnsondidnothing.52

Thereweremanyinstancesofappallingtreatmentofthepooronce

thebenefitchangeshadbegun.Amotheroffouryoungchildrenwastoldinspring2013thatsheandherchildrenwouldbeevictedfromtheLondonboroughofCamdenandmovedtoLiverpoolbecauseshewastoopoortopaytherentandthestatewouldnolongerpayonbehalfofherandherchildren.Sheexplained:‘IwanttostaywhereIamformychildren’seducation.WhatitseemslikeisthegovernmentjustwantsLondonfortherich.Theywanttomovepeopleonbenefitstopoorareas.’53TheLondonboroughofCamdenalone,justinthemonthofJanuary2013,wasplanningtoevictafurther760–mostlynon-white–familieswithchildren.The‘ethniccleansing’effectisperhapsunsurprising,giventhatthemajority

offamiliesonlowincomesinpoorerpartsofinnerLondonarenotwhite.Allthiswasforeseenbyhousing

officials,whoknewthatmanypoorerpeoplewouldnolongerbeabletopaytherentonahomethatwasbigenoughforalltheirchildren.Earlier,in2012,anunnamedcabinetmemberforhousinginoneinnercityboroughwasreportedtohavesaid:‘Let’sfaceit,alotofpeoplewithmorethantwoorthreechildren,andwhoaredependentonbenefitsinthisborough,arenotgoingtobehereforverymuchlonger.’54Theofficialswerecorrect,althoughoftentheolderchildrenofrelocatedfamiliesareleftinLondontotrytoreducethelong-termimpactonthemoftheirfamily’seviction.Theystaywithfriends’familiessotheycancarryon

atschoolinaneighbourhoodtheyknow,buttheynolongerseetheirparentsveryoften.Thehousingbenefitcapisnota

particularlynewschemewhenitcomestoattemptstomovepoorerpeopleawayfromricherareas.AgenerationagotheConservativePartytriedtoachievethesameoutcome,butmoresubtly.In1986theConservative-controlledWestminsterCouncildecidedthatthenumberofcouncilhousesalesshouldbeacceleratedsothat‘anaturalandpermanentConservativemajoritycouldbemanufacturedinWestminster’.55Some10,000councilhomeswereearmarkedtobesoldprivatelywhenthetenantsinthemeithermovedonordied.Inotherwords,thosetenantswerenot

tobereplacedwithpeoplefromasimilardemographic;Westminsterwastobegentrifiedandthepoliticalbalanceshiftedbysellinghomesthatwerelocatedmainlyineightmarginalwards.Eventually,thepolicywasfoundtobeillegal,butnotuntilJanuary1994,longafterithadhaditsdesiredeffects.56

AWestminsterCouncil-styleclearingofthepoor,andespeciallypoorblackparentsandchildren,isnowunderwayagain,butacrossmostofLondon,notjustinthatonethenfamouslycorruptToryborough;andpeoplearebeingmovednotjusttootherpartsofLondon,buttoelsewhereinthecountry.Thewayinwhichpeopleofdifferentethnicitiesaredifferentlyaffectedmaybeanunintendedconsequence,ratherthan

somethingdeliberatelyconsidered,butthatdoesassumesomedegreeofincompetenceamongthoseinpowerwhofailedtograsptheimpactoftheiractions.Anotheraspectofthehousing

benefitcapthatwillhurtsomefamiliesmorethanothers,especiallytheverypoorestoflargerfamilies,istheoverallmaximumlimitthatwillbeappliedregardlessofneed,evenafterdeductionstobenefitshavebeenmade.Thiswillmeanthatifafamily’scostspushthemoveraprescribedlimit–forinstancebecauseachildisdisabledortheygetacarer’sallowanceforanelderlyfamilymember–theirrentmayceasetobecoveredandtheymayhavetoleavetheirhome.However,allthesenewregulationsarevery

complex,andsowillcreateconfusionaswellasdistress.Forinstance,anelderlyfamilymember’sattendanceallowancemightnotbeincludedbecauseotheradultsagedovereighteencanbetreatedasaseparatebenefituniteveniflivinginthesamehousehold,althoughthatmightapplyonlyiftheykeeptheirfoodinseparatecupboards.Itisalmostimpossibletoworkoutuntilyouaretoldwhathappenstoyou.Noneofthisnewred-tapewastheproductofaleft-wing-createdbureaucracy.ThecurrenthousingbenefitsystemwassetupbytheConservativesinthe1980s:theywantedrentstobeabletorisefreelytoencourageprivatelandlords.ManyLondonersarenowtoo

youngtoknowthatinthe1980sit

wasDameShirleyPorter,thedaughterofthemanwhomadeTescoBritain’smostprofitablesupermarket,whowasconvictedoftryingtoclearawaythepoorfromWestminster.Shewantedtowinahighershareofvotesforherpartyinmarginalseatsinlocalelections.In2009sheclaimedtohavewrittenabooktorefuteallthisbutsaidshehaddecidednottopublishit.57

However,thekeydifferencefromtodaywasthatshewasmostlyonlyforcingfamiliesouttootherpartsofLondon,nottootherpartsofthecountry.NottoareasasfarawayasNewcastle,Plymouth,orLiverpool.Todayifthereisanygerrymanderinggoingon,itistoensurethatmuchofLondonissogentrifiedthatthecapitalasawholeneverreturnsa

Labourmayoragain.Butwhowillstafftheshops,fixthedrainsandteachthechildren?Londonbecomesaworseplacetoliveoverallasaresult.ItisnotjusttoLiverpool,butalso

tootherfar-awaycities,thatevictedLondonersnowhavetogo.Oppositionpoliticiansarefinallybeginningtotakenote,verylateintheday.Thus,attheendof2012,itbecamecleartothemainoppositionpartythat‘Thecountryisgrippedbytheworsthousingcrisisinagenerationandthegovernment’sfailedpoliciesaremakingitworsenotbetter…hard-pressedLondoncouncilsarefacedwithhavingtohousethosefacinghomelessnessfromCornwalltoNewcastle.Toloseyourhomeisatragedy.Tofacethen

beinguprootedfromfriends,familyandworkisabsolutelywrong.’58

However,ittooktheLabourPartyalmostanotheryearforthemtosaythattheywouldrepealthehated‘underoccupancy’penaltywheninoffice,andthatwasonlyaftertheScottishNationalistPartycouncilsbannedBedroomTaxevictionsinMarch2013.

ABritishflaghangsfromabalconyatLansdowneflatsinSharrow,Sheffield.Whenyouseeaflaghanginglikethistodayitmakesyouwonderwhyitisthere.Itmaynotbearacistornationaliststatement.Itis,afterall,notan

Englandflag,butthenitcan’tbeaboutfootball,canit,andtheOlympicsweretheyearbeforethisimagewastaken,sowhatisthatflagdoingthere?Maybeitwasputupasanironicgestureorasasignofsolidaritybyafamilyfromaminoritygroup,orbyanenthusiasticchild.OrmaybeitwasputupfortheOlympicsandnevertakendown.But,setbetweenthesatellitedishes,youbegintowonderwhetheryoukindofknowwhatitsays,andthenyouworryaboutwhatthatsaysaboutyou.ThenyoumightwonderhowafamilyfromapoorerpartofLondonmightfeel,turningupforthefirsttimeoutsidetheseflatsinacitytheyhaveneverbeentobefore,beinghousednextdoortotheflatwiththeflag.EvenifthatfamilyfromLondoniswhite,theymightstillbeworried.Ifthenorthbecomesaplacetostow

extraditedpeoplefromthesouth,theimageofthenorthwillbeharmedalongwiththelivesofthose

whohavebeenforciblymoved.

Whatistakingplacetodaythroughthecoalition’shousing

policiesisnowwidelyrecognizedaspromptinganewkindofsocialsegregationintheUK,oneoccurringthroughgovernmentaction.ItisakintoactionsmostclearlyseenintheUS,wheredifferentpartsofmanycitiesarenowhometopeopleofverydifferentethnicorigins.59Theretheprivatemarketplaysabiggerroleinmovingpeopleapartfromeachother,inmaintainingsegregation.ThatcouldnowhappeninBritain,aswebegintomimicevermorecloselyUSlaissez-fairesocialpolicy.SoweneedtolookacrosstheAtlantictolearnfromthere.In2012intheUSitwasfound

thatAfrican-AmericanslivingintheDetroitareawereupto70%morelikelytoendupbeingawardedasubprimeloanthanwerewhite

borrowerswhohadapproachedamortgagebrokerinanalmostidenticalfinancialsituation.ThiswasrevealedthroughananalysiscontainedinthelawsuitbeingpresentedinaclassactionagainstthefinancecompanyNewCenturyloans.Thelawsuitwastorecoupdamagesfortheeffectofloansthatcompanyhadgivenout,high-costloansthatwentfarmoreoftentoAfrican-Americansthantowhitesbetween2004and2006.60Sothekeyquestionforthelawyerswaswhetherthecompanyhadtargetedblackfamiliesmorethanwhitefamilieswhenbothhadsimilarfinancialcharacteristics.Sohowdidthecaseproceed?It

wasfoundthatthe‘similarfinancialcharacteristics’mentionedbythe

analysisweretobefoundinfarfewerwhiteborrowersinDetroitthanblack;andthatthewhitegroupwasfarlesslikelytobetargetedforsubprimelending.Perhapsthemortgagebrokerthoughtthatblackborrowerswereaninherentlyriskieroption,althoughsuchalineofthinkingbreaksAmericananti-discriminationlawsandsubjectsblackborrowerstomuchhigherthanaverageinterestratesbecauseofthisprejudice.Inasimilarway,itcouldbeargued,whiteLondonersarefarlesslikelytohavebeentargetedforacutintheirhousingbenefits.MorewhiteLondonersonbenefitsareolder;andpensionersescapethecutsoutright.61InLondonfewerwhitefamilieshavechildren,sowillhavelowerbenefitsbillstobecut.Many

moreofLondon’schildrenarenon-whiteincomparisonwithLondon’sadults.62

Whenpoliciesaffectdifferentethnicgroupsdifferently,theycanexacerbatetheinequalitiesbetweendifferentgroupsofchildren.Whenlawsenshrinediscriminationbetweenparents,differentgroups’lifechancesaresystematicallyaltered.Forexample,intheUS,subprimeloansweresupposedtobegivenouttopeoplewhowouldnotnormallyqualifyforaloan.Oftentheybeganwithalowrateofinterest,buteventuallyrosewellabovetheaveragerateandbecamemoreandmoreunaffordable.Therehavebeenmanyrepercussions,withfamiliesthattookoutsubprimeloanssubsequentlybeingfarmorelikelyto

seethemselvesandtheirchildrenmadehomeless.Alawyermightsaythatsubprime

loanstobuy(andinsomecasesbuild)housingwereintentionallydesignedtobecomeunaffordableif–asfrequentlyhappened–themortgagorcouldnotre-mortgagebeforetheinterestratestartedtoclimbskywards.Mortgagorswerenotabletore-mortgagewhenthemarketcrashedin2008.ProportionatelymanymoreAfrican-Americanthanwhitemortgagorshadtomoveintotrailerparksorbacktoolderghettosasaresult.Thisiswhythatclassactionlawsuitreferredtoabovebecamepossible:becausesomanypeoplefromoneethnicgroupwerehurtbycomparisonwithothers.Thesamerecoursetosimilar

legislationisnotimpossibleintheUK.IntheUS,thememoryofslavery,

ofhavingnorighttoholdanywealth,liesnotfarbeneaththesurfaceofthecollectiveconsciousness.IntheUK,whenallthesehousingstoriesaremorefullyrevealed,whenpeopleinfuturetellofhowtheirfamiliesweresplitupbecauseofthecutsof2012–15,attitudestorace,toclassandservitude,andtolackofaccesstohousinginthepast,willberemembered.Oldermemoriesofbeinghoused

badlyoftenconcernhavingtoworkinservice,beingaservant.AcenturyagoinBritainalmostallservantscamefromthecountrysideandwerewhite.Itwasthemostcommon

occupationforwomenin1911.63InLondonacenturylater,thenewservantsarenowmostlynon-whiteandcomefromfurtheraway.OftenthewomanpushingthepraminKnightsbridgecanbeidentifiedasthenanny,andnotasthemotherofthechildinthepram,bythecolourofherskin(althoughmoreandmorearenowfromEasternEurope).Servantsweredefinedbyhousing.Theywereemployedtoservethehousehold,didnotusuallyhaveahomeoftheirownandcouldnothavechildren.Workingasaservantstillcausesconcern;peoplewanttohavetheirownhome.IntheformercapitaloftheBritish

Empirerace,likethehistoryofworkinginservice,isalsoanespeciallysensitiveissue.This

sensitivitywasstokedupbyBorisJohnson,whousedthepejorativeterm‘piccaninnies’atonepointwhenhewastryingtoingratiatehimselfwiththoseLondonvotersmostlikelytoswingtowardshimastheirfuturechoice.ThesemighthavebeenvoterswhosawLabourinLondonasfavouringpoorerLondoners,Londonerswhoareoftenblack.64Richerpeople,peoplewhotendtovoteConservative,canpayalotofmoneyfortheirhomes.Mostofthemoneythattherichinvestintheirhousingisnotforthebricksandmortarbutforthelocation,andthevalueofthelocationincreasesthefurtherawayitisfromthepoor,orblackpeople,oryoungpeople,andespeciallyfrompooryoungblackpeople,fromthoseBorismighthave

beenthinkingofas‘piccaninnies’whenheusedthatword.Howyoutalkaboutpeopleand

housing,howyoubuildhomes,whereyoubuildhomes,andwhetheryoubuildhomes–allofthisdependsonthetypeofsocietyyouwantandhowyoubelievethatsocietyshouldbearranged.Whatyouthinkisfairwhenitcomestofinancinghousingdependsonwhatyoumoregenerallybelievetobefair.Forinstance,ifrentcontrolswerereintroduced,greaterincomeandwealthequalitywouldresult.Landlordscouldnotbecomesorich,tenantswouldgettokeepmoreoftheirincomes,thestatewouldnotlosesomuchhousingbenefitmoneytothoselandlords,andfarfewerethnicminorityfamiliesinLondonwouldface

eviction.Youmightsaythatrentcontrolswouldresultinfewerhomesbeingbuilt,but,asitstands,atatimeofconsiderablederegulationoftherentalmarket,veryfewarebeingbuilttodayanyway.Anenhancedhome-building

programmewillbeneededifthedemographicsoftheUKcontinuealongthepatternsofrecentyears–ifmorepeoplecomeinfromabroadtoreplacethechildrenwhohavenotbeenbornsincefertilityslumpedbelowtwochildrenpercoupleinthe1970s.65Butsuchhighratesofimmigrationcontinueforlongperiodsonlyincountriesthatcontinuetobeworthcomingto,oratleastmoreworthcomingtothanthenearbyalternatives.Evenifmanymorehomesneedtobebuilt,for

eachthatisbuiltweshouldatleasttrytofindonemorethroughbetteruseofwhatwealreadyhave.Convertonelargeoldhomeintotwoflatsforolderpeopleandyouleavefreethesecondlargehomethosetwoolderpeoplemayhaveoccupiedseparately.Thereisafiniteamountofspacetobuildin,andfinitefinancialandenvironmentalresourcestousetobuild,heatandalsomaintainournationalhousingstock.Whetheranyfuturebuilding

programmeshouldbeleftentirelytotheprivatemarket,modifiedtomakeitmoregreenorputlargelyinthehandsofthestate–thesearepoliticaldecisionsthatmustbetakenbythestate.Andbecausethestateboughtsomuchofourhousinginthe

past,commissioningprivatebuilderstobuildit,manycallforanewcouncilhouse-buildingprogrammetoday.Butbackthenwedidnothavethesparecapacitywithinthehousingstockthatwehavenow.Howmanyhomeswillbeneededinfutureandhencehowmanywillbebuiltdependsmostlyonhowwellorbadlyweusewhatwealreadyhave.Asecondconsiderationforour

overallhousingneedishowmanymorepeoplecomeintothecountry,orhowmanyleaveit,ifthefutureisworse.Therewasnetemigrationaftertherecessionsoftheearly1970s,1980sand1990s.Athirdconsideration,andperhaps

themostimportantofall,ishowwemightbetterpayforthehousingwealreadyhave,itsupkeepand

maintenance,andpayforanynewhomesthatwereallydoneed.Shouldwereallyallowafewtoprofitsomuchfromhousinginthefuture?

5

Buying

We’recondemningawholegenerationtopayingabsurdpricesforwhatisabasichumanneed–anditdoesn’thavetobethisway.

–FaisalIslam,authorofTheDefault

Line,20131

Forahometobebuiltandmaintainedsomeonehastopayforit.Mostpeoplebuyhousingbythemonth:bypayingrentoramortgageinstalment.Thosewhohaveaninterest-onlymortgageareineffectrenting(witharighttobuy),butwithsomesecurityoftenure.Similarly,

peoplewhorentcouncil-ownedpropertyalsohavearighttobuyoutrightonthepropertyinwhichtheylive,andcannotbeevictedonawhim.Thereusedtobeacleardividinglinebetweenrentingandowning.Now,inonewayoranother,wearealmostallbuyingourmonthlyrighttohousing,butsomeofusendupricherasaresultofhowwepayforit,orhowtheymakeuspayforit.Mostofus,though,enduppoorer.Toseewhereweareheading,itis

worthstartingwiththosewhoarebuyingtheirrighttobehousedfromsociallandlords–fromcouncilsorfromhousingassociations.Examinethechangingfortunesofthisgroup,andyouquicklybegintoseehowfewerandfewerpeoplewillhavetheoptiontobuyinfutureandhowmore

willbeforcedintotheprivaterentalsector.Landlordsareskimmingoffmoreandmoremoneyforthemselvesandthewaitinglistsandrentsgrowastheydothis.Attheheartofthecurrent

problemsthatthepooresthaveinbuyinghousingaretheimplicationsoftheBedroomTax.InSeptember2013theUNSpecialRapporteuronHousingsaidthatthistaxcompromisedtenants’humanrights.Onegroupthatclaimstobeverymuchinfavourofhumanrights–thecoalitionjuniorpartners,theLiberalDemocrats–cametodeclarethattheyhadnotunderstoodwhattheyweredoingwhentheyhelpedtheirConservativealliestointroducethatBedroomTax–or‘charge’,‘penalty’

orevenexcess‘subsidy’,tousetheirterms.NotallLiberalDemocratsclaimed

thattheydidnotunderstandwhattheConservativesweredoing.OneMP,SarahTeather,saidshecouldnotstandagainasaLiberalDemocratMPbecauseherpartyhadbecomesocallous.Hopefullyshewasbeginningtoseethatagreatproblemarisesinthehousingmarketifasmallgroupgetsitselfintoapositioninwhichitisabletomakegreatprofitsfromthemajorityofhouse-buyers.Thegreatestprofits,sufficetosay,aremadebylendingmonies–atconsiderableinterest–toothersforhouse-buying.Themorehousingpricesrise,andthelongerthetermsforpayingbackthemortgage,thegreateristheprofittobemadeand

themoreexpensivehousingbecomes.Thepricesrisenotbecausethecostofbuildingorofmaintaininghomeshassuddenlybecomegreater,butbecauseafewhavefoundbetterwaystomorefullyfeatherthenestsofthosewithmoneytolend:the‘investors’.Oftenlandlordsborrowmonies

fromseparateinvestorstobuypropertytorent.Theythenmustnotonlypassontheinterestcostsbutalsomakeaprofitontopofthat;and,inasocietythathasbeengrowingincreasinglyunequalandacquisitive,whenlandlordsseepeopledoingbetterthantheyareandmakingevenmoremoney,theincentivetochargemoreforrentincreasestoo.Asmallgroupbecomingveryrichatthetopof

societyresultsinmanyothernotsosmallgroupsalsotryingtotakemoretojustaboutmanagetohangontothecoat-tailsofthoseabovethem.Rentsrise,pricesrise,andsoonanykindofpropertyisbeyondmostpeople’sgraspinmanyplaces.InBritain,thegovernmentreacts

toallofthisbytryingtocreateshelteredaffordablehousing–ineffectadmittingthatmosthousingisunaffordable.But,evenasitdoesthis,loomingovertheentirehousinglandscapeisthespectreofLondon:anoverheatedmarketinwhichhousingpricesappeartobespirallingoutofcontrol,onethathasthemakingsofaperfectstorm.

HOMEOWNERSHIP

ThePerfectStormisasetofinterlockingcrises,and,whileparticularproblemshaveparticularsolutions,thereisaneedforjoined-upthinking,forexamplearoundhowrethinkingstatesupportforhousingcanhelptofreeupmoneytomaintainsocialprotectionforall.

–Oxfam,20122

Withinthenextsixteenyearsafurther1.5millionpeopleintheUKagedthirtyandunderwillbeforcedtorentprivatelyfromlandlordsbecauseofalackofplannedextraprovisioninsocialhousing.Ariseinthoseexperiencingdifficultyinaccessingmortgagesisalsoforecast.Thisisevenifmorehomesarebuiltforbuddingowner-occupiers,andevenifmoremortgagesbecomeavailabletohelpthemdothis.Suchdevelopmentsmightbeseenbyboth

potentialandexistingprivatelandlordsasgoodnews.TheestimatesofhowmanymorewouldsoonbeforcedtorentwerecalculatedbytheJosephRowntreeFoundationinareportreleasedduringthesummerof2012.TheRowntreereport’sauthors

proposedwaystoavertwhattheydescribedasaworseningcrisis.Whattheywantedwasasustainedprogrammeofhome-building.Theyalsosuggestedthatmore‘stableprivaterentedtenanciesmightbeachievedthroughsmarterincentivesforlandlords’.3However,insayingthis,theysignalledthattherehasbeenasea-changeinpolicyadvocacy.Wehavenowenteredanewworld,onewheretheaimhasbecometotrytoincentivizeprivate

landlordstobehavewell,ratherthanrequiringthemtodoso.TheRowntreereportproposedtaxbreaksforprivatelandlordstoencouragethemtoprovidelonger-termtenanciesortohousevulnerable,disabledorpoorertenants.Thismightincludethoseschemeswherecouncilsrentfromprivateownersandinturnrentoutthepropertiestofamiliesinneedonthewaitinglist.Significantly,areturntohousing

thatisprovidedbyhousingassociationsandbuiltbylocalcouncils,insteadoftheprivatesector,isnolongerenvisagedasevenaremotepossibilitybymanyhousing‘progressives’.Peopleforgetthatcouncilswereonceallowedtousetheirmoniestobuildhousing,moniesthatwerethenrepaidmany

timesoverinrentandreinvestedinmorehousing.Theyforgetthattheprivatesectoruseshousingtomakemoneyforitself,nottomakesurethateveryoneissecurelyhousedinBritain.Onegenerationmaybesafelyhoused,buttheirchildrenwillnotbesafelyhousedoncetheprivatesectorhasbecomedominant.JustastheBBCexists‘tomake

goodprogrammespopular,andpopularprogrammesgood’,sothestateandlocalgovernmentcouldmakegoodhousingmorewidelyavailable,collectively,onourbehalf.Thestatedoesnotneedtobuildhousingforittohavebettercontrol,justastheBBCdoesnotneedtomakemanyofitsownprogrammes;buttheredoesneedtobeanorganizationatthecentrethatdoes

nothavetheprofitmotiveatitsheart,astherestillisineducation,inhealthandintelevision.Thatorganizationcouldbelocalgovernment.Iflocalgovernmentweretobuyatthebottomendofthemarket,renovateandclearthenewslums,theycouldalsomakecheaperhousingbetter.Iflocalgovernmentwereallowedtotaxhousingmorebyintroducinghighercounciltaxbandswithhigherrates,theycouldalsomakepopularhousingmoreaffordable.TheRowntreereportincludedno

radicalsuggestions,suchasgivinglocalauthoritiesthepowertoincreasetaxation,monitorhousingsupplyorinterveneasnecessary.Whatitdidusefullydowastoprojectthatthenumberofpeoplein

theirtwentiesholdingamortgagewouldalmosthalveby2020.Innotchallengingcurrenttrends,butsimplyrollingthemforward,thereport’sauthorswererightinsayingthatitmightbenobadthingiffeweryoungadultstookonthefinancialriskandresponsibilityofmaintainingthephysicalrepairofabuilding;buttheyaddedthattheyoungneededmoreofachoicethansimplerecoursetotheprivaterentedmarket.Theoneandahalfmillionpeople

thattheRowntreereportsayswillnotbeabletobuyinfutureareapotentiallypowerfulpoliticalforce.Thesewillbepeoplewhowouldhaveboughthousesinthepast,butwhohavenowbeendeprivedofthedecisionwhethertorentorbuy.Theyhavealsobeendeprivedofchoice

whenitcomestosocialhousing,thereisn’taverywideorattractiverangeonoffer.Thesepeople,aswellasmostof

thefamiliesthattheywillform,willmostlyhavenochoicebuttorentprivatelyusingashort-holdtenancy–eveniftheyarereadytosettledowninoneplace,eveniftheyhavechildrenforwhomschoolandnurseryplacesmustbefound.Theycanbemovedoutatanytimeduringthattenure.Therulesremaindifferentincouncilhousing,whereonceyouarein,aslongasyouoccupyalltherooms,youcanstay,butthereissolittlenowavailable.Ifrentskeeprisingastheyare,soonthese1.5millionwillhavelessrealchoiceevenwithintheprivatesectorinfuture.Theywillbelimitedto

whattheycanaffordforaslongasthelandlordallows.Social(not-for-profit)housingis

bothindeclineandunderthreatofgreaterprivatization.Therearevariouswaysinwhichsocialhousingcanbeprivatized.ThebiggestprivatizationinBritishhistorywastheintroductionofthe‘right-to-buy’inthe1980s.Notnecessarilyabadpolicy;lateronI’llsuggesthowitsimplylackeda‘right-to-sell’counter-weightforpeoplewithmortgages,oroutrightowners,whowantedtoonceagainbecometenantswithouthavingtomovehome.The‘right-to-buy’didgivepeopletherighttodoupproperty,todecorate,toextend.ButwhatBritainalsoneedsistherighttogiveupthatright:toreverttoatenancyif

desired,withalandlordtakingoversuchresponsibilities.Large-scaleso-called‘voluntary’

transferofcouncilstocktohousingassociationswasanotherformofprivatizationthatbeganinthe1980s.Thisbecomesespeciallyclearviewedalongsideallthechangesthathaveoccurredtomakehousingassociationslessandlesssociallymotivatedandmoreandmoreprofit-driven.Suchchangesincludetheincreaseinsalariesnowpaidtotheirtopofficials.Thesehavebeensimilartotheincreasesenjoyedbybuildingsocietyexecutivesinthe1920sand1930s.Ifmutualityisnotcarefullyguardedandpreserved,whatwereoncemutualorganizationscangraduallybecomemuchlessmutual.

IntheUK,bytherecentRowntreeestimates,thenumberofadultsagedunderthirtywhoareabletoaccesshousingassociationtenanciesandcouncilhousingissettofallbyalmostathirdby2020,ortojust780,000people.Thenumberprojectedtoendupsleepingonothers’sofasortobecomeactuallyrooflessasaresultoftherecentchangestothehousingsystemisforecastbythatsameorganizationtorisetoabout81,000bythesameyear,asimilarnumbertothosebeinghousedinprison.Farmoreadultswillhavetocontinuetolivewiththeirparentswellintotheirthirtiesorforties–perhapsbecomingparentsthemselveswhileneverhavinglefthome.So,aswemakelessandlessefficientuseofourexistinghousing,

somefamilieswillhavetosqueezeintofewerandfewerroomsinfuture.TheRowntreereportsuggeststhat

whatunderliesalltheseproblemsare‘thelinksbetweenalong-runningshortageofnewhousingsupplyandaffordability.Thisshortageofhousingsupplyaffectsbothhousepricesandprivatesectorrents.’4But–andthisisofcourseoneofthekeyquestionsposedbythisbook–isitassimpleasthat?Wehavenotsuddenlylostalargepartofourhousingstock.Wehavenotrecentlyhadtodemolishhugenumbersofsubstandardbuildings–atleastnotasmanyaswhenslumswereclearedinthe1960sandbefore.Itisnotthebalancebetweensupplyanddemandthathaschangedmostinrecent

times,buthowhousingisowned,managedandbought.Millionsofextensions–lofts,

basementsandsoforth–havebeenaddedtoexistingpropertyoverthecourseofthelastdecadeorso.Althoughhouse-buildingisatanhistoriclow,asmentionedearlierthesupplyofdwellingsandespeciallyroomsperpersonhasneverbeenhigher.Thisisbecausesomanymoreroomshavebeenaddedtoprivatesectorproperty.Butwhathasalsochangedmostrecentlyiswhoisabletoownsomuchofthisproperty:thelarge-scaleprivatelandlords.Earlyin2013oneprivateinsurer,

Prudential,announcedthatitwasbuyingmorethan500homestobecomealandlordinthesouthofEngland,as‘acalculatedbeton

yearsofgoodreturnsfrom“GenerationRent”’.5TwodayslaterthatsamecompanyannouncedthatPrudential’sbosshadreceived£7.8millioninpayandbenefitsthepreviousyear.6Hadtheannouncementsbeenmadeintheoppositeorder,thepressmighthavebeenalittlemorecriticalofthePru’snewmoveintoprivaterenting.Imaginetheheadlinesifthenew(somewhatimprudent)paylevelhadbeenannouncedfirst,andthenthemoveintoprofitingfrommovingintorenting.Howmanyhundredsoffamilieswouldhavetopayrent,alltheirrent,allyear,justtopaythatoneman’shugesalary?WhatthePrudential’s

announcements,thecoalitiongovernment’sactionsandthe

Rowntreereportrepresentwhenallviewedtogetheristheconsensusofestablishmentthinking:aplantomanagegrowingwealthinequalityasmademanifestinthehousingmarket,notaplantoreverseit.TheRowntreereporttriestofindawayofhousingpeoplebetterasincomesdiverge,andasalargeandgrowingsectionofsocietybeginstorealizethattheywillneverbeabletoowntheirownhomes.Furthermore,itisaplanthatdealswiththeshrinkingofthestate:itaimstoencourageprivatelandlordstotakeoverwithakindofrenewedVictorianpaternalisticcontrolassocialhousingisprivatized;toencouragemoreofthewealthyto‘invest’inhousingbyallowingthemtowriteoffanylossesagainsttheirothertaxliabilities;7to

encourageold‘prudential’savingsbodiestobecomelandlords.Thesocialrentedsectoristobetargetedatthose‘mostinneed’–thosewhomnoprivatelandlordwouldotherwisecaretohouse.Socialhousing,inotherwords,istobecomeadumpinggroundforpeopleseenashopeless.ThepoliticalresponseinEngland

totheRowntreereportwasapublicspatbetweenthethencoalitiongovernmentHousingMinister,GrantShapps,andhisLabour‘shadow’counterpart,JackDromey.Theyarguedaboutwhetherthegovernmentwasactuallybuildingafewhundred‘affordablehomes’orwhetheritwasn’tevendoingthat.Therowalsoconcernedthedemolitionandclearingofolderhousing,someofwhichcould

perhapshavebeenpreserved.Theminister‘accusedthepreviousLabourgovernmentofbeingsecondonlytotheLuftwaffeindestroyinghomes’.8InresponseDromey,forLabour,madenopledgetoreversethetrendtowardsmoreprivatelandlords,butlamentedtheadventof‘GenerationRent’.SomeConservativescounteredthe

Labourspokesmanbysayingtheywouldensurethesupplyofhousingfortheneedybyevictingpeoplefromsocialhousing:thatispeoplewhocouldaffordtorentprivately.TheLiberalDemocrats,intheformofLordKirkwoodandhislike(onwhommorebelow),simplygaveagoodimpressionofnotknowingwhatwasgoingon,sogoodinfactthatitreallyispossiblethatsomedid

notknow.Likethechildaccompanyingtheschoolbullywhenhetakespocketmoneyoffaweakerchild,andwholaterclaimshedidnotknowwhatwasgoingon,theLiberalDemocratsappearedtobeverygulliblecoalitionpartners.

SolarpanelscanbeseennowcoveringtheroofofahomeintheGleadlessEstate,Sheffield.Oftenapairofhomeswillhavebeenbuilt

originallybythecouncil,but,bylookingathowthefencinghasbeenalteredaroundthehomes,athowtherenderingorthewindowshavebeenchanged,attheadditionofanextensionoraconservatory,youmightbeabletotellifone

homeisstillinthesocialsectorandanotherisnot–althoughyoucannotalwaystellsimplybylooking.Infuturesocialhousingwillbecomemoreobvious,asitwillalmostalwaysbethemostdenselyoccupiedformofhousing.Thisisbecausethetenantsinitaretobefinediftheydonotfillthehomeupcompletely.Meanwhiletheirneighboursarelivinginwhatwaspreviouslysocialhousing,whichnowoftenlookslessandlesslikesocialhousing,andtheycanliveintheirprivatepropertyatwhateverdensitytheywish

withimpunity.

Thewiderpointthatneedstobemadeisthatallthemajorpartieshavebeenfightingovercomparativelyminorissuesratherthanaddressingtheelephantinthe

room:theoverallcrisis.Allhavebeensuggestingpoliciesthattinkeratthemargins.Sometinkertomakethingsalittleworse.Forinstance,inoneLondonborough,theConservativesannouncedplansto‘preventcoupleswhoearnmorethan£40,000livinginacouncilhome’.9

AcoupleinLondonearningthatamountfromtwowagesisnotwellpaid,butfuturecouncilhousingistobereservedforthelowestpaidandthoseoutofwork,oratleastthosewhoareluckyenoughnottohavebeendeportedfromthecapitalbytheironly‘offer’ofhousingbeingveryfaraway.Whilebickeringamong

themselves,thecoalitionpartnersinBritainhavealsobeentryingtoblurtheboundarybetweenprivateand

sociallandlords.Theydothispartlytofurtherprivatizesocialhousing.Onewaytheyhaveencouragedfurther‘self-privatization’istoannouncethattheywillstoppayingtherentsofpeoplelivinginsocialhousingandrelyingonwelfarebenefitsdirectlytothelandlordfrom2013.Polledbeforethemove,some80%ofhousingassociationsthoughtthatdirectpaymentofhousingbenefittotenantswouldhaveaharmfuleffectontheirassociation;84%saidrentarrearswouldriseasaresult;22%saidthattenantsnolongerpayingtheirrentwouldmakeithardtopaybacktheloanstheassociationitselfowed;and10%suggestedthattheymightevengooutofbusinessasaresultofthisonepolicychange,or–inmodern

managementspeak–theymightfindita‘greatdealhardertomeettheirdeliverycommitments’.10

ThereasongivenbytheUKgovernmentfortransferringrentpaymentstotenantsistotrytomakethembetter‘customers’andbetterabletoshoparoundfortheirhousing.Thepolicyisabouttryingtoencouragefamiliestoshoptheirwayoutofacouncilorhousingassociationhomeintoasupposedlycheaperprivaterentedhome.Theplanisforthemtomoveoutoftheirownvolition.Buttheprivatesectorisnotcheaper.Itisnothardtoseewhythe

coalitiongovernmentisactingasitis.AtpresentalmostoneinfivepeopleinGreatBritainreceivesacashallowancetohelpwithrental

costs.ThisisthehighestproportioninalloftheOECDcountriesforwhichthereisdata.11Theproportionisthishighbecausewagesaresolowandrentsaresohigh.Rentsescalatedthroughacombinationofremovingrentcontrolsandintroducinggreaterhousingbenefitstocompensatefortherisesthatoccurredasaresult.ThiswasalldonewhenMrsThatcherwasPrimeMinister.Todayhersuccessorgovernmentthinksitcanreducethehousingbenefitbillbygettingthosewhoreceivetheseallowancestoshoparoundforcheaperhousing.Itthinksitcanencouragetenantstolookharderbyreducingthecashallowancesofmany.Butitignorespeople’sneedstoremainwheretheygrewup,wheretheirwiderfamiliesandsupport

networksare,andwheretheirchildren’sfriendslive.Italsoignoreshowgoodlandlordsareatkeepingrentshigh,ifyouallowthattobelegal.Researchonmarketshasfound

thattheyoperatewellwhenthereismoreofalevelplayingfieldbetweenconsumers,notwhensomeareveryrichandothershaveverylittle.12

Whatwouldreallymakepeoplebetter‘customers’wouldbeiftheyhadincomesmoresimilartootherpeople,asisthecaseinmostoftheotherOECDcountries,apartfromtheUS.TheUShastrailerparksinsteadofamoreequitableincomeandwealthdistribution,andsomeofthehighesthomelessratesintherichworld.Atanyonetime,eveninwinter,morethan600,000people

sleeproughintheUS.13ThethreatofmasshomelessnessintheUKisusedtojustifytransferringsomuchgovernmentmoneytolandlords.ThefigurebelowshowsjusthowgreatthesubsidytoprivatelandlordsintheUKis,andwhichothercountriesaremostsimilar.Whenitcomestohousing

ownership,landlordshavebeentakingagrowingshareofhousingfinance(throughrents),notjustintheprivatesectorbutinthestateandcharitablesectorstoo.Somesupposedlynot-for-profitprovidershavealreadybecomemoreliketheirprivatesectorcounterparts.Therearenowhundredsofverywell-paidchiefexecutivesofhousingassociations,thousandsofextremelywell-remuneratedfinanceofficers

andother‘top’officialsonveryhighsalaries.

Figure8.Proportionofresidentsreceivingcashallowancesforrentalcosts,byOECD

country,2009.(Note:dataisforproportionofpeople,otherthaninAustralia,Austria,

NetherlandsandNewZealand,wherewhatisshownistheproportionofhouseholds.)

Onceuponatime,eachlocalauthorityemployedahandfulofpeopletobeinoverallchargeofcouncilhousing,or,asitwasreferredto,‘thestock’.Someof

thesepeopleevenlivedinthatstock.Peoplecomplainedthattheyalsodidfavoursfortheirmatestogetthemacouncilhome.Nowhardlyanyhousingmanagersliveinthekindofhometheymanage.Foritsannualsummerconference

inJune2013,heldinManchester,theCharteredInstituteofHousingreportedthatitplannedtohostsome‘7,600seniorhousingprofessionals,keyproviders,partners,suppliersandleaders’.14Atwo-dayconferencepackagecost£705,or‘just’£450foratenantrepresentative.Thesewereonlythe‘early-bird’rates.Someofthefewtenantsthatturnedupmayhavehadtopaytheirownway,buttherestofthose‘packages’willhavebeenfinancedfromrents,fromtenantsagain.Evenifnotenantshad

attended,ifeveryonehadpaidthat£705rateandall7,600‘senior’folkhadturnedup,thatamountstoa£5,358,000conferencebill.It’salotofmoneytohaveapartyinManchester.Mypointhereisthatthosewhousedtoprovideaservicecalledhousingnowincreasinglyseethemselvesasbeinginthe‘housingindustry’,needingto‘network’,tounderstand‘strategicandoperational’issues–butsomeonehastopayforthemtodoallthis.15

Bysqueezingpeopleintotheirpropertiesmoreefficiently,housingassociationsaspiretobecomingricher‘not-for-profit’businesses.Peoplewithanextraroomintheirpropertywillbegiventhe‘choice’ofleavingtheirhomeorofsomehowfindingthesparemoneytohandover

totheassociation,maybebyworking‘ontheside’,orbeggingfromrelatives.Somewilljustfinditalltoomuch.Inautumn2012StuartHodkinson,ahousingresearcherandlecturerbasedintheUniversityofLeeds,explainedthatalready

quotasarebeingusedtolimitcertaintypesoftenantsfromaccessingnewsocialhousing…SincecomingtopowerinMay2010,thecoalitionhasgonetowaronsocialhousingandsocialtenants,especiallyinEnglandandWales…WhenIspokerecentlytoatenantinLeedsalreadysufferingfromdepressionandunabletoworkandnowfacedwiththisappallingchoice[ofhavingtoleaveherhome],shebrokedownintearsandsaidshewasthinkingaboutkillingherself

…16

Whatmakesthecurrentsituationsoinfuriatingisthatithasbeen

createdbyrisinggreedandselfishness,notbysomenationalemergencyornaturaldisaster.Itisnotthatwehavehadmorechildrenandthattheynolongerfitintothehomeswehave,thatthebuildingandextendingofhousinghasnotkeptpacewithpopulationgrowth.Wehavenotjustlosthousinginawarorduetoahugeearthquake.Itisthatafewpeoplehavechosentomakewhatwasnotnecessarilyagreathousingsystemworse,andtheeffectsarefeltfarandwide.OnereadercommentingonStuart

Hodkinson’sresearchfindingsconcurred:‘Peoplehavetowaityearsonahousinglist,andaremadetofeellikescumiftheyneedtoapplyforhousingbenefittopayaprivatelandlord,iftheycaneven

havehousingbenefitinthefirstplace.Thisgovernmentmakespeoplesuicidaljustfornotbeingabletoaffordtolive.’Thatiswhatacrisisturningintoadisasterfeelslike.Ultimatelythereasonforhavingsociallandlordsistopreventpeoplefromthinkingofkillingthemselves.

Thisphotograph,oftheentrancetoatowerblockintheSharrowareaofSheffield,couldhavebeentakenseveraldecadesagoandwouldhavelookedthesame,butforthenewkeypadonthedoor.Thoseluckyenoughtobeallowedsocialhousingnowadays,andsoavoidthe

bottomendoftheprivatesector,cannowstayinitonlyaslongastheyhaveenoughchildrentofilleveryroom,orhavewell-enough-paidworkorsomeextrasourceofincomeontheside.Socialhousinghascometobeseenmoreasatransitcampforfamilieswithchildrenmostinneed,andlessasapermanentbase.Ifaplaceishome,thereisnoneedforasignsaying‘Noballgames’.Peopleeitherknownottoplay,ortheygetglassfittedthatbreakslesseasily.Childrenneedexerciseandplay,aroundaplacethatishome,butnotaroundsomewheretheyarejust

passingthrough.

THEBEDROOMTAX

Athirdofthosehitbythe‘spareroom’taxaredisabled,withnoexemptionfordivorcedparentsorfosterparentswithvisitingchildren.FamiliesinHartlepoolandLiverpoolwhohavesufferedthedeathofachild

nowfacecutsfortheiremptybedrooms.Nothingabouthousingpolicymakessense.Thegovernmentisrightthatspending£23billionayearonhousingbenefitisgrosslywasteful,butwhypunishtenantswhenmostofitgoesstraighttolandlords?Theyclaimedthesecutswouldmakerentsfall,butinsteadtheyrise.

–PollyToynbee,201317

TheBedroomTaxisaviletax.WorsethanthePollTax,ittargetsonlythosewithleast,thosewhoalreadyneedtorelyonthestatetohelppaytheirrent,butwhohappentobedeemedtohaveaspareroom.Maybearoomachilddoestheirhomeworkin,andthensleepsin,whentheirbrotherorsistersleepsnextdoor;ormaybearoomforanadultwhocoughsandwheezesallnight;ormaybeseparatebedrooms

fortheparentsiftheyarejuststayingtogetherforthesakeofthechildren.Rememberthatwheneverpossibleallthechildrenarealreadyexpectedtohavedoubledup.Andalsorememberthatinmanyplacestherearefarmorethree-bedthantwo-bedorone-bedsocialhousingunits.Iftheyasktomove,thereisalmostalwaysnolocallyavailablesocialhousingappropriatetotheircircumstances.Thetaxiswrong.ButforthemajorityofpeoplewhohearoftheBedroomTax,andwhoarenotaffectedbyit,theideathatpeopleonbenefitsshouldnotbeabletohavea‘spareroom’canatfirstsoundseductivelysensible.Thewaywerunhousingalready

contributestosocialsegregationinBritain.InmanywaystheBedroom

Taxissettoexacerbatethatsegregationbymovingthosewhocan’taffordtopayitawayfromareaswherethehomeshaveanextraroominthem,towardstwo-bedandone-bedflats.Alternativelyitcouldbearguedthatintheorynationalratesofethnicsegregationwillbereducedbyforcingpoorerminorityresidentsoutofthecapital.ButinpracticeethnicandreligioussegregationisalreadyquicklyfallingingeneralinBritain,andhasbeensinceatleast1991.18OutsideLondontheverylargemajorityofpeopleaffectedbythenewBedroomTaxwillbewhite.ThevastmajorityofhouseholdsaffectedbythetaxlivealongwayfromLondon,wheretherearemorespareroomsandoftenthereismoresparehousing.

YoumighthavethoughtthatthegovernmentinBritain,facedwithanincreasinglyinefficientdistributionofhousinguse,wouldtrytointroducepoliciesthatwouldspreadbedroomsoutalittlemoreevenly,andhelppeopletostayinplaceswheretherearemoreroomsinordertoreduceindustrialdecline.Intheevent,itdidtheopposite,whilepurportingtobetaxingvacantbedrooms.WiththeintroductionofthenotoriousBedroomTaxinApril2013,thegovernmenthastargetedthegroupofhouseholdsthatisalreadyusinghousingmostefficiently:peoplelivinginsocialrentedhousingwhoarenotpensioners,thosetenantswhoarealreadymostcrowdedintosmallerhomes.Thegovernmentis

demandingthatthisgroupcrowdevenmoretightlyintotheirmodesthomes.TheBedroomTax(ineffect,a

reductioninhousingbenefit)appliestoallsocialhousingtenantsinGreatBritainwhoreceivehousingbenefitandaredeemedtobeofworkingage.Itcanalsobeappliedtonewtenantswhoarepensioners.19Thenumberofbedroomsafamilyisallowedisoneforeachadultcoupleandoneforanyotherpersonoversixteenyears;however,anytwochildrenbelowsixteenmustshareabedroom,exceptwhenthiswouldinvolvetwochildrenoftheoppositesexovertheageoftenhavingtoshare.So,ifyouareafatherofafifteen-year-oldboyandaten-year-oldboy,youareallowedtohave

onlyatwo-bedroomhomeorflat;foranyextrabedroomyouwillhaveyourbenefitreduced.Inthecaseofaseparatedordivorcedcouple,ifonechildalsohasabedroomattheirmother’shome,andtheirmotheristhemaincarer,anybedroomusedattheirfather’shomebecomessubjecttoBedroomTax.TheBedroomTaxrestrictions

wereinitiallyastightasitispossibletoimagine,otherthanthattheyexcludedpensioners.Atfirst,fosterchildrenwerenotacknowledgedaspartofthehouseholdforbenefitpurposes,sofosterparentswouldbetaxedforanyroomsinwhichtheymightsleep.Later,theregulationswererelaxedalittle,butrightuptothelastminutebeforethetax(or‘charge’)becamelawtheruleskept

onbeingchanged.Forinstance,inMarch2013,amonthbeforetheimplementationofthetax,governmentministerssaidthatupto5,000fostercarerswouldbeexemptfromthebenefitsdeduction.Yetrepresentativesofhousingcharitiescounteredthattheexemptionwouldapplyonlytoasingleadditionalroom,andwouldnotapplytocarersinreceiptofhousingbenefitwholookedaftermorethanonefosterchild.20

TheGleadlessValleyishometoseveralhousingestatesinthesouthofSheffield.Thisimageshowsaviewofthemainroadupthevalley.TheBedroomTaxwillaffectmainly

peoplelivinginhousingsuchasthis,maisonetteswheretheremaynolongerbeachildorapairofchildrenoccupyingeverybedroom.Aspeople’sfamiliesage,astheirchildrenleavehome–orifachildgetsintouniversityforexample–theywillbecomeliableforthetax.Manyfamiliesintheseflatswillnow,ineffect,befinedifanyoftheseeventsoccurandforcedtotrytofind

cheaperaccommodationwhentheycannotpaythefine.Iftheycouldaffordtopaythefine,theywouldnotbeeligibleforbenefitsinthefirst

place.ThereisalmostnocheaperaccommodationinSheffield,andsotheywill

havetoeatless,orusethebuslessfrequently,orgetintomoredebtmore–justtogetby.

ThenewBedroomTaxalsomakesnoallowancefordisabledpeople,includingpeoplelivinginadaptedorspeciallydesignedproperties,unlesslocalauthoritieschoosetomakesuchallowancesavailable.Ifadisabled

childneedshisorherownbedroom,21well,badluck:thechild’sfamilyisstillliableforthetax,thoughtheycanapplytoalocaldiscretionaryfundinthehopeofahandouttocoverit.Mostcallouslyifachilddiesandwastheonlyoccupantofabedroom,thefamilyistaxeduntiltheyvacatethehome(orhaveanotherchildtoreplacetheirdeadone).Evenifthedeadchildwassharing,ifanothersiblinghadabedroomoftheirown,then,dependingonthatsibling’sage,theirbrotherorsister’sdeathcouldmeanthatchildnowhastoshare,thethirdroomofthehomebecomesvacant,andthefamilyareliableforthetax.DickenswouldhavebeenabletodescribethismuchbetterthanIhave–notjustbecausehecouldwriteso

well,butbecausehewouldhavebeenfamiliarwiththesentiment.TheBedroomTaxis14%oftotal

rent(notjustoftheeligiblehousingbenefitreceived)foroneextrabedroom,or25%ifafamilyisdeemedtohavetwosparerooms.Assumingarentof£100aweek,thehousehold,therefore,gets£14aweeklessinbenefitsthanitisdeemedtoneedbecauseofthedefinitionofoneroom.Theymustmakeuptheshortfall,probablyoutofbenefitsthattheyreceivetofeedthemselvesandtheirchildren.Housingassociationtenantsare,onaverage,losing£16aweekforhavinga‘spare’room.RecentamendmentsmeanthatwhenUniversalCreditcomesinthiswillincludeanyroomusedintermittently

byachildwhoattendsuniversityformorethansixmonthsayear.AsIwrite,UniversalCreditiscurrentlybeingpilotedinafewareasandissettobespreadacrossallofthecountryby2014,beingfullyimplementedby2017.Itwillaffectmillionsoffamiliesandhowtheyarehoused.TheBedroomTaxisatasteof

whatistocomefromUniversalCredit.Thetaxisalreadyaffectinganestimated660,000working-agesocialtenants,or31%ofexistingworking-agehousingbenefitclaimantsacrosstheentiresocialhousingsector.Themajorityofthesepeoplehaveonlyoneextrabedroom,which,inmanycases–aspertheexamplesabove–itisnotreally‘spare’.22Ifanycomparisonismadewithlivingconditionsfortherestof

thepopulation,itbecomesevenmoreobviousthattheseroomswouldnotnormallybeconsideredspare.Peoplenowoftenhavemoreneedofmoreroomthantheyusedto.ChildrenaremadetodomorehomeworkthanwhenIwasachild.Peopleoftennowhavetoworkpartofthetimefromhome.Withsocialhousingbeingturned

intodormitoryhousing,thelinebetweenthesocialrentedsectorandtheprivatemarketisbecomingstarker,despitealltheattemptstoblurit.Youmighthavetherighttobuy,butyounolongerhavetherighttostayput.AnotthathighlypaiduniversitylecturerlivinginsocialhousinginLondonwrotetomerecentlyaboutthisissue,sayingthatevenhecouldnotunderstandwhat

wasgoingon.Hesaid‘evenhe’becausehedidresearchinthisarea,wassupposedtobeabletoworkoutthedetails,butcouldn’t,despitethepossibilityofbeingadverselyaffectedbyit:

IliveinaflatblockthatismanagedbyMetropolitanHousingsogettheirnewsletter.Therecentonetriedtoexplainwhether,basically,youwereabouttoloseyourhomeduetothenumberofchildren,theirages,sexes,rooms,etc.Intheendtheyjustsaid,it’scomplicated,there’snowayyoucouldfigureitout,socallusifyouwant.Lookingatthecriteriareallydidinduceinmeoneofthose‘outofplaceandtime’feelings,likeawormholesomewhereinWhitehallhadallowedtheChadwickReportto

slipontosomeone’sBlackBerry.23

Whenhetalksofawormhole,thisuniversitylecturerisreferringtoEdwinChadwick,anineteenth-

centurylawyerwhosereporthelpedtousherinthenotoriousPoorLawAmendmentActof1834.UnderthisAct,theaggregateofPoorLawsestablishedoverthecenturieswasabolishedinanefforttocutcosts;outsidereliefwasended;andthepoorcouldreceivehelponlythroughacentralizedsystemofworkhouseunions,madedeliberatelyharshinordertodiscouragethemfromseekingaid.OnehundredandeightyyearslaterinLondon,theparallelsseemfairlyobvious.AminoritywouldliketoturntheclockbacktotheimmoralityofearlyVictorianEngland,wheretheweakestwerethemostpenalized.InOctober2012,sixmonths

beforetheBedroomTax’sannouncement,itwasrevealedthat

almosttwothirdsofallthetenantswhowouldbeaffectedbythetaxhadadisability;manyofthemweredisabledchildren.Inthepast,itwaspreciselythesehouseholdsthathadbeendeliberatelyallocatedextraspace.OnhearingtheannouncementofthisfactintheHouseofLords,oneLiberalDemocratmemberofthegovernmentthathadintroducedthesedraconianmeasures,LordArchyKirkwood,claimed:‘Iwastakenabackbytheextenttowhichtheclientgroup[disabledpeople]willbeaffectedbythispolicychange.IwishthatIhadknownitduringthepassageofthebill.’24

Uponcloserexamination,LordKirkwood’scommentappearstohavebeennothingmorethananattempttowashhishandsofthe

responsibility.In2011DerekLong,headoftheNationalHousingFederation’sNorthernRegions,hadexplainedquiteclearlythat‘thispolicywillhitdisabledpeople,fostercarersandcaresharers.Thesocialsectorisalreadyfourtimesmoreefficientthanthemarketatmatchingpeopletohomes.’25OnerespondenttoLong’snews,writingunderapseudonym,26explainedthatevenearlier,in2010,‘whenanalystsunderstoodtheconsequencesofwelfarereformsandraisedtheseissueswithGrantShapps[theHousingMinister],heconfirmedthatnoneofthesereformswouldaffectexistingtenants:thishasprovedtobealie.’Itisverypossiblethata

Conservativeministerwhomight

havebeendeceivingtenantswasalsoperhapsnottellingthewholetruthtohiscoalitionpartnersingovernment,butapoliticianwithLordKirkwood’sexperienceoughttohavebeenabletoseparatefactfromfiction.Hisandothers’failuretodothatwillhaveconsiderablerepercussions.Housingassociationsareconcernedthat,withtheintroductionoftheBedroomTax,rentarrearswillskyrocketashouseholdsfallbehind,havingnowaytofindtheextrarent.Theonlyotheroption,movingout,willprovefinanciallyprohibitive:movinghomealwayscomesatacost.Todaytherearefarfewercheaperhomestomovetothaneverbefore.Thereisanotherpotentialside-

effectoftheBedroomTax,one

presumablyunforeseenbypolicymakers,butspottedbyaffectedtenants.LornaHolden,wholivedinHartlepool,saidofthetax:‘MypersonalopinionisthatifyoustartaddingBedroomTaxesonandsaying,“You’reunderoccupying”,peoplearejustgoingtooccupythatspacebyhavingmorekids.Andthentheygetmorebenefitfromthegovernmentbecausethey’vegotmorekids.Sowhatthey’rereallydoingispunishingpeoplewhoaretryingtowork,andbringupafamily,andwhoneedthatextrabitofsupporttomakeendsmeet.Ijustdon’tseehowit’sgoingtowork.’27

AlthoughhousingcharitiessaidthatfromApril2013around670,000so-calledunderoccupyingtenantswouldhavetopaybetween£11and

£20aweekextrafortheirapparentoveruseofsocialhousing,thesefigureswereknownfarearlierthanthat.InJune2012theBBChadtriedtoexplainwhytheBedroomTaxwasdoomedtofailure,revealingNationalHousingFederationestimatesthatonly68,000one-bedroomtenanciesbecomeavailableeachyear,whilealmostthreetimesasmanytenantswouldbeofficiallyoveroccupyingtwo-bedroompropertiesaccordingtotheApril2013regulations.TheBBCthenreportedthegovernmentWelfareMinister,LordFreud,sayingthattheextrabedroomswerea‘luxury’.28

Thiswasdespitethealmosttotalnon-existenceofsmallerpropertiesforthesetenants.Thefewthatdoexisthavealreadybeenallocatedto

smallernewlyhomelesshouseholds.Andthere’salongwaitinglisttoboot.It’stimetotakestock.Therearesparebedroomsin

England,buttheyarealmostallinprivatelyownedhomesthatarenotbeingrented.PerhapsifMPsweredeprivedoftheirtaxpayer-subsidizedLondonpropertywheneverthatpropertyhasasparebedroom(perhapstheonethattheyuseasastudy),theymightunderstandtheissuesbetter.Takingaway14%ofthesubsidywouldn’twork:MPs’salariesaresuchthattheywouldhardlynoticethedifference.Youwouldhavetomakethetaxproportionaltotheirdisposableincomes,orincludeallthesparebedroomsinalltheirproperties.Eventhentheywouldprobablyjust

feelangry,notveryfrightened,likethetenantsaffectedbytheBedroomTax.Similarly,ifLordFreud(whosepersonalwealthmakestheaverageMPlooklikeapauper29)believesthathavingasinglesparebedroomisaluxury,presumablyhewouldbewillingtolivewithoutanyspareonesinanyhomeshemightown?Ormaybejustkeeptwoorthreespareonesandgiveuptherest?Tosomeonewhoneedsabed?Itwouldbeworthwhileaskinghim:hehaseightbedroomsinhisLondonhome.LordFreudisrememberedforrecommendingthatmoregroupsonbenefits,suchassomesinglemums,shouldberequiredtoseekpaidemployment.Itistruethat‘thedayswhen

havingababygotyouacouncil

propertystraightawayarelonggone’30(Iquotethisbecauseitwasneveruniversallytrue).But,sadly,thedayswhenyoumighthavetohaveababyifyouwanttostayinyourhomemaywellnowbearrivinginEngland.UrbanlegendhasitthatinMiltonKeynesinthe1970syoucouldgetacouncilhousetomoveintoonthedayofyourmarriage,nochildrequired.Wesoquicklyforgetthosefarmoreequitabletimes,assomeofusreturntoolder,outdatedmoralities.Theissueofpeoplehavingbabies

tobeabletosecurewelfarepaymentshasapedigreeatleast180yearsold.The1832RoyalCommissionthatexaminedthereformofthePoorLaws,priortotheintroductionofthePoorLaw

AmendmentAct,was‘haunted[by]theimageofwomenproducingmultiplebastardsforprofit’.31Whenparliamentbroughtinthe1834Actandreducedwelfare,therewasnoreductioninwhatwasthencalledbastardy,whichhadbeenanaimofthelegislation,buttherewasagreatriseinpoverty.AsaresulttheBritisheventuallygotsociallandlords–butitwasalong,torturousandtortuousprocessfromlosingrightsin1834togainingthemslowlyoverthecourseofthecenturythatfollowed.Then,withdevolutioninScotlandandWalesin1999,peopleinthesecountriesgainedevenmorecontrolovertheirownhousing.ItseemsthatnowitismostlytheEnglishwhoaregettingridofmuchthatremainsoftheoriginalethosoftheirsocial

housingsystemandtryingtoturnit,attheextremes,intotemporary,dormitory,skid-rowhousing.ButitisonlysomeoftheEnglish,andsofartheyhavenotbeencompletelysuccessful.

SKIMMINGPROFITS

Thenumberoffamiliesrentingtheirhomehasdoubledoverthepasttenyears,asmoreandmorepeoplearepricedoutofhomeownership.

–Shelter,201332

Whattenantscomplainaboutmostisnotthebadtreatmentmetedoutbylandlords,butthesensethattheyareslowlybeingbleddryofanypotentialsmallamountofwealth,andsavingsfortheiroldage.33Mosttenantscannotsaveastheypaysomuchrent.Andbecausetheycannot

save,theycannotbuildupadeposit,whichinturnmeanstheycannottakeoutamortgage.Inthepast,whenpriceswerelower,mortgageswerecheaper.Backthenbuildingsocietiesdominated.Thesewereorganizationsthatexistedtohelptenantsbecomebuyers,andwhichdidsowithouttakingaprofit;butmostbecamebanksinthe1980sand1990s.BarclaysBank,throughits

subsidiarytheWoolwich–onceabuildingsociety–triedtodrumupmortgagebusinessinsummer2012byreleasingfiguressuggestingthatowningyourhome,ratherthanrentingit,wouldsaveyou£194,000overfiftyyears.Itadded,‘thisdoesn’tevenincludethevalueofthehomeyou’llownattheendofit.Whilethetotalcostofmortgage

repayments,maintenanceandothercostsofowningtheaveragehomewouldcometo£429,000overfiftyyears,rentingasimilarhomeoverthesameperiodwouldcost£623,000.’34Iftenantsintheprivaterentedmarketfeelbleddry,theyhavecause.Whatthebankdidnotpointoutis

whomakesthemostmoneyoutoflendingthefundsneededtoraiseamortgage.Thebankalsoomittedtohighlighttheflexibilityofrenting,andhowmuchyouloseifyoufailtopaythemortgageofahomeyouaretryingtobuy.Itwillhavebeeninthesmallprintoftheirpressrelease,forlegalreasons,butitwasnotaprominentpartofthestory.Whenyourbanksuddenlyraises

itsinterestrate,yourbestopt-out

maybetotrytosellyourhome.Youcouldtrytoshoparoundforabettermortgage,butthereareusuallypenaltyfeestopayandnothingmuchbetteronoffer.Ifyourlandlordraisestherent,youcanquittheplacefarmoreeasilyandyoudon’tneedtofindabuyer,butyoumayhavetroublelocatinganewhome.IntheUK,tenantsreallydon’thavethatmanyadvantages–yes,theremaybeflexibility,butthere’sverylittleprotectioninanassuredshortholdtenancy–nottomentionthefactthatrentsarenowgoingthroughtheroof,whilemortgageinterestratesare,currently,flat-lining.Ifbeingaprivatetenantwerenot

soinsecure,peoplemightlookalittlemorescepticallyattheideaofbecomingamortgage-holder.

Alreadymanyhavelostwhatfaiththeyoncehadinhousingtosecurethemalittlewealth,alittlesecurity,inlaterlife.Accordingtotheworld’smostpowerfulcentralbank,theUSFederalReserve,thehousingmarketcrashhad,by2010,wipedouttwowholedecadesofsupposedwealthaccumulationamassedbyAmericanfamilies.Adjustingforinflation,by2007

themedianfamilyintheUShadamassedanetwealthof$126,400,accordingtotheUSFederalReserve.Butby2010thathadalmosthalvedto$77,300fortheAmericanfamilythatwaspositionedcentre-stagewheneveryfamilywasputinorderaccordingtowealth.Inshort,themedianaverageAmericanhadbecomemuchlesswealthyinthe

courseofaverybriefperiodoftime.TheNewYorkTimesreportedthatthehousingmarketcrashdirectlyaccountedforthreequartersofthatlossofapparentlyamassedwealth.35

Itisnotthateveryadultwantstobeahomeowner.Infactprivatelyrentingtenantsareoftenamongthehappieroftenuregroupssurveyed–buttheyalsotendtobeyoungandoptimistic;afteralltherearealmosttwomillionuniversitystudentsinBritainandmostofthemrentprivately.Rentingalsomakesiteasiertobemobileforemploymentopportunities,butithasitsdrawbackswhenandwhereinequalityishigh.36ThefactisthatinveryunequalcountriessuchastheUKorUStherearemanyreasonswhypeoplewanttobeinthetop

tenthofsocietyasdefinedbyincomeandwealth,andthetoptenthtendtoownproperty.Inmoreequitableaffluentcountriestheadvantagesofbeingricharelessobviousandthedisadvantagesofhavinglessaregreatlyreduced.Itisfareasiertorentandlivewell

inamoreequitableaffluentnation.ThesameNewYorkTimesreportfoundthat,evendespitethecrash,‘RankingAmericanfamiliesbyincome,thetop10%ofhouseholdsstillearnedanaverageof$349,000in2010.Theaveragenetworthofthesamefamilieswas$2.9million.’Althoughitisonlyanaveragewithintherichesttenth,itishardlysurprisingtheywouldwishtotrytoprotecttheirposition,havinggotsofaraheadoftherest.However,when

averagewagesandwealthfall,therestmaycometorealizethattherichcanonlybecomericherattheexpenseoftheother90%ofUSsociety.TheaveragemedianAmericanfamilynowearnnearlyaneighthofwhatthebest-offtenthearnayear;medianUSfamilyincomefellto$45,800in2010from$49,600in2007.Insterling$45,800wasthenaround£28,600ayear.ThatisMiddleAmerica.Halfthepopulationarepoorerthanthat,manyverymuchpoorer.Partofthereasontherichesttenth

becamesoextraordinarilywealthyintheUSisbecauseotherstherearesopoor.Bydefinitionall‘successful’richlandlordsareinthetop10%.Theyrelyfortheirincomeonotherpeoplehavingtopaythemrents,

highrents,moremoneythanthoselandlordsneedtoliveagoodlife.Othersworkinthefinanceindustrygivingoutloans,aslawyersforbanks,orasrealtors(estateagents)whocandoverywellwhenthemarketisbuoyant.InBritainmoreandmoreestate

agentswerehiredduring2012;theyaccountedforoneinfourofallnewjobscreatedthatyear.37By2013oneineverythreenewjobsintheUKwasnew(oftentemporary)employmentasanestateagent.38

Increasinglyestateagentsalsoworkforlandlords,managingpropertiesontheirbehalf.Manylandlordsarerichenoughnottoneedtointeractwiththeirtenantsthemselves.InboththeUKandtheUS,ifthistrendcarrieson,wewillreachapoint

wherewesee‘thewholeuppertenthofanationlivingwiththeinsoucianceofgranddukesandthecasualnessofchorusgirls’.ThiswashowF.ScottFitzgerald,authorofTheGreatGatsby,succinctlydescribedtheinequitiesof1920sAmericainTalesoftheJazzAge.39

ThisiswhattheUSisreturningto,accordingtothestatisticsoninequalitiesinincomeandwealthjustquotedabove,anditisalsowhattheUKisheadingtowardsifitdoesnotchangecourse.AlmostacenturyagoFitzgerald

wroteofthecasualnessoftheRoaringTwenties.TodayaverageincomesareagainfallingintheUS,justastheydidbackthen.Butnationalincomethen,GrossDomesticProduct(GDP),wason

averagealmostalwaysrising.ItisrisingagainnowinboththeUKandUS.Afewpeopleareagaingettingverywealthy,sothereportedmeantake-homeincomeofpeopleintheStatesrisestodayasthemedianincomefalls.Meanaverageincomeofeveryonecanrisewhenjustonerichperson’sincomerises;butthemedianincomerisesonlyifmostincomesrise.SomethingverysimilarisalsohappeninginBritain:meanincomesarebeingrecordedasrisingevenasthemediannationalincomefallsandinequalitiesgrow.40

Thisriseinincomeandwealthinequalityissoimportantwhenitcomestohousingthathowitaffectsbehaviourneedstobethoughtaboutcarefully.Thinkagainofthatboyinthehypotheticalschoolclass

mentionedrightatthestartofthisbook,butnowlet’smakehimBritish,sotheboyisreceiving£20adaypocketmoneywhileallhisclassmatesintheyear,allninety-nineoftheminthosethreeclasses,receive,onaverage,80penceeachaday.Themeanaveragepocketmoneyofthatyeargroupisthenalmost£1aday.Ifalltherestoftheyeargroupseetheirpocketmoneydrop,onaverageby5pence,butthatoneboyreceivesanextra£5aday,meanaveragepocketmoneyissaidtohaverisen,eventhoughalmosteveryoneisworseoff.IntheUK,asmoreandmore

peoplerentedbetween2001and2011,andasmedianincomesbegantofallinrealterms,theincomesofthoseatthetopofsocietyrose.A

partofthatrisewasduetoincreasingrentalincomes.Furthermore,theUKgovernmentalsoactivelyhelpedsomeofthebest-offlandlordsinBritaintobecomewealthier.Thinkagainaboutthatboyintheclass.Wheredidhisextrapocketmoneycomefrom?Well,supposethathisparentshaveboughtsome‘buy-to-let’flatsandarerentingthemouttotheparentsoftheotherchildreninhisschool.Thoseparentswillbealittleworseoffwhentherentrises,andunabletogiveasmuchpocketmoneytotheirchildren,buthisparentswillhavegainedmore.Peopledon’trentoutpropertybecausetheyaremagnanimous.ButgovernmentintheUKwantstoencouragemoreindividualsandcorporationstobecomelandlords,as

wellasthesameoldlandlordstorentoutmoreproperty.On1February2013theUK

coalitiongovernmentsetoutaplaninwhichupto£10billionwouldbehandedouttoprivatelandlords.Theygaveanexample,and,again,thinkofthathypotheticalrichboy’sparentsas‘investors’tovisualizehowthiswillplayout:‘Aninvestorwantstobuildablockof100flats,whichtheywillthenofferforprivaterent[and]thevalueofthebuiltflatswillbe£20million.Theycanapplytotheguaranteeschemeforupto£16million,or80%oftheendvalue.’41

Nownote,thisisaguarantee,notagift,butitisaguaranteetopreventthelandlordfromincurringanyrealrisktohisinvestment.Thegovernmentis,ineffect,

guaranteeingthat,intheeventthattheflatscan’tbelet,theycanbesold,andsoldatalossthatwewillallbecoveringbecauseitisgovernmentmoney.Governmentappearstobelievethatthemoneywillalwaysberepaiduponfuturesale–thatis,thattherewillbenofuturepricedropsonthebuildinvestment.Nordoesitbelievethattherewillbefuturerentreductions.ThisisworryinglyGatsby-esque.Ifthathypotheticalboy’sparentsweretobuildanother100flatstorentouttootherchildren’sparents,theymightgetevenricher;butiftheschemeweretofail,alltheotherchildren’sparentswouldhavetomakeuptheirlossthroughtheirtaxes;andtheirchildrenmighthavetosharesomeofthecoststooin

futuretaxpayments,asnationaldebtwouldrise,raisinginterestpaymentsfarintothefuture.Allthiscouldresultfromthegovernment’sencouragementofthebest-offboy’sparents’effortstobecomeevenricher.Thegovernment’sunderwritingof

theinvestmentsofprivatelandlordsenablesthemtomakesignificantprofitsintheUK’sverylightlyregulatedrentalmarket.Fromthepointofviewoftenants,theregulationsintheUKmarketareweightedinfavouroflandlords.Thegovernmentisguaranteeingtherisksonthelandlords’investments;thecourtswillhelpthoselandlordsevicttheirtenantswithjustsixtydays’notice.Ifeverythinggoespear-shapedandthelandlord’sscheme

goesbust,taxpayers’moneywouldcover80%ofanylosses.Thechancesofgovernmenthavingpitcheditspolicy‘justright’inordertogivetheprivatemarketexactlytheright‘nudge’itneedsareverylow.Bytheendof2013,MarkCarney,thenewGovernoroftheBankofEngland,wassignallingthathethoughttherewereproblemswiththeseschemes,butthiswastoolateforallthosethathadalreadybeenapprovedinthatyear.Privaterentingcomeswithmany

otherproblems.Thisisbecauseindividuallandlordsare,unsurprisingly,lookingaftertheirowninterests.Clustersofprivatelyrentedproperty–forinstancesinuniversitytowns–canmakeanareaunattractivetofamilieswhocan

affordtomakegenuinechoices.Regulationshavebeenintroducedforhousinginmultipleoccupationtotrytocontroltheclusteringofmassesofbedsitsandverydenselyoccupiedhomeswithmultipletenants,buttheyareoftenignoredandlocalgovernmentenforcementofficersarebeingsackedascutsbite.Theregulationsalsodonotpreventthegardensofstudenthousesbecomingabitofatip.Itsoonbecomesclearwhenandwherethestudentsand‘youngprofessionals’aretakingover.Meanwhile,despiteincomesfalling,rentsarerising.Inlate2012theNationalHousing

Federationstatedthat‘Thecostofprivatelyrentingahomehasrisenby37%inthepastfiveyears,andissettosoarafurther35%overthenext

sixyears.’42InBritain,by2010rentswerealreadythehighestinEurope.43

Veryrecentlytheyhaverisenevenfaster.Alargepropertyservicesfirm,LSL,regularlyreleasesa‘buy-to-let’indexofrentalvalues.ByOctober2012itshowedthattheaveragemonthlyrentacrossEnglandandWaleshadhitanall-timehighof£744,whichwastheseventhmonthinarowofrentincreases.ItalsorevealedthataveragerentsinLondonhadrisenintheyearby7%tonowstandat£1,102amonth,risingbymuchmorethantwicetherateofinflation.44TheyroseagainintheyeartoOctober2013,bywhichtime‘Onamonthlybasis,tenantfinancesfeelimpact,withtotallaterentupby£31million.’45Asrentscarriedonbeingraised,moreand

moretenantsfoundithardertokeepuptheirpayments.Atthispointitmightagainbe

worthrememberingthatsuchpricebubblesneverlastforever,buttheycangetverylargebeforetheyburst.AsIwrite(duringlate2013)moreandmoreoutlyingareasarebeingsuckedintotheorbitoftheLondonbubble.Ifnewjobsand‘wealthcreation’arebecomingmoreconcentratedintothisparticularpartofthecountry,therecanappeartobesomerationaleforhousepricesandrentsalsorisingcorrespondingly.PartofwhatmayhavebeenstokingupthebubbleinLondonisausterityandlackofopportunityelsewhereinEurope,drivingincreasingnumbersofyoungpeopletotrytheirluckinEurope’sonlymegacity.46

Beforeeveryfallinpropertyvalues,beforeeveryfallinrents,comesarapidrise.IntheUS,intheyearsfollowingtheendofwarin1918,itbecameevidentthattherewastoolittlespaceforthereturningtroopsandthechildrenofthebabyboomthatfollowedtheirreturn.AveragerentsacrossthewholeoftheUSwentupby10%in1918–19,thenby20%in1920alone,thenbyafurther10%in1921,increasingtheneachyearbyafurther8%in1922,in1923andin1924;sothatintheperioddirectlybeforethe1929crashtheyhadreached168%ofthepre-war,affordable,level.47ThegeographerDavidHarveyrecentlyassignedtohousingaverylargepartoftheblamefortheeconomiccrashesbothin1929andin2008,

andbelievesthecurrenthousingsystemislargelytoblameforwhatunderliessomuchofourinequitableallocationofproperty.48

InEnglandandWalestheshareofhouseholdsrentingprivatelyroseto18%ofallhouseholdsby2011,asharpclimbfrom12%tenyearsbefore.Mostoftherisewasduetofewerpeoplebeingabletogetamortgageandmoresmallprivateapartmentsbeingbuilt.Homeownershipandbuying(combined)fellfrom69%to64%ofallhouseholdsoverthatsamedecade.Thisleftthereportednationalproportionsofsocialrentedhouseholdsfallingslightlyfrom19%to18%ofallhouseholds.49

Bythefinancialyear2011/12theaveragetenantofasocialhousing

propertyinBritainhadamedianincomeofjust£8,996ayeartoliveoff.Thatmoney,£24.63aday,mightnotbejustforoneperson’sneeds:itcouldbeanelderlycouple,oraparent(ortwo)andchildren.Inrealtermsthatpittanceisabout10%lessthanthesamefigurefor2005/6.Todayfewerpeoplehavewell-paidfull-timeworkthantheydidthen;ithasbeenpart-timeworkthathasbeenincreasingthemost,asbenefitsarebeingcut,soevenifunemploymentfalls,manypeoplearenotatallwelloff.50

Unsurprisingly,giventheirverylowincomes,sometwothirdsofallsocialhousingtenantshavenosavings.51

Ofthosefewsocialhousingtenantswhodohavesavings,half

havelessthan£1,000.Thecutstolocal‘social’fundstohelppeoplebuycookersandtheotheressentialitemstheyneedtolive,andthecutstothemoniesthatcouncilsonceusedtohousehomelessolderteenagers,nottomentiontheintroductionoftheBedroomTax,areallbitinghard.ThesechangesarecurrentlyaddingtotheimpoverishmentofbetweenaquarterandathirdofallsocialhousingtenantsofworkingageintheUK–anothersliceoftheknifeofcutsontopofalreadyfallingstandardsofliving.52However,whenRaquelRolnik,theUNSpecialRapporteuronHousing,highlightedfactslikethis,shewasaccusedofsimplybeingunreliable,someonewho,theDailyMailclaimed(bytalkingtohersister),hadparticipated

inwitchcraft,someonewhowas,ineffect,unhinged.53Campaignersagainstwhatisoccurringareroutinelyeitherdiscreditedorignored,butrarelyaretheyvilifiedtothisextent.Fortunatelytherearemanycampaigners.

VelocityTower,privateapartments,locatednexttotheinnerringroadinSheffield.

Apartmentssuchasthesecanbehardtoletinthecurrentclimate:Sheffieldhasaglutofone-andtwo-bedroomprivateapartmentsbuiltwithinitsinnerringroad,alltargetedataffluentyoung

professionalsandthebest-offstudents,whohave,asyet,notarrivedinthenumbersneededtofillalltherooms.Rentsremaintoohighforthose

olderpeoplewhoarebeingdecantedoutofsocialrentingbecausetheyhavetoomanyroomsintheirhomes.Andsomoreandmoreofthebedroomswithinthecityremainorbecomeunoccupied,whilethewaitinglistforhousingcontinuestogrowinSheffield.Thecityalreadyhasthelongestwaitinglistofanylocalauthority

inEngland.

InJune2012OxfamdeclaredthattheUKwasincrisis.54Asignificantpartofthereasonitgaveformakingsuchadeclarationwastheongoinghousingcrisis.ThecharitycitedevidencethatthenumberofhousingbenefitclaimantsinworkhadmorethandoubledbetweenNovember

2008andFebruary2012.Itpointedoutthat,evenbeforetherecessionhit,therehadbeenanacutehousingshortage.Itsresearchersexplainedthatby2008therewerealready1.77millionhouseholdsinEnglandlanguishingonsocialhousingwaitinglistsandthattherewereafurther489,400householdslivinginwhatwereofficiallyrecognizedasovercrowdedhomes.Theythenexplainedthatgovernmenttargetsforthebuildingofnewhomeshadrepeatedlybeenmissed,andthathousingconstructionhadslowedtoacrawlsincetherecession.Theyshowedhowthecostofhousinghadcontinuedtorise;thatthishadoccurredinspiteoftherecession;andthattherisesinrentsandpricescouldbeseeninboththeprivateand

socialrentedsectors.Theydemonstratedthataveragerentswere,byJune2012,atrecordhighs(theyhaverisenagainquicklyintheyearandahalfsince)andthathomeswerealreadyunaffordableinmorethanhalfofEnglishlocalauthoritiesby2012(again,beforepriceshadrisenevenhigherbywinter2013).Theyprovidedevidencethatthenumbersofnewlyhomelesshouseholdshadincreasedby18%inEnglandbetween2010and2011.Whatresponsedidtheyreceive

fromgovernment?Nothing.Oxfamdrewthegraphicbelowto

illustratethedirectionofrecentchange.Sincethatgraphicwasdrawn,newevidencehasemergedsuggestingthat,justbelowthelevelofdirectorsandchiefexecutives,

peopleintherestofthetopfifthofincomeearnersinBritainhavereceivedacutintheirdisposableincomeaswellasmostpeopleatthebottomoftheheap,andthatthuswhatisknownastheUK’squintileincomeinequalityratiohasfinallybeguntofall,asmostpeopleatthebottomstartedoffwithlesstolose.55

Buttherichestattheverytop,thebest-offtenthofthetoptenth,the1%,arestillseeingtheirrichesgrow.AyearafterOxfam’sreportwasreleased,anothermajorcharity,theNationalChildren’sBureau,producedyetanotherreportshowingthatovercrowdingandpovertyamongchildrenwasontheriseagain,andthatBritainfacedagrowingsocialapartheidbetweenrichandpoorwhenitcametowhere

andhowchildrenweretobehousedinfuture.56TheNationalChildren’sBureauwasalsoignored.

Figure9.IncomechangesintheUK,2011–12,accordingtooccupationofemployees,inpounds

sterlingandpercentages.

AFFORDABLEHOUSING

Housingiscentraltohealth,well-being,prosperityandaspirations.Therearesignificanteconomic,socialandpoliticalreturnstoexpandingandimprovinghousingstock.Conversely,thehousingmarketcanplayadestabilizingroleinthewidereconomyanddisruptpublicpolicyintentions.Recognitionofthis,andagrowingsenseofcrisis,hasseenhousingreturnasakeyissueagain…

–BenMarshall,ResearchDirectorof

IpsosMORI,201257

Asthemajorityofpeoplebecomepoorerinrealterms,evergrowingnumbersarefindinghousinglessandlessaffordable,eveninareaswhererentsarenotrisingandwherepricesarestaticorevenfalling.Inthiscontext,‘affordablehousing’isastrangeterm.Butitisakeyplankofcurrentgovernmentpolicy,onethat

originatedinthedaysofNewLabour.InFebruary2013athree-bedflat

inIslington,northLondon,wasputonthemarketat£705,000.Itwasstatedthat,ifyouhadahouseholdincomeoflessthan£77,200,andwereafirst-timebuyerwholivedoutsidetheborough,youmightbeeligibletopurchaseaquarterofthispropertyandpayareducedrentontherestof‘only’£2,425amonth.Whydoesthisarrangementbenefitonlypeopleoutsidetheborough,ratherthanthoseinit?Thereasonisthattheprovisionof

socialhousinginBritainisnowbeingmixedupwithpropertyspeculation.Therulesthatapplytothese‘affordableoffers’arethatifyouareabletopay£3,472amonth,

youcouldendupowning75%oftheapartmentaftertwenty-fiveyears.Theofferappliesonlytopeoplelivingoutsidetheborough,becausethoselivingwithinithavealreadymanagedtofindawaytolivethere.Shouldthosepotentialtenants/ownersmovinginfromoutsidelaterfindthemselvesabletopayanadditional£1,047amonth,theycouldtakepartfullyinthegreatpropertycasino.58Asitis,theycannowhaveasmallstakeinit.Butwhatreallyunderliesthemaximumincomelimitof£77,200?Thereasonwhythereisamaximumincomelimitisbecausethispropertywasbeingletbyahousingassociation,whichreceivesgovernmentsubsidiesifitengageswithsuchschemes.

AsIwasdownloadingthesefiguresfromthewebsiteofthisparticularhousingassociation,Icameacrossthefollowingnewsitem,whichatfirstglancesoundslikeNewYork,nottheUK:‘1February2013.News:EastVillagebiddingopensforsocialrenthomes…’59Evengettingintosocialhousingcannowinvolveenteringanauction.Allocationisnolongerbasedontheoriginalprinciplesofsocialhousing:prioritizingthoseingreatestneedorthosewhohadwaitedthelongest.Privatizationhasbeenstretchedsofarthat‘bidding’isrequiredeveninsocialhousing.Thisisadeliberateblurringoftheboundariesbetweenthestateandtheprivatesector.

Therearewaysinwhichtheapartheid-likedistinctionbetweenbuyingandrentingcanandshouldbereduced.Peopleshouldbeabletomovefarmoreeasilybetweenthetwotenures,butnotinordertosecureaprofit.Theyshouldbuywhenitsuitsthemtobecometheirownlandlordandtoundertaketheupkeepofthebuilding.Theprivaterentedsectordoesnothavetobesynonymouswiththeprofit-makingsector,inthewaythatschoolinginprivateschoolsismostlynotsynonymouswithprofit-making(mostareaformofcharity).However,togettothatpointwilltakequiteafewchanges,manyofwhicharesuggestedlateroninthisbook.Firstweneedtoagreewhyweneedchange.

Intheprivatesector,allocationcurrentlyhasnothingwhatsoevertodowithneed.Ifyouwantit,andcanaffordit,youcanhaveit.Thatissimilartomostprivateschooling,evenwhen,ostensibly,thereareentranceexams(manyarenotashardastheymakeout).Theprivatizationprincipleisthatapurchasecanoccurregardlessoftheneedyoumighthaveforthatproperty.Afewregulatorymeasuresmight

beinplacetotrytodeterpeoplefrombeingtoogreedy–capitalgainstaxationonsecond,thirdandfourthpropertiesandsoon–butthesecanoftenbecircumventedbytheknowledgeable.60Muchmorethanthatisneeded,includingaculturechange–butaculturechangeis

possible.Theaffluentdonotsendtheirchildrentoprivateschoolsownedbyshareholders.Whyinthefuturedowethinkourchildrenandgrandchildrenwillbewillingtopurchasepropertyfromthosewhohaveboughtitforsomuchless?Peoplelearntoavoidbeingrippedoffafterfirsthavingbeenstung.Anotherwayispossible.

Affordableprivaterentingispossible,butforittobeaffordablerentcontrolsareneeded.Statisticsreleasedduring2012haveshownthatwelloveraquarterofthepopulationofcountriesaslargeasGermany,asincomeequitableasDenmark,theNetherlandsandSweden,andasaffluentasLuxembourgandAustrialiveinprivatelyrenteddwellingswithno

subsidyfromthestate.Rentingcanbeverypleasurable;inSwitzerlandalmosthalf(49.9%)ofallhouseholdsrentprivately.Thetop1%ofSwissearners(includingmanybankers)takehalfasmuchasintheUK,sothosewithlesshaveproportionatelymoreandcanthereforepaymarketpricerent.61

Housingsystemsarefarfromperfectinthesecountries,andthepoorareoftenstilllivinginsubstandardhousing,butthegapsinlivingstandardsbetweendifferentgroupsinBritainarefarwiderthaninplaceslikeSwitzerland,GermanyorDenmark.

TakealookatawiderviewoftheGleadlessValleyinSheffield.SomuchthatisnewandinnovativeinhousingfinanceishappeninginLondonthatitiseasytoforgetthatthereason

whyhousingissoexpensiveinthecapitalisthatoverrecentdecadesmoreandmorepeoplehavebeenencouragedtomovetothesouth.ThereisnowlesshousinginSheffieldthanthereusedtobe.Muchhousingwasdemolishedadecadeagotopropuptheprivatemarket.Iusedtotakemyeldestson,whenhewasatoddler,towatchtowerblocksinSheffieldbeingblownupintheearlynoughties,oftenquitenearthisspot.Istopped

doingitwhenhestartedtosay‘towergoesboom’whenwepassedthosethatwereleft.SchemestobuildaffordablehousinginLondonarepartlyschemestosqueezemoreandmorepeopleintothatcity,whiletherearecitieswithhugeamountsofgreenspaceandbuildingsrequiringrenovationnotmorethanacoupleofhundredmilesaway.

Itiswhereincomeinequalitiesarehigherandprivatelandlordsaremostunregulated,suchasintheUKandtheUS,thatprivaterentingbecomesunaffordable;andthatiswhen

peoplebecomedesperatetobuy.Averytightlyregulatedprivatemarket,weightedmoreinfavourofthetenant,canbealargepartoftheidealsolution.Regulationisveryhardforindividuallandlordstoopposeafteritbegins.Whatcantheydo:demolishtheirpropertyinafitofpiqueifdecentregulationsareintroduced?Incomeinequalitiestendtobehigherincountrieswithlessregulationovertheallocationofhousing.Itishardtoknowwhatcamefirst:thetolerationofrisinginequalitiesorthederegulationthatallowedinequalitiestorise.Insuchcountrieswhatregulationremainstendstobeaone-wayprocess,limitingthecontributionofthestatetosubsidizingjustthoseoninsufficient

incomes,butnotlimitingthescopeoftherichtoprofitfromthehousingmarket.Themapbelowshowsthemaximumthatthestate,in2013,cancontributetorentsacrossEnglandandWales.62Theselimitscanbeimposed,andyetthereislittlecontroloverwhatrentslandlordscandemand,oroverhowmanypropertiesonepersoncanbuy,andleaveempty,shouldtheywish.63

Why,though,doweneedmuchofaprivaterentalmarketatall?Whynotthelarger‘property-owningdemocracy’thatweweremovingtowardsbeforethecrashandthehugeriseinprivaterenting?Intheshortterm,whatmakesbuyinghousingmoreaffordableisalowinterestrate.Byautumn2012interestratesweresolowinthe

UnitedStatesthatthe‘averageonthefifteen-yearfixedmortgage,apopularrefinancingoption,dippedto2.69%,downfromlastweek’srecordlowof2.73%’.64Thiswasthelowestrateonrecord,atthattime,ofallreliablerecordsgoingbacktoatleastthe1950s.Why,then,arewenotseeingmorebuyingandlessrenting?Interestrateswereforceddownby

centralbankstodroptohistoriclowsin2008.AcrossmuchoftheperipheryofmainlandEurope,andbothintheUKandintheUS,hugenumbersofpeoplehadbeencoercedintoborrowingextremelylargesumsofmoney.However,thefinancesofthenextpotentialcohortofhome-buyerswereonaverage(bythen)insuchapoorstate,andtheirabilitytoputdownadeposithadbeenso

diminishedbytheslump,thatlendersbecamedesperate,andtheBankofEngland,theEuropeanCentralBank,theFederalReserveBankandalltheothercentralbanksofrich(andnotsorich)nationsstartedtodowhateverittooktokeepbaserateslow.Foratime,intheUK,thiscameclosetogivingmoneyawaytothecommercialbanksthatdidthelending(at0.5%orless),and,althoughthemoneystillhastoberepaid,atthatinterestratethereisnotsomuchurgencytorepay.

Figure10.MaximumweeklylocalhousingallowancepermittedafterApril2013,England

andWales.

Becausenoalternativetofree-marketmayhemisimagined,interestratesintheUKhavetostaylowtodaytopreventthehousingcrisisturningintoaUS-styledisaster.Tenyearsagoadeposittobuyahomein

theUKwasaboutninemonths’averagesalary;nowitisthreeyears’.65Banksrequirefarhigherdeposits,andaveragesalarieshavefalleninrealterms.Withhousepricescontinuingtosoar,somethinghadtogive,andthatsomethingwasinterestrates.Unlessoffersofverylowrateswerecontinuallymadetonew‘marketentrants’,thehigh-pricedhousingmarketcouldnotbekeptlimpingalong.Recentlyakindofdesperationhasbeenslippingintothelanguageusedtodescribehousingprices:theyarejustabouttofall;arefalling;arerapidlyrising;orjustabouttoriseevenfurther.Thereisnostability.Nocertainty.Asanexample,hereisjustoneofthethousandsofearly2013reportsonthestateoftheUShousingmarket.It

isworthreadingeachsentencetwicetotrytoworkoutwhatisactuallybeingsaidhere:

Single-familyhomepricesintheUnitedStatesslippedinNovemberfromamonthearlier,butwereup5.5%comparedwithayearago,accordingtotheS&P/Case-ShillerhousingpriceindexreleasedTuesday.Theannualincreasebuildsona

stringofgainsthatpointtoahousingmarketthatisonthemend.‘Housingisclearlyrecovering,’

DavidBlitzer,ChairmanoftheindexcommitteeatS&PDowJonesIndexes,saidinastatement.Pricesonanon-adjustedbasis

slipped0.1%fromOctober.Pricesfellinabouthalfofthetwentymetropolitanareascoveredbythesurvey…AseparatereportonTuesdaysaidconsumerconfidenceintheUnitedStatesdroppedinJanuarytoitslowestlevelinmorethana

year.66

Describinghousingpricesas‘recovering’whiletheyarestillfallingshowshowfamiliarfinanciershavebecomewithpricesfalling.But,atthesametime,inotherpartsoftheUnitedStates,financierstalkedofarapidrecoverybeingunderwayinlate2013.InBritain,housepricesaredeeplydivided.InKingstonuponHullthepriceofanaveragethree-bedhomewasunder£70,000andfallingrapidlyearlyonin2013.Duringthatsameyear,inKensingtonandChelseainLondon,averagepricesofflatsroseabovethe£1millionbarrier,oftenforjusttwo-bedflats.Inoneyearpriceshadrisenby13.4%.In2008theaveragepricehadbeen£750,000.67ItisinLondonwherethehousingmarketisoverheatedtothepointofmeltdown,

but,asifdefyingthephysics,itcontinuestogethotterandhotter.Asitdoesso,thereisnosenseofsuretyoverthecurrentdirectionoftravel.On16September2013somefiftynewsstoriesweregeneratedbyonepressreleaseissuedbythepropertyfirmRightmove.PartsofthatpressreleasereportedfallsincentralLondonprices;otherpartsreportedariseinoverallLondonprices;fallsinpricesawayfromLondon;andarisenationally.Nobodyreallyknewwhattothink.

ViewofSheffieldcitycentre,withStPaul’sTower,nowthecity’stallestbuilding,totheleft.Thetowerconsistsofprivateapartmentswithretailonthegroundfloor.OutsideofLondon,developmenthasbeenfarmoremodest,butthefutureisstillfarfromcertain,despitethelackofboom.Heretheproblemisnotimpossiblyhighprices,buttoofewbuyers.Thisisdespiteahugeinfluxofnewstudentstothisareaofthecityinthelastdecade.TheVictoriantownhall,builtinthelastdecadeoftheoldQueen’sreign,canbeseenjusttotheright.SheffieldHallamUniversity

inthecentre,alongwiththerestofhighereducationinthecity,nowbringsinmoremoney

totheSouthYorkshireregionthanallthecombinedmetaltrades.Newhousingreflectschangingtimesandabeliefthatpeoplewillcrowdintocitycentresagain,but,forthattohappen,thecentreswillhavetobecomemoreaffordableandremainaffordable;andyoung

peoplewillhavetokeeponcomingtothesecitiesinthenorth.Thecostofhousingcannotcontinue

toriseasincomesandbenefitsfall.

Tothinkabouthowhousingpricesmightalterinthenearfuture,takeastepbackandlookatthenational

trendsinUKhousingpricesoverthecourseofthelastthirtyyears(inthegraphbelow).IntheUKthe1980sboomlastedfromSeptember1983toSeptember1989;thefallbottomedoutinDecember1992andpricesrosefromthenonwards,moreofteninlateryears,untilapeakwasreachedinNovember2002.Theperiodsincethenhasbeenvolatile,nowpossiblyenteringitsseconddecadeofvolatility.After2002,pricesstillroseinthe

wakeoffalls,butusuallybylessthantheyearbefore,althoughthedegreeofoscillationintheannualandmonthlyswingsisfarhigherthanbefore2002,giventhegrowingpricevolatility.Itakethefinaldottedlinefurtherdownthanothersmight,suggestingitcould,infuture,drop

belowthemostrecent2008minimum.Idothisbecause,asin1989,Idonotthinkweareyetatthelowpointtowhichhousingpricescouldorshouldfall.If,in1989,youhadsaidthattherewouldnotbeasgreatafallagaininhouseprices,youwouldhavebeenwrong.Theyear2008sawamuchgreaterfall.Icouldbewrong.Pricesmaynot

dropagaininthenexttwodecades,atleastnotinLondon.BothyouandIhavenowayofknowingwhatthelong-,ormedium-,orevenshort-termtrendwillbe.Thatisthenatureofmarkets.Thehousingmarketmayhaveturnedin2008andnowbeonthewayup,butwithsomeverydramaticfitsandstarts.However,ifitis,someofthefundamentalrelationshipsbetweenaverageprices

andaverageincomeswillhavechangedforever.Onepersonwhocloselyfollows

theUKratioofhousepricestoearningsisDavid(Danny)Blanchflower,nowProfessorofEconomicsatDartmouthCollegeintheUnitedStates.InSeptember2013hearguedthatthatratio,stillatahighof4.5to1,remainedwellaboveitslong-termtrend.68Predictinghousepricescanonlybeaveryinexactscience.ButIplacemostfaithinDavidBlanchflower’sassessmentthatthehousingpricetrendisstilldownwardsin2013.HeissupportedbytheIMF,whichsayshousingpricesintheUKremaintoohighandcouldeasilydropbyafurther10%–15%relativetoBritain’scurrentaveragesalaries,

whichthemselvescontinuedtofallduring2013.69Thegraphbelowshowstheaveragechangeinhousingprice,nottheoverallprice,andincorporatestheBlanchflowerandIMFassessmentsindetermininghowtoplacethemostrecent(dashed)trendline.Becauseinmostyearsthebarsin

thegraphbelowhavebeenabovethezerohorizontalaxis,meaningthatpriceswererisingduringthosequartersofthoseyears,property-ownersinBritaintendonpapertobefarbetteroffthanthosewhodonotown.Ofcourse,thisvariesverymuchbetweendifferentareas.Insomepartsofthecountry(wherepriceshavenotrisenmuch)property-ownershavenotseensuchincreasesintheirwealth.Inother

partsthegraphisjustamildechoofthehugeincreasestheyhaveexperiencedinthenominalvalueoftheirhomes,especiallyinthemostrecentyears.Whatmakesanarearichorpoor

canvary.Inthepast,beinglocatedinthesouth-westquadrantofacityoftenmadehousingmoreexpensive,astheprevailingwindbroughtcleanairmorefrequentlyintothoseneighbourhoods.Today,beinglocatednearatransporthubcanhavejustasgreatanimpactonanarea’saffluence.Anotherdeterminantoflocalvariationsinurbanhousingpricesisahouse’spositionrelativetopoorareas.Thefurtherawayitis,thehigheritsvaluetendstohavegrown.InmoreequalcountriessuchasFrance,JapanorSweden,where

fewerpeopleareeitherverypoororveryrich,livingawayfromthepoorattractsalowerpricepremium.Housingpriceinflationtendstobelowertoo.Volatilitysuchasthatshownaboveisrarer.Analystswhodonotfindgrowingwealthpolarization(intheperiodfrom2000upto2006,justbeforethecrash)tobethemajorproblemconsidervolatilityasthekeyunusualaspectoftheUKhousingmarket.AsresearchersfromGlasgowUniversity’sDepartmentofUrbanStudiesconcludedinworkpublishedin2010,usingdatafrombeforeeventhemostrecentandmostvolatiletimes:‘Perhapsthemostimportantaspectofourfindings,however,isnotthetrend(orlackofit)inhousingwealthinequality,norits

cyclicalnature,buttheenormousamplitudeofthecycle.’70

Figure11.Three-monthonthree-monthhousingpricechange,1983–2012,UK,andtrend

lines.

Inmoreunequalcountriestherearefewerareasofmixedhousingtenure:fewerpeoplerentnexttowhereothersown.EveninLondon,therichtrytoliveawayfromthepoor–thoughthatmightmeana

distanceofonlytwostreetsaway,ratherthanthetwomilesthatarepossibleinanorthernEnglishcity.However,attheverydensestpointwithinLondon,wherepopulationismostcrowded,inequalitiesaremoreoftenfoundalongjustasinglestreet.ForinstanceinPimlico,themostdenselypopulatedpartofcentralLondon,thattwo-streetgeographicalgapcannotbemaintained,andstoriessuchastheonetoldimmediatelybelow(atthestartofthenextsection),oftherichlivingcheekbyjowlwiththepoor,aremorecommon.71Itreallycan’tbestressedenoughthatinmoreequitablerichcountriesthesocialgapbetweenrichandpoorisnarrower,notjustintermsofmoneybutalsoineducationalopportunities,inhealth

statusandinsharedsocialspaceandrecreationaltastes.Theperceivedneedtoseparateoneselfgeographicallyfromanyonepoorerisfarless.Therearefarfewerpeoplewhoareveryrichtocomplainaboutpeoplewhoareverypoorlivingnextdoortothem,ofwhom,ofcourse,therearefewertoo.Britainisoneofthosecountries

where‘location’determineshousingpricemorethananyotherfactor.InBritain,thelocationofahouseawayfromthepoorandnear‘good’schoolshasrecentlygrowninimportance.Whenestimatedstatisticallytherelativeeffectsofthesefactorsarefoundtobegreatestinnorth-westEngland,buttheabsolutegapsaregreatestwithinLondon,where,in2012,research

conducted(attaxpayers’expense)byLloydsTSBPrivateBankingfoundthatafifthoftopstateschoolswithinthecapitalappearedtocommandahousingpremiumofover£100,000.Thebank’sresearchersconcludedpropertywithinthepostaldistrictofHenriettaBarnettSchoolinnorthLondonhadthelargestpremium,of91%(£394,282),incomparisonwiththeaveragehousepriceinneighbouringareasinthatpartofLondon.72

OriginalGeorgianceilinglathscanbeseeninahomesetforrefurbishmentinNetherEdge,

Sheffield.Youhavenowayofknowingit,unlessyouknowSheffield,butNetherEdgeisanareawherepreciselocationisparticularlykeyindeterminingpropertyprices.Peoplewilltalk

aboutthedécorofhomes,thewonderful‘originalfeatures’oftheproperty,butwhereexactlyahouseislocatedwithinthissuburbofthecity,nearertoNickClegg’sconstituency,ornearertothecentralSheffieldend,willbewhatdeterminesthepriceyoumightpayortherentyouwillhavetopaytolivethere.Theolderuniversity(ofthetwoinSheffield)andthesteepRivelinValley

marktheotherboundariesofposhSheffieldmoreclearly.RecentlythesecondaryschoolnearestmuchofNetherEdge,wherethisceilingis,AbbeydaleGrange,closedbecausetoofew

childrenfromthisareawenttoitandsoithadentered‘specialmeasures’.Becausetheydidnotgo,itsreputationsuffered,butthereputationof

theneighbourhoodwasmaintained.MostchildreninNetherEdgegotohigher-rankingcomprehensiveschools,awayfromthecity

centre,furtherfromthepoor.Homesinthisareaarethenrefurbishedratherthandemolished.

Everythingisrelatedtoeverythingelse:schoolstohomes,homestopolitics,politicstoschools,

but,asthegreatUSgeographerWaldoToblerput

it,mostsimply,nearthingsaremorerelatedthanfar.

WhathappensinLondonismirroredinmicrocosmelsewhere.ThroughoutBritainthereisalocalschoolpremiumonthepriceofhousing.Thepremiumcanbenegative,ineffectadiscount,inthecatchmentareaofschoolsdeemedtobeverypoor.Itispositivewhenschoolsaredeemedverygood,andparticularlyinareaswithinwalkingdistanceofsomeofthemostexpensiveprivateday-schools–schoolsthatonly1%or2%ofallchildrenattend,andthatarealmostalwaysfoundinLondonandthesouth-east.Thuslocalschoolsalsomanagetoaffecttheinflationofpricesinthecapital.Itisnotjustthatthehighestpaidjobsaretheretoo.

LONDON

Everycityhasitsrichandpoorareas,butLondoncancombineextremesofbothinthesamestreets.Whenpropertypricesarehighenough,onlytwogroupscanaffordtomovein:therich,andmigrantswhoarepreparedtocramseveralpeopleintoeachroom.InonehouseonthestreetwhereIusedtoliveinPimlico,migrantworkerssleptsixtoaroominbunkbeds.Intheotherwiseidenticalhousenextdoor,asinglefamilyrattledaboutinagorgeousmansion.

–NeilO’Brien,DirectorofPolicy

Exchange,201273

Whenitcomestohousing,thereisnowhereintheworldquitelikeLondon.Sure,thereareotherexpensivecities,butnoothercityinthedevelopedworldcontainssuchadeep–andgrowing–chasmbetweenrichandpoor,andsuchcomparativelyexpensivehousingfor

bothgroups.TheextraordinarilyhighcostofallkindsofhousinginLondonrubssaltintothewoundsmadebyinequality.Eventhedirectorofaright-wingfree-marketthinktank(PolicyExchange)complains(asquoteddirectlyabove)ofnolongerbeingabletoliveinthecentreofthecitybecauseheisneitherrichenoughnorpoorenough.Othershaveacclimatizedtowhat

Londonhasbecome.TheyknowthereisthestrangeworldofZone1,wheremultimillionpricetagsarenowthenormforanythingwiththreeormorebedrooms.TheyknowofthehorrorsofshedsandovercrowdingininnereastLondon.ButmanyLondonersfindthattheseextremesmakewheretheylive–makeplaceslikeHaringey,orBrent,orEpping

Forest–appearmorenormal.ManyLondonerssaythatpeopleappeartobeableto‘muddleon’atleastforthetimebeing.Buttoanoutsider,especiallytosomeonelookingtorentorbuyinLondonforthefirsttime,itdoesnotlooklikethat.Rightnowthereisgrowing

divisionwithinLondon,divisionthatisreflectedacrosstheUKmoregenerallybutlessacutely.ByFebruary2013itwasreportedthattheaveragepriceofallpropertyinthecapital,ofanydwellinganywhereinLondon,hadreached£398,000.Thatisafortune;and,bythatpoint,itwasmorethan6%higherthantheaveragethathadbeenreportedforFebruary2012.Remarkably,however,itwasafterthatpointwhentheacceleration

reallysetin.Bytheearlyautumnof2013therisesfortheentiresouth-eastweresaidtobemorethan6%ayear.Somesuggestedthatthesehighpriceshad‘moretodowiththeallureofKensingtonandChelseaaddressessuchasEgertonCrescent–wheretheaverageis£8,136,000–thanthefortunesofBarkingandDagenham’.74However,pricesinWestminsterfellby7.4%inAugust2013.Initiallythatmini-slumpwasblamedonthesummerheatwave.75

OutsideofthecoreofZone1,pricescontinuedtorise,atleastthen.EveninthecheapesteastLondonboroughthecostofanaveragehomebyearly2013hadalreadyreached£210,944.Theentiresouth-eastEnglandaveragehadbythenclimbedto£211,092.

Londonisnotthemostexpensivecityintheworldtolivein–thatisTokyo.But,asincomesaremoreequitablydistributedinTokyothantheyareintheUK,asthetransportsystemworkssowellthere,ascrimeissolow,andasmedianwagesarehigher,livinginTokyoislessstressful.Lessstresshappenswhenyouworrylessaboutcrime,aboutcompetingatworkinasystemthatrewardsageingandcollegialityovernakedambition,andwhenpeoplehavehigheraveragelevelsofmentalhealth.TokyoisthemostexpensivecitybecausetheJapanesepeopleremainamongthemostprosperous.ThereisverylittlepovertyinJapan,76andbecauseofthat,andbecausetherichtakesomuchlessinJapan,thereismuchgreaterchoice

formostpeopleaboutwhere,withineachJapanesecity,theycanlive.Wherevertheylive,however,spaceisatapremium,asitisinanymegacity.Therearefifteencitiesinthe

worldthataremoreexpensivetoliveinthanLondon,but(otherthanTokyo)mostofthemaresmaller,allhavefewerpeoplelivinginpoverty,andallhavecheaperaccommodationneartheircentres,ifnotintheircentres.Notoneissurroundedbyanentireregionwheretheaveragehousepriceexceeds£200,000,andnotonehashousinginitscheapestenclavethatisasexpensiveasthehousinginNewhamorDagenham(twoofLondon’slowest-pricedboroughs).Londonisalsoveryoddinotherways.Ithasthegreatest

concentration,andthelargestnumber,ofpeoplelivinginpovertywithinWesternEurope.Andthiscityinwhichsomanypoorpeopleliveisalsobecomingmoreexpensive,bothonitsowntermsandinrelationtootherplaceswithexpensivehousingandahighgeneralcostofliving.AllthisisalsooccurringatatimewhenmedianincomesintheUKarefalling.77

ItisthetopendoftheLondonmarketthatreceivesthemostattention,butthoseincreaseshaveaprofoundeffectonhousingpricesacrossthecapitalandacrossthesouth-eastofEngland.PricerisesinEgertonCrescentrippleouttoNewhamandDagenham.TypethatKensingtonstreetnameintothepropertysaleswebsiteZoopla,and

thefirsthityougotinSeptember2013wasFlat1ofNos.26–7,whichsoldfor£610,000inMarch2002andwhichthewebsitenowestimatestobeworthover£1.5million.Recently,London’smostexpensivehousewassoldfor£300million,whilethemostexpensiveflatfetched£65million.78

Whensuchexcessesaretobefoundnearby,oronlyafewmilesaway,asking‘just’£0.2millionforamodestthree-bedhomeintheEastEndbeginstoappearreasonable.ThetopLondonpricemaywellbe

higherthannearlyathirdofabillionpounds,becausenotallsalesarerecordedthroughtheLandRegistry.Whenindividualsmasqueradeascompanies,theirpropertyisofficiallytransferredfromonecompanytoanother,ratherthansold.

Clearlyitisnotacompanythatwishestoliveinaflat,butapersonorfamily;butifacompanyownsitandsomeonebuysthecompany,theflathasnotbeensold.Itmayappearthatthepointbeingmadehere–thatafewveryrichpeoplehidetheirpurchasesofpropertythroughcompanies–isapurelyacademiconeandcannothavethatmucheffectuntilsuchbehaviourbeginstotemptawiderrangeofpeople.Wearegettingclosertosuchextremes.Thepricesinthesouth-eastofthe

UKarealsobolsteredbyfactorsotherthanconvenienceoflocation.Forsomeoftheworld’srichestpeople,Londonhousingoftencomeswithanextraincentivetobuy.ItisalittlelikethoseshopsinthetouristareasoftheBritishcapitalthat

advertise‘tax-freeshopping’forforeignnationals.TheLondonpropertymarketsellsitselfasabargaintothosewhoarenotBritish,butareintheverytopglobal-wealthbracket.ButLondonisfarfromabargainforpoorerimmigrants,whoareoftenfleecedofthemajorityoftheirincomestoliveintheworsthousinginthecapital.ToppricesinLondoncanriseso

highbecausetheycomeataspecialdiscounttopurchasersfromoutsideBritain.OverseassaleshavesoaredduetointerestfromAsia.Itisnotjustthetaxbreaks,butalsosterlingthatisattractive.In2013theNewYorkTimesexplainedtoitsworldwidereadershipthatthecurrentweaknessoftheBritishcurrencyhasonlyreinforcedpricerises,asthe

poundslumpedduring2008,andby2013wasstillworthabout20%lessagainstboththeUSdollarandaseriesofotherAsiancurrencies,‘givingAsianpurchasersmoreleverage’.79Inaddition,withnon-domiciledstatus,youcanbuyinawaythatavoidsagreatdealoftaxonyourpropertyandonyourincome.Inhis2013autumnstatementtheChancellorproposedtoendthisloopholebymakingnon-residentownersofpropertyliablefortaxontheircapitalgainsmadeafterApril2015;buthedidnotsayhowheproposedtocollectthetaxfrompeoplewhomightnothaveanyaddressintheUKaftertheyhadsoldtheirsparehomeshere.80

Thereisaconcurrenteffectofthepoundbeinglowerthatalso

influencesLondonandthesouth-east.Britishpeoplewhoownpropertyoverseasarefindingitcoststhemmoreandmoretomaintainit,totraveltoitandtoliveabroadwhentheyareinit.Overseasproperty-ownersarepredominatelybasedinLondonandthesouth.However,iftheirpensions,paidinsterling,donotsoonriseinvalue,manyfromtheUKlivinginSpainmaysoonhavetoreturn.TheywillneedhomestoreturntoandthenevenmorepropertyinSpainwillbeempty,whilemorepropertywillbeneededintheUK,especiallyinthesouthofEngland.Buildingformigrants,includingreturningmigrants,iseasiertojustifythanbuildingformoresecondhomeowners.ElsewhereinsouthernEurope,in

Cyprus,inGreece(especiallyinCrete)andinMalta,therearemanyBritishpensionersnowfindingithardertogetbyontheirdevaluedsterlingpension.81On25June2013,whenthegovernmentcutthewinterfuelallowancefor100,000pensionerslivinginwarmeroverseascountriesonthegroundsthattheydidnotneedit,theymaynothaveenvisagedthatthismightcauseafewextrapensionerstothinkofreturningtotheUK,pensionerswhowouldbequitelikelytorentandperhapsqualifyforhousingbenefit.Attheverystartofthisbookgreat

storewasmadeofthefactthatthevalueofallresidentialpropertyinBritain,includingallthatwhichisbeingrented,isestimatedat£5.5trillion,butitwasnotthenpointed

outthatnowalmostaquarterofallthismoneyistiedupinLondon,andthatmuchoftherestofthatnationalwealthishoused(literally)nottoofarfromLondon.Thegraphicbelowmakesthisclear.TheLondoneffectissogreatthatresidentialpropertyinthenearbycommutertownofReadingisworthmorethanallofthatinthemuchlargercityofNewcastle-upon-Tyne.TheDirectorofResearchatthe

companythatproducedthe£5.5trillionfigure,Hometrack,explains:‘Thehousingmarket’stotalvalueisonascalethatdwarfsthecommercialpropertymarketandistwicethesizeoftheFTSEAll-Shareequitymarket.Thisiswhyhousingissoimportanteconomicallyandasastoreofwealth.Withthevalueof

outstandingmortgagedebtatjustover£1trillion,theanalysisshowsjusthowmuchequitythereisinthemarket.’82Thisimbalanceisonereasonwhythereissuchanobsessionwithkeepingthehousingmarketoverinflated.Some£4.5trillionofthewealthofpeopleinBritain,mostlythewealthofarichminority,reliesonpropertyvaluesstayinghigh,andespeciallyontheirstayinghighinLondon.

Figure12.ThevalueofpropertyinBritainbyurbanarea,2012,totalequity(£billion).

InSeptember2013theRoyalInstituteofCharteredSurveyors(RICS)calledontheBankofEnglandandthegovernmenttoactifhousepriceinflationexceeded5%annuallytopreventanotherbubbleforming,perhapsthrough

encouragingtherationingofmortgages.Thisparticularsuggestionwasgreetedwithoutragefromsomeofitsownmembers,businessleadersandTheTimesnewspaper,representingpeoplewhowishtoprofitmoreandmorefromtheincreasesinLondon,theareabeingtargetedbytheRICS.83

However,wheneventhisorganizationtriestoslowdownthemadness,youbegintosensethatsomethingisseriouslygoingamiss.Surveyorsdobetterthefasterthemarketmoves,whentherearemorehomesthatneedtobesurveyed;buttheyalsoknowthattheywilldoverybadlyifthebubblegrows,burstsandslumps.Someofthemoneythathascome

intoLondonfromoverseasbuyers

hasbeenspreadaroundthesouth-eastofEngland(and,despitethefallsinthevalueofthepound,alsooverquitealargeareaofFrance),asolderownerssellup,moveoutandcashin.Oftenfewquestionsareaskedaboutwherethatoverseasmoneywasmade.AmanwhoprofitsbysettingupasweatshopinChinaorIndiamight,yearslater,wishtobuyhisdaughteraflatinKnightsbridge.Shedidnotreallymakethatmoneyandneitherdidhe.Itwasmadebythosewholabouredinthatsweatshop.However,ifworkersinIndiaandChinasecuregreaterrightsandaslightlylargershareofincomeinfuture,asworkersinEuropeandNorthAmericadidbeforethem,therewillbelessmoneyflowingintoLondon.The

capital’stop-endestateagentsrarelyseemtopausetowonderwhetherthenumbersortastesoftheveryrichareasrobustastheythink.Seenasasafehaven,London

remainsafavouredlocationfortheworld’srichestpeople.Buthowsafeaninvestmentisthisformercapitalofanoldimperialempirethatnowfunctionsmorelikeanoffshoretaxhaven?Ifyouhadalargeamountofmoneytospend,whatwouldittaketomakeyouworryaboutbuyingasingleflatatahighlyelevatedpriceinaLondonstreet,whenspreadingitoutindiverseinvestmentsmightbethebetteroption?Whatconditionswouldhavetoprevail,whatstorieswouldyouhavetohear,beforeyouthoughttwiceaboutalltheseso-called‘nottobemissed’

opportunitiestobuybecausepriceswereduetoriseevenfurther?Whatif,inlateautumn2013,

followingthenewsthatnon-residentswouldsoonbeliableforcapitalgainstax,theworld’ssuper-richweretolookmorecarefullyatwhatthetruevaluepersquaremetreofLondonpropertyactuallywasandthencompareitwithotherplaces?OrwhatiftheyweretolookatlivingconditionsnotthatfarawayfromthemostexpensiveplacesandwonderjustwhatLondonmaybebecoming,givenhowpeoplearecurrentlyhousedtheretoday?Dotheworld’ssuper-richreallyneedtolivenearwhereallthecentralLondonofficeworkersalsowanttocongregate,andnotthatfarawayfromveryabject

poverty?Thereareotherplacestobuy.Housingconditionsinpoorerparts

ofthecapitalhaverecentlybeencomparedunfavourablywiththoseinHyderabadinIndiaincommentsmadetoinvestigativejournalistsexamininghowpeoplehavebeenlivinginthepoorerpartsofNewhaminLondoninthelasttwoyears.Oneexamplegivenwasthat,during2012,afamilyoffourwithababywasfoundinLondonillegallyrentingasingleroominanunlicensedhousecurrentlyinmultiple-familyoccupation.84Theconditionsinthesehomes–problemswiththesewage,rubbish,rats,bedbugs,cockroaches,butabovealltheacuteovercrowding–aresimilartotherookeries(slums)

ofthecapitalthatweremostlydemolishedbetweenfiftyyearsandahundredyearsago.

ItmightlooklikeLondon,butitisnotLondon.Instead,thisimageshowsanewmixed-usecommercialandresidentialdevelopment

overlookingaformerindustrialareatothenorthofSheffieldcitycentre.ThisparticularstyleofLondonpropertydevelopmentisnowapedaroundtheworld,includingwithinBritain.It

wouldnotbehardtoimaginebanksofcomputerscreenssurroundingtheconcretepillarswithintheseopen-planoffices,werethisblocktobelocatedwithintheSquareMileandnotatwo-

hourtrainjourneyduenorthofit.Becauseofthatdistance,anddespitethesupposedlynear-

frictionlessspeedwithwhichinformationcanflow,thisentirebuildingcannowberentedforfarlessthanwhatafractionofasinglefloor

wouldcostintheheartoftheBritishcapital.But,despitethelowcommercialrent,thesefloors

remainempty.Volatilityincommercialpropertyprices,letsandoccupancyisevengreaterthanintheresidentialsector.Whenfirmsaredoingwell,theycanjustifymovingtoswankynewoffices,butwhentheyaredoingbadly,itisbettertosackspacethansackpeople.Farmorearethenaskedtoworkfromhomeformoreoftheworkingweek,ortobecomeself-employedandthenbecontractedbackin.Workingfromhomeimpactsonwhatspaceahomeneeds.Everythingis

related.

TheLondonrentalmarketisnotoriouslyexpensive.Eachroominamultiple-occupancydwellinginLondoncanearnthelandlord£400amonth.Potentialtenantsmightfinditslightlycheapertorent(illegally)ashedinabackgarden,ataround£350amonth–althoughsuchanarrangementusuallyinvolvesnohotwater,barelyanyheatingandmattressesonthefloor.IfaroomisinapartofLondonthatisbothpoorandhardtogetto,itcanberentedfromaslittleas£240amonthinafour-room(twoup,twodown)terrace.Ifyouwishtoinvestigatethisworldyourself,simplyspendadaylookinginshopwindowsinpoorerbutquitecentralpartsof

Londonatthelittlecardsadvertisingspacesinthecheapestofformerhomes.ItisnotjustininnerLondonwherethousandsofshedsarenowusedforhousing;thepracticehasspreadasfaroutasSlough.Boththemostexpensiveflatsin

Knightsbridgeandtheshedsatthebottomofthe‘housingladder’aremassivelyovervaluedasplacestosleep.NooneknowshowmanyshedsinLondonarecurrentlybeingletillegally.However,onedatacompanyclaimsithasmapped,inwhatitclaimsisauniquenewdatabase,allthosethatcouldbeusedforsleepingthroughoutthewholeofGreaterLondonandfurtherout.ThisdatabaseisavailableforpurchasefromtheGeoInformationGroup,whichsellsitselfasaleading

supplierofgeospatialdataandservices.Thecompanyexplainedthatthereleaseofitsnew2013product,theUKMap®ShedsBaseMap,wastimedtocoincidewitharecentinitiativesetupbythegovernmenttotackletheproblemof‘BedsinSheds’.Quitewhatthatinitiativeisremainsunclear.However,itsuggestsitis‘offeringtheidealmappingsolutionforthosewhoneedtoaccuratelyidentifyandactonillegaldwellings’.85Wherethereisaprofittobemade,eveninstoppingothersmakingaprofit,nostoneisleftunturned,andnoshedneedbeoverlookedshouldyourlocalLondonboroughbuythissoftware.Thelandlordswhorentoutthe

shedssaythattheyarenotforcing

anyonetotaketheiraccommodation.Theyarejustplacingtheshedsontheopenmarket.Whatthey’redoingisillegal,86buttheymightsimplyrefertothatas‘toomuchredtape’.Thisisoneoftheproblemswithhavingsuchanopenmarketinhousing.Ifitwerebettercontrolled,andifthepenaltyforhousingpeopleinshedswaspossibleimprisonment,Iverymuchsuspectlandlordswouldstarttobehavebetterandwould,forinstance,alsoensuretheyalwayspaidtheirtaxesonrentalincome.Whenlettingisillegal,notaxispaidonthatrentalincome.Encouragepeopletoprofitgreatlyandthen,forsome,‘bendingtherules’isjustaboutbeingmoreentrepreneurial.Anadequatenumberofinspectors

withadequatepowersareneeded.

Otherwiselandlordswillnotjustletoutsheds,butwillbuildsubstantialillegaltwo-storeystructuresthewidthoftheirproperties’backgardensandrenttheseoutbytheroomtoseveralfamilies.Atpresentmostoutbuildingsarerentedouttosingleadultsorchildlesscouples,butinthedistrictofSlough,somewayoutsideofLondon,injustonesmallpartofthatdistrict,some211outbuildingswererecentlyfoundtohavebeenrentedout–andallbutoneillegally.Thelocalcouncilhaveestimatedthatupto3,000shedsmaybeoccupiedinthedistrictasawhole.Intheorythelandlordscouldbefined£200aday,butsofarhardlyanyhave.87Clearlytheyarenotafraid.Theselandlordsmaynotbethatrich,buttheyareapingthe

attitudesofthosemuchricherthanthemselvesintryingtomakeaquickbuckoutofthosewhoarevulnerabletoexploitation.Theymayevenfeelthattheybothdeserveandneedthemoney,perhapstohelpthempaytheiroverinflatedmortgage.Whenpeoplearegivenafreepassongreed,thatgreedcantrickledown.Therich–whoareconcentratedin

London–oftenclaimthatitisonlybecauseofthemthatthepoorcanliveatall,havejobscreatedforthem,andreceivebenefitsmostlyfromtheirtaxesandcharityfromtheirlargesse.OneTimesjournalistrecentlycalculatedthat‘Londonpaysaquarterofallincometax,threetimesasmuchasScotlandandmorethanthenorth-east,thenorth-westandYorkshireandHumberside

puttogether.AquarterofallcorporationtaxcomesfromLondon,morethantwiceasmuchasanyotherregion.AquarterofallbusinessratesareraisedinLondon,asisathirdofallstampduty.Whenalltaxreceiptsareaddedup,Londoncontributesafifthofthetotalandthesouth-eastprovidesthesameagain.Despitetheregularpoliticalpronouncementsthattheeconomywillhavetobe“rebalanced”,Londonisthriving.’88CommentatorsfromthenorthretortthatLondonisthrivingattheexpenseofpropertiesbeingemptyjustafewhours’trainridefromthecapital,property(andpeople)justasshinyandnew,andnearertoopengreenspaces,butnotlocatedquitesoneartheheartofthemoney.

The(southern)Timesjournalist’sargumentcouldbewrittenanotherway,andinawaythatmighthelptomakethelogicalfallacyinhiscaseclearer.Itistruethattherichest1%ofpeoplepayoveraquarterofallincometax,anditisbecausemostofthemliveandworkinLondonthatLondondoestoo.Thiswillbeatleastthreetimesasmuchasthegroupjustbelowthem,thenext1%.Fromthis,doweconcludethattheveryrichestareveryworthy–areworththreetimesmorethanthesecond1%?Ordoweconcludethattheypaythemselvessomuch(andchargesuchhighrents)thatnotenoughremainsforotherstobepaidsufficientlyandforthoseotherstopayalittletaxintheirturn?Thissortofthinkinggivesrisetocoalition

governmentthatactuallycelebratestakingpeopleoutoftaxbecausetheirincomesaresolowthattheycannotaffordtocontributetothecommongood.Thejournalist’sargumentis

scuttlednotsimplybyinequalitiesbetweenrichandpoor,butbyinequalitiesallupanddowntheincomeandhousingscales.Itisbecausethereissomuchinequalityattheapexthatmostpeopleinthetop10%intheUKdonotseethemselvesasrich.Ownathree-bedhouseinSloughandyouandyourfamilymightwellbeinthetoptenthofthecountrybyincome,shouldyoucollectivelybringin,say,£60,000ayear.Butthatmightnotquitecoveryourmortgagepayments.You,yourpartnerandyourgrown-upchild

mightallbeworking.Youmaybeinthetop5%ofpeoplebywealth,giventherisingvalueofyourhome,butyoumaystillbestrugglingtogetbyeachmonth.Sowhatoptionsdoyouhave?Yourentouttheshed.Butwhatifweweretoevictall

thepeoplesleepinginalltheshedsinandaroundthecapital?Allthepeoplewhonowcanaffordtosleeponlyinsheds?Couldtheproblemsbesolvedbymakingthepoorestgoaway,byclearingouttheshedslikesomeLatinAmericangovernmentmightclearoutitsfavelas?What,ingeneral,willhappen,if

Londoncontinuesonitscurrenttrajectoryandeventually‘relocates’(forwhichread‘evict’)everyonelivinginnormalhousingwhoreliesonbenefitsandwhodoesnotpay

tax,isthatthecity’snaturewillchange.IbelievethatLondonwillbecomesoullessandcruelasaresult.89Thedesperate(thosebelowtheradarandnotreceivingwelfarebenefits)willstillrentsheds;they’lljustneedtoensuretheyhavenoheateratallsotheinfra-redcamerascan’tspotthem.Whatisneededisacultural

changeawayfromgreed.Weneedareturntoatimewhenifyouwantedalodgeryouwouldputtheminyourthirdbedroom,notintheshed.Weneedanewfuturetoo,notjustthebestofthepast.Weneedfewerpeopleneedinglodgersandfewerpeopledesperatelywantingtolodgewithincommutingdistanceofthemostoverheatedquarteroftheeconomy.Thealternativeisa

dystopiathatwouldquicklycometobeseenasnormal.WhatifLondonweretocontinue

toboomeconomicallyandtherestofthecountrycontinuetoslump?Withevenmorehigher-ratetaxpayers,LondonerscouldsoonbepayinghalfofallthetaxintheUK.SomeonejokedtomerecentlythattheymighthavetobuildanelectricfencearoundtheM25.PeopleinLondonwhowerenotamongtheveryrichestwouldfinditevenmoredifficulttoacquirehousingwithenoughspaceforchildren;therewouldbelessaccesstochildcare,soitwouldbehardertomaintaintwofull-timeincomes(thecarersthemselveswouldbepricedout).Whatitmeanstobea‘Londoner’wouldfundamentallychange.

Thecoalitiongovernmentopposeslimitsbeingputonbankers’bonusesbytheEuropeanUniononthegroundsthatthismightleadtosomeoftherichestleavingLondon;theywantthepoortoleaveinstead.Theywantthosetheyseeas‘unproductive’,becausetheyarepaidsolittleforwhattheydo,tomakewayformoreoftherichestpeopleintheworld.Theywantthechildrenoftherichtobegivenmorespaceinthecity;andtheywantthechildrenofthepoortogo.Butrecentlybankers’bonuseshavefallen,so,again,wehavenocertaintyastowhatdirectionthetrajectoryofthecapitalanditssurrounds,andbyimplicationamajorityoftheUKhousingmarketbyvalue,istakingatanyparticular

time.Butwedoknowthatiftheirbonusesriseagain,givenhowmanythousandsofhighlypaidbankersthereareinLondon,morejokeswillbemadeabouttheapparentneedforthatelectricfence.Weknowthatmoreareas,currentlyhomestothepoor,willbetakenoverbytherich.Butwecanalsohopethatthistrendiscomingtoanend.In2013Bloombergreportedthat

fewerthanhalfoftheluxuryhomesboughtinLondonduringallof2012werepurchasedwithcash.Thiswasarapidfall,downfromabouttwothirdsofallluxurypropertybeingpurchasedthatwayin2011.(Cashtransactionsarenotjustunder-the-radarmoney-launderingexercisesororganizedcrimepurchases;theyarehowtheveryrich,aswellas

landlordsanddevelopers,oftenbuyproperty.)Thatfallinveryrichpeoplebuyingveryexpensivepropertywithwhatwas,ineffect,sparecashwasshowntobedirectlyattributabletothebanksreininginbonuses.90However,despitethisfall,in2012,£3billionofbankers’bonusmoneywasstillspentonhousinginLondonandthewidersouth-east.91

Thatisahugeannualinjectionofincomebeingturnedintowealth.Someofthebonusmoneyisusedtobuyhomesforotherstorent,andtenantswillsoonmakeupthemajorityofLondonersasaresultofsomanymorenowatthetopchoosingsorecentlytotrytheirhandatbeingalandlord,althoughoftenusingalettingagencytodoallthehands-onworkinvolved.92

Whatmightbedonetocurbtheapparentworthofpropertyinthesouth-eastofEnglandrisinghigherandhigher,outofthereachofmostexceptthosewhowillthenchargeotherssky-highrent?Earlierchaptershavementionedintroducingrentcontrolsandbuildingmorehomesfornewarrivals.YoucannotjustbuildinthenorthandinWalesandScotlandandhopethatpeoplewillmovethere.YouneedtomovekeyactivitiesoutofLondon,jobsthatdonotneedtobeinLondon.Whycontinuetosqueezegovernmentandsomuchofthecivilserviceintothatcity,somanymajorhospitals,andsomanyuniversities?Muchwasmovedoutinthepast,albeittemporarily,duringwar-time,andtheBBChasrecentlyshownwhatispossibleby

establishinglargepartsoftheiroperationsinSalford.Currentlythereisnovisionofan

alternativetogrowingsocialandspatialpolarizationintheUK.Toturnaroundthehousingcrisis,farmorethanjustafewhalf-bakedpoliciesareneeded,especiallythecoalitionpoliciesaimedatunderwritinglandlordsandpushingpoorerpeopleoutofthesouth-east.Illegalactionsbylandlordsthatdeprivepeopleoftheirhomesbyevictingthemwithtoolittlenotice,orhousingpeopleinshedsthatareunfittolivein,needtobecomeseriouscriminaloffences.Actionsbylandlordssuchastheimmoralcontinuouspushingoutoftenantstobringinnew,higher-payingreplacementscandamagerenters’

mentalandphysicalhealth(onwhichmorebelow,inChapter7).Furthermore,sparebedroomsneednotbetaxedinsocialhousing,astheresimplyisnotenoughsmallerpropertytoaccommodatethosewhoneedit.Somewillendupinsheds.Justaswestillbelieve(Ihope)thatnooneshouldhavetosleepinashed,sotooweshouldhaveotherrealandrealizableaspirations.Thereisnogoodreasonwhywe

shouldnothavethelong-termaimofeveryfamilybeingabletoliveinahomewithaspareroomforaplayroom,orforastudy,orforvisitors.WealreadyhaveenoughbedroomsinBritainforthistobepossible(onwhichmoreinlaterchapters).Everysinglepersonshouldbeabletohaveatleastan

apartmentoftheirown,andnotbeforcedtosharewithotherswhomtheydonotknow.RearrangingpeopletofitbetterintothestockwealreadyhavecannotbedonewellbyauthoritariandiktatsliketheBedroomTax;buteventheHomeBuildersFederationoftheUK,representingprivatehome-buildingfirms,recognizesthatpensionerslivinginlargepropertieswithmanyemptyroomsarecurrentlysittingon(andin)propertyworth£400billion.Movefamiliesintothoselargehomes,andthepensionersintotheflatstheyvacate,havingbroughtthequalityofthoseflatsuptoscratch(includinginsulationandsoundproofing),andbothhouseholdshavejustonesparebedroom,ratherthanonehavingmanyandtheother

havingnosparespaceatall.InSeptember2013thethink-tankDemospublishedtheresultsofasurveythatfoundthat:‘Themajorityofolderpeopleinthree-,four-andfive-bedroomhomeswanttodownsize.’93

Ourproblemsinhousingaresogreatthatmanydifferentpoliciesareneededtohelpustofitbetterintowhatwehave;torenovatethestock;tobuildwhatextraweneed;andtofinancethechangesinawaythatdoesnotstokeupfear.Peopleneedmorerightstobeabletostayintheirhome:tobecometenantsiftheycannotpaythemortgage,butnottohavetomoveiftheyfallonhardtimes.Thataspirationmightcreatenewproblems,butalimitedversionoftherighttostayalreadyexistsand

so,lateroninthisvolume,considerationisgiventolookingatwhatextendingthatrightmightimply,andhowitmighthavemanyothercurrentlyunforeseenbenefits.However,itmaytakeafurtherslumpbeforeaculturalchangecantakeplace–beforehousingcanbemadesolidagain,dependable,notaspeculationforacquiringwealth,butaplaceofcertaintytosleepin,andtosleepsafelyin.Askingforhousingthatwon’timpoverishyouthroughyourmonthlyrentormortgagecostsisnotaskingformuch;butwithoutafurtherslumpitmightbeaskingforthemoon.

6

Slump

Humanbeingshavenochoicebuttooccupyaplaceintheworld,andmoreoftenthannotdevelopstrongemotionaltiestothatplace,sobeingdisplacedbyexternalforces–havingthatplacetakenaway,giventosomeoneelse,orevenbulldozed–isamongthemostappallingofsocialinjustices.Displacementinvolvestheremovalofabasichumanneed(shelter)uponwhichpeopledependabsolutely–practically,socially,emotionallyandpsychologically.

–TomSlater,Geographer,Universityof

Edinburgh1

WehavemorehousinginBritain–morehomesandmoreroomsinthosehomes–thanwehaveeverhadbefore.Thisisnotjustinabsoluteterms,butperfamily,perperson.Itisnotthatwehavebeen

buildingthatmanymorenewhomes.Wehavebeenbuildinglessthanhalfthenumberitisoftenclaimedthatweneed.2Whatwehavemainlybeenbuildingisnewroomsinoronexistinghomes.Wehavebeenopeningupatticsandinsertingskylightsandstairs.Wehavebeenputtingnewroomsontopofgaragesorbuildingentirenewwings.Wehavebeenextendinghomesbackwards,sideways,downwards,addinganensuite,asecondorthirdbathroomand,aboveallelse,addingmorebedrooms.Wehavebeendoing

thispartlybecausewethoughtweneededtheroom,andpartlybecauseweweretoldthatwewouldeasilyrecoupthecostoftheseadditionsintherisingfuturevalueofourproperty–thoseofuswhoownedorwerebuying,thatis.Wemaywellhavebeenwrong

abouttherecoupingofthecostsofrecentextensions.Whenpeoplelookupthesupposedvalueoftheirproperty,theyassumethatiswhattheywillget,butonlythosewhohavesoldhaveactuallyrecouped.3

However,whatwehavedoneistoensurethatthereisenoughpropertyforallwhoneedit,becausewehavebeenquietlybuildingallthoseextensionsandloftconversions,andsoenlargingwhatwehave,evenif

wehavenotbeenbuildingsomanyseparatenewdwellings.Inquietlyaddingontoexisting

property,wehavealsohelpedtostokeasysteminwhichpeopletryharderandhardertomovetowherethepropertyismostexpensive–wherethereistheleastspareproperty,butwheretherearethemostjobopportunities.However,wearenotavailingourselvesofeverysquaremetreofextraspaceweown,ofallthoseloftconversionsandbedroomsoverthegarage.Weareatthepointwebuildthem,butshortlyafterwards,whentheteenagerforwhomthebedroomwasbuiltturnseighteen,theroomisemptybecausetheteenagerisoff.HalfofallyoungwomeninEnglandnowgotouniversityeitheratageeighteenorat

agenineteen.Somestayathomebutmanymoveout.Ifwithinourmeans,wehaveextendedourpropertiestofitthemaximumsizeofourfamily,butwhenthatsizedwindleswetendnottomoveon,partlybecauseoffspringkeepboomerangingbackwhentheycan’taffordahomeoftheirown,andpartlybecausethelongerwewait,themore,wethink,we’llmake.Wecouldshareoutthedwellings

wehavebetter,andshareoutpeopleamongregionsbetter.Pricesrisinghigherinthesouthandfallinginthenorthhavecoincidedwithworselivingconditionsinallpartsofthecountry:moreovercrowdinginthesouthandmoredestitutioninthenorth.Ifcurrenttrendscontinue,wemaywellstartdemolishingproperty

againwheredemandislowest.Theperceived‘national’housingshortageis,infact,aregionalshortage,partofthegrowingnorth/southdivide.Everywherethereisvacanthousingthatneedstobeusedbetter.Butincertainareasthereisagrowthofemptyhousingstockthatispartiallydisguisedbyveryhighratesofunderoccupancy,ratesmadepossiblebyhowcheaphousingawayfromjobshasbecome.Or,toputitbetter,cheapasfaraspeoplewith‘good’jobsareconcerned.

Animagefrominsideacouncilflatthatisbeingrepaintedbythenewtenant.TheflatisinBatemoor,asuburbofSheffield.Three-bedex-councilhousesinBatemoorwereonthemarketfor£65,000in2013;other(non-ex-council)

three-bedterracesweregoingfor£75,000;two-bedsemisinthemoresalubriouscorners,

£85,000;andathree-beddetached,£100,000–allthisinanaveragepartofanaveragenorthern

city.Rentsherearemuchlowerthanthenationalaveragetoo,buthowthepropertyismaintainedreflectsthat.Ifyouwantsomethingdoing,oftenenoughitisbesttogetonanddoityourself.Yourlandlordmightchuckinthepaint,butunlessthedécorisreallybeyondthepale,theywillnotthrowinthepainterstoo.Similarly,ifyouaredismayedbythewayhousingingeneralis

allocatedatthewhimofothers,youneedtotakeactionyourself.Politicalparties,pressuregroupsandcampaigningorganizationscangiveyou

ideas,evenslogansandwebsites,butonlywhenpeoplehavedoneitthemselves,havetakenmore

control,hasbetterhousingbeenwon.Nopaternalisticpatroneverwillinglyhandsoverthekeys.Whenthingshavegotbetterinthepast,ithasbeenbecausetheyhavebeenmadebetter.Whenwetoleratewhatisbad,whatwegetis

bad.

Inasocietythatisgrowingevermoreunequal,agoodjobhascometobesynonymouswithonethatpayswell.Thisispartlytheresultofhowwefinancehousing,butthewaywefinancehousing,inmanyareas,isresponsibleforthecurrenteconomicslump.ThereisalsoagreatriskofcurrenteventscausinganewslumpinfutureinthenewlyoverheatedmarketsinandaroundLondon.Thisisaconcernaboveandbeyondtheissueoftheextenttowhichtheworld’ssuper-richmightbepartlytoblamefordrivinguppropertypricesincentralLondon.Ultimatelythequestionbeing

askedhereiswhetherhousinginBritainisreallyworththepricewearepayingforit.Thisappliesbothtonewlybuilthousingandtoall

existinghousing.Itisalsoworthaskingwhether,asawhole,somehousinghasbecomesoexpensivebecauseinotherplacesithasbecomesoverycheap–intheplaceswherepeopledonotwanttobe.Theproblemisthatwehavelittlechoiceinthematter.Ifwewanttobewherethejobsare,wehavetopaytheprice.Thatpriceisnotjustqualifiedinmonetaryterms.Italsoincludesqualityoflife,asincreasinglymoreandmorepeoplehavetoliveinaverysmallspaceofverylowquality.

SMALLROOMS

Britain’snew-buildhomesarethesmallestinWesternEuropeandmanyaretoosmallforfamilylife…

–RoyalInstituteofBritishArchitects,

20114

TheprobleminaplacelikeLondon,youmightthink,isthelackofrooms,butyou’dbewrong.EveninLondonthereare,asthe2011censusrevealed,moreroomsthanpeople,manymoreroomsthanpeople.Infact,thoughyoumayfindithardtobelieve,therearesomanyroomsinLondonthattherearemoreroomsthataredesignatedasbedroomsthantherearepeoplelivinginthecity.Roomsinnew-builtpropertytendtobetoosmall,butroomsinolderpropertiesaregenerallylargeenough,andmostLondonpropertyisstillold.LuckilytheVictoriansbelievedthatlotsofairinourhomeswasgoodforus.Unfortunatelytheyalsobequeathedusfree-marketeconomictheory.However,asdiscussedabove,thefreemarket

doesnotbalancesupplyanddemandwellwhenitcomestohousing;itusuallyincreasestheimbalancesthatalreadyexist.Notallroomsareequal.Itisnot

justthatsomearelargerthanothers;somedon’tevencountasroomsatall.In1911theUKcensusenumeratorswereinstructedto‘countthekitchenasaroom,butdonotcountscullery,landing,lobby,closet,bathroom,norwarehouse,office,shop’.5Acenturylaterthe2011censuswordingproposedaratherlessgenerousdefinition:‘Donotcountbathrooms,toilets,hallsorlandingsorroomsthatcanonlybeusedforstoragesuchascupboards.Countallotherrooms,forexamplekitchens,livingrooms,utilityrooms,bedrooms,studiesand

conservatories.Iftworoomshavebeenconvertedintoonecountthemasoneroom.’Whatconstitutesaroommayhavechanged–but,thankstothedecennialcensuses,wearestillabletoputanumberonhowmanyroomsexist.PartofthereasonwhytheBritish

havesomeofthesmallestnewhousingbeingbuiltisthenationalobsessionwithrooms–inparticular,withacquiringathree-bedorfour-bedhouse.Inthepast,Britishhousingwassoovercrowdedthattheideaofahouseofyourownbecametheidyll,theidealtobeacquired.Todayroomsaresometimesmadesmallertoaccommodatetheprizedlittlestripofgardenaroundahome.6

Furthermore,becausetheBritishpricehousingbasedonthenumber

ofrooms,ratherthanthetotalfloorspace,alittleextraprofitcanalwaysbemadebymakingroomsinanewpropertyjustafractionsmaller.Yetpeoplearegettingbothfatterandtaller,andmostofushavemuchmorestuff,atleastmuchmorethanourparentshad.Wearealsogettingbetteratlookingatthetotalfloor-spacefigureonthefloorplansweareconsideringandnotbeingdistractedbytheglossyphotographstakenwithspecialcameralensesthatcouldmaketheinsideofagoldfishtankappearpalatial.Whilethenumberofroomsinexistencehasbeenincreasinginrecentyears,theamountoffloorspaceandtotalhousingvolumehasnotbeenkeepingpace.

The2011censusintheUKwasthefirsttocountbedrooms;previouscensusesdidnotmakeseparatebedroomcounts.Bedroomsweredefinedasanyroomintendedforuseasabedroomwhenthepropertywasbuilt,whateveritscurrentuse,andanyroomthathadbeenpermanentlyconvertedforuseasabedroom,includinganyroomconstitutingabedsit.Ahousewithaplayroomandastudycouldeasilybecomeahousewithtwomorebedrooms,shouldtheneedarise,buttheyarenotcountedasbedroomsinthecensus.Neverthelessitisinstructivetolookat,howmanyroomsweusetodayasbedroomsinBritain.

Figure13.RoomsperpersoninhousinginBritain:censuscountturnedintoaratio,1911–

2011.

The2011censustellsusthattherearesome66millionbedroomsinEnglandandWalesforaround55

millionpeople.7Justover21millionpeopleinEnglandandWalesaremarriedorinacivilpartnership,andpresumablyoftenshareabedroom.So,evenifnooneelsewassharingabedroom,eveniftherewerenobunk-bedsandnocohabitingcouples,ofthese66millionbedrooms,atleastathird(22million)areemptyonanygivennight.Thisestimateofemptyroomsofcoursedoesn’ttakeintoaccountthoseroomsthatcouldbebedrooms,butthatarenotdefinedassuchbecausetheyareputtootheruses.Thevastmajorityoftheseemptybedroomsarefoundintheprivatesector,mostlyinhomesownedoutright,orinpropertyonwhichpeoplearecurrentlypayinga

mortgagethathasnearlybeenredeemed.Thecensusallowsustoknowhow

manybedroomsareemptyineachsmallarea,withineachtenuregroup.Forexampleinowned-outrightpropertyinBatemoor,Sheffield,wecouldfindouthowmanysparebedroomsthereareandcomparethosewithhowmanysparebedroomsthereareincouncilhouses.But,forallthecensus’sdetail,itisthesimplesttruthsonhousingthatarethemostimportant.Notably,thenearerhousingallocationgetstoapuremarket,thelessefficientlyroomsareallocatedamongfamiliesandthehouseholdstheyconstitute.In2011,inWales,theaverage

numberofroomsperhouseholdrose

to5.7;andthenumberofbedrooms,countedforthefirsttime,wasfoundtobe2.8.Thecensuscounted,forthe3millionpeopleinWales,some7.4millionroomsand3.5millionbedrooms–or2.5roomsperpersonand1.2bedroomseach.IfnoonesharedabedroominWales,thatstillleftatleasthalfamillionspare;8infact,giventhatsomanycouplesdosleeptogetherinthesamebed,letalonebedroom,atnight,thenumberofspareemptyWelshbedroomsisprobablysignificantlyhigher.InEnglandtheaverageswereonlyalittlelower,at5.4roomsand2.7bedroomsperhousehold.Thattranslatedintosome2.4roomsperpersonbasedonarecordedpopulationof52millionhouseholdresidentsinEnglandhaving(if

evenlyspread)1.2bedroomseach,withover11millionsparebedroomsifnoonesharedabedroomandprobably,inreality,significantlymorespareatanyonetime.InEngland,in2011,therewere126millionrooms,ofwhich63millionwerebedroomsforapopulationof52millionresidents.9

EveninLondon–justinresidentialhousing,wheretheaveragehouseholdhadaccessto4.7roomsand2.5bedrooms–therewere1.9roomsperpersonand1.01bedroomseach,whichistosaysome92,000morebedroomsthanpeople.Allthesefiguresarepubliclyavailablefromtheonlinecensusrecords,foreverytown,city,districtandvillageinthecountry.Thenumberofroomsandbedroomsper

personinBritainhasnotjustbeenrising,butthatrise–asthegraphaboveshows–hasrecentlyaccelerated.SowhydotheBritishhaveahousingcrisis?WhyarerentsandpricesskyrocketinginLondon?Whatisgoingon?Theansweristhat,sincethe

censusof1981,thedistributionofbothhousingspaceandroomshasbeenbecomingprogressivelymoreunequal.10Sincethatdate,ahigherpercentageoftheextraroomsinhousesandflatsinBritainhasbeenannexedbyfamiliesorindividualswhoalreadyhadthemostextraroomstobeginwith.Afamilywiththreeorfourbedroomsappearedtobemorelikelytoaddanextraroomtotheirpropertythandidafamilyinasmallerhome.11Whatismore,

smallerhouseholdsweremovingintolargerproperties;andhouseholdsthatbecamesmalleraftertheirchildrenflewthenestweremorelikelytostayputinthoseproperties.ProfessorRebeccaTunstallhas

donemoreworkonthegrowingmismatchbetweenpeopleandrooms,andtherisinginequalitiesinhousingthatresult,thananyotherhousingexpert.HeranalysisshowsthatthelastincreaseintheunequaldistributionofroomsinBritainoccurredalmostacenturyago,betweenthecensusesof1911and1921inBritain.Atthatpointthebest-offtenthofhouseholdshadaccesstofourtimesasmanyroomsperperson,incomparisonwiththeworst-offtenth.After1921thisinequalityfellconstantlyoverthe

nextsixtyyears,untilthecensusof1981,whichrecordedthegreatest-everlevelofhousingequality.Then,thebest-offtenthstillhadaccesstothreetimesasmanyroomseach,incomparisonwiththeworst-offtenth,buthousinghadneverbeenasequallydistributedsincecensusesfirstrecordednumbersofroomsaswellaspeople.ProfessorTunstallhasgone

further,suggestingacauseforthetrendshehasrevealed.Shenotedthatthedistributionofroomscorrespondedverycloselywiththefallandriseinincomeinequalities.AstheeconomicgapsbetweenthepoorestandrichestfamiliesinBritainnarrowedfrom1921tojustbeforethe1981census,familiesinBritainwereabletohouse

themselvesmoreandmoreequitablywitheachdecadethatpassed.Itwasnotjustthatmorehouseswerebuilt.Thetrendoccurredevenasseveralwavesofimmigrationresultedinmanypoorerfamiliesturningupatthebottomendofthehousingspectrum.Whathappenedwasthatthenewhousingthatwasbuiltwassharedoutbetterineachsucceedingdecadeuntil1981.Yearafteryearwebecamebetterhoused–butthen,intheearly1980s,everythingchanged.Atthatpoint,somethingaltered

abouthowmoneywassharedoutinBritainand,fromthenuntilnow,wehavebecomeanincreasinglyunequalsociety.Therewerehousing-specificfactors,suchasthe1980‘right-to-buy’schemethatallowedformerlymoreefficientlyusedcouncil

housingtobesoldatgreatlydiscountedpricestocounciltenants.Beforeprivatization,ifafamilyleftthehouseitusuallybecamehometothenextnot-too-well-off(andnotthatsmall)family.However,afterprivatization,thenewownersofanex-councilhousetendedtounderoccupyortoreselltoevensmallerhouseholds.Thegentrificationofformercouncilhousinghasbeenwidelyreportedandispartlyresponsibleforthecurrentshortageofaccessiblehousingtomanyfamilies.

ThisimageisofaformerplaygroundattheParkHillEstateandshowsthepartofthe

buildingyettoberedeveloped.TheParkHillFlatsappearintheopeningscenesofthefilmTheFullMonty.TheyriseaboveSheffieldCitytrainstationandarenowGradeIIlisted.Mostareempty,awaitingredevelopment.Thewalkwaysbetweentheflatswerebuiltwideenoughforamilkfloattobedrivenalongthem,butnowtheroomsareviewedastoosmall.Partofthe

redevelopmentconsistsofbuildingoutintothatwalkway,tomaketheroomsjustalittlelarger.Butthenthereisstoragespacetothinkof.Theliftsmaystillbelargeenoughtotakeamilkfloat

uptothetopfloor,butwheredoyoustorewhateveryouliftuptoyoursmallcastleinthesky?Theseflatswerebuiltforfamilies.Today

theenlargedversionofthemisbeingmarketedtosinglepeopleandyoungcouples.Whatwethinkofasadecentamountofspaceincreasesover

time.However,itcouldcometodecreasetoo,forinstance,iftheseflatswerefoundintheheartof

London,andnotinSheffield.

However,theintroductionof‘right-to-buy’cannotbesaidtobethetriggerfortheincreasing

inefficiencyinouruseofhousinginBritain;ProfessorTunstallmeasuredonlyagradualincreasebetween1981and1991.Theincreasewasfastesttwentyyearslater,between2001and2011,whentherewerethefewestspaciouscouncilhomesremainingtobeprivatized.Itwasnotthehousingpolicythatwasatfault,butratherthenewincomedistributionthathadbeencreated.Incomeinequalitiesrosequicklyafter1979,reducingflexibility,andrisingwealthinequalitiesfollowedthatupwardtrendaroundadecadelater,growingfromaround1989.Wealth-inequalitytrendsalwayslagbehindincometrends.12

Thetablebelowshowsthepercentageshareofthetotalsumofmoneyreceivedannuallybythe

richestelementsofsocietyintheUK:thevery,very,veryrichest(0.01%);thevery,veryrichest(0.1%);theveryrichest(1%);andtherichest(10%)duringthecourseofthelastcentury.13IfyouwantasingleunderlyingexplanationofwhyBritainnowhasahousingcrisis,youneedlooknofurtherthanthistable.Ifincomeweretobeevenlydistributedamongthepopulationunderasituationofcompleteequality,0.01%ofthepopulationwouldalwaysgetonly0.01%oftheincome.Asitis,by2009,thatbest-offfractionofthepopulationwasreceiving122timesthatamount,ahugeproportionandonethattheylastexceededoverseventyyearsago.Whatiskeyishowthe

percentagesofincomeaccruingto

thepeopleintheserichestpercentilesfallovertime,until1981,andthenriseagain.Thattrendingrowingequalitybetween1921and1981followsandperhapshelpedtoinfluencemanyothersimilarlytimedtrends.Forexample,itwaswhenwebecamemostequalinincome–inthenowmuchmaligned1970s–thatwebegantocaremostforthehomeless;anditisinthepresent-day,whenwehaveagainbecomemuchmoreunequalinincome,thatweagainfindhomelessnessrising.

%ofall

0.01% 0.10% 1% 10%

1911 4.19 11.1 24.4 47.0

1921 2.90 8.1 20.3 42.0

1931 2.44 7.2 18.3 38.0

1941 1.57 5.0 13.1 35.0

1951 0.85 3.2 10.9 33.0

1961 0.60 2.4 8.6 30.0

1971 0.40 1.7 7.0 29.0

1981 0.36 1.5 6.7 31.0

1991 0.73 3.1 10.3 38.0

2001 1.08 4.5 12.7 39.0

2009 1.22 5.1 13.9 40.0

Latein2013ProfessorTunstallupdatedherfigures:sheincorporated2011censusresultsforthefirsttime.Whatshefoundalmostperfectlymirroredtheriseinincomeinequalityshowninthetableofincomeinequalitiesabove.In1981thebest-offtenthofhouseholdshad3timesasmanyroomsintheirhomes,incomparisonwiththe

worst-offtenth,risingtoabout3.7timesasmanyby2001.By2011thathousing-inequalityratiohadrisen,atamorerapidratethaneverbefore,tomorethan5timesasmanyroomsperpersoninthehomeofeachhousing-richperson,incomparisonwiththeworst-offtenth.Thiswasnowahigherratioofhousinginequalitythananythathadbeenmeasuredatanypointsinceatleast1901.14

WhathadNewLabourdonetoacceleratehousinginequalitysogreatlybetween2001and2011,beforethecurrentcoalitiongovernmenthadhadachancetoincreaseitevenfurther?Itcouldhavebeenthatthetrajectorywasalreadyinplaceandthegrowinginequalitywasnotsimplythefaultof

thatgovernment,butNewLabourdidlittletoslowitsgrowth.Twoissuesshouldnowbelooked

ataspossiblymoreimportantthanwasfirstthought.First,theintroductionoftheLocalHousingAllowancehasmeantthathousingbenefitfrom2009onwardswasnotpaidonthefullrentifanybedroomsweredeemedspareforaprivatesectorrentingfamily.15Sothiswas,ineffect,aprivaterenter’sBedroomTax.Familiesinprivatelyrentedaccommodation,therefore,didnotmovetoevenslightlylargeraccommodation,evenifthataccommodationwascheaperoronofferatthesamerent,becausetheirbenefitswouldbedockediftheydid.Secondly,itisworthconsidering

theimpactofthevastnumberof

one-andtwo-bedurbanflatsthatwerebuiltbydevelopersduringthisperiod.Therewasprobablyneverreallythedemandforallofthem,giventheirsmallsize,butfamilieswhoreallywantedorneededathree-bedplacewerebuyingorrentingthesesmallerflats,asthatwasalltheycouldaffordontheprivaterentalmarket.Nowthatwehaveseentherisinginequalityfigures,wehavesomeideaofhowmuchofaneffectthismighthavehad.16Theflatswereoriginallyaimedataffluentindividuals,orespeciallyaffluentstudents,butwerenotalleasilyfilled.The2011censusresultssuggestthattheyoftencametobefilledbysqueezinginpoorerfamilies.

Itis,ultimately,the2011censusthatshowsusthatwecannotbuildourwayoutofthedisasterofourcurrenthousingsystem.Wefirsthavetodealwithgrowinginequality,withhowtobettershareoutandlookafterwhatwehavealreadygot.

AterracedhouseduringrefurbishmentheldunderprivateownershipinNetherEdge,

Sheffield.Housingatmanylevelsissimple.Youneedrooms:theyneedtobeinsulated.Youneedlight:itisbetterifthewindowisdouble-glazed.Youneedheating:radiatorsarenownearly

ubiquitous,butthereisawidevarietyofwaysinwhichthewaterinthemcanbeheated.Weusedtocounthowmanyhomeslackedhotrunningwater,oraninsidetoilet,orhadnocentralheating,butwehavenowgotmostofthose

necessitiesinalmostallofourhomes.Whatwemostoftenlacktodayisspace,butonlybecauseithasbecomenormaltohavealittlemorespacethaninthepast.Younoticethenoisefromnextdoormoretoo.Inmanywayswehaveneverbeenbetterhousedthantoday.Wehaveneverhadbetteraccesstotoiletsandthemeanstowash

withinourhomes,notjustourselvesbutalsoourclothes.Wehaveneverhadbetter-heatedhomes,althoughmoreofusarefindingithardertopaytoheatthem.Wehaveneverhadaswellinsulatedandroofedhomes,neverhadaslittledampaswehavetoday,norasmuchelectriclight;andyetwehavealsoneverhadasmuchtovalidlycomplainabouthowexpensivelywearehousedaswehave

today.

HOUSINGFINANCE

PropertytaxeshavebecometheUK’slatestbattlegroundoverwhoshouldpay–andhowmuch–asthecountryfacesarecordbudgetdeficitandthegovernment’sausterityprogrammeisforcingcutsinsocialprogramssuchasdisabilitybenefitsandaidtofamilieswithchildren.InLondoninparticular,whereaffluentforeignbuyershavekepthomepricesrisingeveninthefaceofthecountry’sfirstdouble-diprecessionsincethe1970s,limitsoncounciltaxeshaveleftmanylower-andmiddle-incomerentersandhomeownerspayingalmostasmuchasthewealthy,andsometimesmore.

–BloombergNews,25October,201217

ThenewsprogrammeonBloomberg,theUSbusinessTVchannelbegunbythemanwhobecameNewYorkMayor,MichaelR.Bloomberg,reportedwithshockthateventheSultanofBruneihadappliedfora

10%discountonhiscounciltaxandsosavesabout£200ayearbecausethehomeheownsinLondon,on‘billionaires’row,ishissecondorthird(orthirty-third)home.Oftentheveryrichobjecttotaxesinprinciple,andobjectsostronglythattheywillapplytobeletoffanamountthattheywouldnevernotice.Perhapsitisjustsoitcanbenoticedthattheyhavedonethis?Perhapstheythinktheypaytoomuchtaxoverall?Housingandtaxationhavealong

andvexedhistory.Therearegroups,liketheUSTeaParty,whichbelievewithsemi-religiousfervourthatpropertyisinsomewaysacredandtaxingitisasin.18TheUK’scurrentsystemoflocaltaxation,thecounciltax,wasintroducedtwodecadesago,in1993,afterawidespreadseriesof

riotsagainstitspredecessor,thePollTax,whichwasafixedamounttobepaidbyeveryadult.Thecounciltaxislargelybasedonproperty,notpeople:thegreaterthevalueofyourhouse,themoreyoupay,butonlyuptoamaximumlimit.Ifyourhouseisveryvaluable,then–howevergreatthevalue–youpaynothingabovethecap,aspecialconcessiontotheveryrich.Thecounciltaxonaproperty

worth£1millionor£10millionisidentical.Furthermore,thetaxonapropertyworth£320,000whenitwasvaluedin1991isnotfourtimesgreaterthanthetaxonan£80,000property;butisonlytwiceasmuch.Youpayproportionatelymorecounciltaxtheloweryourtaxband.Itissimplyanunfairtax.

Proportionatelythecounciltaxisahigherproportionofyourwealthperyearthelesswealththatyouhave.Recentlychangeshavebeenmade

totheUKcounciltaxtomakeitevenmoredisproportional,thustakingevenmorefromtheverypoor.Thesechangeshavebeendubbedthe‘EricPickles’sPollTax’,aftertheMinisterforCommunitiesandLocalGovernment,whointroducedthem.Beforethechangeswereintroduced,verylow-paidworkerswereexemptfrompayinganycounciltaxbecausethiswasasumtheysimplycouldnotaffordtopay.But,asaresultofEricPicklesmakingthatrebatediscretionarysinceApril2013,localcouncils,undergovernmentpressurenottoraiseanyoneelse’scounciltaxbill,cannowchargesomeofthe

pooresthouseholdsinEngland,thoughpoorerpensionersremainexempt.TheschemeisexpectedtosavetheTreasury£500millionayear,andabouttwomillionlow-incomefamilieswillbeaffected.19

ThelegalsituationisgraduallybecominglikeareturntothePoorLaws,withlocalworthieslisteningtoyourcaseanddecidingyourfateatawhim.Inlateautumn2012areporton

thesecounciltaxincreasesforthepoorest,carriedoutfortheConservativeLondonboroughcouncilthatcontrolstheCityofWestminster,explainedthat‘Thesizeoftheseamountsinrespectofcounciltaxwouldinmanycasesbeuneconomictorecover,withthecostsofcollection,includinglegal

recoverycostswhichfalltothecouncilbeinghigherthanthebill,andwouldinalllikelihoodhavetobewrittenoffwhenthedebtisuncollectible.’20Inotherwords,localcouncillorsinPickles’sownpartybelievethatthecurrentsituationhasbeenmadeworsebythearrangementsthatheintroduced.ThisriseinbillswillbepiledontopofthenewBedroomTaxdiscussedearlier.Atexactlythesametimethatthe

Britishgovernmentwastryingtoforcepeopleinsocialhousingtomoveiftheyhadoneormore‘spare’bedrooms,italsobegantodoallitcouldtohelpthewealthyownhousingwithasmanysparebedroomsaspossible.InFebruary2013thegovernmentannounced

planstolimitthecostsoflong-termpublicorprivatecareinoldageto£75,000,inordertoprotectwealthyindividuals’wealth,mostlytheirhousingwealth.Thestatewillpayfortheircarecostsinaresidentialhome,andtheirpropertycanremainemptyatnocosttotheindividual–includingexemptionfromcounciltax–untiltheydie,providedthattheycanstillpaytheaccommodationcostsofaround£10,000ayear.The£75,000spendingcapwas

proposedasanimprovementonthepresentsituation,wherebyyoudon’thavetosellyourhomeifarelativeoversixty(orunderifdisabled),oryourspouseorpartner,stilllivesinyourhome.Thenewsystemalsoincludesahome-carepackage,butonlyifyourneedsareclassedas

severeorsubstantial.21Thepotentialfinancialbenefitsoftheproposedchangesarerevealing.If,forexample,yourassets,afterpayingallaccommodationcosts,are£100,000,itispossiblethatcarecostswilltake75%ofthat,butifyouareworth£200,000theywilltakeonly37.5%ofthetotal–andprogressivelylessthemoreyouhave.Youmaybeabletoavoidsomeofthesecostsaltogetherbytakingoutinsurancewithaprivatecompany.Thepushforthiscomes,therefore,fromownersofmoreexpensiveproperty,fromtheprivatecompaniesthatwillprofitfromprovidingtheinsurance,andfromtheprivatecompaniesthatwillprofitfromprovidingthecare.Privatecompaniesspecializingin

risktendtobeownedbyvery

wealthyindividualswhoaimtoprofitfromourignoranceaboutwhatforusarepossiblyone-offevents,suchasbeingtooilltocarryonlivingasweare.Theamountyoumightloseisfixedbygovernmenttomakeitpossibleforinsurancecompaniestoofferattractive-lookingpoliciesthatareasafebetforthem,becausetheyknowtherealrisksinvolved.Essentiallythesearepoliciesthatlookreasonabletomanyverylow-riskpeople.Ifyourpoliticsareontheleftyoumightcallthisascam;ontherightandyoucouldsayitallowed‘entrepreneurialzeal’.Buthopefullyyoucanseethatthesituationisbothcomplexandconfusing,andhenceripeforprofit.Themixingupofhousingwith

insuranceandinheritance,coupled

withrisingincomeinequality,hasbecomesociallytoxic.Peopleholdontohousingtheydonotneedtoliveinbecausetheywanttoretainassetstohandontotheirchildreninaworldthatisclearlybecomingmoreprecarious–aworldinwhichitlooksmoreandmoreasifyouneedtolookoutjustforyourselfandforthoseyoudirectlycareabout,ultimatelyattheexpenseofothers.Itwouldbebetteriffairproperty

taxeswerepaidbytheliving,beforeinheritancetaxkicksinatdeath,sothatnotsomuchwealthishoarded,butoftenthelivingworkhardtoavoidtax.Someofthelivingworksohard,andaresoopposedtosharingwhattheyseeastheirpersonalwealth,thattheywillbehaveinwaysthatarecriminal.

Manyotherwiselaw-abidingfolkwillbepreparedtocommitfraudtotrytoavoidtaxes,especiallyoninheritedproperty.

Atthelowerendofthespectrumofpropertyandinheritancefraudsittheborrowerswhoarefoundnottoactuallyexist,oratleastnottoexistasdescribedtothelender.Belowthisarenumeroussmallerfrauds,anditisthesethatthepresstendstoconcentrateon,suchashousingbenefitscams.Attheverylowestlevelofhousingfraudissomeonebeggingformoneyforabedforthenightorjustforacupoftea,onlytousethemoneytheyaregiventobuyacanofbeer.However,ifIwereonthestreets,Iwouldaskformoneyfor‘acupoftea’too,butI’dlookfor

somethingalittlestrongertobuywiththatmoneytohelpmeforgetmysituation.Higherupthespectrumis

claiminghousingbenefitonyourprivatelyrentedflatwhenyourrealincomeishigherthandeclared.Abovethatisillegallysublettingyourcouncilhome.Abovethatcomesavoidingcapitalgainstax,say,switchingtheownershipofapropertywitharelative.Abovethatcomesusingcompaniesandnon-domstatustoavoidtax.Attheveryhighestendofthehousing-fraudspectrumaremultibillion-dollarbusinessesthatmakeverysmalladjustmentstoratesthatinfluencetrillionsofpounds’worthofmortgages.

Bysummer2012ithadbecomeevidentthatthetopbanksthemselveswereillegallymanipulatingthereportedaverageinter-banklendingrate,orLibor,andthatatleasttransactionsworth$500trillionhadbeenadverselyaffectedaccordingtotheBritishregulators.22ThisfraudwascommittedbybankersbasedinLondon.Whattheyhavedonemaynothavebeenstrictlyhousingfraud,buttheratestheywereillegallyinfluencingaffectedmoneyprincipallyinvestedinhousing.

AformerlyhomelessgirltakesdownthephonenumberofhernewkeyworkerinSheffield.Werarelyconnectthegrowingnumberofyoung

peoplelivingonBritain’sstreets,orthosebeinghousedinhostelsandlivinginsquats,with

currenteconomicandfinancepolicy.Wedon’tseetheconnectionswithanincreaseinthe

numberofelderlypeopletryingashardastheycantohangoninthere,livingintheoldfamilyproperty,rattlingaroundinitandnotgoingintoacarehomeorjustintoasmallerflat,sothattheycanmaximizetheinheritancefortheirchildren.However,astheyandmillionsofotherolderpeoplestayinhomesbuiltforlargerfamilies,

manyotherpeople’schildrencannotsettledownasyoungadultswithsomeonetheymeetbecausetherearenohomestheycanaffordtorentasaresultoftheshortagecreatedbytheelderly.Theelderly,inthemain,arenotlivingwithsomuchspacebecausetheywantto,butbecausethey

wanttobenefitthegenerationthatwillcomeafterthem.Underlyingallthisisthefarmurkier

manipulationoffinanceandhousingmarkets.Manipulatinginterestratesmakesitmore

expensivetoborrow,soinheritancesbecomemorevital.Seeingthelinksallthewaydownthechain–fromthemanwhofixedtheLiborrateyesterdaytothegirlwhohasnohometoday–is

farfromsimple;whichiswhytheyhavegot

awaywithitforsolong,andwhytheywillcontinuetodosountilweallbecomelesspliant.

Whetherit’s£20ofunwarrantedhousingbenefitclaimed,£2,000cash-in-handtoabuilderora£200,000bonussecuredbecauseyourLiborguesseswerecorrect(afterhavingmanipulatedthemwithyourmates),itisstillfraud.Itis,however,fraudthatincreasesbyseveralordersofmagnitudeasyoumoveupthespectrum.Itwouldtakemillionsofactsofhomelesspeopleallutteringthesamelietoequatetoasinglelieofasinglebankerawardedabonus.Intheendsomeofthemoniesfraudulentlyraisedmightbespentonthesamethingalthoughindifferentform:cocaineintheboardrooms,SpecialBrewonthestreets.Inthiswayweareallthe

same,butwhenitcomestohousingtherearebarriersbetweenusthatareoftensimplyinsurmountable.Thehomelessarenotequal.Just

givingeveryonetheopportunitytobehoused,sayingthattheyhavetheright,shouldtheyworkhardenough,doesnotmeanthatwereallyareequalinopportunity.Ifyouarenotwellhousedyoucannoteasilypresentyourselfasavailableforwork.Youlookamess.Yousmell.Thisisanequalityofopportunitythat,inthewordsofJeremyWaldron,ProfessorofLaw,JurisprudenceandSocialPolicy(inalandmarkpaperpublishedin1991),saidwasanequalitythathadnorealisticprospectofeverhappening.23Similarly,ifyouhavetoliveinthepoorestpartoftown,

youarenotequallyabletocompeteforwork,foreducation,forachance.Whatisreducingthechancesof

thehomeless,andthebadlyhoused,mostisnotgovernment’sfailuretoensurethathousesarebuilt,butratherotherpeople’sover-consumptionofhousing.‘Second’homesshouldbepartofthehomelessnessdebate.Emptyroomsarenotaloneinbeingresponsibleforothershavinglessaccesstohousing.Themorehomesthatareusedassparehomes,thefewerfirsthomestherewillbe,andthelessspacetherewillbeforothers.Space,however,isnottheonly

issue.Skyscrapersuseupverylittlegroundspace,buttheytoopotentiallyincreasehomelessness,becausetheresourcesusedupin

buildingthemcouldbeputtobetteruse.Itisfarmoreexpensivetobuildaskyscraperthanitistoconstructtheequivalentfloorspaceofnormalofficesorapartments.Sosecondhomes,emptyandunder-occupiedpropertyandskyscrapersareallpartofthepresenthousingandbuildingwaste.Therehasneverbeensomuchscopetohouseourselvesbothfarbetterandfarcheaperthanwecurrentlydo.

ViewoverBrookHillinSheffield,showingsocialhousingatthefrontandsmallerprivateapartmentstotheright.Inthedistance,ona

formerslagheap,aski-slopehasbeenbuilt,butitisnotagreatsuccess.Whenitcomestoskiing,SheffieldisaboutasfarfromDavosasitis

possibletoget.ThekeydecisionsthataffecthowpeoplearehousedinSheffieldarenowmadenowherenearthatcity.Mostofthepeoplewhogettoinfluencehousingpolicydonotliveinthekindsofhousingthattheirdecisionsinfluenceeachday.Housingministersandcommentators,chiefexecutivesofhousingorganizationsandthe

mainfinanciersofhousing,aswellasthosedesigningnewhousingbenefitrules,tendtoliveinveryexpensiveproperties.Canyouimaginehavingeducationpolicydesignedbypeoplewhodonotusestateeducationfortheirchildrenandhavenotgonethroughitthemselves?OrtrytoimaginetheNationalHealthServicebeingrunwellbypeoplewhodonotrelyonit,peoplewhoknowthatiftheyareilltheycanaffordthemostexpensiveofprivatetreatmentsthatalmostno

oneelsecanbuy.Allthesebasicservicesbecomebadlymanagedwhenrunanddiscussedby

peoplewithlittleknowledgeofthemandwithnopersonalstakeinthoseservicesworkingwell.

Earlyin2013thethenUKPlanningMinister,NickBoles,andtheChairmanoftheNationalTrust,SimonJenkins,debatedhousingonnationalTV.24Jenkinssuggestedthatthehousingcrisiscouldbesolvedbybuildingmorehigh-riseflatsincities.BolesretortedthathehadbeentoatleasttwoofJenkins’shomes,andthatanyonewhohadaccesstomorethanonehomewasinnopositiontotellothersthattheyshouldlivewithoutagarden.ThenextdayBolesgaveaspeechattheofficesoftheright-wingthinktankPolicyExchange,inwhichheclaimedthattheonlywayforwardonhousing,forConservatives,wastoderegulatebuildingongreenland.TheNationalTrustisaconservationbody,soitislittlewonderthat

JenkinswasangryaboutwhatBoleswassuggesting.TheConservativepoliticalpartyusedtobelieveinconservation,butasithasmovedfurtherandfurthertowardsfree-marketideology,obstaclestomakingaprofit,suchaspreservinggreenbelts,havecomeunderthreat.ThiscreatestensionwithinConservativecircles,asgreenbeltsalsoprotectthehighpropertypricesofthericherpeoplewhotendtolivewithinthebeltsorhaveviewsouttowardsthem.Oftenwhatisbeingprotectedarethevaluesofsecondhomes–countryretreats.Theacquisitionofsecondhomes

ispositivelyencouragedbytheUKtaxationsystem.Secondhomesoftenattractacounciltaxdiscountofupto50%,dependingonthepolicyofthe

localcouncil.25Bycontrast,aswehaveseen,counciltaxbillsfortheverypooraresoonsettorise.WearecurrentlyfindingoutmoreandmoreofwhatthecoalitiongovernmentreallydesiresforBritain;butonlyindribsanddrabs,asjournalistsandhousinganalystswithapersonalinterestdiscoverwhatUK,oratleastEnglish,housingpolicyreallyis.Ithasbeendisguisedbecauseclearlyamajorityofpotentialvotersdonotbenefitfromit.Thehousingpolicythatemerged

during2013encouragedafurtherfree-for-all–akindofsurvival-of-the-fittestfutureforhousing,inwhichafewproperty-owners,includinglandlords,willbecomeevenricher,butmostpeoplewillenduppayingevenmoreforthe

privilegeofbuyinginthelongrun,whilethinkingtheyareenjoyinglowinterestratesintheshortterm.Thelegislationputinplacebythecurrentgovernmenttoderegulatetheplanningprocess,toguaranteemorebanklendingandtopenalizepoorerhouseholdswasnotevenhintedatinanypoliticalparty’smanifesto,norintheMay2010coalitionagreementdocument.OutsideofEnglandthereare

alreadyplansunderwaytoreversepoliciesthathavebeenbroughtinwithoutvotersgettingtohaveasay.InScotland,itwasannouncedinautumn2013thattheBedroomTaxwouldbescrapped.26Theseplanswerebolsteredbythefindingthatsome50,000peoplefacedevictionbecauseofthetax,andthathundreds

ofthousandsmorewerefallingintoarrears,especiallyinlow-incomeareasofScotland.27Earlier–asifthefalloutfromtheBedroomTaxbeingimplementedwerenotenough–inJanuary2013,itwasrevealedbyanalystsworkingfortheResolutionFoundationthinktankthatthediscretionarycounciltaxrebatereferredtoabove,theonedubbed‘EricPickles’sPollTax’,wasveryunlikelytobegiventothoseinneed,aslocalcouncilsfacedsuchgreatcutsinotherpartsoftheirbudgets.InSeptember2013itwassaidthat

thegovernment’s‘decisiontoreducethebudgetforcounciltaxsupportby10%meanslow-incomehouseholdsfaceataxincreaseofupto£600’ayear.28Numerouscutsstartedtokickinduring2013.Theexamplethe

ResolutionFoundationgavewasthatasingleparentwhoisinemploymentcouldseetheirannualcounciltaxbillrisebyover£10aweekafterApril2013.Subsequently,iftheiremploymentislowpaid–andmostsingleparentswhoworkarenotwellpaid–itmaybenearlyimpossibletofindthatadditional£600ayear.Enforcedpaymentofthismoney,saidWestminsterCouncil(referredtoabove),wouldbeuneconomical.HopefullyWestminsterwon’tevenaskforit,butlegallytheyareentitledtotry,andothercouncilsappeartobetrying.BySeptember2013oneinthreecounciltenantswasalreadyinarrearsontheirrent,afarhighernumberthaneverrecordedbefore,andrising,becauseofallthesecutsandcharges.29

Meanwhile,attheluxuryendofthehousingmarket,aboomiscurrentlyunderwayintheUK,mimickingtrendsseenfirstontheothersideoftheAtlantic.ThelargestUSluxuryhomeandluxurysecond-homebuilder,TollBrothers,acompanythatfocusesonaffluentcustomerswhotypicallymakeatleast$100,000ayearand(itclaims)whohavespotlesscreditrecords,reportedagreatincreaseinordersandforecasthigherrevenuefortheyearstocome.Youoftenseeadvertsforthiscompanyontheinternet,andtheyarenotdoingbadly:‘Weareenjoyingthemostsustaineddemandwehaveexperiencedinoverfiveyears,’Toll’sChiefExecutive,DouglasC.YearleyJr,said,wheninterviewedin2012.30

DouglasC.YearleyJunior’ssalaryin2011hadbeen$1million,plusafurther$4.5millionofstockawards,optionsandotherformsof‘compensation’,accordingtocompanyrecords.31Suchimmenselyhighsalariesandaboominluxurybuilding,coupledwiththecontinuedimmiserizationofthepoorestinsociety,tendtocomebeforeafall.Financialanalystsareincreasinglyonthelookoutforfalls,andwhentheamountofwhatiscalled‘quantitativeeasing’–theprintingofvirtualmoneyinLondonandNewYork–slows,afallmightverywellbeonthecards.IntheUS,theFederalReserve

decidedtocarryonwithitsployofquantitativeeasingthroughtoatleastwinter2013becauseofsuchfears.32

Whatisunpredictableishowthehousingmarketwillpolarizebeforethenextfall.Ifafallisprolonged,itiscalledaslump.Buthowcanwetellifaslumpiscomingorisalreadyuponus?Onewayistolookupintothesky.Slumps,overthecourseofthelastcentury,havetendedtobeaccompaniedbytheconcreteresultsofmassiveover-exuberance.Oneformofover-exuberanceistheconstructionofverytallbuildings.

Figure14.Numberofbuildingsover256metreshighbuiltperyear,worldwide,1930–

2012.

Verytallskyscrapersareagoodmeasureofexcess:objectswebuildnotnecessarilywhenweneedthem,butwhenwearefeelingflushenoughtoaffordthem.Itturnsoutthat,worldwide,asmanyverytallbuildingshavebeenerectedinthelastthreeyears,2010to2012,asin

thepreviouseighteen.Inthosetwenty-oneyearscombinedsome152buildingsover256metrestallwerebuiltaroundtheglobe.Twobuiltearlierweredestroyedon11September2001andarenotincludedinthegraphabove.TheideatodrawthisgraphcamefromhavingrecentlyseenonelikeitthatdetailedallnewbuildingsinNewYorkover70metreshigh.NewYork’speakbuildingperiod

camenotin2012butintheearly1930s,justafterthe1929economiccrash.AcopyofthatNewYorkdiagramisshownbelow.Itillustrateshow,aftertheexcessesof1930sbuilding–financedandplannedforoftenlongbefore1929–camealongperiodofbuildingcalminNewYork.Aperiodofcalmcouldbe

returningagaintotheUnitedStates,butitwilldependonlegislation,notjusteconomics.Asof2013housepricesinNewYorkarestillnotmoving.Theyremainjust3.3%abovetheir2006averagelevels.ByDecember2013,ontheothersideofAmerica,housingpricesinLosAngelesweredescribedashavingstayedflatsinceJune.33Thatsummer’srumoursofapropertyrevivalintheUSappearedoverblownjustsixmonthslater.34

Inthe1950sand1960s,whentheUSeconomywasbooming,peopleweresensibleandlimitedtheconstructionoftallbuildings.Backthensuchedificeswerestillrememberedassymbolsoftheexcessive1920sexuberance.Plannersknewskyscraperswere

needednottoturnanhonestprofit,buttoimpressthesuggestible.Later,aspotentialinvestorsbegantoforgetthepast,andintherun-uptothe1970srecession,Americansbegantobuildtallagain,withmost1970sbuildingsreachingtheirmaximumheightafewyearsafterthepeakofthateconomicslump.Thegraphbelowmakesallthisveryclear.ThesamethinghappenedinNew

Yorkagaininthe1980s,andagaininthenoughties.Perhapsthecurrentworldwidebubbleofhigh-risebuildingisanechoofthisNewYorkphenomenon.By2012,inLondon,thecranesusedtoconstructtallbuildingsweremoreoftenbeingtakendownthanputup.FigureswerereleasedinJanuary2013,afterahelicoptercrashedintoa

constructioncraneworkingonhigh-risenearVauxhalltubestation.Theserevealedthat,evenasthepropertyboominthecapitalcontinued,atleastintermsofapparentlyrisinghomevalues,thenumberofcranesonLondon’sskylinefell,from712inthefirsthalfof2011to413bythefirsthalfof2012.35

Figure15.Buildingsover70metrestallconstructedinNewYork,1890–2009,byyear.

CranesfinallybegintocomedownonLondon’sskylinewhenthebuildingoftheshowiestcommercialandresidentialpropertyitselfbeginstoslowdown.Byspring2013itwasalsorevealedthat,inthelightof

fewerbonuses,bankersandverywealthyoverseasinvestorswerebuyingandrefurbishingalittlelessresidentialpropertyincentralLondonthantheyhadbeentheyearbefore.Then,inAugust2013,averagepricesdroppedbyover7%inWestminster,5%inCamden,4%inBrent,and3.5%,and3%in,respectively,Kensington&ChelseaandGreenwich;36whileoverinGreenwichVillage,NewYork,andinmuchoftherestofAmerica,priceshadnotevenrecoveredsufficientlytofallsomuchagain.By2013,accordingtooneUSpropertyspeculator,theyremained‘22%belowthe48-year“trendline”[established]between1951and1999’.37

Itisnotjustwithinmoreprovincialtownsandcitiesthatpowerappearstobelacking.ManydecisionsthataffectLondonandNewYorkarenolongermadeanywherenearthosetwocities,atleastnotbyindividualfamilies.Increasinglytheyaremadebysomeoftherichestpeopleonearth,whoaredrivingthecurrentboominhousing,atleastinthoseplaceswherethereisaboom.(Wherethereisnoboom,theretendtobenosuper-rich.)Ofcoursesomeofthekeydecisionsaremadepreciselyinthetwincentresoftheworldfinancialeconomy,LondonandNewYork.TheprivateequityfirmBlackstoneisheadquarteredinParkAvenue,NewYork;anditsLondonofficesareinBerkeleySquare.But

whenafirmlikeBlackstonestartstobuyuphomesthatusedtobeboughtbyfamilies,ordinarypeopleneedtobeginworrying,andneedtolookatwhoisbehindsuchcompanies.Whosemoneyaretheyinvesting?38

Theclueastowhereprivateequityfirmsgettheircashfromisinthewords‘privateequity’.Itistheprivatemoneyoftheextremelyrich.Sonowweneedtolookatsomeoftherichestpeopleontheplanet.Itistheirbehaviourthatiscurrentlyleadingusmostforcefullyinthedirectionofwhatcouldbeawidespreadslump.

SUPER-RICH

ForthecostofasmallfamilyhouseinFulham,youcouldbuyastreetinSunderland.Fortheamountsomeoftheworld’swealthiestpeopleare

willingtopaytoownahomeinKensington,theycouldalsobuyasmalltowniftheylookedhardenough.London’spropertypriceshavegonemad.Butitisaninsanitywhichislikelytotakeitstollontherestofus.

–AnthonyHilton,businessandfinance

journalist,201339

AnyonewhoknowsanythingabouttheUKandhousingknowsthattheinfluxofincreasingnumbersofinternational,super-richindividualsintotheheartofLondoniswhathasdriventhecontinuedpropertyboomthere,withasubstantialrippleeffect,convincingmorelocalbuyersthatpropertywithintheM25isworthasmuchastheyhavepaidforit.WhenahomeinthecentreofLondonappearstobeworthmanymillionsofpounds,itcanappearplausiblefor

yourhomeontheedgeofLondontobevaluedatmanyhundredsofthousandsofpounds.Themapbelowshowswhere

primecentralLondonpropertyistobefound,andalsowhohasbeenfindingit.Housepricesintheseareaswerereportedtohaverisenbyoverathirdsincethe‘lowpoint’ofMarch2009,sothatbyspring2012theywere12%higherthantheyhadbeenattheheightofthepreviousboom.40Inthefirstsevenmonthsof2013alonetheyroseanother6%,butinAugust,asreportedabove,thefirstfallswereannounced.Withindaysevidencewasalsopublishedofpricesfallinginsomeofthepoorerboroughs,partlybecausecounciltaxishigherthepoorerthearea!41

However,thesefallswereignoredby

theBritishpress,which,inautumn2013,preferredtoconcentrateonhearsaystoriesthattherichwerestillfloodingin.42Allittakestosustainabubbleisover-confidenceandhearsay.Themoreanysmallfallsinhousingpricesareignored,thegreatertheeventuallargefallwillbe.Londonpricesappearedtobe

risinguptoChristmas2013,althoughnotintheleastandmostexpensivepartsofthecapital.InsecurityelsewhereinEurope,especiallyinGreeceandCyprus,continuedtofueltheinfluxofwealthyforeignersintoLondonandpreventedmorepricefalls.TherecentriseinpriceshadbeeninstigatedbyRussianoligarchs,whointurnwerefollowedbyChinesefactory-owners.Nextcametaxexiles

frommainlandEurope.ButbeforetheRussianstherehadbeenothers.TherehavebeeneliteFrenchandothernon-English-languageschoolsinLondonformanyyears,becausefordecadesmuchofEurope’selitepreferredLondonto‘home’.SothecurrentboomisbuiltuponarecenthistoryofLondonasasanctuaryforthesuper-rich.Thesuper-richhavehadthemost

effectonLondon’sboom,butaretoofewinnumbertobeitssolecause.Beneaththemthenot-quite-so-richhavealsobeencontributing.Whatthesuper-richchangethemostistheeverydaythinkingofthosejustbelowthem,whoapetheirbehaviourinslightlymoremodestways.Thismind-setcascadesdowntootherwisenormallysensiblepeople,whoin

turnbehaveinwaysthataresimplynotrationalwhenlookedatwithdetachedeyes.Takeposhsheds–notinprime

gardensinSlough,butinprimeseasideresortsontheEnglishsouthcoast,rememberingthatthiscoasthardlyeverhasMediterraneantemperaturesorbeautifulmountainousvistas.InBritaintheseshedsbytheseaarecalledbeachhuts.Howmuchdoyouthinkthemostpriceybeachhutsellsfor?Theanswerismorethanasixthofamillionpounds,foraone-roombuildingyoucannot(bylaw)sleepin!Youmaythinkyouneedtolooktothesuper-richtoknowwhoisbuyingbeachhutsfor£170,000,butitisnotthem.Themarketisfuelledbypeoplewhohavemadealotof

money,whomimicthebuyingpatternsofbillionaires,butbybuyinghuts,notmansions.

Figure16.PrimecentralLondonpropertylocationsandnationalpreferences,2012.

Alittlegroupofpeoplewithmoremoneythansensecannowbefoundineverysmalltowninthesouthof

England,andinmanylargertownsinthenorth.Takeoneparticulargenuinebeachhut,theonethatfamouslysoldfor£170,000,whichisathirty-minutewalkfromthenearestroad:itturnsoutthat‘IthasbeenboughtbyawealthyfamilyfromChristchurch,whosechildrenarenowgrownup.’43ChristchurchisnoMonteCarlo.Suchbuyingpatterns,andtheoft-repeatedstoriesaboutthem,causemanyslightlylessopulentpeopletothinkthattheextremelywealthy,aswellasthesuper-rich,mighthavealotmoremoneythantheyneed.Sometimeagothatdescendantof

minorRussianaristocracy,NickClegg,suggesteda‘mansiontax’,anewassettaxonhomesworthover£1million.Othersquicklypointed

outthattherewasnoneedforanewtaxtoachieveextrarevenuegeneration;adaptingtheexistingcounciltaxbandscouldworkbetter.CurrentlyeachresidentialpropertyinBritainistaxedaccordingtowhichofeightpricebands,‘A’to‘H’,itfellintowhenvaluedin1991.Manynewbandsmighteasilybecreatedaboveband‘H’.In2005theNationalAssemblyforWalesaddedanextraband,band‘I’,onpropertyworthover£424,000,butthatappliesonlyinWales.TheDeputyPrimeMinistercouldhavesuggestedaddingbands‘J’to‘O’togetupto£1million.44

However,Cleggwantedasimplenewspaperheadline.Thereisaproblemwithcopying

theWelshandaddingextrabands,each£100,000morethanthelast.

LongbeforeyouhitthetoppropertypricesyouquicklyrunoutofbandsifyoudothisinEngland.However,thereisanalternative.Ifeachcounciltaxbandabove‘H’(£320,000)weretobedoubled–sothatband‘I’appliedtopropertyworthmorethan£640,000;‘J’tothatvaluedatover£1,280,000,andsoon–homesworthmorethan£40millionwouldthenfallintoband‘O’.Inatrulyprogressivesocietytheassociatedcounciltaxwoulddoublewitheachsuccessivebandabove‘H’.Amansiontaxisnotabadidea–butitisfarbettertoimplementitlikethis,inincrements,sothatthosewithpropertyworth£5millionknowtheyarepayingless,proportionately,thanthefewwhoown(orarerenting)homesvaluedover£20

million.45Englishsocietyisstillacontinuum,notjustan‘usandthem’division.Propertytaxationneedstobefairandprogressiverightuptotheverytopofthatcontinuum.Nodoubttheodd‘assetrichbutincomepoor’occupantofa$40millionhomewouldbewheeledouttotrytoillustratehowunfairsuchataxwouldbe,buttheysurelycouldtakeinalodger?Remarkably,nogovernmentinEnglandsince1991hasdaredtohavethebandsreassessed,soanyonewhohasbenefitedfromover-averagepropertypriceriseshas,asyet,paidnoextratax.Alternatively(oradditionally),if

NickCleggwantsanewassettax,heshouldlookbackatthegoodoldLiberalideaofalandvaluetax.This

wouldbeataxonalllandonthebasisofwhatitwouldfetchinthemarket,notjustonhomesonthebasisofthepriceatwhichtheylastsold.Alandvaluetaxhasaparticularbeautyinthatifalandownerclaimshisorherlandisworthlessthanitsestimatefortaxpurposes,thegovernmentcanalwaysoffertobuythelandatthatprice;theycancallhisorherbluff.Thevastmajorityofpeoplein

Britainwouldseetheircounciltaxbillsdropiftheywerereplacedbyalandvaluetax.Fewpeopleownverylargegardens,letalonegrousemoorsorofficeblocks.Thelandvaluetaxwouldalsorevolutionizecommercialpropertytaxation.Inonestep,thenatureofourrelationshipwithland,propertyandhousingwouldchange.

ThismaywellstillbeasteptoofarforthewholeoftheUK,butitisbeingconsideredinneighbouringIrelandasIwrite,andcouldbeverypopularinScotland,aswellasinthenorthofEngland,inWales,andamongyoungadultsinthesouthofEngland.Infact,thegroupwhomightbenefitfromopposingsuchataxisrelativelysmall;butthatsmallgroupdoeshavemostofourmoneyandland.IfNickCleggreallywantstolook

atthepossiblebeneficialeffectsofprogressivetaxation,includinglandtaxation,whatheneedstodoistolookawayfromhiscoalitionpartners,andwellawayfromtheirdisdainforthelesswell-off.Heshouldturninsteadtosomeofhisfavouriteplaces,manyofthemore

prosperouscountriesofEurope.ThesecountrieshavelessincomeinequalitythantheUK,andtheirinhabitantslivelongerlives,sufferlesscrimeandrespecteachothermorethandotheBritish.Oneaspectofthatdegreeofrespecthasbeenmeasuredinsurveysaskinghowmuchyoumighttrustastranger;46

butmutualrespectisalsoevidentintheirchoiceofpoliticalparties.Forexample,itisstillcommontohavesocialistpartiesontheContinent,andtherearefarmoresuccessfulgreenpartiestherethanintheUK.InFrance,followingthesocialist

electionvictoryofJune2012,theveryrichestpeoplearenowsettopayastax75%oftheannualincometheyreceiveabovethefirst£810,000.Thisrepresentsexcessand

unneededmoniesbeingdivertedtootherFrenchcitizenswithlesstospare.ButinBritainitwouldbecharacterizedasapunishmentfor‘wealthcreation’.InSwedenthoseearningabove£200,000ayearpayalmost57%taxontheiradditionalincomeoverthatthreshold.InBritainitwouldbesuggestedthatthiswillhindertheSwedesinthe‘globalrace’.InDenmarkthehighertaxratekicksinatanevenlowersalarypoint,attherateof55%forallincomeoverthefirst£46,000ayear.ThiskeepshousingpricesdowninCopenhagen.InBritaintherichwouldmuchratherpaylesstaxandseeeveryoneelsepaymoreinrentormortgagesinordertobehoused.Itisnotjustbetterassettaxation,

counciltaxandlandtaxesthatcould

helptokeepdownhousingpricesinfuture.Thebest-offbeingtaxedmoreontheirsurplusincomes–incometheysimplydonotneedinordertolivewell–wouldkeeppricesatthetopdown,astherichwouldthenhavelesstospendonhousing.Whichisbetter:amultimillionairebuyingahomefor£2million,oramultimillionairepayinganextra£1millioninincometaxandbuyingahomecosting‘just’£1million?Inthecountrieswheretherichpaymoretax,thereareusuallyalsomoregoodjobsforordinarypeople.‘Wealthcreators’maysometimescreatejobs,buttheyarenotnecessarilytheonesyouaspiretohave.TherichinDenmarkhavelessto

spend,buttheyliveinacountryof

greatersocialsolidarityasaresult.Fewerpeopleneedtopayforacartogettowork,becauseofthebetterpublicprovisionofcyclelanes.IntheNetherlandsthetoprateoftaxis52%onanyincomereceivedinexcessof£46,000ayear.TheDutcharenowonaveragethetallestandmosthealthypeopleonearth.InAustriathe50%ratekicksinatincomesover£49,000.UnemploymentbenefitsinAustriaaremanytimeshigherthanthoseinBritain,andthemiddleclassesinAustriadonotfearlosingtheirjobsinthesamewayasaresult.Theyarefreertotakerisksandtomovebetweenjobs.InBritaintoloseyourmiddle-classjobwithoutquicklyfindinganotherisalsotoloseyourclassstatus,toenteraworldyou

knowlittleabout–onethatyouhavelearnedtofear.TheseEuropeancountriesarefar

frombeingsocialistutopias.InDenmark,forexample,wealthinequalitiesbyonemeasure47remainhigherthanintheUK–alegacyofafarmoreunequalpast–butthoseinequalitiesarecurrentlyfalling,whereasinBritaintheyarerising.AlargepartofthereasonwhywealthinequalitiesinDenmarkarefallingisbecauseincometaxesatthetoparehigher,sotheincome-richareleftwithlessaftertax.If,therefore,theDanishrichattempttomakeadditionalmoneyoutofotherpeople,theygettokeeplessofit.Thisensuresalittlemoresalaryandbonusrestraintatthetop.

InBritainthe45%incometaxratedoesnotkickinuntilincomesexceed£150,000ayear.IfyouareBritish,justtryexplaininghowmuchyougetinunemploymentbenefit(JobSeekers’Allowance),shouldyouloseyourjob,toanAustrian.ItissolittlethattheAustrians,ortheGermans,ortheFrench,ortheBelgians,ortheSwedes,ortheDutchusuallywon’tbelieveyou.ThisisbecauseunemploymentbenefitratesaresomuchhigherinalmostallothernorthernEuropeancountries,andgoodrentcontrolsoftennotonlyexist,butarealsostrictlyenforced.Thereislessneedforhousingsubsidieswhenlowwagesarenotsodreadfullylowandunemploymentbenefitscanbelivedonforatleastayear,ifnottwo,

whilesearchingforanotherjob.Youcouldarguethatlowertaxes

incentivizepeopletoworkharder,astheygettokeepmoreofwhattheyearn;lowertaxesalsomakethemlesschoosyabouttheemploymenttheydotake.ButsomeonecouldeasilycounterthisbylistingallthosepoorercountrieswheretaxratesaremuchlowerthaninBritain,butwheretheelderlyliveinabjectpovertyandmuchoflifeisstillnasty,brutishandshort.It’sasimplepoliticalchoice:embarkonaracetothebottom;ortaxtherichheavilyandavoidwidespreadpovertyasaresult.Thechoicebecomesmoreobviouswhentheneedtoreduceouroverallconsumptionlevelsisalsoconsidered–notjusttoreducepollutionbutalsosothatweareable

tolivebetter,lessmateriallydrivenlivesinthefuture.Anunwillingnesstoaddressthesedeeperissuesisalargepartofwhatsustainsourcurrenthousingcrisis.Sincetheelectionvictoryof2010,

CleggandhisConservativeallieshavekeptonlookingforsolutionstothehousingcrisisthatwouldalsoallowtherichtostayveryrich.Clegg’snextsuggestionwasthatparentsshouldbeallowedtodipintotheirpensionpotstoprovidetheiroffspringwiththedownpaymentonaproperty.Itdidnottakelongforpeopletopointoutthatthiswouldraisehousingpricesevenfurther,whilecreatingmorepotentiallyimpoverishedpensioners.TheDailyMailnotedhowClegg’s

plansrapidlybegantounravel‘asit

becameclearthatonlyasmallminorityoffamilieswouldbeabletotakeadvantageofthem.Criticssaidtheywerea“gimmick”whichwouldapplyonlytothewell-off,whocanaffordtorisklosingsomeofthemoneytheyhavesavedtofinancetheirretirement.’48WhentheDailyMailturnsagainstacoalitiongovernmentdoingallitcantotrytokeephousingpriceshigh,yousensethatafundamentalshiftinmainstreamsentimentmaybeunderway.Butthisisashifttowardsuncertaintyandevermoreworry,ratherthantowardsaNewJerusalem.Somanyproperty-owning/mortgageevotersthinktheyhavesomuchtolosefromlowerhousepricesthatalmostnomainstreampoliticiansare

suggestingthatitwouldbegoodifpricesandrentsweresoontofall.Alltheycansuggestisthatitwouldbehelpfuliftheywerenottorisefurther.OthercommentsontheDailyMail

websitealsohelpedtoexplaintoNickCleggwhyhisideawouldnotwork;andhiscolleague,LiberalDemocratSimonHughes,offeredsomehelpfuladvicetoo,butinthepagesoftheGuardian(aswhathehadtosayremainsanathematotheMail).HepointedoutthattheaveragedepositonahomeinBritainhasnowrisento£65,000,whileinLondonitisover£100,000.Hesaidthatwehadreachedthepointwhereitwasimpossibleformosttobuywithouthelpfroman(oftenageing)parentorunspecified‘other

benefactor’,andthatthisappliednotonlytoyoungpeoplebutalsotothemiddleaged.AndheexplainedthatBritonslivinginsocialhousing,onefifthofthepopulation,hadnochanceofeverowningpropertynow,asthedoorwas‘firmlyclosedonthepossibilityoffuturehomeownership’.49SimonHughesadvocatedcontrollingandreininginthepurchaseofsecondhomes,butimpliedthatthisalonewouldnotbeenoughtopreventthehousingcrisisgrowingdeeperandheadingfurthertowardsdisaster.Somethinghastogive,andthe

‘unthinkable’isbeingconsidered,but,sofar,justquietly.Duringsummer2012planswerebeingconsideredontherightwingofBritishpoliticsthatincludedthe

impositionofbothcapitalgainstaxandanewannualholdingtax(of2%oftheproperty’svalue)tobeappliedtoanyoverseasbuyersofEnglishsecondhomesworth£2millionormore.AccordingtothethinktankInstituteforPublicPolicyResearch,thesewere‘measuresonwhichthegovernmentiscurrentlyconsulting’.50Propertyconsultantsbegantolookforloopholesintheproposedlegislationthatcouldapplyto‘non-naturalpersons’whosehomeswouldbeusedonlyfor‘genuinelycommercialactivities’ratherthanforlivingin.51Byautumn2013theChancellorhadannouncedthatnon-domswouldbepayingcapitalgainstaxontheirpropertiesfrom2015.OntheUKpoliticalleft,similarthoughtsandpoliciesare

beingbandiedaboutalittlelessquietly,withthetaxincludingallrichbuyers,notjustthosefromoverseas.Then,justbeforeChristmas2013,EdMilibandpromisedthatLabourwouldimplementaseriesofmoreprogressivehousingpolicies,shouldthatpartygainpowerin2015.Whathappensifnoneofthese

plansisimplemented,nonecomestoanyrealfruition;or,iftheyareimplemented,loopholesarefound?AcolleagueofminelivinginLondonjokedthatheandhispartnerwereplanningto‘buildanelectricfencearoundourhousetokeepouttheriffraffandmansiontaxinspectorsandkeepinournanny’.‘Goodidea,’Isaid,‘buthowareyougoingtogetinfood?’Isuggested

thattheWaitrosedelivery-vandriverwouldhavetobemicrochipped.‘Eatthepoor,’hereplied,meaningmetaphoricallyofcourse,notliterally.WhatIthinkhereallymeantwas–whatelsecouldhedo?Hehadtokeepearningasmuchashecurrentlyearnstokeephisheadabovewaterinthepoolofcompetitioninwhichheandhispartnernowfindthemselves.Anytalkofhavingtopayamansiontaxfrightensthem.Andtheyarefarfromrightwing.Therearemanyexamplesof

backslidingonwhatinitiallyappeartobeprogressivepolicyproposals.WhentheLabourPartyversionofthemansiontaxwasfinallyannouncedinFebruary2013byEdMiliband,itsproposedratehad

droppedto1%.Labourhadback-pedalled,Isuspect,becausetoomanyoftheirfriends,advisersandMPsliveinLondonpropertyvaluedatwelloveramillion.Despitethereducedproposedlevy,London’schatteringclassesreceivedthenewswithsomedismay.ThatGuardiancommentatorandmultiple-property-ownerSimonJenkinscomplained:‘Bysettingthetaxat1%,whichishigh,Milibandhasmadesureofahowlofprotestfromtheasset-richandcash-poor,whowillneedtofindmultiplesof£5,000ayearforeachhalfmillioninvalueabove£2million.’52Itwasinteresting,andkeytounderstandingthedilemmawearein,toseethatJenkinsthoughtthata1%levywashigh.OverattheDailyTelegraph,letter-writerswith

expensivepropertiesalsocomplained.Theysaidthattheywouldfindithardtokeeptheir‘family’homesopentothepublic,orthatthetaxwouldencouragethemto‘ripoutourimprovementsanddeliberatelydevalue’.53Oneschoolofthoughtsuggeststhatthemoretheysqueal,theneareryouknowyou’regettingtothemoney.

Ahalf-boarded-uphomeintheNetherEdgesuburbofSheffield.Oftenitissuggestedthatany

increasesinpropertytaxationfortheveryaffluentwillleadtosomeboardingupofhomesthattheycannotaffordtorun.However,therearealreadymanylargeboarded-uppropertiesthatare

seenasagoodinvestmentbytheirownersbecausetheydonothavetopayahighrateoftaxationforholdingthemempty.Weneed

policiesthatdetervacancywhilesimultaneouslymakinghousingmoreaffordable.Farmore

progressivetaxationisneededtohelpbringdownthesupposedlyhighvalueoflargerhomes.Weneedadevaluationthatmakesthesehomes

affordable,sothatpeoplecanliveinthemasafamilyorasalargegroupofyoungadults.Also,ifpriceswerefalling,andnotexpectedtorise

againanytimesoon,theownermightbekeenertogetaquicksale.Inthephotographabove,theupperwindowsofthispropertyarenotboarded,becauseitisthoughtthatpotentialsquatterswouldfindittoohardtogainaccessthroughthosewindows.Britainhasenoughhomes,buthasneitherthesystemsnorthesocietyneededtomakegooduseofitsplenty.What’smore,if

propertytaxationweretobringdownthevalueofhomesinLondon,howmanypeoplelivingin

Londonmightconsiderlivinginahouselikethis

inSheffield?HowmanypeoplestayinLondonayearlongerthantheyreallywanttobecausetheir

homeismakingmoremoneythantheydothroughtheirjobs?

LENDINGSLOWDOWN

[Whenitbeganin2007]thisself-reinforcingprocesswas,ineffect,amassivebankrunthatcausedtheshadowbankingsystemtoshrivelup,muchastheconventionalbankingsystemdidintheearly1930s.

–PaulKrugman,economist,200854

Researchingpropertyvaluesandlendingtrendsisnotacheapbusiness.IfyourequestdatafromtheLandRegistryforEnglandandWalesonallresidentialpropertytransactions,youwillbetoldthat‘OurchargingpolicyfollowsTreasuryguidelines.’Andthenyouwillbetoldthepricesthatyouwill

havetopay,shouldyouwishtoreceivemanyyears’worthofdata:

1995–2004inclusive(11millionrecords)=£30,000+VAT2005–February2011inclusive(5

millionrecords)=£49,010+VAT55

Furthermorethereisanannualsubscriptionof£2,200plusVAT.But,evenwithoutpayinganyofthismoneyyoucantellthatsomethingdramatichashappenedjustfromthesalesfigures.From1995to2007therewere,on

average,justover1,136,000registeredpropertysalesayearinEnglandandWales.Sincethentherehasbeenaslumpinpropertysales,sotheyarenowaveragingjustover643,000ayear.Inshort,since2008,theUKhousingmarkethasbeensufferingaslowdown.Itshowsno

signyetofsustainedrecovery.Theapparentpricerisesoflatesummer2013werenotaccompaniedbyacorrespondinglargeincreaseinthenumberofsales.Sotheaveragesellingpricesrose,evenwhilethenumbersuponwhichthoseaverageswerebasedfellorstayedlow.Furthermore,thepricesbeingpaidbybuyersusingamortgagewerealsofoundtobefallingastheoverallaveragepurchasepricesrose;itwasthecashbuyerswhowerefuellingthemini-boomoflate2013,andthenonlytoanygreatextentinLondon.56

AlltheresidentialpropertyinGreatBritainandNorthernIrelandisvaluedatbetween£5trillionand£6trillion.However,thatfigurecanonlybeassessedinrelationtowhatBritainitselfisworthineconomic

terms,asanisland,asaplacetocallhome.Bysummer2012ithadbecomeclearthatBritain’sannualgrossnationalproduct,its$2.2trillioneconomy,hadbecomedwarfedbythe$15trillioninbankingassetsthatwere(infinancialtheory)housedintheCityofLondon.Roughlyhalfofthat$15trillionwasheldinthemostvolatileofassetclasses.Thoseassetsexisted,iftheword‘exist’canhaveitsmeaningstretched,intheformofbank-to-bankloansand,evenmoredangerously,inhigh-riskderivativesecurities.Insummer2012,whenreportingallthesefigures,theNewYorkTimessuggestedthat‘theworryisthatwhatwasonceanassethasbecomealiability,withtheCitybecoming,ineffect,toobigto

regulate’.57FortheUKasawhole,withturnovernotpickingup,itwasdawningonafewofthoseoverseasinvestorswhoreadtheNewYorkTimesthattherewasasyetnosignofagradualreturntobusinessasusual.ThismayexplainpartoftheAugust2013slumpbetterthan‘thewarmweather’does!58ItmayalsoexplainthePrimeMinister’sdesperateannouncementinSeptember2013that‘help-to-buy’wouldbebroughtforwardandintroducedwithintheweek.TheUKpropertymarketof1995to2007,whennearly15millionpropertieschangedhands,ishistory.Whenpricesriserapidly,aslump

alwaysoccurseventually,becausesomeoneistakingmorethantheyneed,alittle‘extra’.Inthecaseofa

casino,itisthesupposedcosttothe‘house’ofprovidingagamblingvenuethatisusedtojustifythatextra.Inthecaseofhousing,itisgreedypropertyspeculators,togetherwithcolludingbanks,thatdemandshort-andmedium-term‘interest’,whoaddtothecostofborrowing.Thiscanmakegamblingonhousingnotworthwhileforthevastmajorityofpeople,peoplewhohavetoborrowsuchgreatsumsinordertobuy.Itiswhensufficientnumbersofpotentialbuyersthinkthatitwouldbefoolishtoriskallthattheyhavethataslumpcomes.Justasitisimpossibletoknow

withanycertaintywhenanewslumpmightstart,sotooitisveryhardtoknowwhenaslumpwillcometoanend.Justaswithviolentearthquakes,

wecanrecognizethecircumstancesinwhichpriceslumpsaremorelikelytooccur,andtheplaceswheretheyaremorelikelytohappen,butwecannotknowpreciselywhentheywillstrike.Ifmarketsweremorepredictable,iftheytendedtoreplicatepastbehaviourverysimply,theirpatternscouldbeexploitedforgreatfutureprofit.Analystsliketopretendtheycandosuchthings,andsomemayevenbelievethattheycan,butmostlearnthattheycan’t.Whenitcomestogambling,there

willalwaysbeafewwinners,andsomeofthemwillclaimitwastheir‘system’thathelpedthemtogamblesuccessfully.Somearguethatthefinancialcrisisof2008wascausedbytopbankers’lackofskill,andhencebytheirinadequatebetting

systems.Thiswouldbedespitethosebankershavingbeenassessedbythemarketasbeingworthextraordinarysalariesandbonuses.Peoplewhobelievethatbankers’salariesarejustifiedareforcedtoblamethe2008crashon‘excessivegovernmentregulations’.Otherssuggestthatthecrisiswouldhaveoccurredanyway,asallthebankerswerereallyengagedinwasasophisticatedformofgamblingthatwasdestinedtoeventuallyfail,justasallPonzischemesmusteventuallyfail.Tryingtorecognizeasignofthe

slumptocomeinthehousingmarket,aswithanyothermarket,isliketryingtoguesswherearouletteballwilllandasitclattersaroundthewheel.Itistemptingtotry,butultimatelyfutile.Itisbettertowait

untilitfallsintothezeroslotbeforedeclaringthatthetableistobecleared,butwecannotresistspeculating(intheUSroulettewheelsnowhavetwozeroslots,makingthechancesoflosingoutthereevenhigher).Onepossibilityisthatthecurrentslumpwillbefollowedbyafurtherslump.InthecaseoftheUKthisis,attheveryleast,worthconsidering.InJanuary2013itwasreported

thatrentsinEnglandandWaleshadbeguntofall–notjustinafewperipheralareasbutoverall–andthatrentalarrearshadworsened,withsome£326millionlateorunpaidrentsbeingrecordedacrossthesetwocountries,thehighestlevelsincethepreviousmaximaofJanuary2012.59Andthenrent

arrearsroseevenfurtherashalf(yeshalf!)thefamilieshitbytheBedroomTaxwereaddedtotherolesofnewdebtors.60RentshadevenbeguntofallinLondonandthesouth-eastofEngland.Yetthiswashardlyacaseofslumpfollowingslump,forrentshadbeenrisingrapidlyafterthevolumeofhomesaleshalved.Peoplehadvotedwiththeirfeet:unabletoaffordamortgage,theyhaddecidedtorentinstead.Formost,thatwasnotmuchofadecision.Theyhadnoeffective‘marketchoice’.JustasmostofthosewhomustpaytheBedroomTaxhavefewoptionswhenitcomestosecuringasmallerproperty,somostoftherestofushaveveryfewoptionswhenitcomestobuyingaproperty.

Overthecalendaryear2012Londonrecordedthelargestannualriseinaveragerents(6.3%),followedbythesouth-east,whererentswererecordedasbeing3.9%higherthanthepreviousDecember.61

However,intheEastMidlandsandWales,rentshadalreadybeenfallingforayearby2013;andacrossthewholeofEnglandandWalesestimatesofthetotalrentarrearsintheprivatesectorwerefoundtohavegrowntotheirhighestlevelsinceAugust2012,withtotalarrearsof£326millioninJanuary2013,upsharplyfromatotal£241millionrecordedjusttwomonthsearlier.TheseJanuaryarrearsnowrepresented‘10.1%ofalltherentthatwasdueacrossEnglandand

Wales,whileNovember’sarrearsrepresented7.4%ofallrent’.62

Thus,eveninacountrywherehousingpriceshavebeenfallinginmanyareasoutsideofLondon,manypeoplecan’taffordtopayrentsattheircurrentlevels,letaloneatevenhigherones.SalariesandwagesawayfromLondonhavebeenfallingevenfasterthanhousingprices.WithinandaroundLondon,rentshavebeenrisingfasterthansalariesandwages.Butnowherehaverentsfallenbyasmuchasbenefitshavebeencut.Realizabledemand–householdswantinganewhomethatcanalsoaffordone–isdropping;eveninthesouth-eastmoreandmorepeoplecannotputupenoughmoneyforwhattheyneed.

Coupleswhohavesplitupcontinuetoliveinthesamehome,evensleepinthesamebed.Grown-upchildrendonotleavethenest.Newmigrantsdonotstayinthekindsofnumbersthatwouldreallyhelptoenergizetheeconomy;manywhodoarrivequicklyleaveagain,becausethehousingissopoor.Morenewmigrantsreplacethosewhochoosenottosettle.Theorthodoxstorythatistoldisofimmigrants‘swamping’thesouth,supposedlyimmunetothehighcostoflivingthere;butorthodoxstoriesareoftenbasedmoreontheacceptedmythsofourtimesthanonreality.LookbacktowhenimmigrantswerelastsooftenblamedformakinglifeworseinBritain:intheearly1970s,whentherewasalsoahousingpricespike.

Orthodoxeconomistssuggestthathousingcrisesarerareandareoftenprecededbyothereconomicshocks,butrecentanalysishasfoundthatinthelastmajorworldfinancialstormtohaveoccurredpriorto2008,thatoftheearly1970s,ahousingcrisisprecededlatereconomictroubles:‘Conventionalwisdomhasitthatonlytheoilpricehikeinthefallof1973mattered.Butitturnedoutthatthepropertycrashprecededtheoilpricehikebysixmonthsormore,andtherecessionwaswellunderwaybythefall.’63Inananalysiscarriedoutsincethe2008crash,ProfessorDavidHarveyofCityUniversity,NewYork,hasre-evaluatedwhatoccurredin1973andsuggestedthatitwasproblemswithgrowinghousingdebtthatmattered

morethanoil.Healsofoundthat,workingbackintime,asimilarstorycanbetoldofthe1929crash,whichwasprecededbyafallinthevaluationsofrealestatesecurities,withtheresultthatbuyers’loansbecameunsecured.InFloridatheapparentvalueofbuildingpermitshadincreasedeightyfoldinthesixyearsbetween1919and1925,andUShousepricesrosefivefoldduringthosesameturbulentfewyears–allthispriortothe1929crash.Peopleatthetimetalkedofmigrantsandimmigrantsasacauseoftheproblems,when,inhindsight,itisclearthattheywerenot.Aslumpcancomeatanytime,or

notforyears.WhenIwasfirsttypingthesewordsIread,inFebruary2013,thatthePeople’sBankofChinahad

justbeenreportedtohaveinjected450billionyuan(US$72billion)intomoneymarkets.Apparently‘itwasthelargest-everone-dayliquidityactionconductedbythecentralbank.’64Thereasongivenwastosteadynerves,assomanypeoplehadwithdrawnmoneytobuygiftsfortheChineseNewYear.ButwhywassomuchmoreneededforthisNewYearthanforthepreviousone?Whatevertheeventthatcausedthatslump,itwillalmostcertainlynotbeNewYeargifting.Thereisalwaysanextslump,butitsrealtriggerwillprobablynotbeobviousatthetime.InNovember2012,asIwasat

firstpullingtogethermaterialforthisbook,Ireadthat‘AccordingtotheestateagentKnightFrank,theprice

ofprimeresidentialpropertyinLondonhasincreasedby49%sinceMarch2009–fivetimesmorethantheUKasawhole.’65Likemanyothers,IwonderedthenwhetherLondoncouldbebecoming,financially,aseparatecountry–orwhetherthiscouldbeyetanotherbubble.Thelatterhasmoreofaprecedent.Well-informedcommentatorswritingaboutthattimethoughtanewslumplikely,butthecannyonesneversaywhenitwillhit;theyjustkeeprepeatingthateventuallyitwill.Forexample,DavidBlanchflower,thebest-knownformermemberoftheBankofEnglandmonetarypolicycommittee,saidinJanuary2013that‘Myguesswouldbethatnominalhousepriceswillhavetofallbyafurther15%or

so.’Asalways,hedidnotsaywhenthatfallwouldtakeplace.66

HighhousingpricesintheUKaremaintainedbythefeelingthatpayingrentislikethrowingmoneyaway.Thisfeelingisgeneratedbytworealities.First,theamountofrentthatmostpeoplepayfarexceedsthevalueoftheservicetheyarepayingfor.Largelyunregulatedlandlordstrytheirhardesttomaximizetheirincomesandtominimizetheexpenditurethey‘lose’onmaintainingthepropertiestheylet.Iftheydidnotdothis,facedwithcompetitionfromthemoreunscrupulousmajority,theywouldhavelowerfinancialresourcestofallbackonintimeswhenitishardertogettenantsandtheywouldbemorelikelytohavetosellupandleavethe

business.Thusrentcontrolisneededtobringdownrents,todeterthelandlordsmostinterestedinmakingaprofitandmostintentonofferingabadservice.Suchcontrolswouldinturnbringdownhousingprices,resultinginmorepeoplebuyingwhentheyneededtoandfewerlookingtorentunlesstheywantedto.Second,ever-risinghousingprices

canmakerentingfeellikethrowingmoneydownthedrain.Peopleaskwhypayrentwhen,ifyouinsteadpayamortgage,youcouldeventuallyownapropertyworthasmallfortune.Oneansweristhatifhousingpricesfall,thatsmallfortunecouldturn,withaddednegativeequity,intoalargedebt.Wherehousepricescontinuedtofallinthe

northofEnglandandinWalesandScotlandduring2013,theydidsopartlybecausepeoplewhocouldbuycarriedonrenting,astheydidnotwanttopurchaseanassetthatwasshrinkinginvalue.Incontrastwithmuchofthenorth,

housingpricesinsouthernEnglandarerisingrapidlyasItype(inlate2013),buildingup(atsomepoint)towardsaslumporacrash.Thissurgeinjust-about-realizabledemandisprincipallybecause,ascurrentlyconstitutedintheUK,freemarketprivaterentingencouragespeopleandbusinessestobeortobecomebadprivatelandlords,notjustthroughchargingrentthatistoohigh,butalsobynotofferingtermsthataresecureenough.Peoplerentingsocialhousingnowalsoface

agrowinginsecurityoftenure.Governmentcansuddenlychangetherulesatwill,makingpeoplefacefinesand,ultimately,eviction.Rentingingeneralfeelsincreasinglyinsecure.AsDuncanBowieoftheUniversityofWestminster(locatedatvarioussitesintheheartofLondon)succinctlyexplains,the‘privaterentedsectorisineffectderegulated.Therearenorentcontrols;nominimumsecurityoftenure,andstatutoryregulationofminimumstandardsislimitedtohousesinmultipleoccupation…[and]islargelyineffective.’67

Payingmoreforhousingmeanslessisavailableforallothercommitments.Thenumberofbabiesbeingbornworldwideiscurrentlyslowingatitsfastest-everrate.In

richercountriespeoplepartlyblamehousingcostsforhavingfewerchildren.InthedensestcitiesinpoorerAsia,andnotjustinChina,whereithasbeenmandatory,onebabypercoupleisnowthenorm.68

Whateachgenerationspendsmostofitsmoneyonchangesovertime.Ourgrandparentsspentfarmoreontheirfoodthanonhousing;ourparentsoftenspentmoreoncarsthanonhousing.We,however,spendmoreonhousingthanonanythingelse.Ourchildrenmay–onaverage–spendmoreoneducationunlesstheycanstopthatparticularbubblefromforming,butthatisasubjectforafuturebook.Mortgage-lendersusepeople’s

worriesaboutpayingevenhigherrentsinthefuture,andthecarrotof

theprospectivewealth,toenticethemtotakeoutverylargeloans.Theydon’tpointoutthat,evenatlowinterestrates,borrowerswilloftenhavetopaybackatleasttwicethevalueoftheloanbeforetheyactuallyownthepropertyoutright.MostborrowersintheUKandtheUShavelittleideawhattotalsumtheywillordidenduppayingback,becauseinterestratessooftendramaticallyriseandfalloverthetwenty-five-orthirty-yearlifetimeofatypicalmortgage.Theyalsohavelittleideaofwhatthefinalvalueofthepropertytheyarebuyingwillbe.Butpeopletendtobeoptimistic.Inresearchingthisbook,Ihave

talkedtodozensofjournalistsandhousinganalystsaboutwhattheythoughtmighthappentoUKinterest

ratesinthenearfuture.Alargegroupthoughtthoserateswouldnotriseatall,or,iftheydid,byjustafractioninthecomingyears.Almostallweremiddleaged.AlmostalllivedinLondon.Andalmostallhadmanyyearsofmortgagepaymentsahead.Hardlyanyofthesecommentatorsrented.Theyneededinterestratestoremainlow.Thus,thereisagroup-thinkoperatinginhousingtodaythatisunderstandablebutdangerous.Itprevailsattheverytopofthesupposedpyramidofunderstanding,amongexperts,whothenhelptomaintainanoptimismaboutthefutureofhousingthroughoutsociety.Rarelyarecommentatorsaskedtoseriouslyconsidertheactualprobabilities.

Inthesamewaythatpeopledon’tconsider(ifinapartnership)thattheirmarriageorotherarrangementmaybreakup–althoughthelikelihoodofthathasneverbeenhigher–theyoftendon’tconsider,whenbuyingproperty,thatoneofthetwojobsneededtopaythemortgagemightdisappear;thattheymayneedorwanttomoveearlierthantheycurrentlyanticipate;thattheyareliableforalltherepairsandupkeepontheproperty;orthattheycanfallill.Peoplearemadetoworryaboutwhatmighthappeniftheyweretodie,butnotaboutallthosemuchmorelikelyunfortunateeventsthatcanhappentothem.Thelikelihoodofdeathduringthelifeofamortgageislow,butlendersstillmakelifeinsurancemandatorywhen

amortgageistakenout.Theoriginalmeaningoftheword‘mortgage’inFrenchis‘deathcontract’.Otherformsofinsurance,suchasinsuranceifyoubecometoosicktowork,arenotmandatory.Strugglingborrowerscanmakemoremoneyforthelenderiftheyfallintoarrearsandhavetopaypenalties.Andrecentlylendershavemis-soldpaymentprotectioninsuranceonamassivescale–whichthenfurtherdetersborrowersfrominsuringthemselvesagainstillnessoranaccidentcurtailingtheirincome.Lendersoftenjustifylendingata

profit,andtryingtomaximizethatprofit,bysuggestingthatchargingatinterestrateswellabovethebaserateallowsthemtorewardsavers.However,thegapbetweentheratesatwhichbankslendandtheinterest

ratesthattheyoffertosaversshowshowmuchtheycreamoff.Justcomparewhattheyoffertoday.AsItype,aten-yearfixed-ratemortgagecostsabout4%ayearonthehighstreet,withafeeof£1,500toapply.Simultaneouslythebankofferingthisrewardsitssaverswitharatewellbelow1%,aratethatisbelowinflation.Lendersalsosuggestthatmuchof

theprofitthatbanksmakegoestoshareholders,manyofwhicharepensioncompanies;banksarethereforeindirectlyfinancingourpensions.Butmostpeopledonothaveaprivatepension,andpensionprovisionisincrediblyinequitable.Formostpeople,thegreatestwealthinequalitiesofallaretobefoundbetweendifferentgroupsof

pensioners.Allthejustificationsforkeepingthestatusquoultimatelymakesenseonlyfortheveryfewatthetop.Ifyouarepoorlyhousedinmiddle

age,youarealsomorelikelytobepoorlyhousedasapensioner.Thegraphbelowshowshow,inBritain,thenumberofpropertiesonwhichloansarebeinggrantedremainsathalfthepeakof2007,whileremortgagingbecamefourtimeslesscommonafter2009thanitwasbefore2008.69Remortgagingisraisingafurtherdebtbasedonthesupposedlygrowingvalueofyourhome.Whenhomesdon’tgrowinvalue,remortgagingbecomesharder,buteveninthesouth-eastofEngland,wherehouseshaveapparentlyrisengreatlyinworth,

banksarelessandlesswillingtolendmore:theyclearlythinkpropertypricesmightwellbeovervaluedbyatleast20%.ThatiswhytheChancellorsteppedintoguaranteethat20%inhisMarch2013budget.Thefallinmortgageborrowing

showninthegraphbelowisnotduetoasuddenincreaseinthriftamongthepopulation.Itwasinitiallymainlytheresultofgovernmentshavingcurtailedbanklendingsince2008,tostopthebanksbuildingupadebtmountainthatgovernmentwouldthenhavetounderwrite(ashappenedinIreland).Thisfallinlendinglargelyexplainstheslumpinbuyingdetailedabove.Manypeoplewouldstillliketobuytheir‘next’home,buthavenopossibilityof

raisingthedepositandtheotherstart-upcostsrequired.HenceGeorgeOsborne’snew‘help-to-buy’initiativeinhisMarch2013budget,guaranteeingloansonallpropertytocoverfallsofupto20%oftheircurrentvalue–thevaluethatthebanksbelieveisn’tthere.Ifthevaluewasthere,thebankswouldlendthemoneywithouttheneedforthoseguarantees.Thegovernmentiscoveringtherisktothebank,nottherisktothebuyer.Thebuyerisbeingencouragedtotakeahugerisk,oneevenbanksthinkisfoolhardy.

Figure17.MonthlyapprovalsofloanssecuredondwellingsintheUK,2007–12.

IntheUSthefallinmortgage-lendingsinceitspeakhasbeenevenmoreprecipitous.In2005mortgage-lendingreachedapeak:overatrillionmoreUSdollarswerelentthanwerepaidbackthatyear.Butthenlendingfelllikeastonewiththecrashin2008,recoveredslightlyin2011,andfellagainin2012.When

youlookatmortgage-lendingintheUSitisclearthattheeffectsofthecrashareongoing.TherewasariseinlendinguptoMarch2013thatlookedimpressiveatfirstglance,at38%,but,becauselendinghadfallensomuch,thisamountedtoonlyanadditionalmillionorsonewmortgagesinayear.Mostoftherisewasduetoremortgaging,aspeoplewerefindingithardertogetbyonsolittlemoney.Furthermore,blackandHispanicborrowerswhoaskedforsomeofthisnewmoneyweremuchmorelikelytobedeniedit,incomparisonwithwhiteorAsianapplicants.70Soifitwasarecovery,itwasarecoveryonlyforafavouredfew.IntheUS,mortgagorshavepaid

backsomuch,inaggregate,thatthe

banks’mortgageliabilitieshavefallenineachofthepastfiveyears,despitetheenormousvalueofallthenewloansstillbeingmadeintheUS.Thisisthefirsttimesuchasituationhasoccurredsinceatleastthe1970s,andpossiblyever.Oneresultofthisisthatotherformsofconsumerlending,especiallycredit-cardborrowing,havebeenrisingrapidly.Non-mortgageUStotaldomesticlendingreachedanetpeakofover$117billionintotalcredit-cardandotherlending(incomparisonwiththeamountsbeingpaidoff)bythethirdquarterof2012.71Thisunsecuredborrowinghadbecomehigherthanatanypointsincetheyear2000,anditisstillrisingtoday.Theinterestratesonunsecuredloansareusuallymuchhigherthanthose

onmortgages,soevenmoremoneythenhastobepaidback.Itisworthbeingalittlewaryofall

thesedebtestimates,despitetheirapparentprecision.InMarch2009theFederalReservereportedthatbankshadlent$35billionlessonmortgages,intheyear2006,thanthosebankshadthoughttheyhad!Furthermore,theFed’spublishedfigureonmortgage-lendingfor2008wasinitially37%adrift.72Thesediscrepancies,ofbillions,aresomewhatunderstandable,butitwouldbewrongtoassumethattheFederalReservehasaclinicallyaccurategraspofcurrentevents,oreventhatthebanksreportingtoitalsoconcurrentlyknewtheexactstateoftheirownmortgagebooks.Thecurrentfall(shownopposite)

couldbefound,infuture,tobefarsharper,tobegoingdeeper,thanwhatisdepictedhere.

Figure18.Additionaldebtaddedannuallybysector,UnitedStates,1979–2012.

ThevastbulkoftheUSmortgagedebtmountain,lentbetweentheyears2000and2007–some$6trillion–remainsunpaid.Muchmayneverberepaid,butUSbankshavebeenrecoupingmorethantheyhave

lenteveryyearsince2008,althoughonlybecausetheyhavebeenpreventedfromlendingyetmoreonhousingbytheUSauthorities.Theywouldlendfarmoreiftheyknewtheauthoritieswerepreparedtounderwritewhatevertheylent.ItismostlyonlybecauseUSregulationhasbeenalittlemorelaxonotherformsofconsumercredit,suchasaffectsthosecreditcards,thatlendinghasbeenabletogrowagainintheUS.In2013thosereportsofrisingmortgage-lendingreferredtoaboveweremostlyforremortgaging.Ifbankscan’tlend–especiallyonnewpropertyandtofinancehomemoves–theycannotprofit;butiftheycannotrecoupalmostallthattheylend,theyalsofail.

IntheUKweneedtolearnfromtheUS,andnotmimicitsomuch.SomanyofourmajorbankswereinthegripofUSinstitutionsbytheearly2000sthatwealmostblindlyfollowedUSfinancialpolicy–insomeareas,toourdetriment.Forexample,theUSdoeshavemorepropertytaxesthantheUK,butwedidn’tchoosetocopyanyofthoseandreviseourout-of-dateandveryunfaircounciltaxsystem.However,whathappensinmanystatesintheUSatleastshowsthatgreaterpropertytaxationispossible,ifonlytogetmorecurrentlyunusedpropertyintouse.InNewHampshire,wheretotaltaxationislowerthaninforty-threeotherUSstates,propertytaxesare,onaverage,about$2,424whencalculatedper

personperyear.Thesametaxischargedonahomeusedbyonepersonasitisonasimilar-sizeddwellingcontainingsixpeople.73

Greatertaxationisthereforeleviedonapersonlivinginanunderusedproperty,onsecondhomes,onholidayhomesandonemptycommercialproperty.ThishappensinmuchoftheUSalready,andintheUKitwouldencouragethoseinpossessionofsuchpropertytoputittouseandnotletitremainempty.IntheUK,makingthecounciltax

systemmoreprogressiveisentirelypossible.Asoutlinedabove,itcouldbedonebyextendingthebandstocoverpropertiesworthmanytensofmillionsofpounds.Suchareformwouldbeasteppingstonetowardsaproperlandvaluetax,andisjustone

ofmanywaystodealwiththevolatility,theinequityandthedisparityoftheUKpropertymarket.Itcouldalsohelptoreducerentsforthevastmajoritywholiveinmodestproperties,becausewhenpropertyvaluesfallitishardertojustifychargingsuchhighrents.Theintroductionofafairlandand

housingtax,risingtofarabovethecurrentmansiontaxthreshold,mighthelptoreducespeculation,andalsohelptocontroltherisesinpropertyvaluesinLondon,therebymitigatingthesizeofthepropertybubbleandhopefullycushiontheimpactofthatbubblewhenitbursts.However,toenactanynewpolicywehavetostopbelievingthatwhatwillbewillbe,andthatwearepowerlesstointervene.

7

Speculation

Rightmovesaidhomepriceswillincrease6%thisyearinsteadofthe4%itpreviouslyestimated…Nationally,valueswereup4.5%thismonthfromayearearlier,whilepricesinLondonwere8.2%higher,[but]askingpricesfellby7.4%onthemonthintheCityofWestminster.Theydeclinedby5%inCamdenandby3.3%inKensington&Chelsea.TheaverageaskingpriceintheUKis245,495pounds($389,300).

–BloombergNews,September20131

Justbeforethesmall1989crashintheUKhousingmarket,andinanuncannyechooflate2013,house

priceestimateswererisingrapidlynationally,buttherisehadstalledinLondon.Then,asifoutofnowhere,pricesbegantofall.Firsttheyfellinthecentreofthecapital,inautumn1988.Iknowbecause,intheearly1990s,aspartofmyPhDstudies,withdatafromthelargesttwobuildingsocieties,Imappedpricesin10,000wardsforeveryyearofthe1980s.Iusedanewmappingtechniquethatinvolvedthegenerationofverydetailedareacartograms,whichletyouseeallthoseindividualstatisticstogetherononepage.Icouldseethefluctuationsinpricesindifferentareas,likeanestateagentwithknowledgeofhisorherparticularpatch,butIcouldseethemforeveryneighbourhoodineverytownandineveryruralarea

acrossthewholecountry.Iwasnolongerlookingatalistoffigures,butatanactualpicture.Todescribethatpicturewithafewstatisticswouldhavebeensimilartodescribingapaintingashavinganaveragecolourofred.Thehousingpricepictureisnever

uniform:therearelocalexceptionsandregionalexceptions.Theregionalexceptionsdonotneatlyfitanyadministrativeareas.Igottobethefirstpersontoseedarkspotsgatheronthemapsofhousingpricechangesupto1989.Iwasabletosee,ingreatdetail,thegeographicalprogressofahousingmarketcrash.Negativeequityspreadlikeanepidemicacrossthecountry,slowly,thenveryquicklyandoftenunpredictably.Fewplaceswere

spared.Recoverywasgradual.LaterImappedthedatafor1993.In25%ofwards,25%to50%ofpeoplewhohadboughtwithamortgagebetween1988and1991wereinnegativeequity;inafurther12%ofwardsitwasover50%.Andwiththenewcomputer-generatedcartogramsIcouldseewhereeachofthosewardswas.Bythen,althoughmostwereinthesouth,therewerestillscatteringsinthenorth,ScotlandandWales.Backinthe1980sand1990sonly

afewpeoplecouldmonitorlocalhousepricechangesacrossthewholeofBritain.2Todayfarmorepeoplehaveaccesstothedata.But,inJanuary2013,justninemonthsbeforetriplingitsforecastofthecomingnationalriseto6%,thepropertyexpertsatRightmovehad

suggestedtheywouldbeonly2%.3

InearlysummerRightmoveincreaseditsestimateofannualhousinginflationto4%,inautumnto6%andtheninDecember2013theyincreaseditagain,to8%4.Speculationisrife,theforecastsareunreliableandactualhousingpricesfluctuate.ThesameishappeningintheUS

today,anditisnotonlytheforecaststhatfluctuatewildlybutalsothereportingofthem.On24September2013theFinancialTimestitleditsstoryonthereleaseofonesetoffigures‘PaceofUShousepricerisesslowsasmortgageratesclimb’.5TheBBChadreportedthesamedatathesamedayundertheheadline‘UShousepricesinbiggestannualriseforsevenyears’.6ByDecember

2013theLosAngelesTimesby-lineread:‘November’smedianof$385,000hasbeenaboutthesamesinceJune.Salesslump’.7

Attheheartofthehousingcrisis,aswiththesituationmorebroadly,isspeculation.Theproblemrangesfromthosewhoseektomakeaquickbuckbylendingintheshortterm,topeoplewhoaredesperateforhelptopaytherentormakeamortgagepayment,throughtothosewhoseektomakeaprofitinthelongterm,moreslowlyandsteadily–alloutofourbasicneedtobehoused.Similarsortsofspeculationhad

occurredpreviouslyinBritain,mostrecentlywhencreditbecamemoreeasilyavailableafterthesuddenderegulationoffinancialmarketson27October1986:the‘BigBang’.

Afterthatpeoplebeganoncemoretofallbehindondebtrepaymentsinwaysthathadnotbeenseensincethe1930s;enoughtimehadpassedforthelessonsofthe1930stohavebeenunlearned.InotherEuropeancountriesgovernmentsweremorecareful.ButinBritain,wheretherewasadesiretobeeconomically‘great’again,suchcautionwasviewedastimidity.Similarly,intheUS,whichwasstrugglingtomaintainitseconomicgreatness,theoldruleswererelaxedfromtheearly1980sonwardstoallowshort-termprofitstobemaximized.Earlierinthisbookthehousing

turmoilofthe1930sand1970swasdescribed,anditwassuggestedthatwecouldlearnfromrememberingthosetimes.Itwasalsosuggested

thatperhapswecanbeforgivenforforgettingthem,givenhowlongagothosecriseswere,butmostolderadultsshouldbeabletorememberthe1980sandtheperiodsincethen.InBritainthe1980sendedwiththatsmallhousingmarketcrash,butwetooklittlenoteofitatthetimeotherthantoseeitasafewtoomanypeopletryingtobuywhenpricesweretoohigh,ofteninanattempttosavealittletaxbypurchasingbeforeSeptember1989.AfterthatdateonlyonememberofacouplecouldclaimMortgageInterestReliefatSource(MIRAS)ontheirtax.ThatparticularsubsidywasendedentirelyinApril2000.However,inhindsighttherushtogetinbeforeMultipleMortgageTaxReliefendedwasnottheprimecauseoftheover-

exuberanceof1988.Rather,itwastheavailabilityofnewmoneytoborrowinthelate1980sthatwasmostlytoblame.Worryinglywehavemorenewmoneythaneveravailablenow,butthistimeitisunderwrittenbythegovernment.Ifyouweretryingtosetupthemarketforagreatfall,youcouldhardlydobetterthanthis.Intheninetiesandnoughties,

increasedfinancialspeculationandthecreationofmoreandmorenewmoneybybanks8ledtoevergreaterlending,rapidlyrisingpricesandrents,increasedindebtedness,morearrearsandariseindefaulting.Massdefaultingonmortgagepaymentswascurtailedonlybyadramaticreductioninbaselendingrates.Thiswasdonetotrytokeeptheshowon

theroadinthehopethatsomehowtherewouldbeareturntothenewnormal.Butwhatwehavebeenlivingwithsincehasbeenfarfromnormal:housinginsecurityhasincreased,andgovernmentshavebeencreatingnewmoneythroughquantitativeeasing.Weknowthiscan’tcarryonforlong,ourgeneralsenseofsecurityhasfallen,andcollectivelyevenourhealthhasbeguntosufferinwaysthatcannowbemeasured.Buttheworseitgets,themoretheyenticeustoborrow.Ultimatelyspeculationinhousing

iswrong,becauseitharmshumanhealth.Itunnecessarilyincreasesrentsandprices.Livinginfearoverwhetheryouwillbeabletopaytherent,orkeepupthemortgagepayments,slowlyhacksawayatyour

senseofbeingpartofsociety,makesyouincreasinglyanxiousandharmsyourwell-being.Worryingthatthecarehomeyouarelivinginasanelderlypensionerisabouttogobustbecausethelandlordhasincreasedtherentistoworryabouthomelessness.Oldalternativestorentingbecomenecessaryagainasrisinghomelessnessissufferedbytheyoung:thefrequencyofsquattingrises;millionsmoreendupsleepingonfriends’sofasforaweek,ortwo,ormore.Butforthosewithchildren,andforthosewhoareolder,directactionsuchassquatting(orindirectactionsuchassofa-surfing)islessofanoption,andmanypeoplegetintogreaterandgreaterdebt.

DEBTANDARREARS

It’sshockingtothinkthatsomanyfamilieswillbestartingtheNewYearwithahugeweighthangingoverthem,trappedinadailystruggletokeeptheirhome.Paydayloansmayseemlikeaquickfix,butthehugeinterestchargesmeanthingscanquicklyspiraloutofcontrol.

–CampbellRobb,Shelter’sChief

Executive,20139

InBritain,MargaretThatcher’sfirstgovernmentputthecountryintolong-termdebtbyallowing,evenencouraging,exportmanufacturingindustriestofail:shipyards,coalmines,steelplantsandcarfactories.Insteadhergovernmentusedtheprofitsmadefromexportingoiltocuttaxes,especiallytofinanciers.Exportingoiltooklittlemanufacturingskill;itwasnotthat‘hi-tech’.Thatcher’sgovernmentcouldhaveusedthemoneyto

supportmanufacturinginsteadoftaxbreaks,aswasdoneinmainlandEurope;butsomelargemanufacturingandextractionindustrieswereheavilyunionizedandtheunionswereThatcher’senemynumberone.GovernmentsinotherEuropeancountriesdidnottakesuchanantagonisticapproachtoindustry,nordidtheygivesomanytaxbreakstofinancialservicesandthepotentialcustomersofthoseservices.BankingintheUKbecamepartofthe‘financialindustries’,asifbankersweresomehowindustrious,asifmoneywerehackedoutofrock.InseveralotherEuropean

countriesmanyoldindustriesevolvedintonew,cleanerandyoungerbusinesses.ButintheUK,asaresultofThatcher’s

deindustrialization,‘Britainlastranacurrent-accountsurplusin1983andhasbeenindeficitsincethen,borrowingmoneyfromcountrieslikeChinaandsellingcommercialassetstoforeigners.’10ThehugeriseindebtinBritainsincethe1980sisalsodirectlylinkedtothedecisionstakenthenandtothegrowingsocialinequalitythatresulted.Bankersgotrelativelyricher;workersbecamerelativelypoorer.TheproportionofGDPgoingtowagesfellandthattoprofitsrose.Fallinginbetweenthatgrowinggap,manypeoplegotintomoreandmoredebttotrytomaintaintheirpositiononaladderofincomeandwealthwhosegradientwasbecomingprogressivelysteeper–hardertoclimbandeasiertoslipdown.

ItisbecauseoftheThatchereconomic‘revolution’thatpayingforhousingforyoungadultsinBritainisliketryingtorunfasterandfasteronahamsterwheel.WithThatcher’sderegulation,awiderspreadofpeoplewerepermittedtotakeouthomeloansonmoreexpensiveproperties.Becauseofthis,anewphenomenonbeganinthe1980s:largenumbersofpeoplegettingintoarrearsontheirmortgages.ThathadbeenquiterarebeforeMrsThatcher’sgovernmenttookcharge.11Butmoreandmorethoughtthattheyhadtospeculatetoaccumulate,andthatthemostexpensivepropertieswouldrisethemostinvalue.Thetemptationtoborrowmorethanyoucouldreasonablyaffordwasoftentoo

much.Thenpricesroseastheresultanditbecamenecessarytoborrowjustalittlebitmoreagain,especiallyinmanyareasofthesouth.Peoplestartedtohavedoubtsaboutthedoubtsattachedtoborrowing.‘Don’tbeaskinflint’,theywouldsay.Thisiswhatyouhavetodo.AsoneofThatcher’s

contemporariesputitshortlyafterherdeath:‘Shecreatedtoday’shousingcrisis,sheproducedthebankingcrisis,shecreatedthebenefitscrisis…Everyrealproblemwefacetodayisthelegacyofthefactshewasfundamentallywrong.’12However,itwouldgrosslyoverstateherindividualabilitiestosuggestshedidallthesethingsalone.Shehadhelp,andshefollowedtheguidanceofherlike-

mindedcolleaguesandtheteachingsofafewoldermenwhohadatheorythatpromotingindividualselfishnesswould,overall,increasethecommongood.Theygotachancetotestthattheory,anditwasthatidea–Thatcherism,promotingselfishnessabovethecommongood–whichturnedouttobewrong.Tobeinarrearsmeanstobe

behindinyourmortgagepayments.Ahighlevelofarrearsisnotnecessarilyasignofwoe.Whenhousingpricesarerising,buyersbeinglatewiththeirpaymentsisoftenseenaslessofaproblem.Theyandtheirlendersknowthatthevalueofthehomesisgoingupandthatthebuyers’shareoftheequityinthepropertiesisgrowing.Somemayviewafewmonths’arrearsasaform

ofsecuredborrowing,cheaperthanusingcreditcards,althoughtheywouldusuallydobettertomakeaformalagreementwiththeirlendertoextendtheirmortgageratherthanincurringpenaltyfees;but,eveniftheydon’tmakesuchaformalagreement,theywilloftenstilldobetterincomparisonwithtakingoutotherunsecuredloans.DebtgotoutofhandintheUK

almostassoonasfinancialderegulationbeganin1986,sothatby1989therewasthatsmallhousingmarketcrash.Manyyoungerbuyerswithonlysmalldepositsgotintonegativeequityinthelate1980sandveryearly1990s,whenpricesfell.Theywerelefteitherwithadebtthatcouldnotbecoveredbysellingtheirhome,orwereunabletoremortgage

tocoveranynewdebts,includingmortgagearrears.Intheaftermathofthecrash,the

proportionofpropertiesbeingrepossessedbythebanksroserapidly,tonearly1%ofallthedwellingsthatthebankshadontheirbooks.That1%beingrepossessedinayearwasaverylargeshareofallproperties.Itrepresentedasignificantproportionofallpropertieschanginghandsatanyonetimeandresultedinpartsofthemarketbeingfloodedwithpropertiesbeingsoldoffatauction.Thatinturnreducedpricesfurther.Oncepriceshadfallenslightly,in

1989,formanypeopletheirarrearsbegantoriserapidlytoo,andwhenpricesarefalling,risingarrearsarefarmoreproblematicasfaras

lendersareconcerned.Peoplewhowouldnormallyhavesoldtheirhomeataprofitiftheycouldnotmakethepayments,andthenboughtacheaperone,orwhowouldhaveremortgagedtoborrowmoreinhardtimes,couldnot.Unlikenow,atthattimeitwasusuallyonlyafterafewmonths’worthofarrearshadbeenrecordedthatproceedingstorepossesswerebegun.Butasthevalueofdwellingsdiminishedfollowingthe1989housingpricefallsandnegativeequityrose,lendersbecameincreasinglyreluctanttotakeoverproperties,torepossessthem.So,by1995,upto4%ofallUKmortgageswereinarrearsof2.5%ormoreoftheoutstandingmortgagebalance.Butourcollectivememory-spansappeartobegettingshorterwhenit

comestothedangersofhousingspeculation,andby2005wehadlargelyforgottenthathousingcrash.Speculationworksonlybecause

ourmemoriescanbesoverypoor,butisitreallypossiblethattheyaregettingpoorerwithtime?The1930shadbecomeadistantmemorybythe1980s.Thelessonoftheearly1990swasalsoquicklyforgotteninthe‘boom’yearsofthenoughties.Ourcollectivememorydoesappeartobebecomingshorterandshorter,asdothegapsoftimebetweenboomandbust.Perhapsthatisbecausemorepeoplethaneverbeforearemakingmoneyoutofhousing,andmostofthemdonotwantustothinkaboutthepossibilitiesoffailure.Irememberthe1989housing

marketfallsonlybecauseImadeso

manymapsofthegeographyofthemarketcrashduringmypostgraduatestudies.Iworryabouthistoryrepeatingitselfnowbecausemyfirstresearchjobwastostudytheeffectsonpeopleandneighbourhoodsofnegativeequity.13Mostpeoplewillhaveforgotten,andanyoneunderfortytodayistooyoungtoremember.Aspricesroseandjobsreturned,thelevelofarrearsfell,sothatby2004under1%ofallmortgagesrepaymentswereinarrears–whichmeantthatmorethan99%ofallborrowerswereuptodatewiththeirmonthlypayments!Yetin2008arrearsjumpedto2%,fallingagainonlyasthehistoricallylowinterestratesbroughtthemundercontrol.14

Whatwillhappeninthenextfewyearscanonlybeguessedat–butwecanatleastguesswiththebenefitofhindsight.Thebanksappeartohavesomehindsight,whichiswhytheywillnotlendlargemortgagestopeopleonnotveryhighsalaries,orwithoutalargedeposit,unlessthegovernmentguaranteesthatanylossesthebankmakesafterrepossessingandresellinganypropertyarereducedbyupto20%oftheoriginalpurchaseprice.Inpracticethismeansmostlikelyreducingthepotentialbanklossestozero.Anyincreaseininterestrates,

unemployment,oranyfuturefallinhousingprices,islikelytoseearrearsandthenrepossessionsriseverymuchmorequicklythanthe

officialforecastscurrentlypredict.Theseshort-termforecastsareshowninthegraphbelow.Thosedotsstretchinginto2015intheBankofEngland’sreporthavebeenputtheretoreassure.Noonewhoknowsthehistoryofhousingseesthemasreliable.TheBankofEnglandusedtoputwideconfidencelimitsarounditsfutureprojections.Itnowtendsnottoshowerrorbarsofuncertaintyforfearofcausingfear.Italsonowtendsnottoprojectveryfarahead,asthefewdotsinthegraphoppositeindicate,limitingitshorizonstoavoidtheriskofbeingprovedverywrongveryquickly.Ontheroller-coasterwearecurrentlyriding,nobodyknowswhatwillbearoundthecorner.Wereallyhaven’tbeenherebefore.

Figure19.UnitedKingdommortgagearrearsandpossessionrates,1990–2015.CouncilofMortgageLenders’projectionsforendof2012

arealsoshown.

Inearly2013moneyforlendingwasstilldryingup,andbankswerebecomingmoreandmoreintentongettingbacktheirmonies.Theytoldhundredsofthousandsofpeopleholdinginterest-onlymortgagesthatshouldtheywanttoalteranyoftheir

arrangements,theywouldneedtoconverttheirmortgagesintorepaymentones.Thiswillincreasethoseborrowers’mortgagepayments–and,presumablyforsome,theirarrears.ThengovernmentsteppedinwiththeMarch2013budget:moremortgagesweretobeunderwritteninthenear-future,somorecouldbeoffered,butinterest-onlymortgageswouldnolongerbeoffered.Asvolatilityrises,afewmonths

canseemlikeanageinfinance.Backin2012,onecommentatoronthewebsite‘Moneysupermarket.com’reportedhowthecheapermortgagedealsintheUKwerecomingtoanend.ShefoundthatbyNovember2012therewereonly211interest-onlydealsavailablefrom27lenders.Ayear

http://Moneysupermarket.com

earliertherehadbeen485suchoffersavailablefrom42lenders.Butshealsofoundthattherehadbeennofallintheoffersofinterest-onlymortgageson‘buy-to-let’homes,onloanstolandlords,‘asthesedealsarenotclassedas“residential”’.15Justhowlongcurrent‘businessasusual’willremainusual,andlandlordswillstillbeallowedtoborrowatcurrentlowinterestrateswithoutalsohavingtorepay,remainsanotheropenquestion.InSeptember2013theWestBromwichBuildingSocietyincreaseditsratesforexistinglandlordcustomers,causinggreatanger,asthelandlordshadthoughtthoserateswerefixed.16Asdetailedabove,governmentalsounderwritesthebankswhenlendingtothem,againencouragingspeculation,until

suddenlyaneventlikeahikeininterestratesdampensenthusiasm.Becausehousingpricesarestillsohighincomparisonwithwages,mostfamiliescontinuetofinditveryhardtopaythemortgageonanewlypurchasedhome,evenatlowinterestrates.Toavoidarrears–ormorelikelytoavoidthatthirdorfourthmissedmortgagepaymentthatmightstartrepossessionproceedings–peopleareenteringintoevenriskierformsofborrowing.Bytheendof2012almostamillionpeopleintheUKhadusedapaydayloantocovertheirrentormortgage;afurther2.8millionusedanunauthorizedoverdraft;some7.8millionwerestrugglingtopayfortheirhousing,ofwhich1.4millionwereslowly(orquickly)fallingbehindwiththeir

payments.17Theresultisaninevitableriseinrepossessions.AsJanetHunterputitinspring2013,onbehalfoftheHousingRightsService,‘increasingnumbersoffamiliesarelosingtheirhomes.Wearestrugglingtocopewiththisandunfortunatelywecannotseethesituationimprovingforsomeconsiderabletime.’18

Whilesomearemakingfortunes,othersgotothewall.First,familiesfailtomakethat

onemortgagepayment.Thenextmonthitisharder.Therearesuddenlytwopaymentstomake,andthereasonwhythefirstwasmissedhasnotgoneaway.Thingshavebecomeevenworsethantheywerethemonthbefore,whilethestressofbeinginarrearswillnothavehelped.

Thencomesthethirdmonth,andpeopleasktheirfamilyforhelp.Inthefourthmonththeyaskfriends.Theysaythattheyhaveaproblemwiththeboiler,needpetrolforthecar,butthefriendscanguess.Andtheyworrywhatthosefriendsmustthinkofthem.ButthiscurrentspateofproblemsdidnotstartintheUK.Asmentionedearlier,19intheUS,

beinginarrearsonyourmortgagepaymentiscalled‘mortgagedelinquency’.ForEuropeanreadersitcanbeashockthefirsttimetheyseesuchlanguagebeingused(althoughsomeCreditUnionsnowdouseit).ForEuropeans,delinquencymeansanti-socialandusuallycriminalbehaviour,mostoftenassociatedwithjuveniles,a‘stage’someteenagersgothrough–

butalsoawordgenerallythoughtunhelpfultousenowadays.Thepointatwhichmortgage-

lendersdecidetoforecloseonamortgageinarrearsisentirelyuptothem.Allalong,theywerethelegalownersofthepropertyyoumighthavethoughtwasyours.Theyheldthedeeds.Whenthehousingmarketisdepressed,lendersareloathtobeginproceedings,astheymightthenendupwithavacantpropertyontheirhands,andonethatisdecliningevenfasterinvaluethanitwaswhenoccupied.IntheUS,whenthehousingmarketcollapsedinthewakeofthe2008crisis,theannualincreaseinforeclosuresstalledabruptly,butarrearsspiralledupwards.AsFigure2ofthisbookillustrated(p.25),theaverage

numberofdaystocompleteaforeclosureintheUSnearlytripledintheUSnationwide,fromaboutfourmonthsin2007tonearlyayearby2011.

Figure20.RepossessionsandforeclosuresintheUnitedStates,2000–2011(millions).

IntheUSthelegalprocessesinvolvedinalenderforeclosingonaloanandactuallyrepossessingthehomeareseparated.IntheUKthisisnotthecase–atleast,notyet.Herethegapintimebetweenrepossessionbeinggrantedbyacourtandthedateofevictionisusuallybrief.ButiftheUKweretoreplicaterecenttrendsintheUS,withbanksmorphingintolandlordswhenhousingpricesfall,thelanguageofhousinginBritainwouldultimatelychange.Thismightnotbeabadoutcomeoverall,aslongasbankswereforcedtobegoodlandlords,ortosubcontracttohousingassociationswithgoodtrackrecords.Forinstance,inareaswhereprices

havealreadybeenfallingforseveralyearsandarewellbelowtheir2007

peak,Britishbankscouldbegintorepossesshomeswherethemortgageisinarrears,butthencometosomearrangementwiththeoccupiersofthosehomestoconverttheirownershipintoaformof‘tenancy’.Themortgagerescuescheme(onwhichmorebelow)wasthefirstmanifestationofthisideaintheUK.Banksdon’twanttobecomelandlords–itisnotasprofitableaslending–butcircumstancesmeanthattheymightbeforcedintosuchanarrangement.And,iftheybeginsucharrangementsforsomecustomers,whyshouldothersnotalsohavetheoption?Whyshouldbanksbeallowedtorepossesswhenthevalueofthehomehasrisenandtheycanmakegoodtheirliability,butnotallowthefamilytoremainas

payingtenants?Itdoesn’tseemfair.Inaworldmadefairer,therentonapropertywouldbelowerthanthemortgage.InboththeUSandtheUKthatwasoncethecase.Theresearchbodythatreleased

thefiguresshowninthefigureaboverecorded1.15millionhomesbeingrepossessedintheUSin2011.20

Thiswastheestimatebasedonwhatitknewbytheendof2012.IntheUK,Sheltersuggestedthatalmost200,000familieswereatriskoflosingtheirhomesbySeptember2012,21whichisnotadissimilarproportiontothatfoundinNorthAmerica,giventherelativepopulationsoftheUSandtheUK.Shelteralsofoundthat,despitepropertypricesstillrisinginLondon,itwaswithinthatcity–especially

withinthepoorerEastEnd–thattheriskoflosingtheirhomewasgreatestformortgagors.Thesame,bytheway,hadbeentruebackin1989.ByChristmas2012,some2.7%offamiliesintheboroughsofBarkingandDagenhamwereaffected;2.6%inNewham;2.2%inHaringey,HackneyandSouthwark.Unemploymentwasthemostlikelyimmediatecause.Ifthesefiguressoundlow,rememberthattheyareannual:itwilloftenbehappeningtodifferentsetsoffamiliesthenextyear,andtheyearafterthat.Toextrapolate:iffamilieswith

moreinsecurefinancesarenotreplacedbymorefinanciallysecurein-comers,then,werecurrenttrendstocontinueandcurrentlawsremaininforce,overhalfofallfamiliesina

boroughlikeBarkingandDagenhammightbefacingevictionatsomepointoveratwenty-yearperiod.Thatisalong-termdisaster,notashort-termcrisis.Depressionthenfollowsthenormalizationofcrisis.InSpainthedisasterhasalreadybegun.Inthefiveyearsfollowing2007,foreclosureproceedingsbeganonsome420,000mortgagedpropertiesinthatcountry.Whatismore,amajorityofthoseactionsresultedinthephysicalevictionofthefamilylivinginthatproperty.Mostpeopledidnotmakethemselvesvoluntarilyhomeless.Theydidnotwalkout.Byspring2013over500Spanish

familieswerebeingevictedfromtheirhomeseveryday.Onefamily,whohadalreadypaid$98,000(€71,500,£60,000)ofa$323,000

mortgageatthepointtheydefaulted,thenreceivedademandforanadditional$405,000aftertheirhomehadbeenrepossessed,becausethebankhadcontinuedtoaddinteresttotheirdebt.GarcíaLamarca,aresearcherbasedattheUniversityofManchester,hasdocumentedhowsimilaractionshavenotonlyledtohundredsofthousandsoffamiliesnowhavingnoplacetoliveinSpain,butalsototheirbeing(intheory)indebtfortherestoftheirlives.Atthesametime,sheestimatesthat‘20%ofSpain’stotalhousing–5.6millionhomes–remainsunoccupied.’22

However,peopleinSpainwillbeinlife-timedebtonlyforaslongastheyputupwiththepoliticiansthathavesanctionedsuchdebt,andtheirhomeswillremainunoccupiedonly

foraslongastheclamourtousethemispresentedasunreasonable.InformedpoliticiansfromalloverEuropenowlookatSpainandworryaboutwhatcanhappeninhousing.Somealsolookforinspirationindealingwithwhatmightsoonhappenintheirowncountries.Britishpoliticiansandthosein

chargeoftheUKfinancialwatchdogsduringtheyears2010to2013reassuredthemselvesthatwhathappenedinSpainwillnothappenherebylookingatthequarterlypatternofrepossessionsandnotingnogreatrise.However,asoneinsiderexplainedittome,onconditionofanonymity,thedecisiontorepossessisatimingdecisionbythelender;andcurrentlywehaveasmuchofaproblemaswehadinthe

early1990s,whenmanypeoplewereevicted.Thedifferenceisthatnowfarmorefamiliesareaffected,andthedebtperfamilytendstobeofalessersize.This,asfaraslendersareconcerned,meansthatit’snotyetworthwhiletakinganyactionagainstmostindividualfamilieswhoarebehindwiththeirpayments.Theposition,andthereforethe

statistics,canbecomecloudedwhenlendersappoint‘receiversofrent’in‘buy-to-let’cases:thisallowsthemtotakeoverownershipofthepropertyfromalandlordbutavoidsarepossessionorderbeingmade(asnooneisbeingevictedwhenthetenantsstayinplace);theforeclosure,asaresult,doesnotappearintheCouncilofMortgageLenders’repossessionstatistics.Thelandlordsstilllosethe

property,buttheirtenantsdonotimmediatelylosetheirhome.23

However,inallthesesituationstheoccupantsremaininfearthatassoonasthebankthinksitcanmakeaprofitonthesale,itwillservenoticethatthetenancyistoend.Suchcasesareconsideredcontractscomingtoanend,andsoalsofailtofigureinrepossessionstatistics.Reassuranceisdangerousinthe

currentclimate.SomewithintheUKgovernmentareawarethatthecrisiscouldbeworsening,buttheyvacillatebetweenconcernoveragrowingbubbleandthefearofanimminentcrash.TheylookaroundtheUKandwonderhowonearthpricesandrentsinthesouth-eastcanrise,givenwhatelsetheysee.MuchnearerthanSpainisIreland,which

washitbyapropertydisasterin2008.Theleadingsocialresearchinstitutetherefoundthatthecrashhadaffectedeveryaspectofsocialandeconomiclife,inbothurbanandruralcommunities.Itleftinitswakemasspropertyvacancyaswellasrenewedmassemigration.Therearehundredsofunfinishedestates,thousandsofemptyoffices,dozensofghostretailparksand,aboveallelse,‘atopographyofbrokenlives,shattereddreams,terminalindebtedness,and,forsome,chronicstress,anxiety,depression,andevensuicide’.24ItishardlysurprisingthoseinpowerintheUKaresoreluctanttotalkofthepossibilityofabubbleleadingtoacrash.Ifthehousingcrisisdoesworsen,

therepercussionswillbefarwider

thanmanycurrentlyrealize.WeknowthisfromstudiesundertakenintheUS,whichactsasthemodelforwhatensueswhenyouallowmarketforcestoreignsupreme.Whenhousingfails,whatfollowsisadeclineinhumanhealth,evenforthosenotimmediatelyaffected.ResearchbyJanetCurrieof

PrincetonUniversityandErdalTekinofGeorgiaStateUniversity,publishedin2011,foundthat,amongthosewholivedinaneighbourhoodwheretherewasasuddenriseinpropertyforeclosuresandevictions,therewerestatisticallysignificantincreasesinurgentunscheduledhospitalvisits,almostallbymembersoffamiliesnotthemselvesactuallybeingevicted.Thisincludedanincreaseinvisitsforpreventable

conditions;peoplewerelookingaftertheirhealthless,soendedupmakingmorefrequentemergencyvisitstohospital.Thepeopleoftheneighbourhoodwerebecomingmoreworriedandmoreillthroughworry,orwerelessabletolookaftertheirhealth.Theseresearchersalsofoundthattheestimatedeffectscouldnotbeaccountedforbyanyincreaseinunemploymentinthearea;norweretheythatcloselycorrelatedwithdeclinesinhousingprices,orrisingout-migration,orpeopleswitchingfromout-patientproviderstohospitals.Theirstudywasthorough.25Theyweresurethatitwastheactualforeclosuresandthefeartheyengenderedthatwereliterallyputtingpeopleinhospital.

InBritaintheprovisionaldeathcountsforEnglandfor2012becameavailableinmid-January2013.Thatcountshowedatotalof465,290deaths,anincreaseof11,966(or2.6%)ontheequivalent52weeksof2011.Aconscientiousresearcherwhoworksinpublichealthreportedonthemountingdeathtollandexplainedthatthis2.6%increaseisthebiggestproportionalincreaseindeathsthatwehaveseeninthepastseventeenyears.26Mostoftheadditionalmortalitywasamongelderlywomen,anditwasnot,asfarasweyetknow,duetoanepidemicortheweather.Theresearcher’semployer,PublicHealthEngland,laterdistanceditselffromthisfinding,suggestingthatyoucouldmakeaninformedguessthattherise

inmortalitymightbeduetoinfluenza,butitdidnotreporttheresultsoftestsforanynewstrains;nordiditexplainwhycurrentvaccinationprogrammesmightnotbeworkingsowellanylonger.Manyobserversdidnotfindthisreassuranceconvincing,27

particularlyasitchosetostopitsemployeefromhighlightingtheweeklydeathreportsfromAugust2013,whichwouldallowotherstocheckwhatwasoccurring.28

Intime,ananalysisofwhereandwhenthe2012UKmortalityriseoccurredwillprobablyrevealalinktoincreasinginsecurityinhousing,includingwithincommunalcarehomes,whichwererockedbothbyseveralscandalsthatyearandbyoneverylargeprivatecare-home

provider,SouthernCrossHealthcare,goingbustbecauseitsannualrentalbillhadbecomeunaffordable.Themajorityofresidentsincarehomesareelderlywomen.Thefearoflosingaroominacarehomecandamagehealth,but,becauseyoungerdeathstendtobemorenewsworthy,theriseinelderlydeathswas,atfirst,ignored.Later,whenitwassuggestedthatthedeathsmightbeduetotheflu,thatexplanationwasridiculedbytwooftheUK’sleadingepidemiologists–DrDavidStucklerandProfessorMartinMcKee;29

interpretationsvarydependingonwhatmodelisbeingused,butthereisevidencethatincidentsoffluwereunusuallylowintheUKatthistime.30Despitelevelsofflubeinglow,reportsoffallinglifeexpectancy

amongtheelderlybegantocirculateintheUKbythewinterof2013.31

Thesearethefirstrecordedfallssincethe1930s.32

Financialcrisesarenowknowntohaveextremelyrapidaswellaslong-lastingeffectsonhealth.Over10,000suicideswerecausedin1998alonebytheAsianfinancialcrisisofthatyear.33Infacttheinitialturmoilofacrisisandtheinsecurityitbringscancausesuicideratestorisebeforeanyactualriseinunemployment.Thisrapidriseinanxiety,associatedwiththefearofbecomingjobless,wasrecordedinboth2008andaroundthetimeofthe1929crash.34

Andduringbothperiodstherisedidnotquicklyabate.During2013itwasreportedthat

callstotheSpanishequivalentofthe

Samaritansconcerningsuicidehadrisenby30%overthecourseofthepreviousyear,andthatsuicidehadbecometheleadingnon-diseasecauseofdeathinSpain.By2012thefigureswerenineSpaniardskillingthemselvesaday,andalmost200suicideattemptsbeingmadeaday.35

Manyofthesesuicidesandsuicideattemptswillbeinfluencedbyconcernoverhousing.InSpainthefinancesystemisnowcausingmoredeathsthanroad-trafficaccidents.Shockstoourpersonalsenseofsecuritycanbeveryhardtobear.Sheltermakesusphysicallysecure;havingahomeinwhichtoresideandtomeetwithfriendsandfamilyhelpskeepusmentallysecure.Wenowknowthatinsecurityoverhousing–simplythefearthatyouandyour

familymaylosetheroofoveryourheads–canbadlyaffectbothyourmentalandphysicalhealth.

Anotherhalf-boarded-uphomeandgarageintheaffluentNetherEdgesuburbofSheffield.Thisisafinesolidproperty.Itcontainsenoughroomstohousemorethanonefamilywell;yeteventhegaragehashadtobesecuredforfearofvandalism.Itisalsoapropertyinarelatively

affluentareaofthecity,butnotthemostaffluent.Itscurrentstateillustratesthatitisnotjustintheworst-offneighbourhoodswherepeoplesufferwhenthehousingmarketbecomesvolatile.Wedonotappeartoknowwhattodowhenpricesfall,astheyhaveinthispartofSheffield.Oftenweboarduphomes,hopingthatwhatwethought

werethegoodtimeswillreturnandthatsomeone,fromsomewhere,willtakeoutanevenbiggerdebtthanwedid,justtogivethemtherighttoliveinthem.Atsomepointoursystemsoffinancinghousingwillhavetochange.They

willhavetocometorelylessonyoungergenerationspayingevermoremoneyfortherighttoshelterthanwedid.Whenthatpointarrives,propertylikethiswillstillexist.Allthesewersthatservehousinglikethiswillstillbethere.Homeswillnothavedisappeared.Butworkingoutwhatweneedtodotogettheboardingtakenoff,theinsidesrenovatedandhomeslikethis

reoccupiedistheconundrum.

HEALTHANDEVICTION

…wheninequalitybecomeslargeenough,theveryrichnolongerliveinthesamesocietyaseveryoneelse…thegapbetweentherichandtherestissuchathreattoourhealth.

–AngusDeaton,Professorof

Economics,Princeton,201236

On9January2013theUSInstituteofMedicinereleasedareportthatclearlyshowedthattheUSpopulationofeverysocialstratumhasworsehealththanthoseincomparabledevelopedcountriessuchasGermany,Japan,Spain,ItalyorFrance.37ThesuperficialreasonsgivenforwhypeoplehavepoorerhealthintheUSwereadversebirthoutcomes,moreinjuries,morehomicides,moreinfectiousdiseases,moredrug-relatedcasesofprematuremortality,moreobesity,more

diabetes,andagreaterprevalenceofheartdiseaseandchroniclungdisease.However,theunderlyingreasonsbehindtheInstituteofHealth’ssuggestionforalltheseoutcomeswerenotgreaterlaziness,risk-takingorfecklessnessintheUS,butwerethemoreadversesocialandeconomicconditionsfoundthere,thegreaterpovertyandthewiderinequality,andthefactthatsuch‘astressfulenvironmentmaypromotesubstanceabuse,physicalillness,criminalbehaviour,andfamilyviolence’.38Havinglittleornowelfarestatetofallbackonmeansthat,whenhousingandothercostsincrease,visitstothedoctorhavetobecurtailed.TheInstituteofMedicineReport’s

authorslinkedhighUSasthmarates

tounhealthyhousing;yetthiswasaminorphenomenonincomparisonwiththementaldistressbeingcausedbyrapidlyrisinghousingandfinancialinsecurity.ProportionatelyfarmoreAmericansare,quiterationally,infearoflosingtheirhomesthanarepeopleinanyotherrichcountryonearth.EvenafterGreece’scataclysmicfinancialcrash,fewerpeoplewerehomelessinGreeceincomparisonwiththeUS.GreecehasaverylongwaytogotogettothesituationintheUS,wheresomanypeoplesleepincarsandsleeprough.InGreecemanyevictionsofdebtorsdon’toccurbecauseofnewlawsbroughtintoprotectpeopleduringthecrisis.39

FewintheUSwouldconsiderlawsprotectingresidentsinthatwaya

possibility.MostdonotknowofthegreaterrightsenjoyedbymanyEuropeans,orofhowtenantsinJapancannoteasilyhavetheirrentsincreasedorbemadetoleaveapropertywhentheydon’twishto.40

Attheextremeoftherelationshipbetweenpoorhealthandbadhousingarethefindingsthatbank-lendingdecisionsinChicagoledtohighorevenrisinghomicideratesinparticularneighbourhoodsofthatlakesidecity.MaríaVeléz,AssistantProfessorintheUniversityofNewMexico,studiedlendingrecordsandfoundthatpeoplelivinginblackandLatinocommunitieswerelesslikelytobeallowedtotakeoutloansincomparisonwithpeoplelivinginareasthatwerepredominatelywhite.ShealsofoundthatAfrican-

Americanareashadfivetimes(andLatinoneighbourhoodstwotimes)asmanyhomicidesaswhiteneighbourhoods.Shethenranapredictivemodel,whichsuggestedthatitwastheinsecurityofhousingthatledtothis:‘holdingallothervariablesconstant…[Wefind]thatblackandLatinoneighborhoodswouldexperiencefewerhomicidesifmorefinancialcapitalwereinfusedintotheseneighborhoods.Thesefindingssuggestthatneighborhoodsareshapedprofoundlybythedecisionsofexternaleconomicactors.’41Inotherwords,risinginsecurityinhousingcanleadtoameasurabledeteriorationinthelocalsocialenvironment,andithasbeenshownthatthisdirectlyraisesthehomiciderate.Itwasmostlyinthose

housingblockswherepeoplewerethevictimsofracisminlendingpracticesthattheviolencewasworse.Therearemanysimilarfindingstothese,andmanyofthesefindingsdatefrombeforethecrash,frombeforethesituationinsomanyneighbourhoodsbecamemuchmoredire.Evidenceconcerningthecrashand

thegeneralstressithasbroughtinitswakeisstillbeinggathered.Theonesetofinternationalcomparisonsthathasbeenputtogether,byDavidStuckleroftheUniversityofOxfordandSanjayBasuofStanfordUniversity,suggeststhat,whereausterityhasbeengreater,theresultinggeneralsocialharmanddamagetophysicalandmentalhealthisalsoworse.42

TherearemoreandmoresignsofpublichealthbeingdamagedinBritainbycurrentausteritycuts–andnotjustthroughpossiblehighermortalityratesamongtheveryelderly,ormoresuicidesattheextreme.Ouroveralllevelsofmentalhealthandoursenseofwell-beinghavesuffered,andthathasaffectedourgeneralhealth.Wealreadyknowthatself-reportedlevelsofgoodhealthintheUKhavebeendeteriorating.Inearly2013theUK’sOfficeofNationalStatisticsannouncedthattheproportionofadultsreportingtheirgeneralhealthtobeverygoodhadfallenfrom40%in2009to34%by2011.43

Whenawholegroupofpeoplehasbeenharmedbysomeevent,iftheycanfindsomeonetoblameforthe

harm,theyhavetheoptionofgoingtocourttoseekrecompense.Particulargroupscanclaimparticulargrievancesfromhavingsufferedharmanddistressthroughhowtheyweretreated.Asyetwehavenothadanyclass-actionlawsuitsconcerningmortgagemis-sellingintheUK,althoughgroupsoflandlordsarethreateningtotakebanksandbuildingsocietiesthathaveincreasedtheirinterestratestocourt.Theirslogantotrytodrumupsupportis:‘Yourwealthisatriskifyouchoosetoignorethismessage!’44

Again,itisinstructivetolookacrosstheAtlanticforcluesastowhatmightbehappening.InJuly2012WellsFargo,thelargestmortgage-lenderintheUS,agreedto

payaminimumof$175million‘tosettleaccusationsthatitsindependentbrokersdiscriminatedagainstblackandHispanicborrowersduringthehousingboom’.45Thatisahugesumofmoneytohandoverincompensation,andfromjustonelender.Thetimesmaybechangingastowhatbehaviourthecourtsandthepeople,andsomeoftheirpoliticians,arewillingtoputupwithfrombankers;but,thenagain,perhapsnot.Afterall,inmanyrespects,itappearstobebusinessasusualinthebankingsector.However,theamountoffineshasbeenrisinginrecentyears,andinSeptember2013BarclaysBankwasorderedtopayback£100millionininterestchargesthatturnedouttobe

illegal.Thebanktriedtohidethisfactwithinamuchlargerdocument;thankfullyafewslightlymoreradicaloutlets,andthennewspapers,gavethatstoryprominence.46

Newspapers,whichareoftenalmostreverentialintheirtreatmentoffinancialinstitutionsandtheirmisdemeanours,oftenappeartoofferverylittlesympathytoindividualswhoaredownontheirluck,evenwhenpurportingtocare.Forexample,newspaperstoriesonthegrowingphenomenonofsquattinginyourownhomeoftentrytogiveaglimpseintothehumansideofthesestatistics,buttheeffectofthesestoriescanbetodetractfromtheweightofthenumbers.Whattheyneedtodoisbothtosayhowmanymillionsofpeoplehavebeenaffected

andtodelveintothefulldepthsofsadness,fearanddespairthatcanresultwhenpeoplecannolongerpayfortheirshelter.47

Journalistsarenotnormallyreticentaboutbeingghoulish,sowhynotspelloutjusthowbadsomanypeople’smentalhealthhasbecome?Familiesareallowedtostayintheirhomesonlywhenitisinthedirectfinancialinterestsofthelendersnottoevictthem.Corporatelenderscareaboutsuicidesonlybecauselifeinsurerswon’tpayupon‘deliberate’deaths,thusdeprivingthelendersoftheirrepayments.Itwouldhelpifoccupiersknew

theyhadaccesstomorebargainingtools.Ahomethatisoccupiedretainswhatvalueitmighthavefarlongerthanonethatisabandoned.

Theoccupyingfamilyactasunpaidsecurityguards,cleanersandcaretakers.Themortgagecompanymaythenreducetheloantoalevelthefamilycanpay,but,iftheoccupiersareoutofworkorinlow-paidwork,theymayhaveenoughmoneyonlyforfoodandnotforareducedmortgagepayment.IntheUStodaythemortgage

companywilloftenpayforbuildingsinsurancewhenthefamilycannot.Buttheywillhardlybepreparedtopayforfoodorgivethecaretakeranywage.Youmightretort‘whyshouldthey?’Theansweristhat,iftheyareretainingtherighttoevictatanytime,theresidentsareeffectivelybecomingtheiremployees,theircaretakers.However,itisonlythebuildingtheyvalue,notthepeople.48

Anditsvaluedependsonhowitiskeptup,andonhowtheneighbourhooditisiniskeptup–anemptyhousedevaluesthewholearea.Boarded-upemptypropertyona

streetcaneasilyraisetheaveragenegativeequityforotherfamilieslivinginhomesonthatsamestreet.Nearbypropertypricesfall.Evictionsalsocontributedirectlytorisinghomelessness,which,ifvisible,alsofurtherdevaluesaneighbourhood.Havingyourneighbourssleepingbyyourgutterdoesnotmakeyourhomelookgood.YoumaythinkthisappliesonlytotheUS,butinBritain,asmorehomelesshostelsandprobationhostelsareshut,morepeoplewhodolosetheirhomeswillfindthemselves

roofless.InthecityofBristol,inautumn2013,some150peoplewerethreatenedwithlosingtheirhomelesshostelbedsasenhancedausteritycutswereimposed.49

NEGATIVEEQUITY

Peopledonotwanttobeconfrontedwiththesightofthehomeless–itisuncomfortableforthewell-offtoberemindedofthehumanpricethatispaidforasocialstructureliketheirs–andtheyarewillingtodeprivethosepeopleoftheirlastopportunitytosleepinordertoprotectthemselvesfromthisdiscomfort.

–JeremyWaldron,199150

IfyouhaveeverwonderedwhyinterestsrateshaveremainedsolowforsolongintheUK,considerthis.Keepingupthevalueoftheneighbourhoodpresentssomething

ofadilemmatolenders.Whenborrowersfallbehindontheirpaymentsif,forexample,interestratesrise,theusualactionistoevictthem;butifmillionsofborrowersfallbehind,whatthendoyoudo?IntheUK,governmenttriestoavoidthedilemmabyurgingtheBankofEnglandnottoraiserates.Banksandbuildingsocietiesthentendtofollowsuitandtaketheircutbychargingtheircustomersmuchmorethanthebaserate,butnotasmuchastheyotherwisewould.IntheUS,interestratesdidnot

needtorisetobringonacrisis:propertyvaluesandwagesbothfallinghadasimilareffect.ThisiswhyVickeeAdams,aspokeswomaninthehomemortgagedivisionoftheUSbankWellsFargo,stressedin

2012thatthebankwaskeentosupport‘folksremainingintheirhomes–thereisabenefittokeepingacommunitywithresidents’.51Andthisiswherewebeganthishousingdisasterstory:byintroducingtheimplicationsofthegrowthininequalityintheUSatthestartofthisbook(pp.24–5).BankersintheUSlettingsome

peoplelivefreeinformerhomesgivesusonepossiblescenarioforwhatmighthappenifandwheninterestratesintheUKriseand/orhousingpricesfall.Youmightask:whydon’tWellsFargoandotherbankssimplyturntheirdefaultingcustomersintotenantsandchargethemarent?Agoodexplanationisthattheydidnotchargerentandbecomelandlordsthelasttimethere

wasahousingfinancecrisis,inthe1930s,andWellsFargosurvivedthat.ThisismadeclearerbyacommentpostedonlineinresponsetothenewsstoryinwhichVickeewasquoted.Thecommentwasmadeby‘Bob’,anditisnoteasytoforgetonceyouhavereadit.Itsuccinctlytellsuswhatweshouldmostrememberaboutthepast,anditisadmirablyterseinexplainingwherewemightbetomorrowincountriesliketheUSandtheUK:

WhenIwassevenyearsoldmyparentspickedahouseoutofabookletprovidedbyatitlecompanyandboughtit.Theyfoundthepreviousowners(mortgagees),whohadlongsincedefaultedontheirmortgage,livingthere.Itwasagreathardshipfortheoccupantstoleave;theyhadnoplacetogo.Myparentshadtohavethemevictedinorderto

movein.Manyyearslater,Ifoundthebookletandrealizedthatabout20%ofthehomesinthetownwerelistedandmanyofmyschoolclassmatesbelongedto‘squatter’families.Itobviouslybenefitedthebanksandtitlecompaniestoletpeoplesquatratherthanletthepropertiesfallintoruinandtherewasalwaysthechancethattheycouldrepurchasetheirformerhomes.Thatwas1939.Thatisnow.

–Bob,Boonsboro,Maryland,201252

WhenIfirstworkedinhousingintheearly1990s,itwasnegativeequitythatIstudied:whereitoccurred,whowasaffected,howthoseunsecureddebtsthenalteredotheraspectsofthelivesofthoseaffected,likevotingandhealth.53

OnenewspaperstorykeepsoncomingbacktometodayasIanalysethiscurrentcrisis.Thatstory

wasaboutacouplediscussingtheirnegativeequity:thewomanwascalledJanet,Ithink,andthemanmighthavebeencalledTim.Theydidn’tlookveryhappy;theyhadrecentlysplitup.Janetwasholdingacupofteaandlookingmiserableinthephotographaccompanyingthestory.Theyhadtostayinthehousetheyhadbought,tocontinuelivingwitheachother,withsomeonetheynolongerloved,becauseoftheearly1990sUKhousingcrisis.Todayitisnolongerwholehouses

thatarebeingsharedbypeoplewhohavesplitup,butjustonebedroom.Thisisdespiteourhavingmorebedsthaneverbefore,perperson.Anditisnotjustcoupleswhohavesplitupwhoaredoingthis.Verypoorimmigranttenantstalkofhot-

bedding–twoorthreepeopleusingthesamebedbutsleepinginitatdifferenttimesofthedayandnight.Butageneralsenseofhousingbeingincrisismightbegintobebetterappreciatedwhenit’snotjusttheverypoorwhohavetoshareabedwhenthey’drathernotdoso.ThestorythatfollowswastoldintheUKin2013;twentyyearson,thecouplearecalledAdelaandTanek,notJanetandTim.HereisthesituationasAdeladescribesit:

Itwasadifficultdecisionandaterriblestepbackwards,buteventuallywedecidedwehadnochoicebutformetomovebackintothefamilyhome…Wegetonwellasfriendsbutthissituationisterriblyawkwardandverywrong.Wewanttogetonwithourlivesandmeetnewpeoplebutwe’restucktogether.Wecan’taffordasecondbedandhave

nowheretoputoneanyway.Wedon’thaveasofawecansleeponandwedon’twantthechildrentohaveto

sharetheirroomwithoneofus.54

Intheearly1990sIhadtoconstantlyexplainwhatnegativeequitywasifIwantedtowriteaboutthatnewphenomenon.Itwasanewphrasethen;itevenfeaturedasanew‘wordoftheyear’inonereviewoftheyear’snews.Todayfewpeopleinterestedinhousingdonotknowthatnegativeequityisthedifferencebetweentheoutstandingmortgageowedandahome’scurrentvalue.Equitybecomes‘negative’whenaproperty’svaluedropstolessthanthedebtsecuredonit–meaningthatthepotentialownerispayingbacktothebankmorethantheirpropertyisworth,ontopoftheinterest.

IntheUS‘nearly16millionUShomeowners,or31.4%ofallhomeownerswithamortgage,werefinanciallyunderwaterin2012.Theyowed$1.2trillionmorethanthevalueoftheirhomes.’55AsIwrite,figuresfor2013haveyettobereleased,butweknowthatremortgagingintheUSisontheincreaseagain,asreportedabove,sopositiveequityisbeingdrawndown.Inaresponsetopersistentnegativeequity,thecityofRichmond,California,voted,on11September2013,tousethepowerofeminentdomain(similartocompulsorypurchaseordersintheUK)to‘becomethefirstinthenationtoacquiremortgageswithnegativeequityinabidtokeeplocalresidentsintheirhomes’.56

Negativeequitycanbesetupfromthestartbycorruptlenders.AdataanalystintheUShasusedhousingtransactiondatatodeterminewhethertheinitialsurvey,or‘appraisal’,ofapropertydoneonbehalfofthelenderdeliberatelyinflateditsvalue.Thisputsthebuyerintoinstantnegativeequity.Ifcurrentpropertyvaluationsarebeingmadeatlevelsthatareunattainableorunsustainable,inpartsofBritainthiscouldbehappeningnow.Thedataanalyst’scompany,

Triaxx,identifiedloansthatmighthavebeeninflatedbycomparingeverysaletofiftysalesofsimilarlysizedpropertysoldatthesametime.57Theanalystestimatedthatforonelenderalone,ResCap,58‘phoneyappraisals’resultedin$1.29billion

morebeinglentthanshouldhavebeen.OneexamplewasofamortgageissuedinNovember2006onahomeinMiami.Thiswasforthepurchaseofa1,036-square-footsingle-familyresidence(averysmallhomeforAmerica).Theappraisalwasthatthepropertywasworth$495,000anditalloweda$396,000mortgagetobeissued,at‘arelativelyconservative80%loan-to-valueratio’.However,whatappearedtobean

80%loancaneasilyturnoutnottohavebeenaloanatthatlendingproportionatall.Analysingtensimilarsalesmadearoundthetimeofthisloan,Triaxxsuggestedthatthepropertyinquestionwasactuallyworthabout$279,000–sothe$396,000mortgagerepresenteda

142%loan-to-valueborrowingratio.Triaxx’sreportadded,drily,thatthevalueofthehomeinquestionmightpossiblyhavebeenjustifiedhaditcontainedgold-platedbathroomfixturesanddiamond-encrustedappliances.Ofcourse,theTriaxxtechniquetocheckforfraudulentvaluingonlyworksifthemajorityoflendersarenotalsoinflatingtheirsurveys.Itiswhenfraudbecomesthenorm–whenalmosteverysurveyorsaysallhomesareworthmorethantheaskingpricesayearago,atthesametimeasaveragewagesarefalling–thatweshouldrealizewecannotgoonlikethis.Couldhousepricessoonrise

greatlyagainandfreemortgagorstrappedbynegativeequityintheUS,acrossmuchofEuropeand

elsewhereintherichworld?Manythinknotinthenearfuture,butallittakesisforalittlegeneralinflationtotakeplaceandhousingpriceinflationwillfreethosecurrentlytrapped.Sucharisemighthelppeopleindebt,butitwouldnotmakehousingmoreaffordable,unlesshousingpricesdidnotrisebyasmuchaswagesandsalaries.InNovember2012reportersattheWallStreetJournalsuggestedthatatippingpointhadbeenpassedintheUK.Theydrewthefollowinggraph.Itmaylooktobeonlyofmarginalrelevancehere,butwheneventuallyoneofthoseupwardblipsbecomesatrend,everythingthatiscurrentlystableinhousingchanges.Tenmonthslater,inAugust2013,

theConsumerPriceIndex(CPI)

remainedat2.7%,soifOctober2012wasaturningpoint,nothinghasturnedverymuchyet;althoughtheRetailPriceIndex(RPI)didrisefrom3.1%inJuly2013to3.3%byAugust,justtwenty-eightdayslater.59TheRPIincludesthecostofmortgagepayments;theCPIdoesnot.HousingisonceagainbecomingmoreexpensiveintheUK,rapidlysoinautumn2013,buttheabilitytopayforitisnotrising.

Figure21.WallStreetJournaldepictionofUKinflationtrends,October2011toOctober2012.

Therearemanyothersignsthatinflationmightsoonrise.InlateFebruary2013theUKlostitsAAAcreditrating.Thelasttimethatoccurred,backinthe1970s,inflationbecamehighandthenrosefurther.

Risinginflationhasthebeneficialeffectforhouseholdsinnegativeequityofreleasingthemfromtheirdebt,butitalsotendstomakecentralbankersbelievethatinterestratesshouldbeincreasedtoo,todampenanyfurtherrise(aspeoplethenhavelesssparemoneytospend);otherwiseinflationkeepsonrisingandrisingandeventuallyanotherbubbleisformed.Neitherrapidlyfallingnorrising

housingpriceswillhelpusall,inaggregate,infuture.Theywillhelpsomepeople,butnotothers.Whatthisbookarguesisthatmorehousingrightsareneeded,asisaslowchangeinattitude,untilweagainseehousingasshelter,asthebuildingsaroundwhichcommunitiesgrow,notasretirementnest-eggs.Slowly

fallinghousingpricesandrentswouldrebalancetheeconomy.Benefitsneedtorisefasterthanwages,wagesfasterthansalaries,salariesfasterthanhousingprices,andrentsneedtoriseslowestofall,ifatall.Describingthepathweshouldtaketogettothissituation,whichIattempttodointhenextchapter,isfarharderthandescribingtheidealsituationweneedtoaspireto;butfirstwehavetoknowthatthealternativeoffuturestaggeringlyunaffordablehousingisfrighteningenoughtomaketheeffortworthwhile.InIrelandtherearecountless

neighbourhoodsthatarenowcharacterizedbymassnegativeequity:‘Forresidentsintheseestates,theyarelivingwiththestress

ofanuncertainfuturewithregardstoworksbeingcompleted,massivenegativeequity(inexcessof60%frompeak),andalackofasenseofplaceandcommunity.’60NegativeequityatcurrentIrishlevelsrequirespricerisesinmanyareasof60%simplytoremovetheunsecuredpartofthedebt.Aninflationrateof2.7%achievesthatonlywithacontinuouseighteenyearsofuninterruptedpricerises.Thus,ifthevalueofhousinginmanyareasofIrelandweretorisebythecurrentrateofUKinflation,inagenerationitwouldagainbeworthwhatfamiliespaidforitin2008.Butwhyshouldthathappen?InMarch2013,theIrish

governmentwentbacktoitsmajorcreditor,theEU,toaskformoremoneyandlongerrepaymentterms.

InDecember2013itofficiallyescapedthedirectcontrolofinternationalcreditors,althoughtheTroikawillreturntoinspectthecountry’sbookstwiceayearformanyyearstocome.61AsAlanBarrett,headoftheEconomicAnalysisDivisionatIreland’sEconomicandSocialResearchInstitute,putitinaconsiderableunderstatement,Irelandinearly2013wasin‘afairlyunstablesituation’.62

AdaylateritwasreportedthatpropertywasstillsellingatauctioninIrelandforlessthanafifthofitspeakprice.63Evenbeforethat‘eminentdomain’reactioninRichmond,California,thegovernmentinIreland,throughtheNationalAssetManagementAgency(NAMA),createdinlate2009,had

beguntoconvertemptyformerprivatehomesintohomesthatcouldbeusedforrentthroughhousingassociations.Some4,000wereannouncedin2013,butthatisonlyatinyfractionofthe96,000thatneedtobeconverted.64UnfortunatelytheIrisharealsolookingtoselloffpartofthatrentalportfoliotoinvestmentfunds,65claimingtheyarestrugglingtodrumupenoughinterestfrompotentialnot-for-profitlandlords.66

Transferstonot-for-profitlandlordsisthekindofactionthatisstillbeingdemandedinEurope’sothermosthousing-downturn-affectedcountry,Spain,whereelectedofficialshavebeentalkingabouttheneedforfundamentalchangeandforextendingcompulsorypurchasingpowersformanymonthsnow:

Utopiasaren’tchimeras;theyarethemostnobledreamsthatpeoplehave.Thedreamofequality;thedreamthathousingshouldbelongtoeveryone,becauseyouareaperson,andnotapieceofmerchandisetobespeculatedwith;thedreamthatnaturalresources–forinstanceenergy–shouldn’tbeintheserviceofmultinationals,butintheserviceofthepeople.Allthosedreamsarethedreamswe’dliketoturnintorealities.

–JuanManuelSánchezGordillo,theMayorof

Marinaleda,201267

YoumightthinkthatMarinaledaisanexceptionalcase,andthatGordillo’spronouncementisn’ttypicalofSpanishofficialdom.Andyouwouldberight.ButwhenyoulookatwhathashappenedinIrelandsincethatSpanishmayorspoke,youmightalsothinkhewasjustalittleaheadofhistime.AllaroundEurope

theunderlyingcircumstancescontinuetochange.InGreeceaveragepropertypricesarenowfallingtolevelsbelowhalfoftheir2008peak,belowwhatin2012wasthoughttobetheirfloorprice.68

UnderthesecircumstanceswhatwasonceimpossiblebecomespossibleinmanypartsofEurope,justastheseizingoflandandpropertyforthepublicgoodhasnowbecomepossibleinRichmond,California.WhenJuanGordillo,theMayorof

thatsmalltowninruralAndalusia,ledfarmlabourersintosupermarketstoexpropriatebasiclivingsupplies,heexplainedtothetelevisioncamerasthatabetterworldwaspossible,justonesmallstep,ortheft,atatime.Whenitcomestoprovidinghousing,abetterworldis

moreeasilypossible.Incontrasttotakingfoodoffsupermarketshelves,orsupplyingenergy,housingdoesnotneedtobestolen,onlymoreequitablydistributed.Itcanbemadetobelongtoeveryonejustalittlebitmorethanitcurrentlydoesbyextendingrights,bysayingthateveryonehastherighttobehoused.Governmentscouldtransferemptyprivatelyownedpropertyintosocialhousing,andthosewhoarehoardinginatimeofausteritycouldbecajoled,taxedorotherwisepersuadedoutofsuchbehaviour.Astheynowchantat

demonstrationsinSpain,‘Nopeoplewithouthouses,nohouseswithoutpeople’,69whichisfittinginthecountrywiththelargestnumberofemptyhomesandalsohometo

Europe’slargestslumshantytown,CañadaRealGaliana.70ThereisnonecessityinEuropetoseeshantytownsgrow,buttheywillgrowifwefailtoshareoutbetterwhatwehave,oratleastshareaswellasweusedto.AsyettherearenosimilarshantytownsorslumsintheUK,buttherecouldbeinfuture,ashousingvaluesskyrocketinsomeplacesandnose-diveinothers.Mostpeoplewanttostayintheir

homes,butsomewhohavesplitup(orwhoaresufferingdomesticviolenceandshouldsplitup)desperatelywanttoleave.Themajorproblemforpeoplewithnegativeequitycomeswhentheywanttomove.Theycan’tsell–butimagineascenarioinwhichtheycouldselltheirpropertytotheirlenderand

becometenantswithanewlandlord.Thentheycouldleave.The‘right-to-stay’,therighttobecomeatenantinthehomeyouarealreadylivingin,would–ironically,givenitstitle–alsogivehome-buyerswithnegativeequitytheoptiontoleave.Itisthecounterbalancetothe‘right-to-buy’,anditalreadyexistsinlegislationintheUKforhouseholdswithchildrenorothervulnerablepersons;itisjustnotyetwellenoughimplemented.The‘right-to-stay’istherightto

stayinyourhomewhenadverseeconomiccircumstancesmeanyouwouldbebetteroffbecoming,ineffect,atenant.IthasmuchwiderimplicationsforthehousingmarketintheUKifitiseverextended.ItisthemissinglinkinUKhousinglegislationbetweenmortgage-buyers

andtenants.Tenantsinsocialhousinghavethe‘right-to-buy’,therighttobecomemortgage-buyers;sowhyshouldpeoplewhohaveamortgagenothavethereverseright–therighttobecometenants?IntheUS,lawyersactingonbehalfofbankerswhocurrentlyownpropertyinnegativeequityaretryingtoblockcurrentplanstheretomakethispossible:‘whichtheysayreliesonthemswallowinglosses’.71Noteveryonewinswhenresidentsgainmorerights.Suchrightsareonlywonandextendedduringtimesofgreatturmoil,butwemaywellbeapproachingsuchturmoilagainnow,acrosstheentirerichworld.Aportentofwhatcouldcomewas

firstseeninGreeceduringthesummerof2010,whenalawwas

passedallowingmortgage-holderstoremainintheirpropertywhentheyhavenegativeequityandcannolongeraffordtokeepuptheirpayments.Whatismore,thislawalsogivesthemalong-termwayoutoffinancialpurgatory.Itenablesborrowerstoavoidforeclosureontheirprimaryresidenceiftheycommittopaybackaportionoftheirremainingmortgagedebtsatanaveragemortgagerateoveratmosttwentyyearsforamountsofupto85%oftheirhome’scurrentmarketvalue–significantlynotthevalueofthepropertywhenthemortgagewassecured.Thisgivestheresidentsequityofatleast15%ofthenewvalue,andthebankshavetoswallowthelosses.72

Allaround–inItaly,Spain,Portugal,Ireland,IcelandandevenintheprivatepropertycapitaloftheUS–changeisafoot.Somechangeisvocalanddirect;someismorecautious;muchispragmatic;andalmostallofitistoolittletoolate–butthemodelofthelastthirty-threeyearsofbanksprofiteeringfrompeople’sstrugglesjusttobeabletostayintheirhomewhenthingsbecomeadverseisnowunderwidespreadthreat.Thedenialofprofitstothebanksisthepossibilitythathasemergedfromthecrisis.Thelawrescuingmortgage-

holdersinGreecewasbroughtinbythethenEconomyMinister,LoukaKatseli.Itdoesnotapplytothemostexpensiveproperties,sothewealthyarenotprotected;moreover,

borrowershavetoshowthattheyhavenootherassetswithwhichtorepaytheirdebts.Onlythemainhomeisprotectedandthenonlyifitsvalueisunder€150,000fortheunmarried,andunder€300,000formarriedcouples.Contrasttheextensionofhousing

rightsincrisis-strickenGreecewiththetimidityoftheUKgovernment,which,during2012,soughttogivemortgage-holderstheadditionalrighttobuildsmallextensionstothebacksoftheir(bank’s)propertywithoutplanningpermission;73andwhichtriedandfailedinthatsameyeartoencouragemorepeopletobecomemortgage-holdersbypromotingthe‘right-to-buy’.IntheUKmanypeopledonothavearighttoshelter,andthosethatdocanstillbegiven

inappropriateshelter.Peoplehavetherighttogetintodebtinordertobuy,tobuild,toextendorjusttospend,butnottherighttostayintheirhomesandtobeprotectedfromthevagariesofthemarket.Perversely,themorepeoplearepreparedtotakeonadditionaldebtthebettertheeconomyissaidtobe–risingdebtandspendingareoftentakenasasignofconsumerconfidence,whichhelpsthemarketeconomy.Thegovernmentoftenseemsmorewillingtoprotectthebanksfrommarketforcesthanitsownpeople,eventhoughindividualscannotbeexpectedtounderstandtheseforcesaswellasthebanks.Unsurprisinglythehigh-profile

2012‘right-to-buy’relaunchhadminimaltake-up.Some5,697people

intwenty-fivelocalauthoritiesexpressedadesiretobuytheircouncilhouse.However,only233havedonesobecauselessthan5%ofthosewhowereinterestedwereearningenoughmoney.74AlmosteveryonewhohasthefinancialwherewithaltobuyintheUKhasalreadybought.Morepeopleneedtobeabletosell–especiallythosewhoarefindingithardtokeepuptheirmortgagepayments.IntheorypeoplecansellandstayputastenantsintheUKunderexistinglaws,butthecurrentcoalitiongovernmenthasnoenthusiasmforpromotingorextendingtheselaws.Peoplecurrentlyhavetherighttosellthehometheyarebuyingbacktotheirlenderortohaveitpassedontoahousingassociation.InEnglandthis

iscalledtheMortgageRescueScheme(MRS);therearesimilarschemesinWalesandScotland;whileafullmortgagerescueschemewasproposedforNorthernIrelandin2010buthasnotyetbeenimplemented.75

ThecurrentUK‘right-to-stay’isinfacta‘right-to-sell’:theownershipofyourhomecanbepassedfromyourbanktoanewlandlord,evenwhenyouownonlyasmallpartornoneofit.Theseschemeswereproposedduringthepreviousgovernment’sterminofficebutwerenotdevelopedenoughwhenNewLabourwasinpower.Take-upwasnotinsignificant,butitwasnotcelebrated.PerhapsthiswasbecausebecomingatenantagainintheUKisseenasasourceofshame.Perhaps

theword‘rescue’doesnothelp.AllthesecurrentschemesappearnottobefavouredbythecurrentUKgovernmentandtheirUnionistalliesinNorthernIreland,butallremainonthestatutebook,readytobeusedshouldthecrisisdeepentodisaster,shouldinterestratesneedtoriserapidly,andshoulditbecomeessentialtoavoidthemassevictionoffamilieswhocannolongerpaytheirmortgage.76

Thecoalitiongovernmentmightwishtoseetheabsoluteprivatepropertyrightsofbankingcorporationsdefended,butithasnoplansatpresenttoreversethe‘right-to-sell’legislation.Itmightknowthatthisisindefensibleinthecurrentclimate,andsoitallowslocalauthoritiestocontinuetousethe

legislation.InthecityofSheffieldoverahundredMRSswerecompletedbetween2010and2012.Thiswasdonebytransferringownershiptohousingassociations.However,expertsonhousinginthatcitysuggestthatthenumbersweresolowbecausetheamountsallowedunderthenewhousingbenefitcapsareoftennotenoughtopaytherent.Thecutsinhousingbenefitcan

preventthosewhocannolongerpaythemortgagefrombeing‘rescued’andturnedintotenants.Itisnotfecklessnessbutalmostalwayslossofemployment,reductionincontractedhours,illnessorseparationthatcausesfamiliestobecomeatriskoflosingtheirhome.LocalhousingexpertsinSheffieldclaimthattheexistingschemesare

notenough.Therealsoneedstobemoreresponsiblelendingwithrobustlandlordregulation,aswellasmoreadviceandhelpwithbudgetingandmoneymanagement.77ButservicessuchastheCitizensAdviceBureaushavebeensavagelycutjustatthetimetheyaremostneeded.ThatservicebegantobedecimatedinApril2011.78

Wearecurrentlyinthemiddleofafightoverthephilosophyandlegalityoftherighttobehoused,therighttoadviceandtherightnottoberippedoff.The‘right-to-stay’–tosellthehomeyouareintoasocialoreventoaprivatelandlord,buttocontinuetooccupyitasatenant–wouldworkonlyiftenancyconditionsintheUKbecamemorepalatable.Ifitbecomesnecessaryfor

evenmorefamiliestorent,ratherthantoborrowandbuy,andiffamiliescurrentlylockedintomortgagesaretoregardaswitchtorentingasacceptableandnotasaretrogradestep,therewillhavetobeareformoftenants’rights.ManyoftherightsthattenantsenjoyedinthepastintheUKhavebeenlost,butbelowisalistofwhatiscurrentlythepracticeinother(similar)countriestoshowwhattherangeofworkableoptionsis.

Table2.Notableprivaterentalpracticesinothercountries.

Country Purpose Practice

Ireland Tenantsecurity

Fouryear’ssecurityoftenureafterintitialyear

Sweden Tenantsecurity

Offersindefiniteleases

HongKong Tenantsecurity

Offerstwo-yearleases

Netherlands Landlordfinance

Depreciationallowance

France Landlordfinance

Offsettingrentallossesagainstotherincome-‘negativegearing’-makesinvestmentmoreappealing

US Singleownership

Blocksofrentalpropertiesundersingleownership,makingpropertieseasiertomanageandportfolioseasiertoassemble

Switzerland Rentregulation

Rentceilings,regularlyadjustedbyofficials,thatmaynotbeexceededforaffordableproperties

Denmark Rentregulation

Setsanofficiallydeterminedratebywhichrentsareallowedtoincreasefornewtenanciesandhas

localrentcontrolboards

Austria Rentregulation

Onlypermitsmid-tenancyrentrisesinlinewithConsumerPriceIndexinflation

Finland Rentregulation

Banslandlordsfrompassingoncoststocovermaintenance

Belgium Rentregulation

Allowslandlordstoincreaserentstomakeimprovementstoproperty

Germany Tenantcontrol

Landlordsrentouta‘shell’thattenantscanthendecoratethemselves

Spain Social-private

Apublicinstitution(SociedadPúblicadeAlquiler)hasbeencreatedtoprovideguranteedrentalschemesfor

tenantsandlandlordsinordertoencouragethedevelopmentoftherentalsector

ImagineiftheUKhadmanyofthoserightsenjoyedbytenantsinallthoseothercountrieslistedabove.Imagineifyouhadthe‘right-to-stay’aslongasyoulivedinyourrentedhome,aslongasyoupaidtherent.Whataboutrentstayingfixedforatleasttwoyearsorevenforfiveyears,atwhichtimeyoucouldrenegotiate?Imagineiftherentcouldnotsimplybeincreasedatthewhimofyourlandlordbutwassetbyalocalboard,perhapsexactlylikeLocalHousingAllowancesforhousingbenefitareset.Whyisn’ttheallowancethemaximumrent?Thatisnomoreodd

thanhavingaminimumwagetopreventexploitation.Wewonthatminimumwageonlyin1997.Howlongbeforewewinamaximumrent?Butpleasedon’tstopimaginingjustyet.Imagineiftherewereminimum-

qualitystandardsthatensuredhousingforrenthadqualitiesthatmostpeoplewouldbewillingtoputupwith,andnotjust‘lowqualityforthepoor’.Youmightsaythatlandlordscouldnotaffordtoprovideallthis.But,ifthatwerethecase,theywouldthenhavetoselltheirpropertycheaplytoadeveloperfamilythatcoulddoitup,andpriceswouldfall.Forsomereasonlandlordsareabletodoallthisinmuchoftherestof(atleastnorthern)Europe.Perhapsitisbecausehouse

pricestherearelower,whentheyrisetheyclimbmoreslowly,andnegativeequitythenbecomesrarer.High-qualityrentalaccommodationmaybyitselfbekeepinghousepricesdown.Ofcourse,lessprofitismadeoutofhousinginalmostalloftherestofEurope;someoneloses.Butthemainmotivationforprovidinggoodhealthservices,goodeducationandgood-qualityhousingshouldneverbeprofit.Thereiscurrentlyabattletaking

placeoverhousingpolicyintheUK.Ononesidearethosearguingforprogressivechange;theseareadvocatesrangingfromgroupswishingtoincreaserightsforsquatters,tothinktanksproducingoptionssuchasthoseshowninthetableabove,79topoliticalpartiesless

inclinedtokowtowtobankers.Opposingthemarepeoplewhoseetheirpurposeasprotectingthepropertyinterestsofarichminority.Thisgroupwantstoseemoresquattersimprisonedbecausetheyseesquattersasthethinedgeofawedgeinthebattleformorehousingrights.Theydon’twant‘easyoptions’forthehomeless.Iftherichminoritywins,then,insteadofgreaterrightsandamoreefficientrationingofourcurrenthousingstock,we’llgetincreasedhomelessness.

HOMELESSNESS

[Fromtoday]councilswillbeabletodischargetheirdutiestohomelesspeoplewiththeofferofasuitabletwelve-monthtenancywithaprivate

landlord,andhomelessfamilieswillnowendupinshort-termprivatelets.

–Shelter,9November201280

Thedate9November2012markedawatershed.Itwaswhenwelostoneofthemostsignificantofthosehousingrightsthathadbeenwoninthe1960sandstrengthenedthrough1970spoliticalagitationafterpeoplewatchedCathycomehomeontheBBC,the1966filmshowingayoungmotherasshetraipsedfromprivatelettothestreets,todestitutionanddespair.MeasuresintheLocalismActof2011meantthatfromthatday,9November,justsevenweeksbeforeChristmas2012,localcouncilswerenolongerlegallyrequiredtoofferhomelessfamiliesandvulnerablepeopleasecurehomemanagedbythemorbyahousingassociation

landlord.Instead,theycouldputthenewlyhomelessstraightintothehandsofaprivatelandlord,whosemaingoalwastoprofitfromtheirhomelessness.Inthecoalitiongovernment’swords,before9November2012,‘underthepreviousrules,peoplewhobecamehomelesswereabletorefuseoffersofaccommodationintheprivaterentedsector,andinsistthattheyshouldbehousedinexpensivetemporaryaccommodationuntilalong-termsocialhomebecomesavailable.’81

The2011Actalsomadeitpossibletorentoutcouncilhousesononlyshort-termlets.InBritain,youthhomelessnesslast

rosewhenhousingbenefitpaymentsforhomelesssixteen-andseventeen-year-oldsweremadeillegalby

MargaretThatcher’sgovernmentintheveryearly1980s.DavidCameronwouldliketoreduceyoungpeople’shousingrightsevenfurther.Ifhegetshisway,almostallthoseagedundertwenty-fivewon’tqualifyforanyhousingbenefitsifhomeless.82Theywillgetnosupportatallandhavetostaywithfamilyorliveonthestreets.Alreadypeopleagedunderthirty-fivecanbeallocatedonlyenoughhousingbenefittoallowthemtoliveinaroominsharedaccommodation,sharingsomeorallofakitchen,bathroom,toiletandlivingroomwithstrangers.Iftheyfalloutwithotherresidents,theycantheneasilybecomehomeless.And,oncehomeless,iftheydon’thaveachildorareotherwiseveryvulnerable,theauthoritieshaveno

responsibilityforthem,otherthantoensurethattheyarenoteasytoseeonthestreets.ThisistheUKin2014,butwheredidthethinkingthatthiswasOKcomefrom?Gobacktwenty-fiveyears,to

1989,andacrosstotheUS,oncetheresultsofanearliermini-housing-crisisspreadingacrossthecountryhadbecomeabitmorenormalizedinpeople’sperceptions.ItwasreportedthatNewYorkershadbeguntogrowtiredofconfrontinghomelesspeopleeveryday.Theymetthemonthesubway,andthenatthemainlinetrainstations;theyweresteppingoverthemattheentrancestosupermarketsandevenonthedoorstepsoftheirownapartmentbuildings.ThethenAdvocacyDirectorfortheCoalitionforthe

Homeless,KeithSumma,explainedthat‘Peoplearetiredofsteppingoverbodies.’AndLynetteThompson,aTransitAuthorityofficialwhowasatthattimeoverseeingtheoutreachprogrammeforthehomelessinthesubways,saidthatduring1989therehadbeenamarkedchangeinthetoneoflettersshewasreceivingfromsubwayriders.‘Atthebeginningoflastyear,thetenorofthoseletterswas“Pleasedosomethingtohelpthehomeless.”ButsinceAugustandSeptember,they’vebeensaying:“Justgetthemout.Idon’tcare.Justgetthemout.”’83

IfirstsawhundredsofhomelesspeoplewhenIvisitedSanFranciscointheearly1990s.EventhoughIwascarryingoutresearchinto

housingIwasshocked,buttheAmericansaroundmehadbecomeusedtothesituationandsteppedoverthelivebodies.ThuswhatbeganintheStateshasspreadtoBritain.Inbothcaseswhatcamefirstwerethegovernmentpolicesmakingithardertosecureahome,thenthemasshomelessness,thentheacceptanceofmasshomelessness.IntheStatestheReagangovernmentof1980–88beganlegislationearly.By1989,whenGeorgeBushSeniorbecamePresident,theRepublicanshadsucceededincreatingablame-the-victimsea-changeinpublicopinion.TheThatchergovernmenttookalittlelongertosecurethepoliciesthatwouldresultinsomanymoreyoungpeoplelivingonthestreets,buteventuallyThatcher’s

protégésmanagedtocreatethesamesea-changeinthinking:namelythatthosewhohavefallenonhardtimeshaveonlythemselvestoblame.Oncepeoplebecomeimmuneto

masshomelessness,theonlytimethehomelessaretreatedwellisintheimmediateaftermathofanearthquakeorsimilardisaster,whenmanydecentlyhousedpeoplebecomehomelessaswell.Butwhenhomelessnessbecomescommonamongaminorityandlittleisdonetoalleviateit,thehomelessbegintobeblamedfortheirownplight.Yetmanyofusseemtobeunawareofquitehowclosetothepossibilityofhomelessnessweare.Aquarterofallemployedpeople

inScotlandareonlyonemonthlypaychequeawayfrombecoming

homeless.Ifaparentlosttheirjob,mosttwo-parentfamilieswithchildreninScotland,andalmostalllone-parentfamilieswithchildren(some56%ofallfamiliesintotal),couldpaytherentforonlythenextthreemonths.ByChristmas2012,about1%ofthisnumber,orover5,300children,werealreadybeinghousedwiththeirfamiliesinemergencyhomelessaccommodation.84

ItisnotlackofhousingthatiscausinghomelessnesstoaffectchildrenintheUK.Politicallythereisalackofwilltotackletheprivaterentedsector,includinghotelsandB&Bsprofitingoutofthehomeless.InLondon,wheretherearestillmorebedroomsthanpeople,itcancostcouncilsintheheartofthecapitalup

to£350anighttoputafamilyupinexpensivehotelaccommodationthatiscompletelyunsuitableasemergencyaccommodation.85Yetthereductionintheavailabilityofhomesinthesocialhousingsector,andthe9November2012changeinlegislation,givecouncilsnooptionbuttheprivatesectorwhenitcomestorehousingthoseonlowincomes,includingthenewlymadehomeless.Themajorityoflandlordsjust

wanttheirhighrentspaidandthepropertykeptingoodorder,buttheimpactofmanyofthecurrentchanges,includingthesporadicandbadlyimplementedintroductionofUniversalCredit,meansthatallcouncilswillsoonnolongerbeabletofacilitatedirectpaymentsofhousingbenefitmoniestolandlords.

Thegapbetweenrentsandbenefitsisgrowing,justasthegapbetweenhousepricesandwagesisgrowing.Allthisisveryconfusingfortenants,justasmortgagesareveryconfusingforbuyers(includinglandlords,whodonotreadthesmallprintandfindthattheirtrackermortgagesnolongertrackthebaserate).Thestatewelfarerulesarecomplexandconstantlychanging.Forexample,housingbenefitisnowsetonthe30thpercentile,ratherthanthe50th,ofassessmentsoflocalrents,andistobeupratedusingCPIratherthanRPI.86Buthowmanypeopleknowwhatthedifferencesbetweenthosetwoindexesare,letalonewhattheacronymsstandfor?Allofthismakesithardertohousepeoplewho

arepoorer,andmorepeoplethenenduphomeless.Underlyingalltherecentchanges

tolawandregulationappearstobeacoalitiongovernmentdesirethattheprivatesectorinEnglandshouldbeabletomakemoremoneyoutofthehomeless.In2012twounnamed‘privateproviders’wereawardedcontractsbytheGreaterLondonAuthority,currentlycontrolledbyConservativeMayorBorisJohnson.Thecontractscouldbeworthasmuchas£5millionintheshortterm.Theyaredesignedtoallowthoseprivatecompaniestotacklewhatistermed‘entrenchedroughsleepers’.‘Entrenched’isdefinedaspeoplewhohavebeenrecordedaspersistentlysleepingroughinthecapitaloverthecourseofthelasttwo

years:some831suchhomelesspeoplewereidentifiedin2011and2012.Theseareseenasthe‘hardcore’oftheestimated5,678peoplesleepingroughatsomepointinLondoninthefinancialyear2011/12.Theorganizationencouragingallthis,liaisingbetweenthelocalauthorityandthesuppliers,isarathershadowygroupcalledSocialFinance.87

ThetwoprivateproviderswhohavebeenawardedthecontractstoclearthehomelessfromLondon’sstreetswillberewardedfortheir‘investment’iffivecriteriaareachieved:first,a‘coreoutcome’–areductioninthetotalnumberofrecordedroughsleepers;secondly,areductioninthenumberofindividualswhoareseentobe

sleepingroughoverasuccessionofquarters;thirdly,aconfirmedsustainmentoftenancyinanon-hostelsetting;88fourthly,aconfirmed,‘successful’reconnectiontoacountryinwhichtheindividual‘enjoys’localconnections(aeuphemismforwhatmaybedeportation);and,fifthly,adecreaseintheaveragenumberofA&Eepisodesperpersonperyear.Allthisisdefinedas‘progress’,althoughthesetargetslookasiftheyareconcernedmorewiththecosmeticappearanceofLondonthanwiththeplightofthehomeless.Theseguidelinetargetsappearon

thewebsiteofSocialFinance,whoseboardmembersincludehedgefundmanagers.89SocialFinanceisn’toneofthetwoprivateproviders;itisa

privatebrokerbetweengovernmentandtheproviders.Ithelpsthegovernmenttoremainatarm’slengthfromtheaction,shieldsitfromanyblame–anecessaryprecaution,shouldthoseprivateproviders,motivatedbyprofitandunderpressuretoachievefinanciallyrewardingtargets,betemptedtoresorttomeansthatvoluntaryorganizationsmightregardasunethical.Thecompaniesinvolved(which

arehardtoidentify,possiblyduetocommercialconfidentiality)wouldnodoubtstresshowethicaltheyare;andyet,readingallthedetails,itishardnottospeculatethatthenumberofindividualsbeddingdownonthestreetswillbereducedbyharassingthehomeless–byforcingthemto

findplaceswheretheyarenotseenastheyaresleeping,withinmulti-storeycarparks,forinstance,orundercanalbridges.‘Asustainedtenancyinanon-hostelsetting’couldbeintheworstofRachman-stylebedsits,withnosupportorsocialization.A‘confirmedreconnectiontoanothercountry’soundsnotdissimilartotheNationalFront’ssuggestionofofferingpeoplefromtheCaribbeanaone-wayflight‘home’inthe1970s.AdecreaseinA&Eepisodesmightbeachievedbydirectinganillhomelesspersontoanother,non-A&E–andpossiblylesssuitable–facility.Werethedeathrate–highanywayforroughsleepers,whohaveanaveragelifeexpectancyofdyingintheirforties90

–toincrease,afallintheirnumbers

mightbeachieved.Notnecessarilygoodoutcomes,unlessyouthinkadeadroughsleeperisbetterthanonewhoisbreathing.Attimestheeffortstoremoveroughsleepersandthetechniquesusedtoestimatetheirnumbersareworryinglyreminiscentofthebadscienceofbadgerculling,whichwasbeingtenderedforatthesametime.Thenumberofroughsleepersin

theUKrosebyalmost25%injustthetwelvemonthstoautumn2011.MaterialnowtaughttochildreninschoolsinBritainexplainsthateveryyearsome75,000childrenintheUKwillwakeuphomelessonChristmasmorning.Afurther1.6millionBritishchildrenliveinhousingthatisovercrowded,temporaryorrun-down.The2011censusrevealedthat

theproportionofhomesrentedprivatelycontainingchildrenhassoaredby69%since2001.Othersurveysfindthatcurrentlysome44%ofBritishpeoplebelievetheirchildrenwon’tbeabletoaffordtobuytheirownhome.AllthesefactsarebeingtaughttochildreninschoolsinBritaintoday.Whatmusttheythinkoftheirparents?91Whatthechildrenarenottoldisthatifhousingrightsarenotimproved,andmortgagedefaultersarenotgivensomesecurityoftenure,allthesenumberswillinevitablyrise.Perhapstheywillstarttoworkthisoutforthemselves?Thosepeoplemadehomelesswith

childrenatleaststillhavealimitedrighttobehoused,asafamily,byalocalauthority,althoughnowonlyin

aone-yearletinwhatisoftenthemostshoddylocalprivateaccommodation.Butincreasinglythatrightisbeingignored.Localauthoritiestrytopassthebucktoeachother,topassthefamilyontoanotherarea,butwhenthatisnolongerpossiblethehomelessfamilyisoftenplacedinwhatissupposedtobetemporaryB&Baccommodation.Cynically,inJune2013,thegovernmentaskedlocalcouncilswithsomeofthe760familieswhohadbeeninB&BforoversixweeksbyJune2013totakepartinabiddingauctionforfundstorehousethem.92ThousandsmoreareinB&Batanyonetime,butforlessthansixweeks.Homesoftenbecomesecurityfor

smallbusinesses.InFebruary2013a

Londonfamilyoffour–amotherwiththreechildren–werebeinghousedinasingleroom.Onlyafewweeksearliertheyhadbeenlivinginafive-bedroomhouse,butthenthehusband’sbusinesswentbustandthefamilyweremadehomelesstopayhisdebts.SheandthechildrenweremovedtoadifferentB&Beveryfortnightfortwomonths.Itcostthecouncilalmost£1,000aweektoprovideoneroominLambethforthem.Asthemotherexplained:‘There’snoplacetocook,nofridge,nowi-fi,nowashingmachine,noplacetoputourthings.Thewholeplaceendsupsmelling.’93Thechildrenalsodidnotreallyknowwheretheywereorwhatwashappening,becausetheywerekept

movingbetweenonetemporaryaccommodationandanother.Thereportfromwhichthisstory

wasdrawnrevealedthatthenumberoffamiliesbeinghousedillegally–thatis,formorethansixweeks–insuchaccommodationhasrisenninefoldsince2010.FromMay2010,whenthecoalitiongovernmenttookoffice,upuntil2012therewasariseinthenumberoffamiliesinsuchdirestraitsofalmost1,000%!In2013itwasrevealedthatthenumberoffamilieslivinginB&BinLondonhadsoaredagaintoover2,000.ThehomelesscharityCrisisdirectlyblamedgovernmentcutsfortherise.94

Therearetoofewstatisticskeptonhomelessness;andthegovernmentiskeepingtrackoffewergroupsof

peopleallthetime.InEnglandtheDepartmentforCommunitiesandLocalGovernmentdoesn’tcountthenumberofsingleadultsaskingforitshelpotherthanthosewhohaverecentlybeenincare.ItnolongercountsthosewhocomeforhelpwhowereintheArmedForces,orsleepinginnightsheltersorhostels.Nordoesittrytoestimatethenumbersthataresofa-surfing.Bycontrast,inDecember2012,thedevolvedScottishparliamentextendeditshomelessnesslegislation,sothatanyonefindingthemselveshomelessthroughnofaultoftheirownwasentitledtosettledaccommodation.95ThiswassouncontroversialtherethatithadbeenpassedunanimouslybytheScottishparliament.

ThereisaperceptionthatrecentroughsleepingincreasesinLondonaremostlyconnectedwitharrivalsfromEasternEurope;thatthishomelessnessistheresultofaspecificsetsofcircumstances.Buttherearenostatisticstosuggestthatthisisthecase,whereastherearenumerouswell-researchedclaimstoshowthatoneBritishfamilywithchildrenisbecominghomelesseveryfifteenminutesandthat,ifthecurrentincreaseweretocontinue,by2015over10,000familieswithchildrenwillbehomelessinEngland.96Butby2015wemaynotknowifthishasoccurred,givenhowthestatisticalserviceswerelyuponarecurrentlybeingsoreadilydisbanded.

NodepartmentismoreenthusiasticincuttingstatisticsthanEricPickles’sDepartmentforCommunitiesandLocalGovernment,thedepartmentresponsibleforhousing.TheNationalHousingFederationexplainsthat‘Beyondthesix-weekmark,nodataiscollectedonlengthofstaysinB&Bs.Thismeanswedonotknowhowlongfamiliesarereallyspendinginthistypeofaccommodation.’97ThisapparentlackofinterestinsuchinformationmightappeartositoddlywithPickles’sfrequentpronouncementsthathecaresdeeply,andwithhispersonalroleasatrusteeofthehomelesscharityBrentwoodFoyer,whichhadfortybedspacesinMarch1999.98BrentwoodFoyerwasstill

lookingafteryoungsinglehomelesspeopleagedoversixteenandundertwenty-fourin2012.99ItwouldbeworthaskingPickleswhatheknowsoftheoutcomesofthehundredsofyoungpeoplewhomusthavepassedthroughitsdoors,stayingbetweensixmonthsandtwoyears,since1999.Shelterhasissueda‘classroom

kit’tohelpteachersgivelessonsabouthomelessnessandtheissuessurroundingit.Forexample,childrenareaskedtoimaginetheyaredifferentpeopleinanationaldebateonhousing.Onesuggestionistoimaginethatyouareanenvironmentalist:

Youareagainstthenewdevelopment.Youareunhappyabouttheaddedtrafficthenewdevelopmentcould

bringtolocalroads,andyouwonderwhetherthenewhomeswillbeascarbonneutralastheycouldbe?YouareworriedthatnewdevelopmentsareconcretingoverBritain’sgreenbeltandthatareasofbrownbelt,whichcanbevaluableurbanwildernesses,arebeinglosttoo.Youthinkthatitmightbebettertorestore

oldhousesthanbuildnewones.100

Thereispotentiallygreatsignificanceinthedevelopmentofthisclassroomkitandsimilarinitiatives.Ifyoungpeopletodayaretaughttherealityofjusthowbadlyhousedmanyoftheirpeersare,orhowbadlyhousedtheyareincomparisonwithmostofthechildrenlivingintherestofEurope,thiscouldprovetobeoneofthewaysinwhichourcultureonhousingcanbechangedforthegenerationstocome.Achildfindsithardtoimagineever

havingtopayforahome,butitisthechildrenoftodaywhowillbemostaffectedbythechangesbeingmadebythecoalitiongovernment,andtheirchildreninturn.HousingpricesinBritainarehigh

partlybecausesofewpeoplehavesomuchcontroloversomanybuildings.Astheproportionofpeoplewhoaretenantsincreases,sotoowillthepoweroflandlords.Andthoselandlordscanseeanever-growingmarketforthebedroomstheyhavetorentout.AsShelter’sclassroomkitexplains:‘England’spopulationisprojectedtoincreaseby10millionbetween2010and2035andbenearly18millionhigherby2061.’Mostofthatincreasewillbethechildrenborntotoday’schildren.Alargepartoftherestwillbetheir

grandparentsandparentslivinglonger;asmallerpartwillbemoreimmigration;butallofthisisadditionalforeseenprofitforlandlords.Shelter’sclassroomkitfor

schoolteacherscontinuesbyexplainingthatthegovernment’slatesthouseholdprojectionshaveindicatedthatthereisanacceleratingpressurefornewhousing,suggestingthatanadditional5.1millionnewhouseholdsareexpectedbetween2011and2031.Thiswillbeconsiderablymorethanthenumberaddedoverthetwoprevioustwenty-yearperiods:3.6millionmorehouseholdsbetween1991and2011and3.2millionmorebetween1971and1991.Whatthekitdoesn’tsay,however,isthatwehavebuiltmore

roomsthanwehavegainedpeopleduringboththoseprevioustwotwenty-yearperiods;thecharityconcentratesondwellingnumbers,notdwellingsize.TheShelterclassroomkitnext

givesteachersdetailsofthegrowthoccurringdisproportionatelyinthesouth-easterncornerofEngland:‘withtheLondon,south-eastandeastregionsaccountingforoverhalf(52%)ofthe2010–35populationincreasedespitecomprisingonly30%ofEngland’sarea’.101Ifschoolchildrencanbeexpectedtocopewiththeseissues,andsuchfigures,whyistherenotawiderdebateamongtheirparents?Perhapsitneedstobesetasadulthomework?Thecurrentexpectedlevelofpopulationincreasewillrequiremore

house-building–butnotsoverymuchmoreifweusewhatwehaveinbetterways.102

Solet’sexploresomeareasinwhichwemightbeabletousewhatwealreadyhavemoreefficiently.Onegoodplacetostartiswithsquattersandhowtheymighthelpustogetemptyproperty,includingcommercialproperty,intoresidentialuse.

SQUATTINGANDREFURBISHMENT

Whatthesquattingdisputeboilsdowntoisasplitbetweenthosewhoconsiderprivatepropertytobesacred,andthosewhowouldprioritizetherighttoshelter.Fewpeoplewouldhappilyforfeitasecondhometosquatters,butnordoesitfeelmorallyjustifiableforanationtohaveanestimated930,000empty

homeswhilepeoplesleeponthestreets.

–SteveRose,journalist,2012103

Peopledon’tsimplyacceptbeingmadehomeless.Manybecomeresignedtoit,butothersdosomethingaboutit.Ifyouarehomelessandnoorganizationwillhouseyouadequately,youmayhavetohouseyourselfinemptyproperties–tosquat.Almostallsquattinginvolvesanemptypropertythatisnotbeingused.ItisarathermoreeffectivemethodofusinggenuinelyemptyroomsthantheBedroomTax.But,whiletheUKgovernmentoftentalksaboutpeopledoingthingsontheirowninitiative,squattingisoneinitiativeitdetests.So,since2012,ithascriminalizedwhathadbeen,untilveryrecently,onlyaciviloffence.

WhiletheUKgovernmentjustifiestheBedroomTaxwiththeexcusethatmoneymustbesavedbyfillingeverylastbedroominsocialhousing,itnonethelessmanagestofindalotofmoneytoattacksquatters.Campaigners‘havecalculatedthecostofcriminalizingsquattingtobeprojectedtocostupwardsof£790millionoverafive-yearperiodfollowingintroductionofthelegislationin2012’.104Themoneycouldbebetterspent.Itistruethatsquattingcancause

greatproblems.Sometimes,ofcourse,squatterscanbeill-behavedorevendestructive,butrarelydosquatterswishtoputthemselvesortheirhomesinperilinsuchaway.Squattingisbyitsnatureprecarious

–andsquattersoftenfeeltheyhavenooptionbuttosquat.Thefirstsquattertobeimprisoned

underthenewlawwasAlexHaigh.AlexhadmovedfromPlymouthtoLondoninsearchofwork.Justtwenty-oneyearsoldandlivingwithtwoothersinavacanthousingassociationproperty,hewasarrested,triedandsentencedtotwelveweeksingaolinSeptember2012.HewouldhavebeenyoungenoughtobehousedinthedormitoryoftheBrentwoodFoyer,thecharitythatEricPicklesisatrusteeof,hadtherebeenasparebedthereatthattime.Buthewouldhavehadnochoiceabouthisroommates,andlikelynowherenearbywherehecouldfindgoodwork.Squattingisentrepreneurial;thereisalittlemore

freedomtochooseyourfriendsandtolivenearplaceswhereyoucanbeenterprising.When21-year-oldAlexwas

imprisoned,aMinistryofJusticespokespersonisreportedbytheBBCtohavesaid:‘Fortoolongsquattershavebeenplayingthejusticesystemandhavecausedhomeownersuntoldmiseryineviction,repairandclean-upcosts.’105WhatthespokespersondidnotevenhintatisthattherearegoodreasonswhypeoplelikeAlexprefertherisksofsquattingtothealternativeofoffersfromthelikesofPickles’s‘foyer’charity.TheMinistryofJusticelookedonlyatthecostsfortheownerofavacantproperty,atthoseclean-upcosts,andnotatthecostsofinsecurityforsquatters.TheMinistryofJusticehas

averynarrowviewofjustice.Almostallsquattedbuildingsareemptypropertiesboughtforinvestmentpurposes;andmostarevacantcommercialpremises.Awiderviewofjusticewouldadd

themiseryofthesquatterstothoseclean-upcosts;and,atanextreme,thefeelingsofsuicidebroughtaboutbyeviction.Awiderviewofjusticewouldconsiderthedespairyougetwhenyouaretrappedbydebtandnegativeequityinapropertyyouwishyouhadneverbeenfooledintobuying.Itwouldtakeintoaccounthowa21-year-oldmightfeelaboutbeingplacedinadormitoryforthehomelessoutoftownwherethereisnoworkandlittlehope.Ifnecessary,allthesesocialevilscouldhaveamonetaryvalueattachedtothemto

helppeoplewhofindithardtounderstandfeelingstodevelopabettersenseofjustice.Thereisagrowingbodyofnasty

right-wingopinionthatopposeswhatitcallsamorelavishsystemof‘socialhousing’onthebasisthatitcreatesanincentiveforindolence.Suchrhetoricisamodern-dayversionoftheVictorianregressivewhobelievedthathungerwasafarmoreeffectiveweaponthantheoverseer’swhipinencouragingworkerstotoil.Thosewhotodayareagainstthehomelessbeingdecentlyhousedarenotsoideologicallydifferentfromtheirpredecessorswhoopposedhealthcare,includingthe1930seugenicistswhobelievedanationalhealthservicewouldonlyhelptheweaktosurviveandbreed.

Everyoneshouldbeabletobenefitfromthequietenjoymentofahome,freefromnoise,fromharassmentandfromfear.Butamongtherich,thefarrightseesthequietenjoymentoftheirproperty,nomatterhowbigtheirpropertymightbe,asbeingasimilarbasicright.Thatenjoymentextendstotheirwealth,theirhomesandtheirland,andtotherighttogrowtheirlegacyeverlarger.However,astheycannotliveinalltheirhomesatthesametime,theyleavealotofpropertyempty,andwhatshouldbearealhomeforarealfamilybecomesjustemptypropertygatheringdust.Theconceptofhouseholdshaving

therighttothequietenjoymentoftheirhomewasintroducedtotrytoprotecttenantsfrombeingharassed

bylandlordsandloansharks;itspurposewasnottoprovideacovenantfortheprotectionoftherich.Justasfreedomofspeechdoesnotgiveyoutherighttoshout‘fire’inacrowdedtheatre,sothequietenjoymentofyourhomedoesnotgiveyoutherighttokeeppropertyemptyattheexpenseofotherfamilies.Itisarenewedconceptionofthe

apparentsanctityofprivatepropertythatis,perhaps,therealimpulsebehindthenewanti-squattinglaws.Thatwouldcertainlyexplainwhythenewlawsarefailingsodramatically.InApril2013morethantwodozenlawyersrevealedthatnotoneconvictionunderthenewsquattinglawshadprotectedowner-occupiers;instead‘theeffect…hasbeento

facilitatekeepingpropertiesempty,despitethecurrenthousingcrisis.’106

Whywouldagovernmentchangethelawtokeepbuildingsempty?Atanyonetimebetween20,000

to50,000peopleintheUKsquat,almostallinabandonedbuildings,andonlyveryrarelyinonethatsomeoneelseactuallywantstolivein.Bydefinitionitishardtobemoreprecisethanthat;squatterstendnottobeagroupwellcoveredinsurveysorbyacensus.Butwedoknowthattheynumberaroundjust0.1%ofthepopulationoftheUK,orperhapsevenless.Worldwide,atenthofallpeoplesquat,aratethatisonehundredtimeshigherthanthatintheUK.MostofthepoorworldisfarmoreinequitablethantheUK.Andthemoreinequalitythereis,the

higherbecomestheproportionofpeoplewhohavetosquat.Itisonlyinajustsocietythatthesquattingratecanfalltozero.Peoplesquatbecausethe

alternativesareworse–betheytheEricPickles’stypeof‘foyer’charityortheprivatesectorprofit-makingequivalent.Thecurrentgovernmentwantstocriminalizesquattingevenfurther,extendingthelegislationtoallowthepolicetoarrestandimprisonpeoplewhoaresleepinginabandonedcommercialbuildingsandoldbarnsandotherout-buildings.Yetsuchacrackdownwillproveeconomicallyunviable.Themorepeopletheyforceoutofsquatting,themoretheyforceintoemergencyhomelessnessaccommodationorthecheapestofroomsintheprivate

rentalmarket,orontothestreet,whichwillmakethingsworseforeveryone.Anexampleoftenhelps,and

hundredsofthousandsofpeopleworldwidewereshownwhatisgoingwrongtodayinBritainwhenBloombergreportedonwhatjustoneplanningofficerwasfindinginoneLondonboroughin2012.ChristineLyonsistheChiefPlanningEnforceroftheLondonboroughofNewham.WhatshedescribedtoBloomberg’sreportersinthesummerof2012evokedscenesreminiscentofVictorianEngland.SheshowedthemillegallyrunpropertiesoccupiedbytenantswhowerecrammedintowhatthatTVchanneldescribedasslum-likeconditions,withentirefamilieslivinginsingledirtyroomsandin

thosegardensheds.Asthechannelcrudelyputit:‘Surveyingthestinkingtoiletandfly-infestedkitchenareallinaday’sworkforChristine.’107ThiswashardlyagreatadvertforLondon.Whydopeopleputupwiththese

conditions,andwhydoLondonersasawholeallowtheircitytocontainsuchhousingmisery?TheinternationalviewersofBloombergmighthavewonderedwhatisgoingonintheUK.Perhapsthosepayingrenttoliveinsuchsqualoraretooafraidtosquatelsewhere.OnemaninthereportonChristine’sworkfoundthatwhathethoughtwasacupboardinthekitchennexttothefridgeturnedouttobetheplacesomeonewasrentingtosleep.Thehousewaslicensedforfivetosleep

in,butitturnedoutthatthereweretwelveoccupants.Thelandlordwasfined–buthowlongbeforeanothertwelvedesperatetenantsmovein?Squattinggenerallyinvolvesaless

crampedexistencethanthebottomendoftheprivaterentedmarketorafull-uphomelessshelter;squattingisalsomoreaffordableandfreerinmanyothersenses.Youarefreeoftheexpenseofrenting,freetochoosewhereyouliveandhowyoulivethere.Squattersoftenrenovatetheemptypropertiestheyoccupy.Whywouldn’tthey?Thereclearlyisaneedforthatrenovation,butthereshouldbenoneedforsomanytosquat.Thereisenoughhousingforall,eveninacrowdedislandlikeBritain,evenintheheartofLondon(whereitreallycannotberepeated

enoughthattherearestillmorebedroomsthanpeople).Whatwelackisahousingpolicythatiscollective,notindividualistic.Theincentivetolookafterjustour

owninterestscanbegreat.Ifyouareamortgage-payerhopingtosellinfuture,youmaythink:don’tdoupthehome,justpaintoverthecracksandsellitataprofit.Ifyouarealandlord,youmaythinkofaskingyourtenantsforanother£10aweek.Theycan’treallyaffordit,butyou’llgetanextranight’sskiingforthatextra£520yougainayear.Yougetanextra£3,120ifyouputuptherentwhenyouhavesixtenantssleepinginthehouse!Similarly,ifyouareatenantlivinginasocietypromotingmoreandmoreindividualism,youmightwellthinkofillegally

sublettingyourhousingassociationflat.Everyoneelseisonthefiddle–whynotyou?Ultimatelyitisthinkingasanindividualandthenbeingfrustratedwithyourlife,withtheideathatyouhavetoolittle,whichbolstersalltheseattitudes,including,attheextreme,thethought:whynotgivetheblokesleepingroughakickingwhenyou’vehadadrink?He’sscum.Contemptgetsintotheverylanguageweuse;whenwetalkaboutsomepeopleastaxpayers,andothersaslivingonwelfare,wegrowcontemptuous.Andcontemptsoeasilybreedsmorecontempt.

8

Solutions

Theprimeministerurgedpeopleto‘trust’theBankofEngland,whichhasbeengivenanenhancedroleinmonitoringtheeffectofthe[‘help-to-buy’]schemeonprices…MrCameronalsousedhisAndrewMarrinterviewtostressthattherewouldbeno‘mansiontax’ifhewasprimeministerafterthenextelection,makingitclearthatthiswouldbeaso-called‘redline’–apointhewouldrefusetoconcede–incoalitionnegotiations.

–BBCNews,September20131

Sometimesitistemptingtosuggestthatpolicymakersshouldsimply

lookatwhatthecurrentPrimeMinisterissuggestinganddotheopposite.Butprogressivepoliticsoftenmovesslowly,and,justwhenyouthinkthereisnohope,itmaterializes.Whenbettersolutionsareimplemented,oftenatfirstyouhardlyrecognizethem,theyhavebeensowatereddown.Thenyousaythattheyarenotenough.Nextyouchangewhatitwasyouweredemanding.Youkeeponfighting.Buteventually,oneday,youlookbackandsuddenlyrealizehowfaryouhavecome.Thatishowchangeshavebeenwonelsewhere;itishowtheywerewoninthepast.Itishowtheconsensusbecomessomethingelse,oftenimperceptiblyslowly;itishowprogressismade.

THERIGHTNOTTOBERIPPEDOFF

…thepastwasbetter.Forthefuturetobebetter,weneedtobreakwithaneconomicmodelthatnolongerworks.

–PaulMason,BBCEconomicsEditor,

20122

Thecrisisofhousingispartofawidercrisis.Thosewhocurrentlybenefitfromthecrisishavemorefinancialcontroloverpoliticiansthanthosewholose.IntheUK,arecentinvestigationfoundthatbanks,insurers,hedgefundsandprivateequityfirmspayanestimatedannual£15.8milliontothirty-eightpublicaffairsconsultancies(includingseveralpublicrelationsfirms)tolobbythegovernmentontheirbehalf.Ontopofthatspending,currentlyoneinsixmembersoftheHouseofLordsbenefitspersonally

fromdirectfinanciallinkswithfinancialservicesfirms.AmajorityofthemembersofthecommitteeoftheHouseofLordsthatscrutinizesthebudgetarealso‘paidbyfinancefirms’.3Noneofthisiscalledcorruptionbecausetheselordsdeclaretheseinterests,asifthedeclarationactuallyabsolvesthem.IntotaltheBritishfinancial

servicesindustryisestimatedtospend£92millionayearlobbyingbothpolicymakersandso-calledmarketregulatorstoactintheirfavourratherthaninthefavourofordinarycitizensandconsumers,orofresidents,familiesandhouseholds.4Infuturechildrenwillbetaughtabouthowunelectedmeninthepayofbankssatinachamberofthehousesofparliamentandacted

toprotectafewrichvestedinterests;butasyetthatinformationhasnotreachedany‘classroomkit’.Partoftheunderlyingreasonfor

ourcurrenthousingcrisisisthetolerationofendemiccorruptioninourlegislatureandlegalandfinancialsystems.Whatallowedthatcorruptiontoincreaseweretheproblemsassociatedwiththegrowinginadequaciesofouroldhousingsystems,mostlysetuparoundacenturyago:statehousing,buildingsociety-fundedhousing,charity-providedhousing.Statehousinghasbeen‘residualized’andisnowreservedonlyforthoseperceivedasfailures;buildingsocietieshavemostlybeenprivatized.Charitablehousingassociationsnowmoreoftenbehave

asifmotivatedbyprofitthanbycharitableconcern;oftenthistransformationiscalledputtingthemona‘soundfinancialfooting’.Financingthebuyingofahouse

throughamortgageisincreasinglyriskyformanypeople,giventhatthenatureofworkisbecomingincreasinglyprecarious.Thestateisnolongerseenasprovidingasafety-netforall,onlyaselectedfew,thedeserving,sosocialhousingisstigmatized.Ineraswhentherichtakemore,evencharitiescanbecomelesscharitable,alittlemoremean-spirited,alittlemorepejorative,describingtheiractionsasphilanthropyratherthanascampaigning.Theyhelpthepoortobudgetbetterinsteadofworkingharderagainsttheinjusticeoftheir

poverty.Ihavewatchedthishappenoverthecourseofmylifetime,andthisoccursevenwhen,andperhapsbecause,thosewiththemosthaveevermoreto‘give’.Currently,acrossthedeveloping

world,peoplearebuyingfewerhomes,stayingintheircurrenthomesforlonger,borrowinglessiftheycan,slowlypayingbackdebts–and,insodoing,deflatingtheeconomy.Manyofthesetrendsreadlikegoodsigns,buttheydon’treflateaneconomydependentonever-growingconsumption.Whenpeoplearepessimistic,theirbehaviouralters;theydobudgetbetterwithouthavingtobetold.Fouryearsafterthecurrentcrisisbegan,inApril2012,some28%ofresidentsinGreatBritainstatedthattheythought

theirpersonalfinancialsituationwouldgetworseoverthenextsixmonthsandonly22%thoughtthattheirsituationwouldgetbetter.Forthemajority,theirfinancialsituationdeteriorated.5

Thinkaboutwhatelsegoeswrongwhenhousinggoeswrong.Howhardisittorecruitschoolteachersinacitywherethepricesandrentsareastronomical?Howeasyisittogetpeopletomoveintoareaswherethehousingissocheapthattheysuspectsomethingisgoingwrongwiththelocaleconomy?Housingcoststheleastintheplacesthatneedthemosthelp,theplacesthatmostneedpeoplewithdisposableincome.But,forsomeperverseeconomicreason,lowhousingpricesarenotseenasattractive.Migrantsfromoutsidethe

UK,andyoungmigrantswithinthecountry,tendtogotowherehousingcoststhemost,toLondonmorethananywhereelse.Butmigrantscomeonlywhenitisworthcoming,whenthereismoneytopayforjobstobedone,whentheyplantoearnratherthantospend.MervynKing,theformer

GovernoroftheBankofEngland,explainedthat‘mostofthehugedebtsaccumulatedbybankscouldbetiedtothehugebonusesexecutivesreceivedasrewardfortheirlending.’6Thosehugebonusesandtheimpressiontheygave–thatbankersweresimplyonapersonalmissiontoenrichthemselves–createdgreatmistrust.Thatmistrustofthebanks,themainmortgage-lenders,nowclearlyreachesrightto

thetop,toBankofEnglandgovernors.ThelawsarebeingchangedataEuropeanleveltotrytobettercontrolthebankers’activities,andhopefullytheactivitiesofmanyotherswhotrytoprofitbyinsertingthemselvesbetweenahomeanditsoccupant.However,theUKgovernmentistryingtopreventthosechanges(inBrussels)toallowbankerstotakeasmuchmoneyinbonusesastheylike.7

Interestingly,inScotland,thefollowingfeesarenowunlawfulwhenchargedforpeopletryingtorentahome:feesforcarryingoutcreditchecks;feesforcarryingoutreferencechecks;chargesforcheckingandpreparinganinventoryofitemsinaproperty;anyadministrationchargetorenewan

existingtenancy;anynon-refundable‘holdingfees’orsimilarpaymentasaninducementtograntatenancy;chargesforarrangingduplicatecopiesofthelease;apaymenttotransferformallyatenancytosomeoneelse(knownasan‘assignment’);andtheprovisionofoverpricedfurniture–includingthesaleoffurnituretoatenantforanexcessiveprice.InWestminster,manywoulddescribethatastoomuchregulation,unlikeinHolyrood.In2012ShelterScotlandlaunched

acampaigntoencourageprivatesectortenantstotaketheirlettingagentstocourttowinbackmoniestheyhadbeenwronglycharged.Onetenant,RachelRyan,saidofhersearchforahome:‘Weeventuallyfoundaflatthatwelikedand

decidedtoarrangeaviewing.Theagentthatshowedusaround,answeredourquestionsabouttherent,deposit,andwhenwecouldmovein,buttheonethinghefailedtomentionbeforewepaidthe£250non-refundable“holdingfee”wasthatwewouldalsobeaskedtopay£175inagencyfeesand£35VAT.’8

Thatmeantthataswellaspayingtwomonths’rentinadvance–whichcameto£1,275–Rachelandherpartnerhadtopay£460inonelumpsumtotheagentiftheywantedtosecuretheflat.RachelcontactedShelterforadviceandsecuredarefundofalltheillegalcharges.IntotalShelterScotlandhelpedseventy-threepeoplestartproceedingsthatallowedthemtoreclaimover£11,400inthefirst

twenty-fourhoursoftheirwebsite’soperation.9

Thatwasspring2012.BytheNovemberofthatyeartherehadbeena43%increaseincallstothecharity’shelpline,andShelterScotlanddeclaredthat‘Sofar,morethanaquarterofamillionpoundsinclaimshavebeenmade.’10AllthiswasachievedbyjusttwoShelterScotlandworkers.Thatisanannualtakefromunscrupulouslandlordsofover£125,000each.Ifyoueverthinknothingcanchange,looktoScotlandandtothiswork.However,realsuccesswouldbefortheShelterwebsitetonolongerbeneeded.Perhapslettingagentsshouldbeprosecutedfortheftandfraudwhentheycommitit?Theymightthenstarttopolicethemselves.

Itisnotimpossibletoimagineadaywhen,tobewellhoused,wenolongerrelyontheactionsofcharities,evenonesaslaudableasShelterorCrisis,bothsetupafewdaysafterthefirstbroadcastoftheBBCtelevisionplayCathycomehome,in1966.Butcurrentlythatdaydoesseemratheralongwayoff,giventhecurrentUKpolicydirectionandthecontinuedrelianceofoureconomyonanoverheatedhousingmarket.Itneednotbelikethis.Wenolongerdependoncharitiestoprovidehealthcare.Peoplenolongergotothecharityhospital.Suchhospitalswerealmostallnationalizedin1948.Therecentincreaseinprivate

provisionwithintheNHSisastepbackwards,butinhousing,formost

peopleinBritain(whodonotrelyonsocialhousing)wenevertookthestepforwardthatwasneededinthefirstplace.Implicitinthatstepistheideathatallshouldbewellhousedandnooneshouldprofitgreatlyoutofhousing.Ifyouthinkthataspirationfanciful,themostobviouscorrelateishownotrelyingoncharityfundinghaslargelytransformededucationinBritain;theschoolsthatclaimcharitystatustodayaremostlycharitiesfortherich.Andhardlyanyprivatefirmcurrentlyprofitsmuchfromdeliveringeducation,althoughsadlymoreandmorearetryingtoturnthatsectorintoamoney-spinner.Housing,healthandeducationareallessentials,buthardlyanyofuscanbecomeexpertsintheir

consumption;thatisbecauseourpersonalinvolvementislargelythroughone-offevents,withchoicegreatlylimitedbycircumstance.Weneedadiversityofprovision,butwealsoneedprotectionfromthosewhowouldprofitbyhavingsomeinsideknowledge,vestedinterestsandfewerscruplesthanmost.

LansdowneflatswiththeLevertonGardenstowerblocksbehind,intheSharrow

neighbourhoodofSheffield.HousinghasalwaysbeenthedifficultthirdsectorofstateprovisioninBritain.The1944EducationActensuredthatfreesecondaryeducationwouldbecomeavailableto

all,asalsooccursintheUS.The1948implementationoftheNationalHealthServiceensuredthesameforhealthcare,whichwasapolicynotfollowedinAmerica.Whenitcomes

tohousing,andmoreinlinewiththeUS,governmentinBritainisincreasinglyconfiningitselftothedirectprovisionofhomesonlyfortheveryworst-off,withtheresultthatstatehousingisnowseenashousingforthepoor.Greaterstateinfluenceinhousingneednotmeanmorestatehousing.Itcouldincludecurtailingtheundueprofitthatismadefromprivatehousing,

controllingtheextentofcapitalgainsthatcanbemade,includingsellingonflatslikethese–flatsthatmayhavebeenboughtunder‘right-to-buy’.Morestatecontrolcouldalsomeanmorecontroloftherentsthatarechargedtotheprivatetenantsofwhatwasoncestatehousing.Itcouldincludeashiftfrombuildingsocialhousingunitstothenationalizationofsomeprivatehousingunder

various‘right-to-sell’schemes,allattheinstigationofthecurrentresidents.Whatever

doeshappeninfuturewillnotreplicatewhathasoccurredinthepast:howwebecomebetter

housedisupfordebate.Butthefactthatwedoneedtobebetterhousedshouldbeobvioustoall.

CurrentlyintheUKprogressineducationandhealthseemstobeinreversegear,movinggraduallyawayfromnon-profitprovision,ashasbeenthecaseinhousingforsometime.Whenwewerelastaseconomicallyunequalaswearetoday,enoughpeopleactedsothathardlyanyoneinthepopulationhadtorelyoncharity.Thestepstakenweremany,andofteneachaloneappearedinsignificant;theyrangedfromstrikingtoimprovepaytovotingoutcorruptMPs.Lessobviouspoliticalactionscanbeimportant.Therewasagrowinggeneraldistasteofgreedfromthe

1930sthroughtothe1970s.Peoplecommentedmoreandmoreopenlyonunfairnessandcampaignedforgreaterequality:betweenmenandwomen;betweenlandlordandtenant;andbetweenrichandpoor.Backwhensomuchofthe

provisionofhousingwasnotanentitlement–whennoonewouldhaveenvisagedB&Bsbeingusedforhomelessfamilies–backin1921,itwaspossiblefortheacademicRichardTawneytowritethat‘Noonehasforgottentheoppositionofferedinthenameoftherightsofpropertytofactorylegislation,tohousingreform…Eventothisday…anEnglishurbanlandlordcancrampordistortthedevelopmentofawholecitybywithholdinglandexceptatfancyprices,English

municipalitiesarewithoutadequatepowersofcompulsorypurchase.’11

Thegreatchallengewefacetodayisthatmanypeoplehaveforgotten–orhaveneverbeentold–thatnotsolongagowewereamuchmoreequalsociety.Councilswould,forinstance,forcethepurchaseofpropertyfromprivatelandlordsatthelowpriceofitsactualworthanddemandthedemolitionoftheslums.Youcangetridoffilth.Ifonlywe

rememberedthat,ourpoliticalparties,charitiesandnewspaperswouldnotnowbesofeebleinpromotinghousingrights.Itisbecausewehaveforgottenwhatcanbeachievedthathousingcharitieshavebecomeincreasinglyessential.Oncemorechurchesandcharitiesarebeingreliedupontoprovidesoup

kitchenstofeedhundredsofthousandsofpeopleintheUKatleastforpartoftheyear,noweachandeveryyear.12

ThediagrambelowwasproducedbyacharityestablishedtofightpovertyinAfricabutthatnowalsofocusesonwhereitbegan:inBritain.Wehavebecomelessabletolookafterourselves.Wehavebeentakenforarideandneedtorealizethatitistimetobecomelessstupid.

Figure22.TheeffectofspendingcutsonpeopleinBritain,2010–16.

THERIGHTNOTTOBESTUPID

Forourworkersinthebigcities,freedomofmovementisthefirstconditionoftheirexistence,andlandownershipcouldonlybea

hindrancetothem.Givethemtheirownhouses,chainthemonceagaintothesoilandyoubreaktheirpowerofresistancetothewagecuttingofthefactory-owners.Theindividualworkermightbeabletosellhishouseonoccasion,butduringabigstrikeorageneralindustrialcrisisallthehousesbelongingtotheaffectedworkerswouldhavetocomeontothemarketforsaleandwouldthereforefindnopurchasersorbesoldofffarbelowtheircostprice.

–FriedrichEngels,187213

Mostpeoplefindithardtoimaginegreatsocialchange.Theworldinwhichasingleindustrycandominateacityisending,buttheworldinwhicha‘generalindustrialcrisis’canharmthe‘market’valueofallpropertyiswithusasneverbefore.LooktoCyprusandtherunonitsbanksin2013,looktoGreece,toItaly,Spain,Portugal,overtoparts

ofFrance,toallofIreland,uptoIceland,acrosstotheUSandtoDetroit–andofcoursetheUK.Attheheartofthehousingcrisis

arethosetheoriesthathousingisbestallocatedbyamarketopentospeculation.Shelterthenbecomesthecornerstoneoftheeconomy,themainsinkofwealthandsavings.Moremoneyisinvestedinhomes,lessinbusiness,andcertainlylessistrustedtothegovernment,eitherintaxorthroughthebuyingofgovernmentbonds.Thebest-offbelievetheirhomeswillearnthemaluxuryretirement.Theydon’tevenconsiderwhatthestatepensionmightbe;forthemitispocketmoney.Theworst-offknowthatiftheydonotstrive,theycouldeasilylosetheirhome.Beingmade

homeless,apparently,isthethreatthatdrivesthemarket.Homelessnessisthestick;wealthisthecarrot.Marketsworkasefficient

distributorsofresourcesonlywhenpeoplecanoptoutofthem,whencustomerscansaytheywant‘noneoftheabove’.Butinhousingmarkets,evenifpeoplecannolongeraffordtopaythemarketrate,whetherinrentorthroughamortgage,theystillneedtobehoused.Theycan’t‘choose’togowithoutahome.Consequentlytheyareopentoexploitation.Looktomoreequitablecountries,wherethehousingmarketworksmuchbetter,wheretherearefewerhomelesspeopleandcheaperhomes.LooktoScandinavia,Japan,theNetherlands,AustriaandGermanyforcountries

wherehousingmightbefarfromperfect,butwherebetterprovisionismadeforthemajority.14

Atparticulartimeshousingandpoliticscanbecomeaheadymixofenthusiasmandgoodwill.InBritain,inthe1950sand1960s,successivehousingministerspromisedtoconstructhundredsofthousandsmorehomesayearthantheirpredecessors.BothbeforetheFirstWorldWarandafterthe1970s,housingbecametheCinderellapolicy,theonethatneverquitegottothebudgetaryball.Itfeaturedneitherinthemanylistsofpastachievementsnorinmanifestodesires.Notevenanadministrationwithrealsocialambitionwasmuchcommittedtohousing,andfewpoliticiansviedtoholdtheportfolio.

Whentimesgetreallybad,far-rightpartiesreartheirnastyheadandclaimthatcouncilhomesshouldgofirst(andhencealmostonly)topeoplewhoseparentsorgrandparentswerebornlocally.ThisisanattempttobringingbackanaspectofthePoorLaws,wherereliefwasgivenonlytothebest-behavedlocalsoftheparish.Byautumn2013itwasnottheremnantsofthefascistBritishNationalPartybutthemoremainstreamUKIndependencePartythatwasadvocatingthatonly‘locals’whohadfamilynearbyshouldqualifyforsocialhousing.15Sadly,attimestheLabourPartyhastoyedwithsimilarpolicies–‘Britishjobs’for‘Britishworkers’ratherthan‘Britishhomes’for‘Britishfamilies’–butnearenoughtocauseworry,

althoughthankfullyLabourstillknowsthatracismremainsmoreunpopularthanimmigration.16

OneofthemostvocalsupportersofthelastLabourgovernment,PollyToynbee,explainsthat‘werememberallthatLabourdidbest:anNHSimmeasurablyimproved,20%morepupilswithfivegoodGCSEs,manymoreatuniversityorinfurthereducation,minimumwage,righttoroam,civilpartnerships,3,500SureStarts.’17But,insummingupthesupposedtriumphs,shesaysnothingaboutwhetherthenationwasbetterhousedafterthirteenyearsofthatLabourgovernment.Itwas;therewasahuge‘decenthomes’renovationprogrammecompletedbothwellontimeandonbudget;butthatwasnot

news.Itdidnotevenbecomenewswhentheprogrammewasquietlyditchedin2010.18

Whenhousingroseupthenewsagenda,asthecrisisworsenedbetween2012and2013,ToynbeelookedbackatNewLabour’srecord.DespitenormallybeingacheerleaderforLabour,sheconcludedthat,despitetherenovationprogramme,whenitcametohousingandthefinancialcrisisintheUK,‘Labourisjustasmuchtoblame.GiganticbubblesinflatedhousepricestosuchadegreethatShelterestimatesachickenwouldnowcost£51iffoodpriceshadrisenasfastoverrecentdecades.’19Thereisnoneedforhousepricestohaverisensofarandsofast,butitdoeslookasifitwasaconsciousdecisiononthepartofthe

lastLabourgovernmentnottotrytoreininthepricerises.Itwouldnothavebeennecessaryforthatgovernmenttohavebuiltmorehousinginordertobringthepricesdown.Rather,it‘just’neededasustainedprogrammeofrenovationofexistingstock,curbsonrentrisesandpoliciestopreventspeculation,includingbeefinguptheirpolicytopreventsomanyemptypropertiesbeingleftemptyforlong.IncontemporaryBritain,instead

ofanygovernmentplansforrefurbishmentandrenovation,rumoursofspeculativenewgreenbeltbuildingabound.Ithasbeensuggestedthat100,000homescouldbebuiltongreenbeltlandeastofBirmingham.ThiswouldintheprocesscreatetheUK’slargest

conurbation,stretchingsomefortymilesfromCoventryupthroughtothenorthofWolverhampton.Thattheremightbesuchaplanwasrecentlydeniedbythegovernment–butitwas,nevertheless,revealedinaspeechbyAndrewMcNaughton,theChiefEngineerontheproposedhigh-speedraillineHS2,whichistorunfromLondontoBirmingham.Whenitbecameevidentthat,

undernewlawspassedbythecoalition,developerswouldbepermittedtobuildongreenbelt,DavidCamerontriedtodistancehimselffromanysuchschemes:‘hewasbroughtupinthe“beautifulvillage”ofPeasemoreinBerkshire,wherehelearnedtorideasayoungster.’20Theimplicationisthatthiscountry-rearedsonofa

stockbrokerwouldnotcountenancesuchbuilding.However,hisgovernmenthaspassedtheplanninglawsthatwillallowit.Itisnotimpossibletoimaginea

chasmopeningupbetweentheConservatives–whoclaimthattheywillconservethegreenbeltevenwhilerelaxingplanninglaw–andLabourpoliticians,whosaytheywillencouragemuchmorenewhome-buildingbutwithgreaterstatecontrol.InhisSeptember2013conferencespeechEdMilibandpledgedthatLabourwouldensurethatprivatebuildersbuiltatleast200,000homesayear,everyyear,upto2020,amillionintotalinfiveyears,iftheyshouldgainpowerin2015.21HesaidtherewouldbearenewedNewTownsprogramme;

thattownswouldbepermittedtogrowoutoftheir(oftenLabour-controlled)boundariesandintothe(oftenConservative-controlled)surroundingcountryside;thatdeveloperswhodidnotusetheirland-bankswouldlosethem;andthathewouldworktoputacommissioninplacebefore2015tomakeallthishappenshortlyafteraLabourelectionwin.Labour’sautumn2013plansoundedinspiring,butinfact(oncetheyearsofslumparefactoredin)itisjustareturntonormalbuildinglevels,anditdoesn’tbegintoaddresstheissuesofinequalityinhousing.WhatLabour’snewhousingpolicywouldensureisastabilizationofthesituation:enoughhomestocopewithrecentimmigration,butnoredistributionof

ourexistingstock,tohelpusallfitbetterintowhatwealreadyhave.EdMilibandisthesonof

immigrants.Heperhapshasabettergraspthanthecountry-rearedsonofastockbrokerastowhymostpeopleneedjustonedecenthome,andhowprejudicecanleadthemtonotevengetthat.ButwhatMilibandisnotyetwillingtodoistotakeonthosewhohaveavestedinterestinthwartingamoreequitabledistributionofhousing.Intwooftherichest,butalsomost

inequitable,ofrichcountriesintheworld,politiciansonthecentre-leftpromisemorebutdeliverless.IntheUS,thePresidentisthegrandsonofamanwhowasimprisonedbytheBritish.22Unlikehisgrandfather,heisnorevolutionary,butObamadoes

scaresomebankers,alittle.InMay2009BarackObamatoldtheCEOsofAmerica’slargestbanks:‘Myadministrationistheonlythingbetweenyouandthepitchforks.’23

HethenpromisedbeleagueredAmericanmortgagorshewouldrescuethem,butrenegedonthatpromiseforthreequartersofthosewhomhehadpledgedtohelp.HehadkeptthepitchforksawaybuthehadalsopreventedtheUSfromturningtowardsafairerfutureforhousing.AstheNewYorkTimes,apaper

normallysympathetictotheDemocrats,revealed:‘MrObamasaidinArizonaafewweeksaftertakingofficethatthegovernmentwouldhelp“asmanyasthreetofourmillionhomeownerstomodifythe

termsoftheirmortgagestoavoidforeclosure”.’AsofMay[2012],4.3millionpeoplehadappliedforaid,butonlyonemillionhadreceivedgovernment-sponsoredmodifications,accordingtothemostrecentdata.Aboutathirdofthoseturnedawaylosttheirhomes,werefacingforeclosureorhadfiledforbankruptcy.24Allthis,however,wasmuchmorethanthecoalitiongovernmentintheUKwaspreparedtodo,andmorethanLabourhasyetpromisedtodo.Labourpromisestoboostnew

housingstartnumbers(buildinghomes)from100,000to200,000ayear,butnottoprotectfamiliesfromfutureforeclosure.ThefirstseriousassessmentofLabour’sMortgageRescueScheme(itsexperimental

‘right-to-stay’policy)foundthat2,600householdshadbeenhelpedtoavoidrepossessionandhomelessness,butatacostofinexcessof£240million.Theoriginalplanhadbeentohelp6,000householdsforonly£205million.AstheheadoftheNationalAuditOfficeputit,inMay2011,whencommentingontheDepartmentforCommunitiesandLocalGovernment’soverallrecord:‘TheDepartmentmadeassumptionsaboutthelevelofdemandfortheMortgageRescueSchemeandmadethewrongcall.Therewasmoreneedthanexpectedformoreexpensivesupportandlessfortherelativelylowcostrescueoption.’25TheNationalAuditOfficesaidthatasaresulttheschemewasbadvalueformoney.

Whattheydidn’tpointoutisthatifthebankshadbeengivenlesscompensation,itcouldhavebeenverygoodvalueformoneyindeed.Thecoalitiongovernmentmade

cutstotheMortgageRescueSchemeandscrappedotherschemesonceitcametooffice.Theschemehadpreventedanevengreaterriseinhomelessness,anditsimplementationalsomeantthatmanyhouseholdsthatdidnotintheendtakeitupinsteadgotgoodadvice;26butby2012itwasclearthatdemandfor‘mortgagerescue’wasnotgrowing.Withinterestratesfallingtosometimesaslowas2%,fewerhouseholdsweregettingintotroublewiththeirmortgagepayments.Butsuchlowinterestratesmeantthatthesellingpriceof

housinginmanyareashadnotfallenfurther.Sonownewlyforminghouseholdsareunabletobuy,andthereisacontinuedslowingofthemarketandagrowingfearoftheinevitableeventualimpactoffutureinterestraterises.Thesoleconcessiontothe

conundrumwearenowin,andthecentrepieceofthegovernment’sMarch2013budget,whichhasbeendiscussedalreadyindetailmuchearlierinthisbook,wastotrytoshoreupthehousingmarket.Thatshoringuphas,amongotherthings,madeitcheapertobuysecondhomes,with£12billionpledgedfortheunderwritingofalargepartofmany,ifnotmost,newmortgagesforsevenyears.27Allthisdoesistomaintainhighhousingprices,thus

preventingnewmortgagorsfrombuyingstarterhomesfromhouseholdsthathavegrownlargerandthatneedtomoveupandout.Themostexpensiveschemesstartin2014.ManycommentatorsbelievethattherealaimistodelayanycrashuntilaftertheGeneralElection,scheduledforspring2015.Amoreradicaloppositionparty

wouldadvocatechangingpolicytoshowwhatwouldstillbepossiblewhenthemoneyrunsout.Ashasbeensaidearlier,manyemptypropertiescanbebroughtbackintouse.Squattersdothis,andcriminalizingthemiscounterproductive.Compulsorypurchaseofpersistentlyemptypropertiesmaywellbeneeded,asEdMilibandnowadmits,butitwill

actuallyhavetobecarriedoutoftenenoughforattitudestochange,notjustthreatened.Weknowthisbecause,asmentionedinthechaptersabove,NewLabourputalawonthebooksthatallowedabuildingtobepurchasedafterithadstoodvacantforsixmonths,butonlywhenthiscouldbejustifiedandtherewasnoalternative.Thatlawwashardlyusedatall.Asaresultoftheunderuse,whenthecoalitiongovernmentmadethelawlesseffectiveinNovember2012–byextendingtheperiodanyresidentialbuildingcanlieempty,withnoactionevenbeingproposed,totwoyears–hardlyanyonenoticed.28

Theywereactingintheinterestsoflandlordsandmultiple-propertyownersinlengtheningtheperiodto

twoyears,butfewpeopleknew,becauseNewLabour,throughoutitsthirteenyearsinpower,hadneitherexplainedhowvaluabletheoldlawcouldbenorhaditutilizeditspotential.Foranypropertythathasbeen

emptyfortwoyears,anEmptyBuildingManagementOrdercanbemade.Peoplebeinghomelessorshockinglyhousednearbyareadequatejustifications.However,althoughitwouldbegoodtogetthetimeperiodbackdowntosixmonthsbeforeactioncanbetaken,itisnotthelegalitythatisreallystallingprogresstowardsconvertingmoreemptybuildingsintohomes;insteaditisalackofpoliticalwill.Thethreatofcompulsorypurchase,enactedenoughtimestobebelieved,

wouldbeahuge‘incentive’fortheownersofemptypropertynottoleavethatpropertyempty.Convertingemptybuildingsintoresidentialpropertyduringacommercialpropertymarketslumpisacheapsolution.Itcanbemadeevencheaperifafuturegovernmentdeclaresthattheamountofcompensationproperty-ownerswillreceivewillbebasedonitsvaluewhenitwasvacated,withafurtherreductiondependingonhowlongithadremainedunoccupied.Manycommercialpropertiesare

empty:officeblocksnotbeingused,workshopsmothballed,andshopsboardedup.Conversiontoresidentialdwellingscouldrenewthehighstreetsthattheout-of-townsuperstoresandtheinternethave

decimated.Itwouldnotbeeasy–eachresidentialpropertyneedsitsownfrontdoor,notadoorintoashop–butitispossible.Complaintsarealwaysmadeaboutchangeandsomepeoplewouldloseout.Thecomplaintswouldcomefromeverysector,andsomewouldbeunexpected.Forexample,artistswillcomplainthattheycannotfindcheapcommercialpropertytorentasstudios,placesinwhichtocreatetheirart.Afewalreadydowhenhousingschemeslikethisareproposed.Butshelterismoreimportantthanstudios.Amoreutopicvisionofthefuture

wouldseeusmakespaceforbothstudiosandhomes,forbothworkspacesandroomsforrecreation.Muchlandfromthecontinueddecay

ofoldindustryremainstobefreedupacrosstherichworld.Moreandmorebrownfieldsitesarebecomingavailable.InBritaintheyaremostlyinthenorth,wherethehill-walkingisbetterandtheaircleanertoo.Moreandmorejobsaredonefromhome,ontheinternet,orattheveryleastdonotrequireamileandahalfofflatland,suchasusedtoberequiredbyasteelmill.Asourworkrequireseachofus,onaverage,tohavelessspacetoworkin,morespaceisfreeduptohouseusall.Sowhydoesnoneofthishappen?Whyarewebecomingmoreandmorecrammedintothesouth-eastofEngland?WhyarethenewRachmanlandlordsnotdemonized?Whycanwenotfixhousingaswefixeditbefore?Isitbecauseweneedcollectiveaction,

buthavelostthewilltoactcollectivelyduringrecentdecades,decadesinwhichindividual‘aspiration’hastriumphed?Localvoluntarymodelswork

painfullyslowly,iftheyworkatall.TheEastLondonCommunityLandTrust,thefirstofitskindintheUKtotrytobuildhomesforlocalpeople,runbylocalpeople,isstillstumblingalongyearsafteritsinceptionin2007;itslatestnews(inFebruary2013)isamessagefromtheyearbefore,saying‘Youarecordiallyinvitedtoourcommunity-leddesignweekendtohelpdesignandbuildtheUK’sfirst-everurbanCommunityLandTrust!’29

Actinglocallyonhousingonlygetsyousofar,anditdoesnotgetyouthereveryfast.Itwasacting

collectivelynationallythatachievedrentcontrolinthepast.ThatbeganwiththeRentRestrictionActof1915andtheHousing(HomelessPersons)Actof1977,justpartofalonglistthatcanbedrawnuptoshowthathousinginthepastwasimprovedmostlythroughcollectiveaction.30Actsofparliamenttorestoreandimproveoldrights,tochangethelawontenure,oncapitalgainsandoncounciltax,areonewayforward,butanewagerequiresmorethanjustnewlaws;itrequiresadifferentkindofthinking.Peopleneedtostopthinkingof

decenthousingassomethingonlyafewdeserve,andrealizethatitissomethingweallneed.Inalmostallrichcountrieswehaveneverhadasmuchhousingavailableaswehave

now.Neverhasourfinancialmodelforallocatingthathousingbeenmoreobviouslywantingthanitisnow.

PostfortenantspastandpresentisleftinthehallwayofaGeorgianhouse,nowdividedintosixflats,inNetherEdge,Sheffield.Someonehasbeenstackingtheposteversoneatly.Someonecaresabouthowtheentrancetotheirhomelooksandiswillingtospendthetimeneededtokeepittidy.Theymightdoitbecausetheybegrudgetheirneighbours’tardyattitudetodealingwiththeirbills,buttheyknowthatiftheydidnotact,nooneelsewouldtidyup.Itiseasiertoactinacollectivewaywhenyoucanseetheimmediateimpactofyouractions,andittakesonlyafew

peopletoactcollectivelyforeveryone’senvironmenttobeimproved.Thealternativetocollectiveactionisamess.Inthiscasethepostwouldallbeinapile,andeachtenantwould

havetosortthroughthatpile,makingitmoreofamess.Theywouldhavetodothiswhenevertheywantedtoseeiftheyhadreceivedaletter.Wearepainfullyawareofourpersonalinfluenceon

others(andwhattheythinkofus)whenweworryaboutnotbargingaheadinaqueue,ornottakingmorethanourfairamountofspaceonthebusortrain,notputtingluggageonaseatwhenpeoplearestanding.Butwhenactionsarelessvisible–ifpeopledon’tknowthatyouareresponsibleforthatemptyhomeorshop,ortheybelieveyouwhenyousaythatyoucannotaffordtosellata

lowerprice–oncewhatyouaredoingbecomeslessobvious,itiseasiertobeselfish.

CONCLUSIONS

Thestagnationofthelivingstandardsofthemajorityisnotatallunrelatedtothesuccessatthetop;ineffect,thoseattheverytopareplunderingthepoorandthemiddleclasses…themarketisatriskbecauseextremedifferencesofpowermakeamockeryofthevoluntarynatureofmarkettransactions.Thepoliticalsystemisatriskbecauseplutocracygraduallyreplacesdemocracy.

–fromareviewofJosephStiglitz’sworkby

AngusDeaton,201331

Inhousing,volatilityincreasesasinequalityincreases.WhenthedistinguishedeconomistAngusDeatonspokeofthestagnationoflivingstandardsthatmostcitizensoftheUShavebeenexperiencingfor

nighonageneration,hewasdescribinghowwhatwasonceasolidcertainty–thatmostpeopleintheworld’srichestcountrywoulddowellandbehousedadequatelythroughouttheirlifetime–hasmeltedintothinairfollowingthe2008crash.Growinginequalityhasinducedevengreatervolatilityandcausedthemarkettofail.Volatilityisultimatelythereason

whyeventhosenotbotheredbytheideaofincreasinginequalityshouldbebothered.Youmaythinkyouaredoingfine–youownahomeanditisworthalot–butitsvalueisbeingproppedupbyagovernmentdesperateforyourvote,agovernmentthatappointsmemberstoitsnationalbank’sadvisoryboardwhowillensurethatinterestratesare

keptathistoricallyunprecedentedlows.Lowinterestratescannotlastforever.Iffastmoneycanfindsomewherebettertogointheglobe,itwillgothere,andthequantitativeeasingthatmakessuchlowratespossiblecannotlastforever.Everythingdependsonconfidenceinthemarket–sothemorevolatilethemarket,thesooneritwillcrash.Aboringmarket,withfewer

second-andthird-homebuyers,becomesasafer,slowermarket.Arentalmarketwhererentsarebothlowerandlessvariable,becausetenantshavemoresimilarincomes,leadstoimprovedconditionsoftenureinplaceofafewbetter-offtenantsrentingswankyapartments.Wheninequalityrises,mostpeoplebecomeevermoredismayedbywhat

theyaregettingfortheirmoney.Discontentbecomesrife.JosephStiglitzhasfoundthat,intheUS,plutocracyisalreadyreplacingdemocracy.Aplutocracyisasocietybothruledanddominatedbyatinyminorityofitswealthiestcitizens.AndweareindangerofplutocracyspreadingtoEurope.By2013itwasrevealedthatupto

athirdofallcouncilhomesthathadbeenpurchasedunderthe‘right-to-buy’hadbeensoldontojustafewrichlandlords.Take,forinstance,IanGow,whowastheministerwhopresidedovertheintroductionofThatcher’s‘right-to-buy’scheme.Hissonisnowahousingtycoon,owningmorethanfortyex-councilflatsinoneLondonestatealone.Asonecommentatorremarked,‘You

couldn’tmakeitup.ThefamilyofoneoftheToryministerswhooversaw“right-to-buy”endsupowningswathesofex-councilhomes.’32IfAmericanplutocracyspreadstoEurope,itwillenterthroughtheUKfirst.Buttherearemanysignstosuggestthatthiswillnothappen.Astheyoftendo,eventsmaybe

movingfasterthanpolicy.InIrelandanewtaxisbeingintroducedonproperty,onethatincreasesinlinewiththevalueofthatproperty.Whilenotstrictlyalandvaluetax,itseffectmaywellbesimilarintermsofactingasabrakeonfuturerisinghousingprices.Unsurprisingly,themostvocaloppositiontothetaxhasbeenfromthewealthyresidentsofthosepartsofDublinwhereprices

remainhighest.Ofcourse,therearemanyslightlylessaffluentareasinDublintherichcouldmovetoiftheywishedtoreducetheirtaxliability,andahugenumberofemptypropertiesfromwhichtochoose.Itisnotthethreatofbeingunabletoaffordahomethatworriesthem;itisthepossibilitythattheymaynotbeabletokeepalltheirwealthinalandwheresomanyhavelostallthattheyhad.Greatinequalityengendersagreatfearofsharing.ThenewIrishpropertytaxhas

embarrassedtheUKTreasury,whichclaimedthatimposingasimilartaxinBritainwouldbetoocostly.Alandregistrywouldbenecessarytoadministeranypropertytax,andtheUKalreadypossessesamostlycompleteone.Irelanddoesnothave

oneatall,andyet‘theIrishrevenuecommissionersputthecostofsettingupthesystemat€25.9millionfor2013withanadditionalinitialIToutlayof€9million,themajorityofwhichwillbeattributedtothedevelopmentofthepropertyregister.’33Thisismuchlessthan3%ofallthemoneythat,itispredicted,thetaxwillraise.IftheBritishcouldmatchtheIrish,giventhatmuchoftheworkofregisteringpropertyhasalreadybeencompleted,thecostofadministeringanewlandvaluetaxcouldbelessthan1%ofallmoniesraised.Itisnotasifthereisnoprecedentforsuchatax:theUShasone.Iftheycanmakeitworkthere,wecanmakeitworkhere.IncertainUSstates,varioussmalllandvaluetaxesalreadyexist.Whenaland

valuetaxisinplace,itbecomesfinanciallyfarlessprofitabletositonunusedlandandhomes.Indeed,ithasoftenbeenclaimedthatoneofthequickestwaystoimproveacountry’sinfrastructureortogeneratejobsistointroducesuchatax.TheUSlandvaluetaxiswidelycreditedwithhavingcuredthe1930sslump.34Alandvaluetaxisintheinterestsofthevastmajority,butthewealthydon’tviewallpeopleasequal.InBritainthejournalistKevin

Cahillcalculatedthat,in2002,69%ofthelandwasinthehandsof0.6%ofthepopulation.Governmentstatisticsshowthatsincethentheconcentrationhasintensified.Between2005and2011thenumberoflandholdingsinEnglandhad

fallenby10%,whiletheaveragesizeofholdingshadrisenby12%.ThiscouldbeoneofthefastestconsolidationsofownershipsincetheHighlandClearances.35TheBritishhaveenoughlandandhousing;itisjustthatincreasinglymostofitisownedbyasmallerandsmallerelite.Acrisisisinevitableiftherichest

1%areallowedtocontinuetoobtainanever-greatershareofthenationalwealth.Therichhavetoholdthatshareinoneformofinvestmentoranother.Itcouldbeinshares,oringold,butitneednotbeinland.Thefundamentalproblemwiththerichistheirwealthandtheconsequenteffectsoftheirownershipofsuchagreatshareofthethingsweallneed.

Butbettertoletthemhoardgoldthanlandandphysicalproperty.Weneedtorememberthathousing

isaspecialkindofgood–asocialgood–whichbringswithitwiderbenefits.Inthisitislikeeducationandhealth.Itisbetterforallofusifothersarealsowellhoused,welleducatedandhealthy.Thesimilaritiesdonotendthere.Housingisalsonotsomethingthatyoutendtobearepeatconsumerof,notifthingsgowell.Completelyfreemarketsworkwellonlywithgoodsthatyoubuyoften,sothatyoucanlearnfromyourpurchasingmistakes.Peopledonotwanttomovehomemanytimesintheirlives,buttheycanfeeltheyhavenoalternative.Thisvolatileenvironmentispreciselywhatthe

housingmarketofthepastfewdecadeshasencouraged.Youcannotbeawell-informed

consumerofhousingunlessyouarealandlordorotherhousingagent.Theunfetteredmarketdoesnotworkwellinallocatinghousing,becauselevelsofknowledgearesounevenlydistributedandthereisnosanewayofbalancingoutsuchknowledge–notunlessyouwanteveryonetobecomelikeanestateagentintheirunderstandingofhousingmarkets.Youmightuseasearchenginetoshowyouallthepropertyavailableinyourareatorentortobuy,butdoyouknowhowoftensales,onceagreed,fallthrough?Whatistheaveragerentinsomestreets?Isitnormaltobeaskedtoputdownsixmonthsofrentasadeposit?And

whyisthemortgagebrokersokeenforyoutotakeoutoneparticularproduct–doesshegetakick-back?Housingisbecomingharderandhardertosecureandtounderstand.Whatisclearisthatthehousing

marketwillnotbemademoreequitablethroughvoluntaryactiononthepartofthemostinterestedparties.Weneedtohelptherichtolearntocontrolthemselves.Asafirststepweshouldattheveryleastbeenactingpoliciessuchasthatsuggestedin2012byresearchersfromtheInstituteforPublicPolicyResearch:levyingalandvaluetaxon,ataminimum,allcurrentlyundevelopeddevelopablelandthatisworthabove£2millioninvalue.Thiswouldswiftlyencouragenewbuildingandraisefundsforthe

governmentforhousinginvestment.36

Alandvaluetaxisevolution,notrevolution.Itisnowbeingproposedbysomeofthemostseriousofcommentators.ItisbeingintroducedinplaceslikeIrelandwiththeblessingofnot-too-radicalinternationaleconomists.TheexistingUKcounciltaxisaverycrudeandinefficientformofit.Manyhavecalledforabetterlandvaluetax,butonlyaworseningofthecurrenthousingcrisisislikelytowakenupthewiderpublictotheneedforit.Taxationmaybejustapartofany

solution,butitisfundamentallynecessaryfortworeasons.First,itcandiscourageexcessivelandandpropertyholdingbyaveryfew.

Secondly,inraisingfundsfromthosewhohavethemosttogive,ithelpstohousethosewhomostneedhelp.Wealthisredistributed.Amongrichnations,wealth

inequalitiesarelowestinJapan,Spain,Italy,FinlandandAustralia.NextcomeNewZealandandtheNetherlands,thenPortugal,GermanyandCanada.OnlyafterthesetencountriesarepassedoverdowegettotheUK(moreunequalinwealththanallofthem).TherearethreelargerichcountriesthathavegreaterwealthinequalitythantheUK:France,DenmarkandtheUS.Theorderofcountrieschangesifincomeinequalitiesareusedtoranktheminsteadofwealthinequalities.Goingbyincome,bothFranceandDenmarkaremuchmoreequitable

placestoliveinthantheUK.PartofthereasonwhyFranceandDenmarkhavesuchanunevendistributionofwealthisbecauseoftheiropennesstopoorerimmigrantswhoarrivewithsoverylittle;this,andthelegacyofslavery,accountsforwealthinequalitiesintheUS.Thesonsanddaughtersofslavesinheritnowealth,whichdisadvantagesgenerationsoftheirdescendants.InbothFranceandDenmark

inequalitiesinincomearelowerthanaverageforOECDstates,despitehigherwealthinequalities.Theacademicpaperthatfirstreportedthesestatisticsalsoshowedfarhighercorrelationsbetweenwealthinequalityandprematuremortalitythanbetweenincomeinequalityandpoorhealth.37Whereincome

inequalitiesarecurrentlyhighest,wealthinequalitieswillgrowmostinfuture.Whereincomeinequalitiesarelowest,wealthinequalitiesmayalreadybefalling.Iwouldadvocategradually

reformingcounciltaxinto‘anationallandandpropertyvaluetax’;alsoextendingmortgagecontrolstopreventlendinggettingoutofhand;andintroducingamoreeffectivesafety-netformortgagors–that‘right-to-sell’andbecomeatenant,shouldyoufindyouareunabletopaythemortgage.Thealreadyestablished‘right-to-stay’laws,whicharecurrentlyusedverylittleandthenonlythroughtherecentlymuchmutedMortgageRescueScheme,couldbeenhancedintoa

‘right-to-sell’thatcouldactuallymakeadifference.38

Mortgagecontrolsmaysoundscaryandimplygreatlevelsofstateintervention,butgreatstateinterventioniscurrentlyrequiredtosustain,promoteandexpandtheuncontrolledmortgagemarketintheUK.Simplypullingbackonthebankguaranteeswouldhelptocreateamorecontrolledmarket.IntheUSthesimilarloan-aidprogrammehasbeenfoundtohaveaidedbanksfarmorethanhome-buyers,tothetuneof$12billionby2012,withthemoneymostlygoingtoJ.P.MorganandWellsFargo;39ittoocouldbefruitfullycurtailed.TheUK’sown£12billionguaranteewentaheadearlyinOctober2013;and,intheend,ifthemarketweretofalland

theguaranteeshadtobedrawnon,themoneywouldalsogomostlytoacoupleofthebigbanks,whilethemortgagorswhocouldnotkeepuptheirpaymentswouldbeleftindirestraits.Ifthemarketdoesn’tfall,thebankswinanyway.ItisgrosslyirresponsibleoftheUKgovernmenttogifta‘win-win’situationtothebanks.Althoughthe‘help-to-buy’

schemehasbeendescribedastheequivalentofarichdadgivinghischildrenmoneytohelpwiththeirdeposit,itisnot.Noonegivesthemortgagoranymoney;insteadtheyhavetotakeoutabiggermortgage.Theschemeisbettercharacterizedasarichdad,thegovernment,goingtothebankmanagerandgivinghimorherafinancialinducementto

approveamortgagethatthebankmanagerconsideredrisky,theriskbeingthelikelihoodofthemortgagorgettingintoarrears.Thereis,however,anotherriskthatdoesnotimmediatelyaffectthebank.TheChancellor,GeorgeOsborne,thinkstheschemecouldsupportupto£130billionofnewmortgages,withgovernmentliabilityexpectedtobenomorethan£12billion.Ifthishappens,excessivehousepriceinflationisinevitable,makingthesituationworseforfuturebuyersandcreatingamarketatevergreaterriskofcrashing.Ifinterestratesweretoincrease,

propertyvalueswouldfallbuttherewouldbelarge-scaledefaultingonmortgagepayments.Therewouldalsobetherentincreasesimposedby

landlordstocovertheirownincreasedmortgagepayments.Consequentlyawaywouldhavetobefoundtoavoidmassevictionsandtheaccompanyingmiseryandderelictionofpoorerareas,whichwouldbehardesthit.Butnosolutioncomesforfree.Monieswillneedtoberaised.Iftheprivatesectoristobedeterredfrominstigatinganyfurtherincreaseinevictions,the‘right-to-stay’willneedtobefunded.Themostsecurewaytoraisemoneyisbytaxingthepropertyandthelandofthosewithmorethantheyneed–wealthwhichofcoursecannotbemovedorhiddenawayinoffshorelocations.Oneofthemostfavouredestate

agentsoftheveryrichestinvestorshasalreadytriedtopourcoldwater

ontheideaofintroducinghighlandtaxes,includingthemansiontaxnowproposedbybothLabourandtheLiberalDemocrats.InLabour’sversionanannuallevyof1%wouldbeplacedonhomesworthover£2million,raising£2billionayear.TheestateagentSavillssaiditwouldraiseonlyhalfthatamount,butithasagreatvestedinterestintryingtopreventtheimpositionoflandtaxes.Housingdevelopersaresimilarlyopposedtotheseproposedinterventions,but,asEdMilibandpointedoutinDecember2013,thefourlargestsawtheirprofitssoarby557%bytheendofthatyear.40

Manyarebeginningtotireoftherichtellingthemthatthereisnoalternative.41

ThisbookhasbeenconcernedwithwhyitisthattheactivityanddignityandfreedomofmillionsofpeopleinBritain,andhundredsofmillionsofpeoplearoundtheworld,areatstakebecausetheycannotgetsecureaccesstodecenthousing.42

Or,toputitmoreasapoliticianmight,thesearepeoplewhoarenotfreetobewhotheycouldbe,todowhattheycoulddo,toholduptheirheadsandlivewithoutfearofdebt,tolivewhereitwouldbereasonabletolive.Thesepeoplecouldbeyou.Theyarethemajority.Ineconomicallyunequalcountriesitisnotthatpoorerorjustaveragepeopledonotworkhardenoughortrytosaveenough;itisthatwehaveallowedafewtobecometoorich,withtheresultthatmostofusfindit

veryhardtofindsuitableplacestoliveinatall.Becauseofactionsbytherich–suchasbuyingpropertyforinvestmentpurposesandturning1970sflatsbackintogiant1920s-styletownhouses–housingbecomesmoreandmoreofastruggleforeachsuccessivegenerationintheUK.Incountriessuchasthe

NetherlandsandDenmarkhousingisfarbetterallocated,andthisallocationisgettingbetterovertime.ThesecountriesarenotdissimilartotheUK,yet,asthenumerousexamplesgiveninthepagesabovehaveshown,inmuchofmainlandEuropehousingisbettersharedout.Thisisnotjustbecausethesearemoreequitablesocieties.DenmarkevenhasamoreunevendistributionofwealththantheUK,asdiscussed

above,butrespectively15%and10%ofthehouseholdsinthesetwocountriesreceivestatebenefitstowardstheirrent,incomparisonwith18%intheUK,whichisstillaproportionfargreaterthanthatinmostOECDcountries.43BothcountriescontrolrentsfarbetterthantheUKdoes,aswellasdampeningdownhouseprices.44AsaresultpeoplearefarfreertochoosewheretheyliveintheNetherlandsandDenmark–nearertheirplacesofwork,forexample.Thewayweorganizeourhousing

influencesmanyotheraspectsofourlives,includingourpreferredwayofgettingtoworkandhencehowfarfromworkwelive.CyclingwasmentionedinChapter6ofthisbook(p.221).IntheUKonly2%ofall

journeysareundertakenonabike.Thiscompareswith27%intheNetherlandsand18%inDenmark.InanincreasingnumberofEuropeantownsmorethan50%ofalljourneysaremadebybike.45Togetadultsandchildrencycling,youneedpeopletobeabletolivenearenoughtowheretheyworktobeabletogiveupthecar.Youneedsensiblehousingpoliciesforthat.InJapan,carusehasbeenfallingforovertwodecades,andthisisnotunrelatedtothefactthathousingisfarmoremixedtherethanitisinBritain:46

smallerpropertiesarebuiltnexttolargerones,anditisnormal(evenifofficiallystillillegal)tocycleslowlyonpavements.Therearealsoveryfewverypoororveryrichenclaves.Peoplecanlivenearertheirwork.

Publictransportandotherpublicpoliciesaremoreeasilyimprovedwhenhousingpolicyisimproved.Bycontrast,themoreindividualististhehousingpolicythatacountryadopts,themoreindividualistitstransportbecomes.Allowurbansprawlandanincreasinglyinefficient‘free’marketbeginstodominate,whichforcesmanypeopletolivealongwayfromwheretheyareemployed.Moreandmorepeoplewillcometorelyoncarstogetthemtoalmostanydestination–toschool,tothelocalshops,andnotjusttowork.Andthemorepeoplerelyoncars,themoresegregatedeachresidentialneighbourhoodbecomes.Makerentingattractiveandaffordable,dampentheexpectationofspeculativegainsonbuyingproperty,

andpoorerareasriseinattractiveness,whileplacesthatweremainlypopularbecausetheywereexpensivebecomebothlesspopularandlessexpensive.Leftalone,themarketfailstomovetowardssuchequilibrium.Housingshowshowmarketscan

fail–andafailureinthisareamattersmorethaninalmostanyotherareaofourlives.Thatisbecauseweneedhousingeveryday,allofus,allthetime.Andweappeartobeforgettingthat.Forinstance,justoverfiftyyearsago,themajorproblemsfacinghousinginBritaininthePenguinSpecialonthesubject(releasedin1962)includedensuringkitchenswerebuiltwith‘roominthemforpeopletositdowntomealscomfortably’.47Housingissuesback

thenwerebeingaddressedmoreefficientlyandpractically;weweremovingintherightdirection.Thequestionswereaboutwhattoimprovenext.Wewerenotpreoccupiedbyoldproblemsthatwerebecomingmuchworse.Howhousingissueshavechanged

frombeingsopracticalandinclusiveintheiraimstobeingsodivisivecanbehardtograsp.Butifyoubelievethattheremustbeabetterway,thegoodnewsisthatyouarenotalone.ThelargestcontinuousInternationalSocialSurveyProgrammeundertakenworldwidehasfoundthatmostadultsinrichcountriesdothinkthatpeopleshouldbedecentlyhousedandthattheirgovernmentshaveadutytoensuresuchasituation.FortheBritish,thereisa

particularreasonwhyhopeiswarranted.Pastadvocacyforbetterhousinghasleftalastingmarkonourcollectiveconscious,asrevealedbyouranswersinthoseinternationalsurveys.Becauseofthis,futurecampaigningstartsfromahigherthreshold.Incomparisonwithsixteenotheraffluentdemocraciesforwhichthereisdata–Australia,Canada,Denmark,Finland,France,Germany,Ireland,Japan,theNetherlands,NewZealand,Norway,Portugal,Spain,Sweden,SwitzerlandandtheUS–in2012theBritishwere‘significantlymorelikelytobelievethegovernmenthasaresponsibilityto“providedecenthousingforthosewhocan’taffordit”…Morethan85%ofBritishrespondentssupportedthe

government’sresponsibilityforhousing.’48Thisisincomparisonwith‘only’77%ofadultsintheUSwhobelievegovernmentshouldbeinvolvedinhousing.Buteventherelessthanaquarterofthepopulationbelievethathowwearehousedisnobody’sbusinessbuttheindividual’s.Overthreequartersbelievegovernment–allofusactingcollectively–isresponsible.Thatargumentisalreadywon.Thenextargumentiswhatgovernmentmustdo,aswecometorealizethatwhatwehavebeendoingfordecadesnolongerworks.Recently,aformerUScabinet

secretaryaskedhismentorfromcollege,whohadbeenborninthe1930s,49whathopetheremightbeofmostAmericanscomingtoseethat

theyweregoingdownthewrongpath;theoldermananswered:‘Yes,andthey’restartingtounderstandthat…Andbeginningtoseethatthedistinctionbetweenthemiddleclassandpoorisdisappearing.Manywhowereinthemiddlehavefallenintopoverty;manymorewilldoso.’50

Hewentontoexplainthat,fordecades,thoseatthetophadtriedtoconvincethemiddleclassthattheireconomicenemieswereethnicminoritiesandthepoor.Butnowthatolddivide-and-conquerstrategyisstartingtofail.Andasitfails,hesuggested,itwillbepossibletocreateapowerfulpoliticalcoalitionofthepoorandthemiddleclasses.SoonAmericawillbeamajorityofminorities.Womenaregainingmoreandmoreeconomicpower.Hecould

seealotofreasonsforhope.ButhewasoldenoughtorememberthelasttimeUSsocietywasmademoreequitable.Theformercabinetsecretary

counteredthatthe400richestAmericansarenowwealthierthanthebottom150millionAmericansputtogetherandthattheyhavemorepoliticalinfluencethanever.Theoldermanreplied:‘Justyouwait.’Wehavealreadybuiltenough

homes.Wehavemorebedroomsthanwehaveeverhadbefore.Butafewhavebeentakingfarmorethantheirfairshare,increasinglysoeversince1980;andveryrecentlytheyhavebeentakingfarmoreagainwitheachyearthathaspassedsincethecrash.Manyattheverytopofsocietyhavebeenharmingtherest:

inevictingthepoorestfromtheirhomes,inpenalizingpeoplefarmorecrampedthantheyareforhavingaspareroom,inimpoverishingthemiddleearnersthroughhighrentandmortgages,indamagingthechancesofthoseinthetoptenth(butnotthetop1%ofsociety)byenticingthemtoborrowmore.ThevestedinterestsinBritishhousingarecurrentlystokinguptheembersofthelastcrashtocreateanewcrisis.Butacrisisisasgoodatimeasanytogetourhouseinorder.Whatwearecurrentlyseeingis

notaconflictbetweenoldandyoung,butanewrealanddangeroushistoricaltrend.Awholegenerationhasnowgrownupinaneconomybasedonmonopolisticmarketsandthemyththatthesearesomehowfree

markets.Thecutsand,formost,arecessionwithoutanendinsightdrivespeopleapartastheystrugglenottobeleftbehind.Inthesecircumstanceseveryone–richandpoor–isafflictedwithcontagiousinsecurity,mistrustandagrowingfearofthefuture.Itmatterswhoprovidesgoodsor

services,andunderwhatconditions.Itisnogoodsayingthatitdoesn’taslongascustomersaresatisfied.Itiswrongtoassumethattaxisapenaltyratherthanasubscriptiontosociety.Wearecurrentlyinaviciouscyclewherethelesssolidarityyouhave,thelessyouwant.Buthumanscontainwithinthemaninnatedesireforlarge-groupcohesion.It’swhywechantincrowdsandfeelhappyatfestivals.Wedevelopedtheimpulse

alongtimeagoinordertosurvive.Allthemodernthreatswefacecould,ifdescribedaccuratelyandaddressedcarefully,driveustorediscoverthisdesiretoworkbettertogether.Ifthethreattoourhousingandourchildren’schancesofbeingwellhousedisrealizedasoptional,ratherthaninevitable,thenthereishope.51

Manysuggestionshavebeenmadeinthechaptersofthisbookaboutwhatpoliciescouldbedonebetter.Toend,Itaketenoftheseandlistthem,notinanyparticularorder.Thereisnothingexhaustiveaboutthelistthatfollows,butanysinglepolicyonitsown,unlessintroducedinanerawhenattitudesarechanging,isunlikelytohaveagreateffect.Ourhousingwillbemade

moresolidthroughaconjunctionofnewpolicies,notthroughanysingleone.Butweneedlistsofoptionstothinkabout.Sohereismine:

1. Extendthecurrentcounciltaxbandsuptoband‘Z’withaviewtotransformingthetaxintoafairernationallandandpropertytax.

2. Enhancetheexisting‘right-to-stay’intoa‘right-to-sell’,givingmortgagorstherighttobecometenantsratherthanfaceeviction.

3. Secondhomes,holidayhomesandemptycommercialpropertyneedtobeincludedinafairerpropertytaxsystemtodiscouragewaste.

4. Sparebedroomsshouldnotbetaxed.Everyfamilyshouldbeabletoliveinahomewithaspareroomforvisitors.Wealreadyhaveenoughrooms.Everysingleadultwhowantstheirownspaceshouldhaveit.

5. Anenhancedhome-buildingprogrammewillbeneededifmorepeoplecomeintotheUKthanleave,ashasbeenthecaseinrecentyears.

6. Benefitsarenowsolowthattheymustsoonrisefasterthanwages,whichmustrisefasterthansalaries–allofwhichmustrisefasterthanhomeprices.Rentsneedtostaystill,ifnotfall.Alltheseareoutofbalance.

7. Greaterincomeandwealthequalitywouldbeimprovedbythereintroductionofrentcontrols,whichwouldalsoreducehousingbenefitbillsmassively.ThealreadycalculatedLocalHousingAllowancescouldbeusedtosetthemaximumfairrentinanarea.

8. Squattingandallotheractsthataredonepurelytoseekshelterandnottostealitemsforprofitshouldagainbeacivil,notacriminal,offence.Squattingisasymptomofaproblem,nottheproblem.

9. Illegalactionsbylandlordsandbankersthatdeprivepeopleoftheirhomeandsheltershouldbecomecriminal,ratherthancivil,offences.

10. Wehavetorecognizethathousingiscentraltoenvironmentalsustainability.Whenwebuild,weneedtobuildfortheverylongterm.

Ofallofthesesuggestionsthefirstandlastmaybethemostimportant.RecentlythemildlyconservativeInstituteforFiscalStudiescameoutinfavourofbetterlandvaluetaxationwhenitconcludedthatcurrenttaxationoflandandpropertyisinefficientandinequitable.52Therichwillnothoardlandandbuildingsiftheyaretaxedheavilyfordoingso.But,asthetaxesaresetasaproportionofcurrentvalue,andastheirintroductionwillreducethatvalue,theymightwellfallovertime,becausethelandvaluesthemselveswillfallduetothetax.Suchataxwouldprobablybeintroducedgradually,butevenknowingthatmorewastocomewouldinfluencepricesdownwards.Themoneycouldbeputtogooduseinensuringallare

wellhoused,butalsohousedinawaythatconsidersboththefutureandtheenvironmentasiftheymattered.Wecannotsimplybuildagainasfastaspossible.Mosthomessurviveforfarlongerthanmostpeople.Goodhousingstandsformanygenerations.Housingshouldbeaboutthelongterm,aboutprovision,notprofit.Shouldyouhavegottothispoint

andstillremaintobeconvincedthatthereisaseriousproblemtobeaddressed,ahousingcrisisrequiringverydifferentanswerstothosewhichareusuallyproffered,youcertainlyareamagnanimousreader,orperhapsonewillingtocountenanceviewsverydifferentfromyourown.Totrytofinallyconvinceyouthatallisfarfromsolidwhenitcomesto

housinginBritain,I’llleavethepenultimatewordstotheDublin-basedwriterJulianMercille.InanexhaustivestudyofhowthehousingbubbleinIrelandgrewsolarge,heconcludedthatsomanypeopleapparentlyshowedsolittleconcernforthefuturebecause‘priortothebubble’scollapse,themediamadelittlementionofit,remainedvagueaboutitortriedtorefuteclaimsthatitevenexisted,thussustainingit.’53

Whilefirstwritingthelastwordsofthisbook,inMay2013,IwatchedhowmutedwasthereactiontothedowngradingofCo-operativeBankstocks,whichweresuddenlyknockeddownsixlevelstojunkstatus.Thisnewswasmainlyconfinedtothespecialistfinancialpress.54Revisitingthosewordsinthe

autumnof2013,Iwonderwhytherewasnotmoreshockwhenitwasannouncedthat6,700landlordswouldbehavingtheirinterestratesgreatlyincreasedwithoutwarningbytheWestBromwichBuildingSociety(whichfoundanoteinthesmallprintallowingthemtodothis).ItgotafootnoteinthebroadsheetsandevenamentionontheBBC,55butwhynotmorecoverage?Nodoubtherewillpresentlybeanothereventand,asalways,I’mleftthinking,ifnotnow,thensoon.Ifthehousingcrisismustworsen

beforewecanbelieveinit,ourscopeforactionwillbelimited.Propertythathasbecomedevalued,becauseitwasnotbuiltinthe‘right’places,willbeunnecessarilyandwantonlydemolished;thehealthofmanywill

havebeenirreparablyharmed;financialsystems,havingforcedgreatdebtuponpeoplethatwillneverbefullyrepaid,willhavesunkfurtherintothemire;morepeoplewillhavebeentaughtthatlookingaftertheirowninterestsisalltheycandoandthattheywillgetbyonlyattheexpenseofothers.Thesoonerweact,theeasierit

willbe.Thelasttimewefacedacrisisasdeepasourpresentpredicamentthemassunemploymentandeventualwarthatfollowedchangedthecourseofhistory.Wehaveforgottensomuchofwhatwelearnedthen,butin1930,ayearafterthegreatcrash,apredictionwasmadefortheworldinacentury’stime.Itremainsapredictionthatcouldstillcometopassunlesswe

heeditswarningandthesolutionimpliedwithinit:

Ofcoursetherewillstillbemanypeoplewithintense,unsatisfiedpurposivenesswhowillblindlypursuewealth–unlesstheycanfindsomeplausiblesubstitute.Buttherestofuswillnolongerbeunderanyobligationtoapplaudandencouragethem.

–JohnMaynardKeynes,193056

Desistingfromapplaudingorencouragingthosewhowouldblindlypursuewealthturnedout,inthelongrun,nottobeenough.ThuswefindourselvesagaininthequandarythatKeynesidentified,alifetimeafterhewrotethosewords.Therewillalwaysbepeoplewhoaregreedy,buttherewillcomeatimewhenweproperlyrecognizethistobeaproblem,whenwelookatthe

relationsbetweenusmoresoberlythanwedonow,andwhenwearecompelledtoactonwhatwemoreclearlysee.AnotherprophecywasmadealifetimebeforeKeyneswaswriting.Itgavethisbookitstitle,andithasyettocometopass:

Allthatissolidmeltsintoair,allthatisholyisprofaned,andmanisatlastcompelledtofacewithsobersenses,hisrealconditionsoflife,andhisrelationswithhiskind.

–KarlMarxandFriedrichEngels,

184857

InJanuary2014theFinancialTimesreleasedananalysisshowingthatoverthecourseofjustthelastfiveyearstheequityofmortgageholdersinBritainhadfallenby£169billion,whilethatoflandlordshadrisen

byamassive£245billion.58

Thereisnosurersignofahousingcrisisturningintoadisasterthanthis.

Notes

1CRISIS

1.The61%figurecomesfromJ.Heartfield,Let’sbuild!Whyweneedfivemillionnewhomesinthenexttenyears,London:Audacity,2012.http://www.audacity.org/research.htm

2.P.Collinson,‘Houseprices:guidetopropertyhotspots’,Guardian,30March2012.http://www.guardian.co.uk/money/2012/mar/30/house-prices-guide-property-hotspots#

3.R.Lynch,‘UK“value”fallsby£94billion’,Independent,2August2010.http://www.independent.co.uk/news/uk/home-news/uk-value-falls-by-pound94-billion-2041594.html.OntheannualcostoftheNHS,thenaround£105billion,see:http://www.kingsfund.org.uk/projects/general-election-2010/faqs#budget

4.S.CarreraandJ.Beaumont,‘Incomeandwealth’,Socialtrends,No.41,Table5.http://www.ons.gov.uk/ons/rel/social-trends-rd/social-trends/social-trends-41/index.html

http://www.audacity.org/research.htm


http://www.independent.co.uk/news/uk/home-news/uk-value-falls-by-pound94-billion-2041594.html

http://www.kingsfund.org.uk/projects/general-election-2010/faqs#budget

http://www.ons.gov.uk/ons/rel/social-trends-rd/social-trends/social-trends-41/index.html

5.M.Easton,BBC,‘Housingcrisisdeepens’,BBCNews,12June2012.http://www.bbc.co.uk/news/uk-18416365

6.R.Ramesh,‘Sharpdropinnewaffordablehomesundercoalition,councildatashows’,Guardian,10February2013.http://www.guardian.co.uk/society/2013/feb/10/sharp-drop-new-affordable-homes

7.HPSauce,‘Cunningstunts’,PrivateEye,23August–5September2013,No.1,347,p.9.

8.S.HawkinsandJ.Bingham,‘EndoftheThatcherpropertyrevolution’,Telegraph,28June2013.http://www.telegraph.co.uk/news/politics/10149480/End-of-the-Thatcher-property-revolution.html

9.T.Ross,‘DavidCameron:mymortgageplanforstrugglingfamilies’,Telegraph,27September2013.http://www.telegraph.co.uk/news/politics/david-cameron/10342014/David-Cameron-My-mortgage-plan-for-struggling-families.html

10.https://www.gov.uk/government/news/montague-plan-offers-boost-to-private-rented-sector

11.ITN,‘Demandforhomesdoublestheratehousesarebuilt’,ITVNews,23August2012.http://www.itv.com/news/update/2012-08-23/reportoffers-blueprint-to-expand-private-rented-sector/

12.P.ThomasandH.Brennan,‘Osborneunveils£130billionMIGschemeand£3.5billionofsharedequityloans’,MoneyMarketing

http://www.bbc.co.uk/news/uk-18416365

http://www.guardian.co.uk/society/2013/feb/10/sharp-drop-new-affordable-homes

http://www.telegraph.co.uk/news/politics/10149480/End-of-the-Thatcher-property-revolution.html

http://www.telegraph.co.uk/news/politics/david-cameron/10342014/David-Cameron-My-mortgage-plan-for-struggling-families.html

http://www.gov.uk/government/news/montague-plan-offers-boost-to-private-rented-sector

http://www.itv.com/news/update/2012-08-23/reportoffers-blueprint-to-expand-private-rented-sector/

Newspaper,20March2013.http://www.moneymarketing.co.uk/home/budget-2013/budget-13-osborne-unveils-130bn-mig-scheme-and-35bn-of-shared-equity-loans/1068076.article

13.C.Fincher,‘Governmentfleshesoutcontestedmortgageguaranteescheme’,Reuters,23July2013.http://uk.reuters.com/article/2013/07/23/uk-mortgage-guarantee-idUKLNE96M00820130723

14.M.d’Ancona,‘DavidCameron:aPrimeMinisterinahurry’,Telegraph,28September2013.http://www.telegraph.co.uk/news/politics/david-cameron/10341422/David-Cameron-a-Prime-Minister-in-a-hurry.html

15.L.Elliott,‘GeorgeOsborne’s“help-to-buy”scheme“amoronicpolicy”’,Guardian,4June2013.http://www.theguardian.com/business/2013/jun/04/george-osborne-help-to-buy-moronic

16.A.Withnall,‘Toriesbringforward“help-to-buy”:youngBritonstoget95%mortgagesnextweek’,Independent,29September2013.http://www.independent.co.uk/news/uk/home-news/tories-bring-forward-help-to-buy-young-britons-to-get-95-mortgages-next-week-8847350.html

17.InScotlandaverylimitedformoftheschemewillrun,onlysupportingmortgagesonnew-buildpropertyandthenonlythoseworthless

http://www.moneymarketing.co.uk/home/budget-2013/budget-13-osborne-unveils-130bn-mig-scheme-and-35bn-of-shared-equity-loans/1068076.article

http://uk.reuters.com/article/2013/07/23/uk-mortgage-guarantee-idUKLNE96M00820130723

http://www.telegraph.co.uk/news/politics/david-cameron/10341422/David-Cameron-a-Prime-Minister-in-a-hurry.html

http://www.theguardian.com/business/2013/jun/04/george-osborne-help-to-buy-moronic

http://www.independent.co.uk/news/uk/home-news/tories-bring-forward-help-to-buy-young-britons-to-get-95-mortgages-next-week-8847350.html

than£400,000:BBC,‘Scottish“help-to-buy”schemeunveiled’,BBCNewsScotland,27September2013.http://www.bbc.co.uk/news/uk-scotland-scotland-business-24297003

18.R.Ramesh,‘Extra10,000workingpeopleamonthreliantonhousingbenefit,saysreport’,Guardian,22October2012.http://www.theguardian.com/society/2012/oct/22/working-people-housing-benefit-report

19.G.Peev,‘Workingfamiliesonhousingbenefitsoar:numberofapplicationsrisingby10,000everymonth’,DailyMail,22October2012.http://www.dailymail.co.uk/news/article-2221111/Working-families-housing-benefit-soar-Number-applications-rising-10-000-month.html

20.D.Bartlett,‘WhydoestheUKsubsidizelandlordssomuch?’,LiverpoolDailyPost,28January2013.http://blogs.liverpooldailypost.co.uk/dalestreetblues/2013/01/why-does-the-uk-subsidise-land.html

21.Ramesh,‘Extra10,000workingpeopleamonthreliantonhousingbenefit’.

22.D.Johnson,‘Rentcontrols:shouldtheybereintroduced?’,Guardianhousingnetworkblog,5August2013.http://www.theguardian.com/housing-network/2013/aug/05/rent-control-debate

23.CommunitiesandLocalGovernmentCommittee,‘Supplementarywrittenevidence

http://www.bbc.co.uk/news/uk-scotland-scotland-business-24297003

http://www.theguardian.com/society/2012/oct/22/working-people-housing-benefit-report

http://www.dailymail.co.uk/news/article-2221111/Working-families-housing-benefit-soar-Number-applications-rising-10-000-month.html

http://blogs.liverpooldailypost.co.uk/dalestreetblues/2013/01/why-does-the-uk-subsidise-land.html

http://www.theguardian.com/housing-network/2013/aug/05/rent-control-debate

submittedbyShelter’,February2013,postedonline16July.http://www.publications.parliament.uk/pa/cm201314/cmselect/cmcomloc/50/50ii06.htm

24.P.Inman,‘Bovisreportsboostinhalf-yearprofitsassalesrise18%withpricesup6%’,Guardian,20August2012.http://www.theguardian.com/business/2012/aug/20/housebuilder-bovis-boosts-half-year-profits

25.J.Titcomb,‘Barclayschiefwarnsofhousingbubble’,Telegraph,11September2013.http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/10301510/Barclays-chief-warns-of-housing-bubble.html

26.N.Klein,TheShockDoctrine:theriseofDisasterCapitalism,London:Picador,2008.

27.AttemptstosidelinethepoorintheUSshowthepriceofsuchfailure:‘Inpoorblackneighborhoods,evictionistowomenwhatincarcerationistomen:atypicalbutseverelyconsequentialoccurrencecontributingtothereproductionofurbanpoverty.’M.Desmond,‘Evictionandthereproductionofurbanpoverty’,AmericanJournalofSociology,Vol.118,No.1(2012),pp.88–133.

28.R.Frank,‘Fallingbehind:howrisinginequalityharmsthemiddleclass’,lecturepresentedtotheseventhAaronWildavskyForumforPublicPolicy,RichardandRhodaGoldmanSchoolofPublicPolicy,UniversityofCaliforniaatBerkeley,18–19October2001.ThebookbasedonthelecturewaspublishedbytheUniversityofCaliforniaPresson9July2007.

http://www.publications.parliament.uk/pa/cm201314/cmselect/cmcomloc/50/50ii06.htm

http://www.theguardian.com/business/2012/aug/20/housebuilder-bovis-boosts-half-year-profits

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/10301510/Barclays-chief-warns-of-housing-bubble.html

29.R.Frank,‘PositionalgoodsandkeepingupwiththeJoneses’,YoungFoundationandSmithInstitutejointseminar,No.11DowningStreet,September2006,replybyOliverJames.http://youngfoundation.org/publications/positional-goods-new-inequalities-and-the-importance-of-relative-position/

30.T.Walker,‘Society:theonlywayisFinland’,Independent,23May2012.http://www.independent.co.uk/news/uk/politics/society-the-only-way-is-finland-7778796.html

31.D.Dorling,Fairplay:areaderonsocialjustice,Bristol:PolicyPress,2012,Table44.1,p.349.

32.S.Pizzigati,Therichdon’talwayswin:theforgottentriumphoverplutocracythatcreatedtheAmericanmiddleclass,1900–1970,NewYork:SevenStoriesPress,2012.

33.‘Delinquency’isaUStermforpeopleinmortgagearrears.Seesectionbelowconcerningrepossessions,inChapter7byFigure20,page249.

34.Again,toseehowbadthesituationcanbecome,looktotheUS,where:‘Overall,thegovernment’sprioritiesremaininthewrongplace–itcontinuestospendthemajorityofitshousingsubsidiesonthosewhoneeditleast.’L.Cattell,etal.,Wecalltheseprojectshome,NewYork:RighttotheCityAlliance,2010,p.53.

http://youngfoundation.org/publications/positional-goods-new-inequalities-and-the-importance-of-relative-position/

http://www.independent.co.uk/news/uk/politics/society-the-only-way-is-finland-7778796.html

http://www.righttothecity.org/index.php/resources/reports/item/61-we-call-these-projects-home

35.G.Oliver,‘Claim:“Draconianrulespreventingfirmsfrombuildinghomes”’,OxfordMail,21September2013.http://www.oxfordmail.co.uk/news/10669374.Claim_____Draconian_rules_preventing_firms_from_building_homes___/?ref=rc

2PLANNING

1.M.Stephens,‘TacklinghousingmarketvolatilityintheUK’,JosephRowntreeFoundation,researchreport,16May2012.http://www.jrf.org.uk/publications/tackling-housing-market-volatility-uk

2.Shelter,‘Buildingmorehomes’campaign,websiteaccessedAugust2013.http://england.shelter.org.uk/campaigns/why_we_campaign/building_more_homes

3.E.TwinchandN.Duxbury,‘Cablecallsformassivehouse-buildingprogramme’,‘InsideHousing’website,25September2012.http://www.insidehousing.co.uk/development/cable-calls-for-massive-house-building-programme/6523911.article

4.C.Hope,‘DavidCameronbacksNickBolesoverhouse-buildingplans’,Telegraph,5December2012.http://www.telegraph.co.uk/earth/hands-off-our-land/9724371/David-Cameron-backs-Nick-Boles-over-house-building-plans.html

5.D.Dorling,‘FairnessandthechangingfortunesofpeopleinBritain’,Journalofthe

http://www.righttothecity.org/index.php/resources/reports/item/61-we-call-these-projects-home

http://www.oxfordmail.co.uk/news/10669374.ClaimDraconianrulespreventingfirmsfrombuildinghomes/?refrc

http://www.jrf.org.uk/publications/tackling-housing-market-volatility-uk

http://england.shelter.org.uk/campaigns/whycampaign/buildingmorehomes

http://www.insidehousing.co.uk/development/cable-calls-for-massive-house-building-programme/6523911.article

http://www.telegraph.co.uk/earth/hands-off-our-land/9724371/David-Cameron-backs-Nick-Boles-over-house-building-plans.html

RoyalStatisticalSociety(A),Vol.176,No.1(2013),pp.97–128.http://www.dannydorling.org/?page_id=3597

6.G.Speight,‘Thelendingfrenzyofthe1930s’,presentationmadeattheAshmolean,Oxford,2010.http://winton.ashmus.ox.ac.uk/PastSeminars/Michaelmas2010/Colloquium/Presentation%20Slides/Speight.pdf

7.F.Alvaredo,etal.,‘Thetop1%ininternationalandhistoricalperspective’,NationalBureauofEconomicResearchWorkingPaperNo.19075,May2013.http://www.nber.org/papers/w19075

8.H.Glennerster,‘WhywasawealthtaxfortheUKabandoned?Lessonsforthepolicyprocessandtacklingwealthinequality’,JournalofSocialPolicy,Vol.41,No.2(2012),pp.233–49.Page4offreeonlineversion:http://eprints.lse.ac.uk/42582/1/Why_was_a_wealth_tax_for_the_UK_abandoned_(lsero).pdf

9.R.Tunstall,‘Whatshouldweworryaboutwhenweworryabouthousingproblems?’,inaugurallecture,UniversityofYork,2012,Table2.http://www.york.ac.uk/chp/news/2012/inaugural/

10.Ibid.ThesefigurescomefromthesameTable2:ifanabsolutespacepovertylineisused,thatcanalsobeseentobegrowingfrom1991to2001,bywhichtimeover11%werepoorlyhoused.No2011figureshadyetbeencalculatedtocontinuethetimesseriesatthetimeofwritingthischapter,butsomeareincludedinChapter6below(seeFigure13)

http://www.dannydorling.org/?page_id=3597

http://winton.ashmus.ox.ac.uk/PastSeminars/Michaelmas2010/Colloquium/Presentation20Slides/Speight.pdf


http://eprints.lse.ac.uk/42582/1/WhywasawealthtaxfortheUKabandoned(lsero).pdf

http://www.york.ac.uk/chp/news/2012/inaugural/

andwhattheyrevealisadramaticriseinhousinginequality.

11.D.Dorling,Theno-nonsenseguidetoequality,Oxford:NewInternationalist,2012.

12.Figuresformedianageatdeatharenormallyhigherthanlifeexpectancybecauseinfantdeathsreducethemean.OfficeforNationalStatistics,‘MortalityinEnglandandWales:averagelifespan’,17December2012.http://www.ons.gov.uk/ons/dcp171776_292196.pdf

13.N.Cohen,‘Acoalitionofthecomplacent’,Spectator,7January2013.http://blogs.spectator.co.uk/nick-cohen/2013/01/a-coalition-of-the-complacent/

14.OfficeforNationalStatistics,‘Birthsbyareaofusualresidenceofmother,EnglandandWales,2011’,pressrelease,31October2012.http://www.ons.gov.uk/ons/rel/vsob1/births-by-area-of-usual-residence-of-mother--england-and-wales/2011/index.html

15.D.Dorling,ThepopulationoftheUK,London:Sage,2012(secondedition),Chapter2.

16.LondonCouncils(thelobbyingbodyofLondon’s32boroughcouncilsandtheCityofLondon),‘London’sschoolplaceshortage’,2013.http://www.londoncouncils.gov.uk/policylobbying/children/schools/primaryschools.htm

17.M.PemberReeves,Roundaboutapoundaweek,London:Virago,1913;1979reprint,p.35.

http://www.ons.gov.uk/ons/dcp171776292196.pdf

http://blogs.spectator.co.uk/nick-cohen/2013/01/a-coalition-of-the-complacent/

http://www.ons.gov.uk/ons/rel/vsob1/births-by-area-of-usual-residence-of-mother--england-and-wales/2011/index.html

http://www.londoncouncils.gov.uk/policylobbying/children/schools/primaryschools.htm

18.HouseofCommonsLibrary,‘Acenturyofchange:trendsinUKstatisticssince1900’,HouseofCommonsLibraryResearchPaperNo.99/111,UnitedKingdomParliament,21December1999.http://www.parliament.uk/documents/commons/lib/research/rp99/rp99-111.pdf(page12)/

19.C.Jones,‘BankofEngland’sMarkCarneyseekstowinoverguidancesceptics’,FinancialTimes,29August2013.http://www.ft.com/cms/s/0/bec5124e-0fd6-11e3-a258-00144feabdco.html

20.SeeA.Haldane,S.MillardandV.Saporta(eds.),Thefutureofpaymentsystems,London:RoutledgeInternationalStudiesinMoneyandBankingNo.43,2007,Chapter10byGeorgeSpeight.

21.G.Speight,‘Thelendingfrenzyofthe1930s’.22.T.Powley,‘UKgovernmentfacespressureto

drop“help-to-buy”mortgagescheme’,FinancialTimes,13August2013.http://www.ft.com/cms/s/0/43C4fob2-035d-11e3-b871-00144feab7de.html

23.B.Green,‘England’shousingstockgrowsslowerthanthepopulationforthefirsttimeindecades’,blogentryforBuilding.co.uk,30June2011.http://brickonomics.building.co.uk/2011/06/england’s-housing-stock-grows-slower-than-the-population-for-the-first-time-in-decades/

24.NationalHousingFederation,‘Parentsfeelthestrainasgrown-upkidsremainlivingat

http://www.parliament.uk/documents/commons/lib/research/rp99/rp99-111.pdf

http://www.ft.com/cms/s/0/bec5124e-0fd6-11e3-a258-00144feabdco.html

http://www.ft.com/cms/s/0/43C4fob2-035d-11e3-b871-00144feab7de.html

http://brickonomics.building.co.uk/2011/06/englands-housing-stock-grows-slower-than-the-population-for-the-first-time-in-decades/

home’,pressrelease,6September2013.http://www.housing.org.uk/media/press-releases/parents-feel-the-strain-as-grown-up-kids-remain-living-at-home

25.N.Crafts,‘Deliveringgrowthwhilereducingdeficits:lessonsfromthe1930s’,Centreforumpolicypaper,2011.http://www.centreforum.org/assets/pubs/delivering-growth-while-reducing-deficits.pdf

26.T.Leunig,‘Weneedtolearnfromthe1930s:inthe1930s,Britain’seconomygrewthankstolowinterestratesandhouse-building’,Telegraph,25April2012.http://www.telegraph.co.uk/news/politics/9226679/We-need-to-learn-from-the-1930s.html

27.L.Samy,‘“Theparadoxofsuccess”:theeffectofgrowth,competitionandmanagerialself-interestonbuildingsocietyrisk-takingandmarketstructure,c.1880–1939’,DiscussionPapersinEconomicandSocialHistoryNo.86,January2011,UniversityofOxford,Figure14.http://www.nuff.ox.ac.uk/economics/history/Paper86/Samy86.pdf

28.T.Greenham,headofFinanceandBusinessattheNewEconomicsFoundation,speakingonTheTodayProgramme,BBCRadio4,19December2012.http://news.bbc.co.uk/today/hi/today/newsid_9779000/9779870.stm

29.G.Eaton,‘Cameron’staxreturnisn’tenough’,NewStatesman,11April2012.http://www.newstatesman.com/blogs/staggers/2012/04/cameron-taxreferringtoTheTimes:

http://www.housing.org.uk/media/press-releases/parents-feel-the-strain-as-grown-up-kids-remain-living-at-home

http://www.centreforum.org/assets/pubs/delivering-growth-while-reducing-deficits.pdf

http://www.telegraph.co.uk/news/politics/9226679/We-need-to-learn-from-the-1930s.html

http://www.nuff.ox.ac.uk/economics/history/Paper86/Samy86.pdf

http://news.bbc.co.uk/today/hi/today/newsid9779000/9779870.stm

http://www.newstatesman.com/blogs/staggers/2012/04/cameron-tax

http://www.timesonline.co.uk/tol/news/politics/article6267193.ece?token=null&offset=84&page=8(firstaccessedbythisauthorwhenitwasnothiddenbehindapaywall,on15July2009).

30.DepartmentforCommunitiesandLocalGovernment,‘Livetablesondwellingstock(includingvacants).Table101:bytenure,UnitedKingdom(historicalseries)’,21May2013.https://www.gov.uk/government/statistical-data-sets/live-tables-on-dwelling-stock-including-vacants

31.T.Shepperson,‘TheRentAct1977incontext’,‘Landlord-Law’websiteblog,19July2011.http://www.landlordlawblog.co.uk/2011/07/19/the-rent-act-1977-in-context/

32.G.Horsfield,Familyspending:areportonthe2010livingcostsandfoodsurvey,London:OfficeofNationalStatistics,2012,p.13.http://www.ons.gov.uk/ons/rel/family-spending/family-spending/family-spending-2011-edition/index.html

33.Again,seeM.PemberReeves,Roundaboutapoundaweek,p.35.

34.P.K.Piff,etal.,‘Highersocialclasspredictsincreasedunethicalbehaviour’,ProceedingsoftheNationalAcademyoftheUnitedStates,publishedonline27February2013.http://www.pnas.org/content/early/2012/02/21/1118373109.full.pdf+html

35.A.Mani,etal.,‘Povertyimpedescognitivefunction’,Science,Vol.341,No.976(2013).

http://www.timesonline.co.uk/tol/news/politics/article6267193.ece?tokennulloffset84page8

http://www.gov.uk/government/statistical-data-sets/live-tables-on-dwelling-stock-including-vacants

http://www.landlordlawblog.co.uk/2011/07/19/the-rent-act-1977-in-context/

http://www.ons.gov.uk/ons/rel/family-spending/family-spending/family-spending-2011-edition/index.html

http://www.pnas.org/content/early/2012/02/21/1118373109.full.pdf+html

http://www.sciencemag.org/content/341/6149/976.full.pdf36.D.Dorling,‘Meanmachine:structural

inequalitymakessocialinequalityseemnatural’,NewInternationalist,Issue433(2012).http://newint.org/features/special/2010/06/01/structural-inequality/

37.M.Bennett-Smith,‘NiallFerguson:KeynesianeconomicsflawedbecauseKeyneswasgay,childless’,HuffingtonPost,4May2013.http://www.huffingtonpost.com/2013/05/04/niall-ferguson-keynesian-economics-gay-childless_n_3215427.html

38.M.Gongloff,‘NiallFergusonre-apologizesfordumbKeynesstatements,makesmoredumbstatements’,HuffingtonPost,5August2013.http://www.huffingtonpost.com/2013/05/08/niall-ferguson-apologizes-keynes_n_3238940.html

39.O.Wilde,‘Thesoulofmanundersocialism’,London:privatelyprinted,1891.http://www.marxists.org/reference/archive/wilde-oscar/soul-man/

40.Ibid.41.G.Fraser,‘Adebateoverwhetherdecent

housingisabasichumanrightislongoverdue’,Guardian,5July2013.http://www.guardian.co.uk/commentisfree/belief/2013/jul/05/debate-decent-housing-human-right

42.AttheNewYorkUniversitySchoolofLawand,inBritain,successortoIsaiahBerlinand

http://www.sciencemag.org/content/341/6149/976.full.pdf

http://newint.org/features/special/2010/06/01/structural-inequality/

http://www.huffingtonpost.com/2013/05/04/niall-ferguson-keynesian-economics-gay-childlessn3215427.html

http://www.huffingtonpost.com/2013/05/08/niall-ferguson-apologizes-keynesn3238940.html

http://www.marxists.org/reference/archive/wilde-oscar/soul-man/

http://www.guardian.co.uk/commentisfree/belief/2013/jul/05/debate-decent-housing-human-right

GeraldCohenastheChicheleProfessorofSocialandPoliticalTheoryatAllSoulsCollege,OxfordUniversity.

43.JeremyWaldron,thenProfessor,JurisprudenceandSocialPolicyProgram,BoaltHallSchoolofLaw,Berkeley,UniversityofCalifornia:J.Waldron,‘Homelessnessandtheissueoffreedom’,UCLALawReview,Vol.39(December1991),pp.295–324.http://faculty.washington.edu/pembina/all_articles/Waldron%201991.pdf

3FOUNDATIONS

1.ITN,‘Youngpeoplelockedoutofhousingmarket’,ITVNews,13June2012.http://www.itv.com/news/calendar/2012-06-13/young-people-locked-out-of-housing-market/

2.L.Bourke,‘Howtoleavepropertytoyourgrandchildren’,‘CityWire’websitemoneyblog,19September2012.http://citywire.co.uk/money/how-to-leave-property-to-your-grandchildren/a619412

3.Ibid.4.J.HillsandH.Glennerster,‘Whytheleft

needstotakewealthseriouslyagain’,Juncture,Vol.20,No.1(2013),pp.72–9.http://onlinelibrary.wiley.com/doi/10.1111/j.2050-5876.2013.00730.x/pdf

5.D.Dorling,etal.,Thegreatdivide:ananalysisofhousinginequality,London:

http://faculty.washington.edu/pembina/all_articles/Waldron%201991.pdf

http://www.itv.com/news/calendar/2012-06-13/young-people-locked-out-of-housing-market/

http://citywire.co.uk/money/how-to-leave-property-to-your-grandchildren/a619412

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6.J.Bingham,‘Twomillionelderlyplanningtosellhome’,Telegraph,21August2013.http://www.telegraph.co.uk/property/propertynews/10255271/Two-million-elderly-planning-to-sell-home.html

7.J.HillsandH.Glennerster,‘Whytheleftneedstotakewealthseriouslyagain’,p.74.

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11.Theworld’sbest-off1%includeallofthebest-off10%intheUKandUS;becauseonlyaminorityofthisgrouparealsoholidayorsecond-homeowners,mostdonotseethemselvesaswealthy.SeethegraphinB.Sutcliffe,‘Theworlddistributionofgrossnationalincome’,EnvironmentandPlanningA,Vol.41,No.4(2009),p.764.http://www.envplan.com/abstract.cgi?id=a4227


http://www.telegraph.co.uk/property/propertynews/10255271/Two-million-elderly-planning-to-sell-home.html

http://www.spi.sanlam.co.uk/investment-thinking/investment-blog/greed-good-now-its-legal/

http://www.envplan.com/abstract.cgi?id=a4227

12.N.Blackmore,‘Home-buyersinLondonneed£64,000deposit’,Telegraph,28August2013.http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10271969/Home-buyers-in-London-need-64000-deposit.html

13.R.WilkinsonandK.Pickett,Thespiritlevel:whyequalityisbetterforeveryone,London:Penguin,2010.Notethisisthesecondeditionwithachangedsubtitle,becauseeventheveryrichestdobetterwhenallaremoreequal.

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15.TUCScotland(2010),‘Mythnumber7:theUK’sdeficitwascausedbyhighgovernmentspending’,report,2010.http://www.thereisabetterway.org/top-myths-about-the-crisis/the-uk-s-deficit-was-caused-by-high-government-spending

16.OfficeforNationalStatistics,‘Publicsectorfinances,March’,released23April2013.http://www.ons.gov.uk/ons/dcp171778_306382.pdf

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http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10271969/Home-buyers-in-London-need-64000-deposit.html

http://www.irishtimes.com/news/world/noam-chomsky-interview-the-public-can-make-a-difference-and-in-more-democratic-societies-a-lot-of-difference-1.1344852

http://www.thereisabetterway.org/top-myths-about-the-crisis/the-uk-s-deficit-was-caused-by-high-government-spending

http://www.ons.gov.uk/ons/dcp171778_306382.pdf

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19.C.Keena,‘SeanDunnebankruptcyincontrastwithpositionofsmallborrowers:ifyouwantdebtforgiveness,youneedtohaveenormousdebts’,IrishTimes,3April2013.http://www.irishtimes.com/business/sectors/financial-services/sean-dunne-bankruptcy-in-contrast-with-position-of-small-borrowers-1.1346903

20.H.Spencer,Socialstatics;or,theconditionsessentialtohumanhappinessspecified,andthefirstofthemdeveloped,London:JohnChapman,1851.

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22.IncomeinequalityintheUSishighertodaythanatanytimesince1917.E.Saez,‘Strikingitricher:theevolutionoftopincomesintheUnitedStates’,workingpaper,UniversityofCalifornia,Berkeley,Figure2,updatedwith2012preliminaryestimates.http://elsa.berkeley.edu/~saez/saez-UStopincomes-2012.pdf

23.M.Easton,‘Rent“unaffordable”forlow-incomefamiliesinthirdofUK’,BBCNews,15July2013.

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http://www.bls.gov/opub/uscs/

http://elsa.berkeley.edu/~saez/saez-UStopincomes-2012.pdf


24.ThatismoresquarefeetofhousingperpersonwhenitcomestoUKandUSmeasurements,squaremetreselsewhere.PossiblyjustaftertheBlackDeathwehadmore.Foranestimateoftheglobalhousingstockseedataat‘Worldmapper’website.http://www.worldmapper.org/display.php?selected=194

25.BBC,‘SocialhousingwaitinglistsriseinEngland’,BBCNews,15January2011.http://www.bbc.co.uk/news/uk-12198429

26.InEssex:J.Melley,‘Socialhousing:Essexhasthousandsonwaitinglists’,BBCNews,26January2013.http://www.bbc.co.uk/news/uk-england-essex-21202473

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28.That240,000figuremaybeanoverestimatemadefromassuming38%ofstreethomelesspeopleratherthanallhomelesspeoplehavesquatted.However,asanestimateofallthosewhohaveeversquatted,andgivenhowmanydidaschildrenwiththeirfamiliesaftertheSecondWorldWar,Ithinkitisreasonable.Forthesourcessee:K.Reeve,‘Squatting:ahomelessnessissue,anevidencereview’,reportpublishedbyCrisisandCRESR,


http://www.worldmapper.org/display.php?selected=194


http://www.bbc.co.uk/news/uk-england-essex-21202473

http://www.crisis.org.uk/data/files/publications/HiddenTruthAboutHomelessness_web.pdf

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31.EmptyHomesAgency,‘StatisticalarchivesoftheEmptyHomesAgency’,June2011.http://emptyhomes.test-host.net/wp-content/uploads/2011/06/amended-stats-08-09-1.pdf

32.ThereisalsoavibrantpositivesquattingmovementgrowingagainacrossEuropebutittendstobefortheyoungandchildless.http://sqek.squat.net/;and,inparticular,SquattingEuropeKollective,SquattinginEurope:radicalspaces,urbanstruggles,NewYork:MinorCompositions,2013.http://sqek.squat.net/wp-content/uploads/2013/03/sqek-book.pdf

http://www.crisis.org.uk/publications-search.php?fullitem=327

http://www.independent.co.uk/news/uk/politics/numbers-of-homeless-people-in-uk-up-by-17-per-cent-2351644.html

http://www.independent.co.uk/voices/comment/if-we-want-the-government-to-take-housing-seriously-a-national-tenants-union-is-the-first-step-8500068.html

http://emptyhomes.test-host.net/wp-content/uploads/2011/06/amended-stats-08-09-1.pdf

http://sqek.squat.net/

http://sqek.squat.net/wp-content/uploads/2013/03/sqek-book.pdf

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35.Thetruenumbermaybehigher.D.M.Halbfinger,‘TheMcCainproperties’,NewYorkTimes,23August2008.http://www.nytimes.com/ref/us/politics/mccain-properties.html?ref=politics

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38.L.Berman,‘Death(certificates)tookholidayinwakeofbankruptcyfiling’,DetroitNews,29August2013.http://www.detroitnews.com/article/20130829/METRO01/308290046

39.TheoldphraseattributedtoFrancisBaconin1625comestomind:‘Moneyislikemuck,nogoodunlessitisspread.’Forthemodern-day

http://www.theguardian.com/uk/2001/jan/20/politics.labour

http://thecaucus.blogs.nytimes.com/2008/08/21/obama-counts-mccains-houses/

http://www.nytimes.com/ref/us/politics/mccain-properties.html?ref=politics

http://www.reuters.com/article/2010/12/09/us-life-expectancy-idUSTRE6B86K720101209

http://www.detroitnews.com/article/20130829/METRO01/308290046

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43.Guardian,‘Housingcrisis:homeeconomics’,editorial,2September2012.http://www.guardian.co.uk/commentisfree/2012/sep/02/housing-crisis-home-economics-editorial

44.RoyalInstituteofCharteredSurveyors,‘RoyalInstituteofCharteredSurveyors/CiPortuguesehousingmarketsurvey:lettingssectorshowsfirstsignsofweakness’,pressrelease,November2012.

http://www.equalitytrust.org.uk/research/education

http://www.equalitytrust.org.uk/research/mental-health

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http://www.guardian.co.uk/commentisfree/2012/sep/02/housing-crisis-home-economics-editorial

http://www.rics.org/Global/Portuguese-Housing-Market-Survey-November-2012.pdf

45.G.Tremlett,‘MorethanaquarterofSpanishworkforcearejobless’,Guardian,24January2013.http://www.theguardian.com/world/2013/jan/24/quarter-spanish-workforce-jobless

46.RTÉ,‘Fitchexpectsfurther20%dropinIrishhouseprices’,RTÉNews,9January2013.http://www.rte.ie/news/2013/0108/361799-fitch-sees-further-20-drop-in-irish-house-prices/

47.S.Binge,‘StillnobottomforSpanishhouseprices’,PropertyShowRooms,onlinemagazine,17September2013.http://www.propertyshowrooms.com/spain/property/news/still-no-bottom-for-spanish-house-prices_312902.html

48.ColmMcCarthy,describingtheresponsetoanewsitemonIrishTVon2October2008,quotedinM.Lewis,Boomerang:themeltdowntour,London:AllenLane,2011,p.98.

49.M.Lewis,‘WhenIrisheyesarecrying’,VanityFair,March2011.http://www.vanityfair.com/business/features/2011/03/michael-lewis-ireland-201103.print

50.J.Smyth,‘Ireland.Bleakhouses:thecountryfacesamortgagecrisisthatcouldtriggermassevictionsandjeopardisestability’,FinancialTimes,29April2013.

http://www.rics.org/Global/Portuguese-Housing-Market-Survey-November-2012.pdf

http://www.theguardian.com/world/2013/jan/24/quarter-spanish-workforce-jobless

http://www.rte.ie/news/2013/0108/361799-fitch-sees-further-20-drop-in-irish-house-prices/

http://www.propertyshowrooms.com/spain/property/news/still-no-bottom-for-spanish-house-prices_312902.html

http://www.vanityfair.com/business/features/2011/03/michael-lewis-ireland-201103.print

http://www.ft.com/cms/s/0/f5d742a8-a3a1-11e2-ac00-00144feabdc0.html

51.S.Garrett,‘AustralianswarnedofIrish-stylehousingcrash’,IrishTimes,2September2013.http://www.irishtimes.com/business/sectors/commercial-property/australians-warned-of-irish-style-housing-crash-1.1512560

52.P.Geoghegan,‘RebuildingIceland’,SundayBusinessPost,22May2011.http://www.petergeoghegan.com/?p=462

53.P.Eavis,‘Irelandplansboldmeasurestolifthousing’,NewYorkTimes,9October2012,p.A1(NewYorkedition).http://dealbook.nytimes.com/2012/10/08/ireland-mortgage-bill-aims-to-aid-owners-and-jump-start-economy/

54.J.Smyth,‘Irelandactsonunsustainablemortgages’,FinancialTimes,13March2013.http://www.ft.com/cms/s/0/fc299d74-8bfd-11e2-b001-00144feabdc0.html

55.R.BurtenshawandA.Robinson,DavidHarveyinterview:‘Theimportanceofpost-capitalistimagination’,RedPeppermagazine,August2013.http://www.redpepper.org.uk/david-harvey-interview-the-importance-of-postcapitalist-imagination/

56.R.Kitchin,S.O’CallaghanandJ.Gleeson,‘Unfinishedestatesinpost-CelticTigerIreland’,NorthernIrelandStatisticsandResearchAgencyWorkingPaperNo.67,

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http://www.irishtimes.com/business/sectors/commercial-property/australians-warned-of-irish-style-housing-crash-1.1512560

http://www.petergeoghegan.com/?p=462

http://dealbook.nytimes.com/2012/10/08/ireland-mortgage-bill-aims-to-aid-owners-and-jump-start-economy/

http://www.ft.com/cms/s/0/fc299d74-8bfd-11e2-b001-00144feabdc0.html

http://www.redpepper.org.uk/david-harvey-interview-the-importance-of-postcapitalist-imagination/

2012,p.13.http://ebookbrowse.com/nirsa-working-paper-67-unfinished-estates-in-post-celtic-tiger-ireland-pdf-d312024595

57.P.Geoghegan,‘Icelandicmyths’,LondonReviewofBooks,25June2012.http://www.lrb.co.uk/blog/2012/06/25/peter-geoghegan/icelandic-myths/

58.HMTreasury,ReportunderSection2oftheLoanstoIrelandAct2010:1October2012to31March2013,London:HerMajesty’sTreasury,2013.https://www.gov.uk/government/publications/bilateral-loan-to-ireland

59.D.O’Donovan,‘Propertycrash“over”asMoody’sinsistsmarketatbottom’,IrishIndependent,14November2013.http://www.independent.ie/irish-news/property-crash-over-as-moodys-insists-market-at-bottom-29753716.html

60.J.Mackintosh,‘Europe’shousepricebubbles:Iceland,IrelandandSpainupdated’,FinancialTimes,‘LongShort’blog,13March2013.http://blogs.ft.com/ft-long-short/2013/03/13/europes-house-price-bubbles-iceland-ireland-and-spain-updated/

61.S.Lyall,‘AbruisedIcelandhealsamidEurope’smalaise’,NewYorkTimes,7July2012.http://www.nytimes.com/2012/07/08/world/europe/icelands-economy-is-mending-amid-europes-malaise.html?_r=1

http://ebookbrowse.com/nirsa-working-paper-67-unfinished-estates-in-post-celtic-tiger-ireland-pdf-d312024595

http://www.lrb.co.uk/blog/2012/06/25/peter-geoghegan/icelandic-myths/

http://www.gov.uk/government/publications/bilateral-loan-to-ireland

http://www.independent.ie/irish-news/property-crash-over-as-moodys-insists-market-at-bottom-29753716.html

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http://www.nytimes.com/2012/07/08/world/europe/icelands-economy-is-mending-amid-europes-malaise.html?_r=1

62.OnlythreecountriesinEuropearemoreequitablethanGermany,accordingtotheir90:10incomeinequalityratios:Sweden,NorwayandFinland.Housingmarketswerefarmorelikelytogetintocrisisincountrieswithhighincomeinequalities.SeeD.Dorling,Injustice:whysocialinequalitypersists,Bristol:PolicyPress,2010,p.323,n.37.

63.R.Rayasam,‘“Cementgold”:Germanpropertymarketsoarsamideurocrisis’,DerSpiegel,22June2012.http://www.spiegel.de/international/germany/german-real-estate-market-soars-amid-euro-crisis-a-838437.html

64.C.Bryant,‘Germany’sgoldstandardjobsrecordmaskshiddenflaws’,FinancialTimes,2September2013.http://www.ft.com/cms/s/0/0bf80e46-0fc2-11e3-99e0-00144feabdc0.html

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http://www.theguardian.com/commentisfree/2013/apr/24/terraced-house-250m-housing-crisis

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67.LandRegistry,‘Housepriceindex,July’,released29August2013.http://www.landregistry.gov.uk/__data/assets/pdf_file/0010/54001/HPIReport20130822.pdf

68.I.Birrell,‘Thehousingcrisis:anightmarecausedbyoursanctifiedsuburbandreams’,Guardian,20August2012.http://www.guardian.co.uk/commentisfree/2012/aug/20/planning-housing

69.RoyalInstituteofCharteredSurveyors,‘NewRICScommissionintotheUKhousingcrisis’,RICSpressrelease,7February2013.http://www.rics.org/uk/knowledge/news-insight/press-releases/new-rics-housing-commission-calls-for-evidence/

70.S.Nolan,‘Britainfacesslowesthousingmarketrecoveryonrecordwithsomepropertypricesnotsettopeakagainuntil2021’,DailyMail,6January2013.http://www.dailymail.co.uk/news/article-2257916/Britain-faces-slowest-housing-market-recovery-record-property-prices-set-peak-2021.html

71.H.Brennan,‘“Help-to-buy”couldspark30%surgeinhouseprices’,MoneyMarketing,7May2013.http://www.moneymarketing.co.uk/news-and-analysis/mortgages/help-to-buy-could-spark-30-surge-in-house-prices/1070754.article

72.RoyalInstituteofBritishArchitects,‘2013budget:amissedopportunityonaffordablehousingandgreengrowth’,RIBApress

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http://www.rics.org/uk/knowledge/news-insight/press-releases/new-rics-housing-commission-calls-for-evidence/

http://www.dailymail.co.uk/news/article-2257916/Britain-faces-slowest-housing-market-recovery-record-property-prices-set-peak-2021.html

http://www.moneymarketing.co.uk/news-and-analysis/mortgages/help-to-buy-could-spark-30-surge-in-house-prices/1070754.article

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73.HPSauce,‘GeorgeOsborne’s£15.5billion“help-to-buy”’,PrivateEye,No.1337(5April2013),p.9.

74.L.Chiswick,‘“FirstBuy”:flawed,andsuchsmallportions–agovernmentinitiativetoreignitethehousingmarketoffersalifelinetobuildersbutlittleforbuyers’,‘CityWire’websitemoneyblog,22June2011.http://citywire.co.uk/money/firstbuy-flawed-and-such-small-portions/a502558

75.A.Jones,‘CompanybehindthenewNotts.campusgoesbust’,NottinghamTabStudentNewspaper,1April2013.http://nottingham.tab.co.uk/2013/04/01/opal-goes-bust/

76.A.Jupp,‘ThirteenOpalcompaniesfallintoadministration’,ManchesterEveningNews,13March2013.http://www.manchestereveningnews.co.uk/business/property/further-13-companies-within-manchester-1741874

77.BBC,‘UKwagesdeclineamongworstinEurope’,BusinessNews,11August2013.http://www.bbc.co.uk/news/business-23655605

78.H.Wilson,‘Nearly2,500Britishbankerspaidover€1million,saysEUregulator’,Telegraph,15July2013.http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10180313/Nearly-2500-British-bankers-paid-over-1m-says-EU-regulator.html

http://www.architecture.com/NewsAndPress/News/RIBANews/News/2013/2013BudgetAmissedopportunityonaffordablehousingandgreengrowth.aspx

http://citywire.co.uk/money/firstbuy-flawed-and-such-small-portions/a502558

http://nottingham.tab.co.uk/2013/04/01/opal-goes-bust/

http://www.manchestereveningnews.co.uk/business/property/further-13-companies-within-manchester-1741874


http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10180313/Nearly-2500-British-bankers-paid-over-1m-says-EU-regulator.html

79.B.Brady,‘Labourrevivesplantoprotectprivatetenants’,Independent,13January2013.http://www.independent.co.uk/news/uk/politics/labour-revives-plan-to-protect-private-tenants-8449404.html

4BUILDING

1.H.Rifkind,‘Whyweshouldfearthenewhousingbubble’,Spectator,17August2013.http://www.spectator.co.uk/columnists/hugo-rifkind/8993311/why-we-should-fear-the-new-housing-bubble/

2.J.Rickards,‘RepealofGlass–Steagallcausedthefinancialcrisis’,USNews,27August2012.http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisis

3.L.Adelman,‘Racialpreferencesforwhites:thehousesthatracismbuilt’,SanFranciscoChronicle,29June2003,quotedonSlide23ofS.Carlson,‘AhistoryofhomelessnessinAmerica:homelessness101’,two-dayworkshop.http://mesh-mn.org/workshops-events/homelessness-101/RelyinggreatlyinturnonKenKusmer’sDownandout,ontheroad:thehomelessinAmericanhistory,Oxford:OUP,2002.

4.A.Smithers,Theroadtorecovery–howandwhyeconomicpolicymustchange,

http://www.independent.co.uk/news/uk/politics/labour-revives-plan-to-protect-private-tenants-8449404.html

http://www.spectator.co.uk/columnists/hugo-rifkind/8993311/why-we-should-fear-the-new-housing-bubble/

http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisis

http://mesh-mn.org/workshops-events/homelessness-101/

Chichester:Wiley,2013.5.M.West,‘Capitallosses:theinteractivemap

thatshowstheLondonboroughswherehousepricesareactuallyFALLING’,DailyMail,17September2013.http://www.thisismoney.co.uk/money/mortgageshome/article-2423620/The-London-boroughs-house-prices-falling-just-like-rest-country.html

6.A.HullandG.Cooke,‘Togetherathome:anewstrategyforhousing’,InstituteforPublicPolicyResearch,report,21June2012,p.53.http://www.ippr.org/publication/55/9279/together-at-home-a-new-strategy-for-housing

7.L.Boyce,‘OECDrevealstheworld’scheapestandmostovervaluedpropertymarkets’,DailyMail,‘ThisisMoney’website,1June2013.http://www.thisismoney.co.uk/money/mortgageshome/article-2333944/Property-prices-Britain-31-high-says-OECD.html

8.P.Wintour,‘Weneedtobuildhousesonathirdmoreland,saysplanningminister’,Guardian,27November2012.http://www.guardian.co.uk/society/2012/nov/27/housebuilding-needs-more-open-land

9.W.Hurst,‘Labourfireswarningoverland“hoarding”’,BuildingMagazine,21June2013.http://www.building.co.uk/news/labour-fires-warning-over-land-hoarding/5056698.article

10.L.Mark,‘BovisHomesbossslamslandhoardingclaimsas“nonsense”’,Architects’

http://www.thisismoney.co.uk/money/mortgageshome/article-2423620/The-London-boroughs-house-prices-falling-just-like-rest-country.html


http://www.thisismoney.co.uk/money/mortgageshome/article-2333944/Property-prices-Britain-31-high-says-OECD.html

http://www.guardian.co.uk/society/2012/nov/27/housebuilding-needs-more-open-land

http://www.building.co.uk/news/labour-fires-warning-over-land-hoarding/5056698.article

Journal,21August2013.http://www.architectsjournal.co.uk/news/bovis-homes-boss-slams-land-hoarding-claims-as-nonsense/8652223.article

11.Staffreporter,‘WhoownsBritain:topUKlandowners’,CountyLife,11November2010.http://www.countrylife.co.uk/countryside/article/506868/Who-owns-Britain-Top-UK-landowners.html

12.W.Johnson,‘UKmigrationfallsbyaquarterasstudentandforeignworkernumbersfall’,Telegraph,29November2012.http://www.telegraph.co.uk/news/uknews/immigration/9711047/UK-migration-falls-by-a-quarter-as-student-and-foreign-worker-numbers-fall.html

13.OutsideofSydney!NotehousingpricesarehighintheUKbecausewealthinequalitiesarehigh.Inothercountrieswithfarlesshousingavailableperperson,pricesareoftenlower.

14.A.Hill,‘Woman,81,lefttostarveafterimmigrationraidoncarecompany’,Guardian,9May2013.http://www.guardian.co.uk/society/2013/may/09/woman-left-to-starve-raid-care-company

15.C.Blackhurst,‘LibDemsinfreshrowover“racistleaflet”’,Independent,11November1993.http://www.independent.co.uk/news/uk/lib-dems-in-fresh-row-over-racist-leaflet-1503514.html

http://www.architectsjournal.co.uk/news/bovis-homes-boss-slams-land-hoarding-claims-as-nonsense/8652223.article

http://www.countrylife.co.uk/countryside/article/506868/Who-owns-Britain-Top-UK-landowners.html

http://www.telegraph.co.uk/news/uknews/immigration/9711047/UK-migration-falls-by-a-quarter-as-student-and-foreign-worker-numbers-fall.html

http://www.guardian.co.uk/society/2013/may/09/woman-left-to-starve-raid-care-company

http://www.independent.co.uk/news/uk/lib-dems-in-fresh-row-over-racist-leaflet-1503514.html

16.W.Johnson,‘Curbingmassimmigrationcouldbringdownhouseprices,TheresaMaysays’,Telegraph,12December2012.http://www.telegraph.co.uk/news/uknews/immigration/9739590/Curbing-mass-immigration-could-bring-down-house-prices-Theresa-May-says.html

17.R.Syal,‘BorisJohnsoncriticizesTheresaMayoverimmigrationclaim’,Observer,16December2012.http://www.guardian.co.uk/politics/2012/dec/16/boris-johnson-theresa-may-immigration

18.AllthesefigurescomefromTable209ofagovernmentstatisticaldatasetasaccessedon17January2013from:https://www.gov.uk/government/statistical-data-sets/live-tables-on-house-building

19.SeeChapter6ofthisbookfordetailsofwhatthelatestcensusrevealsaboutboththenumbersofroomsandbedroomsinresidentialhousinginBritainin2011andhowroomsperpersonhaveincreased.

20.T.Lloyd,‘Letcouncilsbuild–andborrow’,Shelter,policyblog,13March2013.http://blog.shelter.org.uk/2013/03/let-councils-build-and-borrow/

21.P.Collinson,‘Equityreleaseisnotthesolutionforolderpeoplewhoneedextracash’,Guardian,16March2013.http://www.guardian.co.uk/money/blog/2013/mar/16/equity-release-older-people-cash

22.E.Klinenberg,‘Iwanttobealone:theriseandriseofsolo-living’,Guardian,30March

http://www.telegraph.co.uk/news/uknews/immigration/9739590/Curbing-mass-immigration-could-bring-down-house-prices-Theresa-May-says.html

http://www.guardian.co.uk/politics/2012/dec/16/boris-johnson-theresa-may-immigration

http://www.gov.uk/government/statistical-data-sets/live-tables-on-house-building

http://blog.shelter.org.uk/2013/03/let-councils-build-and-borrow/

http://www.guardian.co.uk/money/blog/2013/mar/16/equity-release-older-people-cash

2012.http://www.guardian.co.uk/lifeandstyle/2012/mar/30/the-rise-of-solo-living.

23.D.Dorling,Population10billion,London:Constable,2013,p.229.

24.PersonalcommunicationswithAlexFenton,referringinturntotheestimatesmadeofrequiredstockrepairsintheEnglishHousingSurvey.Seealsothe1984workofA.Curtis,‘ThegreatBritishhousingdisaster’.http://www.youtube.com/user/AdamCurtisFilms/videos

25.Oxfam,Theperfectstorm:economicstagnation,therisingcostofliving,publicspendingcutsandtheimpactonUKpoverty,Oxford:Oxfam,2012.poverty,http://policy-practice.oxfam.org.uk/publications/the-perfect-storm-economic-stagnation-the-rising-cost-of-living-public-spending-228591

26.Rightmove,‘Summersellingchallenge’,JulyIndex,2012.http://www.rightmove.co.uk/news/house-price-index/july-2012

27.H.Osborne,andJ.Treanor,‘Mortgagelendingstallsoversix-monthperiod’,Guardian,25March2013.http://www.guardian.co.uk/money/2013/mar/25/mortgage-lending-stalls-six-months-bba

28.Althoughestateagentsputthefalldowntorisingstampduty;seeR.Neate,‘Foreignbuyersbehindhalfof£2million-plushomesalesinLondon’,Guardian,6May2013.

http://www.guardian.co.uk/lifeandstyle/2012/mar/30/the-rise-of-solo-living

http://www.youtube.com/user/AdamCurtisFilms/videos

http://policy-practice.oxfam.org.uk/publications/the-perfect-storm-economic-stagnation-the-rising-cost-of-living-public-spending-228591

http://www.rightmove.co.uk/news/house-price-index/july-2012

http://www.guardian.co.uk/money/2013/mar/25/mortgage-lending-stalls-six-months-bba

http://www.guardian.co.uk/business/2013/may/06/foreign-buyers-luxury-home-sales-london

29.H.Jones,‘Averagetwo-bedprimeLondonpropertytohit£1million’,‘IntroducerToday’website.http://www.introducertoday.co.uk/news_features/average-two-bed-prime-london-property-to-hit-C2A31-million?tickertape=yes

30.StatutoryInstrumentNo.2,625,‘Housing,England:TheHousing(EmptyDwellingManagementOrders)(PrescribedPeriodofTimeandAdditionalPrescribedRequirements)(England)(Amendment)Order2012’,made17October2012;laidbeforeparliament23October2012;cameintoforce15November2012.http://www.legislation.gov.uk/uksi/2012/2625/pdfs/uksi_20122625_en.pdf

31.N.Duxbury,‘PMtobewarned–cutgreenleviesandyouwillincreasebillsforpoor’,‘InsideHousing’website,25October2013.http://www.insidehousing.co.uk/eco/pm-to-be-warned-cut-green-levies-and-you-will-increase-bills-for-poor/6529212.article

32.Shelter,personalcommunication–withresearchersofthecharityattemptingtoestimatethenumber,London,June2013.Asyetnopolicydocumenthasbeenpublishedgivinganactualestimate.

33.A.Fenton,‘Housingbenefitreformandthespatialsegregationoflow-incomehouseholdsinLondon’,report,UniversityofCambridge(AlexisnowbasedattheLondonSchoolof

http://www.guardian.co.uk/business/2013/may/06/foreign-buyers-luxury-home-sales-london

http://www.introducertoday.co.uk/news_features/average-two-bed-prime-london-property-to-hit-C2A31-million?tickertape=yes

http://www.legislation.gov.uk/uksi/2012/2625/pdfs/uksi_20122625_en.pdf

http://www.insidehousing.co.uk/eco/pm-to-be-warned-cut-green-levies-and-you-will-increase-bills-for-poor/6529212.article

Economics);anonlinecopyofthereportishere:http://www.cchpr.landecon.cam.ac.uk/outputs/detail.asp?OutputID=240SeealsoA.Fenton,etal.,‘Publichousing,commodification,andrightstothecity:theUSandEnglandcompared’,Cities,Vol.35(2013),pp.373–8.http://dx.doi.org/10.1016/j.cities.2012.10.004

34.ForabriefhistoryofsimilarattacksseeT.Slater,‘Grievingforalosthome,revisited:theBedroomTaxanddisplacement’,UniversityofEdinburgh,SchoolofGeosciencesblogentry,23September2013.http://www.geos.ed.ac.uk/homes/tslater/bedroomtax.html

35.B.ThomasandD.Dorling,IdentityinBritain:acradle-to-graveatlas,Bristol:PolicyPress,2007.http://www.dannydorling.org/?page_id=1467

36.LondonBoroughofHammersmithandFulham,cabinetbriefing,23April2012,p.141.http://image.guardian.co.uk/sys-files/Guardian/documents/2012/05/02/hamm.pdf

37.R.Ford,‘Knee-jerkIslamaphobia:whyTrevorKavanaghiswrongaboutBritishMuslims’,NewStatesman,21January2013.http://www.newstatesman.com/politics/2013/01/knee-jerk-islamophobia-why-trevor-kavanagh-wrong-about-british-muslims

38.HomeOwnersAlliance,‘Thedeathofadream:thecrisisinhomeownershipintheUK’,report,2012,p.10.http://hoa.org.uk/campaigns/publications-

http://www.cchpr.landecon.cam.ac.uk/outputs/detail.asp?OutputID=240

http://dx.doi.org/10.1016/j.cities.2012.10.004

http://www.geos.ed.ac.uk/homes/tslater/bedroomtax.html


http://image.guardian.co.uk/sys-files/Guardian/documents/2012/05/02/hamm.pdf

http://www.newstatesman.com/politics/2013/01/knee-jerk-islamophobia-why-trevor-kavanagh-wrong-about-british-muslims

http://hoa.org.uk/campaigns/publications-2/the-death-of-a-dream-the-crisis-of-homeownership-in-the-uk/

2/the-death-of-a-dream-the-crisis-of-homeownership-in-the-uk/

39.D.Leigh,H.FraymanandJ.Ball,‘Revealed:therealidentitiesbehindBritain’ssecretpropertydeals’,Guardian,26November2012.http://www.guardian.co.uk/uk/2012/nov/26/indentities-behind-secret-property-deals

40.R.Brooks,Thegreattaxrobbery:howBritainbecameataxhavenforfatcatsandbigbusiness,London:OneworldPublications,2013,p.161oftypescript.

41.J.Ball,‘SecretfilmshowshowbuyersofluxuryLondonhomescanavoidmillionsintax’,Guardian,16December2012.http://www.guardian.co.uk/uk/2012/dec/16/london-property-tax-avoidance-offshore

42.O.Wainwright,‘Billionaires’basements:theluxurybunkersmakingholesinLondonstreets’,Guardian,9November2012.http://www.guardian.co.uk/artanddesign/2012/nov/09/billionaires-basements-london-houses-architecture

43.Andtheoldandthepoorarepushedoutandoff.ForavividaccountseeB.Dumbleton,Helpus,somebody:thedemolitionoftheelderly,London:TheLondonPress,2006.

44.BBC,‘Highstreetvacanciesstillstubbornlyhigh,saysreport’,BBCBusinessNews,10September2013.http://www.bbc.co.uk/news/business-24025297

http://www.guardian.co.uk/uk/2012/nov/26/indentities-behind-secret-property-deals

http://www.guardian.co.uk/uk/2012/dec/16/london-property-tax-avoidance-offshore

http://www.guardian.co.uk/artanddesign/2012/nov/09/billionaires-basements-london-houses-architecture


45.G.LynnandE.Davey,‘Londonlettingagents“refuseblacktenants”’,BBCNewsLondon,14October2013.http://www.bbc.co.uk/news/uk-england-london-24372509

46.J.Bingham,‘WhitegroupsfacingunspokenracisminUK,saysDoreenLawrence’,Telegraph,19February2013.http://www.telegraph.co.uk/education/educationnews/9880562/White-groups-facing-unspoken-racism-in-UK-says-Doreen-Lawrence.html

47.S.Beasor,‘Housingbenefitandwelfarereform:impactoftheproposedchangesonblackandminorityethniccommunities’,BetterHousingBriefingPaperNo.18,RaceEqualityFoundation,April2011.http://www.better-housing.org.uk/briefings/housing-benefit-and-welfare-reform-impact-proposed-changes-black-and-minority-ethnic-commu

48.S.Swinford,‘UNreportcriticizingBedroomTaxis“absolutedisgrace”saysGrantShapps’,Telegraph,11September2013.http://www.telegraph.co.uk/news/politics/10301297/UN-report-criticising-bedroom-tax-is-absolute-disgrace-says-Grant-Shapps.html

49.RollingitouttoallareasbytheendofSeptember2013:DepartmentofWorkandPensions,‘Benefitcap:finalstagestarts’,pressreleaseissuedunderthepolicyheadingof‘Simplifyingthewelfaresystemandmakingsureworkpays’,12August2013.

http://www.bbc.co.uk/news/uk-england-london-24372509

http://www.telegraph.co.uk/education/educationnews/9880562/White-groups-facing-unspoken-racism-in-UK-says-Doreen-Lawrence.html

http://www.better-housing.org.uk/briefings/housing-benefit-and-welfare-reform-impact-proposed-changes-black-and-minority-ethnic-commu

http://www.telegraph.co.uk/news/politics/10301297/UN-report-criticising-bedroom-tax-is-absolute-disgrace-says-Grant-Shapps.html

https://www.gov.uk/government/news/benefit-cap-final-stage-starts

50.BBC,‘BorisJohnsoncriticizedfor“Kosovo”benefitsremark’,BBCNews,28October2010.http://www.bbc.co.uk/news/uk-politics-11640219

51.A.Gentleman,‘Squeezedout:Londonlandlordsevicttenantshitbyhousingbenefitcap’,Guardian,24April2010.http://www.guardian.co.uk/society/2012/apr/24/london-landlords-housing-benefit-cap

52.Thereissadlyalongprecedentfordoingnothinginthefaceofobviousunfairness.InhousinghistoryseeP.Marcuse,‘Gentrification,abandonmentanddisplacement:connections,causesandpolicyresponsesinNewYorkCity’,JournalofUrbanandContemporaryLaw,Vol.28(1985),pp.195–240.

53.R.Ramesh,‘CamdenCouncilplanstomove761poorfamiliesfromLondon’,Guardian,13February2013.http://www.guardian.co.uk/uk/2013/feb/13/london-council-relocation-benefits-cap

54.P.ButlerandB.Ferguson,‘HomelessfamiliestobeexpelledfromLondonbycouncils’,Guardian,4November2012,includingarecord1,448commentsfrommembersofthepubliconthewebsite.http://www.guardian.co.uk/society/2012/nov/04/london-boroughs-housing-families-outside-capital

http://www.gov.uk/government/news/benefit-cap-final-stage-starts

http://www.bbc.co.uk/news/uk-politics-11640219

http://www.guardian.co.uk/society/2012/apr/24/london-landlords-housing-benefit-cap


http://www.guardian.co.uk/society/2012/nov/04/london-boroughs-housing-families-outside-capital

55.N.Cohen,‘Dumpingthepoor:NickCohenunravelsthehomes-for-votesscandalengulfingDameShirleyPorter’,Independent,16January1994.http://www.independent.co.uk/news/uk/dumping-the-poor-nick-cohen-unravels-the-homesforvotes-scandal-engulfing-dame-shirley-porter-and-reveals-that-her-successors-on-westminster-council-are-still-1407226.html

56.M.Macdonald,‘Localelections:favourableverdictonhomes-for-votes’,Independent,7May1994.http://www.independent.co.uk/news/uk/local-elections-favourable-verdict-on-homesforvotes-1434137.html

57.R.Kay,‘UntoldtaleofDameShirleyPorter’sscandal’,DailyMail,1September2009.http://www.dailymail.co.uk/debate/article-1210385/RICHARD-KAY-Untold-tale-Dame-Shirley-Porters-scandal.html

58.J.Dromey,oppositionhousingspokesman,quotedinR.Ramesh,‘Londoncouncilsfacequestionsforhousingfamiliesoutsidethecapital’,Guardian,3December2012.http://www.guardian.co.uk/society/2012/dec/03/london-councils-housing-families-outside-capital

59.C.Hartman,Cityforsale:thetransformationofSanFrancisco,Berkeley:UniversityofCaliforniaPress,2002.

60.J.Silver-Greenberg,‘ACLUsuesMorganStanleyovermortgageloans’,NewYork

http://www.independent.co.uk/news/uk/dumping-the-poor-nick-cohen-unravels-the-homesforvotes-scandal-engulfing-dame-shirley-porter-and-reveals-that-her-successors-on-westminster-council-are-still-1407226.html

http://www.independent.co.uk/news/uk/local-elections-favourable-verdict-on-homesforvotes-1434137.html

http://www.dailymail.co.uk/debate/article-1210385/RICHARD-KAY-Untold-tale-Dame-Shirley-Porters-scandal.html

http://www.guardian.co.uk/society/2012/dec/03/london-councils-housing-families-outside-capital

Times,15October2012.http://www.nytimes.com/2012/10/15/business/aclu-to-sue-morgan-stanley-over-mortgage-loans.html

61.B.ThomasandD.Dorling,IdentityinBritain:acradle-to-graveatlas,Bristol:PolicyPress,2007(seechaptersontheelderly,mapsoftenureofpeopleagedoversixty-fiveinLondon).

62.ThomasandDorlingasabove,butnowlookatthechapteronchildrenandthemapsontheirethnicity.Somecanbeviewedforfreehere:http://www.dannydorling.org/books/identity/

63.InEnglandandWalesin1911:‘Domesticserviceisstillthemainoccupationforworkingwomen,employing1,345,358’.http://www.hastingspress.co.uk/history/1914bluebook.htm

64.B.Roberts,‘BorisJohnsonrace-rowfury:DavidCameronwasblastedafterrefusingtocondemnBorisJohnsonforcallingblackchildren“piccaninnies”’,DailyMirror,10December2007.http://www.mirror.co.uk/news/uk-news/boris-johnson-race-row-fury-527310

65.D.Dorling,‘Migration:along-runperspective’,InstituteforPublicPolicyResearch,paper,2009.http://www.ippr.org/publication/55/1688/migration-a-long-run-perspective

http://www.nytimes.com/2012/10/15/business/aclu-to-sue-morgan-stanley-over-mortgage-loans.html

http://www.dannydorling.org/books/identity/

http://www.hastingspress.co.uk/history/1914bluebook.htm

http://www.mirror.co.uk/news/uk-news/boris-johnson-race-row-fury-527310

http://www.ippr.org/publication/55/1688/migration-a-long-run-perspective

5BUYING

1.F.Islam,‘Homeownership:howthepropertydreamturnedintoanightmare’,Observer,18August2013.http://www.theguardian.com/books/2013/aug/18/default-line-extract-faisal-islam-housing

2.Oxfam,Theperfectstorm:economicstagnation,therisingcostofliving,publicspendingcuts,andtheimpactonUKpoverty,Oxford:Oxfam,2012,p.41.http://policy-practice.oxfam.org.uk/publications/the-perfect-storm-economic-stagnation-the-rising-cost-of-living-public-spending-228591

3.D.Clapham,etal.,‘Housingoptionsandsolutionsforyoungpeople’,JosephRowntreeFoundationreport,June2012.http://www.jrf.org.uk/publications/housing-options-solutions-young-people

4.Ibid.,p.43.5.J.Rankin,‘Prudentialinvestsin“Generation

Rent”in£100milliondeal’,Guardian,3April2013.http://www.guardian.co.uk/business/2013/apr/03/prudential-invests-generation-rent-100m-deal

6.G.White,‘PrudentialbossTijaneThiam’spaysoarsto£7.8million,despiteFSAcensure’,Telegraph,5April2013.http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/insurance/9974069/Prudential-boss-Tijane-Thiams-pay-soars-to-7.8m-despite-FSA-censure.html

7.D.Clapham,etal.,‘Housingoptions’,p.45.

http://www.theguardian.com/books/2013/aug/18/default-line-extract-faisal-islam-housing

http://policy-practice.oxfam.org.uk/publications/the-perfect-storm-economic-stagnation-the-rising-cost-of-living-public-spending-228591

http://www.jrf.org.uk/publications/housing-options-solutions-young-people

http://www.guardian.co.uk/business/2013/apr/03/prudential-invests-generation-rent-100m-deal

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/insurance/9974069/Prudential-boss-Tijane-Thiams-pay-soars-to-7.8m-despite-FSA-censure.html

8.M.Sergeant,‘Housing:theGrantShappsvJackDromeyrowdeconstructed’,BBCNews,13June2012.http://www.bbc.co.uk/news/uk-politics-18415715

9.R.Ramesh,‘UKhousingshortageturningunder-thirtiesinto“GenerationRent”’,Guardian,13June2012.http://www.guardian.co.uk/society/2012/jun/13/generation-rent-uk-housing-shortage

10.‘Theimpactofwelfarereformonhousingassociations’,HouseMarkNews,Issue612(2013).http://www.housemark.co.uk/Newsletter.nsf/1/33BD59ABE761608780257B01003AEDA3?OpenDocument


12.D.Dorling,TheNo-nonsenseguidetoequality,Oxford:NewInternationalist,2012.

13.‘January2012nightcount’(633,782people),NationalAlliancetoEndHomelessness(NAEH),2013.http://www.endhomelessness.org/pages/faqsandhttp://www.naeh.org/

14.Seethe‘CharteredInstituteofHousing’website.http://www.cihhousing.com/asaccessedJanuary2013.BySeptember2013itwasalreadyadvertisingthe2014conference(24–6Juneifinterested)!


http://www.guardian.co.uk/society/2012/jun/13/generation-rent-uk-housing-shortage

http://www.housemark.co.uk/Newsletter.nsf/1/33BD59ABE761608780257B01003AEDA3?OpenDocument


http://www.endhomelessness.org/pages/faqs

http://www.naeh.org/

http://www.cihhousing.com/

15.Forquotesonthe2013conferencesee:http://www.cihhousing.com/page.cfm/Link=63andforphotographsoftheCapitaandKierstands,andfetchingimagesofJohnPrescottandMichaelHeseltine,seethephotogallery:http://www.cihhousing.com/page.cfm/Action=photoGallery/

16.S.Hodkinson,‘HowtheConservativesruinedsocialhousing’,Independent,1October2012.http://www.independent.co.uk/voices/comment/how-the-conservatives-ruined-social-housing-8192726.html

17.P.Toynbee,‘Howtoturnahousingcrisisintoahomelesscatastrophe’,Guardian,18February2013.http://www.guardian.co.uk/commentisfree/2013/feb/18/housing-crisis-bedroom-tax-failure-to-build

18.L.Simpson,‘Moresegregationormoremixing?’,EconomicandSocialResearchCouncilCentreonDynamicsofEthnicity,report,December2012.http://www.ethnicity.ac.uk/census/869_CCSR_Bulletin_More_segregation_or_more_mixing_v7NW.pdf

19.N.Ledwith,‘Sparebedroomtaxonunoccupiedcouncilhouseroomscouldforcepensionerstomoveintosmallerhomes’,DailyMail,18February2013.http://www.dailymail.co.uk/news/article-2280358/Spare-bedroom-tax-force-pensioners-smaller-homes.html#

20.P.Butler,‘FostercarerswithmorethanonechildwillstillfaceBedroomTax’,Guardian,14March2013.

http://www.cihhousing.com/page.cfm/Link=63

http://www.cihhousing.com/page.cfm/Action=photoGallery/

http://www.independent.co.uk/voices/comment/how-the-conservatives-ruined-social-housing-8192726.html

http://www.guardian.co.uk/commentisfree/2013/feb/18/housing-crisis-bedroom-tax-failure-to-build

http://www.ethnicity.ac.uk/census/869_CCSR_Bulletin_More_segregation_or_more_mixing_v7NW.pdf

http://www.dailymail.co.uk/news/article-2280358/Spare-bedroom-tax-force-pensioners-smaller-homes.html

http://www.guardian.co.uk/society/2013/mar/14/foster-carers-bedroom-benefits-cut

21.Aspareroomisoftenneeded,forinstance,duetouncontrolledshoutingatnight,notjusttostoreequipmentsuchasawheelchair;orbecauseextraspacebythesideofabedisrequiredforotherequipment.

22.NationalHousingFederation,‘BedroomTax’webpage.http://www.housing.org.uk/policy/welfare_reform/%E2%80%98under-occupation%E2%80%99_penalty.aspx

23.IhadbetterkeephisidentityanonymousincasetheMetropolitanHousingAssociationgetsupset.

24.C.Brown,‘LordsfearBedroomTaxwillhurtdisabledtenants’,‘InsideHousing’website,17October2012.http://www.insidehousing.co.uk/tenancies/lords-fear-bedroom-tax-will-hurt-disabled-tenants/6524235.article

25.D.Long,‘Prettyvacant?Howpoliciesonunderoccupationwillhitnortherntenants’,Guardian,housingnetworkblog,3October2011.http://www.guardian.co.uk/housing-network/2011/oct/03/pretty-vacant-under-occupation-northern-tenants

26.ThepseudonymbeingClareBelzofNorthStaffordshire.http://www.theguardian.com/housing-network/2011/oct/03/pretty-vacant-under-occupation-nothern-tenants#start-of-comments

http://www.guardian.co.uk/society/2013/mar/14/foster-carers-bedroom-benefits-cut

http://www.housing.org.uk/policy/welfare_reform/%E2%80%98under-occupation%E2%80%99_penalty.aspx

http://www.insidehousing.co.uk/tenancies/lords-fear-bedroom-tax-will-hurt-disabled-tenants/6524235.article

http://www.guardian.co.uk/housing-network/2011/oct/03/pretty-vacant-under-occupation-northern-tenants

http://www.theguardian.com/housing-network/2011/oct/03/pretty-vacant-under-occupation-nothern-tenants#start-of-comments

27.J.Harris,‘Thesparebedroomtax:amessofcontradictionandimpossibility’,Guardian,25January2013.·http://www.guardian.co.uk/society/2013/jan/25/spare-bedroom-tax-contradiction-impossibility

28.E.Lester,‘Socialhousingspareroomsaluxury–welfareminister’,BBCNews,6June2012.http://www.bbc.co.uk/news/uk-politics-13671653

29.K.Mudie,‘Loadsofroomtotalk!BedroomTaxToryLordFreudlivesineight-bedroomcountrymansion’,Mirror,19January2013.http://www.mirror.co.uk/news/uk-news/bedroom-tax-tory-lord-freud-1545677

30.E.Budd,‘Havingababytogetacouncilhouse?Notin2012’,‘Mumsnet’website,2012.http://www.mumsnet.com/Talk/am_i_being_unreasonable/a1568974-Having-a-baby-to-get-a-council-house

31.ObservationbyLyneLeesHollen,madein1990,quotedinK.C.Martin,Hardandunrealadvice:mothers,socialscienceandtheVictorianpovertyexperts,NewYork:Palgrave,2008,p.55.

32.Shelter,‘“GenerationRent”familiesdoubleintenyears’,pressrelease,1July2013.http://england.shelter.org.uk/news/july_2013/generation_rent_families_double_in_10_years

33.P.Hetherington,‘England’shousingcrisisisbeingignoredbypoliticians’,Guardian,8January2013.http://www.guardian.co.uk/society/2013/jan/08/england-housing-crisis-ignored-politicians

http://www.guardian.co.uk/society/2013/jan/25/spare-bedroom-tax-contradiction-impossibility


http://www.mirror.co.uk/news/uk-news/bedroom-tax-tory-lord-freud-1545677

http://www.mumsnet.com/Talk/am_i_being_unreasonable/a1568974-Having-a-baby-to-get-a-council-house

http://england.shelter.org.uk/news/july_2013/generation_rent_families_double_in_10_years

http://www.guardian.co.uk/society/2013/jan/08/england-housing-crisis-ignored-politicians

34.Barclays,‘Buyingbeatsrentingbyalmost£200,000overalifetime’,pressrelease,18June2012.http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?site=pfs&task=homefreeopenplanwealth&value=18997

35.B.Appelbaum,‘Familynetworthdropstolevelofearly1990s’,NewYorkTimes,11June2012.http://www.nytimes.com/2012/06/12/business/economy/family-net-worth-drops-to-level-of-early-90s-fed-says.html?_r=2

36.D.BlanchflowerandA.J.Oswald,‘Doeshighhomeownershipimpairthelabourmarket?’,EconomicsDepartmentworkingpaper,UniversityofWarwick,May2013.http://www.andrewoswald.com/docs/finalmayHomeOwnershipUnemBlanchflowerOswald2013.pdf

37.S.Nolan,‘“Anationofestateagents”:propertysectorjobssoarasVinceCablewarnsofdangersofanewhousingbubble’,DailyMail,12September2013.http://www.dailymail.co.uk/news/article-2418402/Property-sector-employment-soars-Vince-Cable-warns-George-Osborne-dangers-new-housing-bubble.html

38.P.Aldrick,‘Estateagenthiringboomhelpsdrivejobsgrowth’,Telegraph,11September2013.http://www.telegraph.co.uk/finance/jobs/10301646/Estate-agent-hiring-boom-helps-drive-jobs-growth.html

39.F.S.Fitzgerald,TalesoftheJazzAge,NewYork:CharlesScribner’sSons,1922.

http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?site=pfs&task=homefreeopenplanwealth&value=18997

http://www.nytimes.com/2012/06/12/business/economy/family-net-worth-drops-to-level-of-early-90s-fed-says.html?_r=2

http://www.andrewoswald.com/docs/finalmayHomeOwnershipUnemBlanchflowerOswald2013.pdf

http://www.dailymail.co.uk/news/article-2418402/Property-sector-employment-soars-Vince-Cable-warns-George-Osborne-dangers-new-housing-bubble.html

http://www.telegraph.co.uk/finance/jobs/10301646/Estate-agent-hiring-boom-helps-drive-jobs-growth.html

http://fitzgerald.narod.ru/crackup/056e-eho.htm

40.OfficeforNationalStatistics,‘Middleincomehouseholds,1977–2011/12’,London:OfficeforNationalStatistics,2December2013.http://www.ons.gov.uk/ons/dcp171776_341133.pdf

41.D.AlexanderandM.Prisk,‘Nextstepsfor£10billionhousingguarantees’,‘GOV.UK’website,1February2013.https://www.gov.uk/government/news/next-steps-for-10-billion-housing-guarantees

42.D.Orr,‘Hometruths2012:England’,NationalHousingFederation,report,22October2012.http://www.housing.org.uk/media/home_truths/home_truths_2012_england.aspx

43.Staffreporter,‘Britishtenants“facehighestrentsinWesternEurope”’,Telegraph,28June2013.http://www.telegraph.co.uk/finance/personal-finance/7858800/British-tenants-face-highest-rents-in-western-Europe.html

44.N.King,‘UKhomeownershipfallstolowestlevelsince1988’,Guardian,16November2012.http://www.guardian.co.uk/money/2012/nov/16/home-ownership-lowest-since-1988

45.LSLPropertyServices,‘RentsreachrecordhighinSeptember’,report,18October2013.http://www.lslps.co.uk/documents/buy_to_let_index_sep13.pdf

46.T.CaveroandP.Krisnah,Acautionarytale:thetruecostofausterityandinequalityinEurope,Oxford:Oxfam,2013.http://policy-

http://fitzgerald.narod.ru/crackup/056e-eho.htm


http://www.gov.uk/government/news/next-steps-for-10-billion-housing-guarantees

http://www.housing.org.uk/media/home_truths/home_truths_2012_england.aspx

http://www.telegraph.co.uk/finance/personal-finance/7858800/British-tenants-face-highest-rents-in-western-Europe.html

http://www.guardian.co.uk/money/2012/nov/16/home-ownership-lowest-since-1988

http://www.lslps.co.uk/documents/buy_to_let_index_sep13.pdf

http://policy-practice.oxfam.org.uk/publications/a-cautionary-tale-the-true-cost-of-austerity-and-inequality-in-europe-301384

practice.oxfam.org.uk/publications/a-cautionary-tale-the-true-cost-of-austerity-and-inequality-in-europe-301384

47.LouisBoyson,1931,quotedinW.N.GoetzmannandF.Newman,‘Securitizationinthe1920s’,NationalBureauofEconomicResearchWorkingPaperNo.15650,January2010.http://www.nber.org/papers/w15650

48.D.Harvey,Rebelcities,London:Verso,2012.49.AsIwrite,figuresfromScotlandhaveyetto

bereleased.ForEnglandandWalesseeT.Smith,‘Whatdidthecensusfeedingfrenzytellusabouthousing?’,Guardian,2January2013.http://www.guardian.co.uk/housing-network/2013/jan/02/social-housing-census-data-2011

50.R.Lynch,‘Unemploymentfallswithriseinpart-timeworkers’,Independent,14July2013.http://www.independent.co.uk/news/uk/home-news/unemployment-falls-with-rise-in-parttime-workers-2026252.html

51.K.Gulliver,‘“Allinittogether?”Measuringtheimpactofausterity,housingstrategyandwelfarechangesonvulnerablegroupsinsocialhousing’,HumanCityInstituteBulletinNo.10,March2012.http://www.humancity.org.uk/publications.htm

52.Ibid.53.M.Seamark,‘RaquelRolnik:adabblerin

witchcraftwhoofferedananimalsacrificetoMarx’,DailyMail,12September2013.


http://www.guardian.co.uk/housing-network/2013/jan/02/social-housing-census-data-2011

http://www.independent.co.uk/news/uk/home-news/unemployment-falls-with-rise-in-parttime-workers-2026252.html

http://www.humancity.org.uk/publications.htm

http://www.dailymail.co.uk/news/article-2418204/Raquel-Rolnik-A-dabbler-witchcraft-offered-animal-sacrifice-Marx.html

54.Oxfam,Theperfectstorm.55.OfficeforNationalStatistics,‘Theeffectsof

taxesandbenefitsonhouseholdincome,2011/12’,statisticalbulletin,2013.http://www.ons.gov.uk/ons/dcp171778_317365.pdf

56.B.Mason,‘Britain:children’scharityfindsriskof“socialapartheid”’,‘WorldSocialist’website,9September2013.http://www.wsws.org/en/articles/2013/09/09/pove-s09.html

57.B.Marshall,‘Thehousingeconomy:boom,bustandconsumersentiment’,IpsosMORISocialResearchInstitute,May2012,p.12.http://www.ipsos-mori.com/_emails/sri/understandingsociety/may2012/mobile/no4.htmlAyearaftermakingthestatementaboveBenMarshallrevealedmorepollfindings,suggestingthat‘thefurtheryoutravelawayfromBritain,thebetterBritainlooks’:‘HowdoestheworldviewBritain?’,UnionJack,19January2013,p.1.http://www.unionjacknews.com/articles/how-does-the-world-view-britain/.PartofthereasonBritainlooksbetterfromadistanceisbecause–fromadistance–you’renotpayingtolivehere.

58.Alldetailswereatthis‘FirstSteps’websiteasof8January2013.

http://www.dailymail.co.uk/news/article-2418204/Raquel-Rolnik-A-dabbler-witchcraft-offered-animal-sacrifice-Marx.html


http://www.wsws.org/en/articles/2013/09/09/pove-s09.html

http://www.ipsos-mori.com/_emails/sri/understandingsociety/may2012/mobile/no4.html

http://www.unionjacknews.com/articles/how-does-the-world-view-britain/

http://www.firststepslondon.org/property-details.asp?PropId=7501

59.D.Binns,‘PeopleonhousingwaitinglistinWalthamForestcannowapplytoliveatOlympicPark’,EppingGuardian,31January2013.http://www.guardian-series.co.uk/news/10198108.People_on_housing_waiting_list_can_now_apply_to_live_at_Olympic_Park/

60.Althoughinhisautumnstatementof2013theChancellorannouncedmeasurestomakesuchcircumventingalittleharderthanithadbeen,butstillnotimpossible.Hereducedtheperiodinwhichyouwereallowedtoclaimahomewasyourmainresidence,evenifyouwererentingitout,toeighteenmonthsafteryoustatedthatyouhadlastlivedinit.Landlordswhoevicteveryyearandclaimtomoveinforamonthbeforerentingoutagainwouldstillbeabletoavoidcapitalgainstaxand,nodoubt,therearelesstroublesomewaysthanthat,butnonethataregoodforthetenants.

61.Eurostat,‘Housingstatistics:datafromOctober2012’,‘EuropeanCommission’website,2012.http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Housing_statistics

62.R.Ramesh,‘CamdenCouncilplanstomove761poorfamiliesfromLondon’,Guardian,13February2013.http://www.guardian.co.uk/uk/2013/feb/13/london-council-relocation-benefits-cap

63.Nowforaslongastwoyearswithnothreatofanyactionbeingtakenbylocalgovernment–seethereferencetotherelevant

http://www.firststepslondon.org/property-details.asp?PropId=7501

http://www.guardian-series.co.uk/news/10198108.People_on_housing_waiting_list_can_now_apply_to_live_at_Olympic_Park/

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Housing_statistics


legislation,StatutoryInstrument2625of2012,whichisgiveninChapter4ofthisvolume,p.111above.

64.AssociatedPress,‘Mortgageratesfalltoarecordlow’,NewYorkTimes,4October2012.http://www.nytimes.com/2012/10/05/business/mortgage-rates-fall-to-a-record-low.html

65.D.Orr,‘Hometruths2012’.66.Reuters,‘Homepricesup5.5%fromayear

ago’,NewYorkTimes,29January2013.http://www.nytimes.com/2013/01/30/business/home-prices-up-5-5-from-a-year-ago.html

67.P.Collinson,‘Housepricescreepupover2012’,Guardian,29January2013.http://www.guardian.co.uk/money/2013/jan/29/house-prices-creep-up-2012-land-registry

68.D.Blanchflower,‘Housepricesareboomingagainbutthebustthat’sboundtofollowwillcostusdear:ariseinrateswouldinevitablycauseanimmediateanddeephousepricecrash’,Independent,1September2013.http://www.independent.co.uk/voices/comment/house-prices-are-booming-again-but-the-bust-thats-bound-to-follow-will-cost-us-dear-8793316.html

69.SeequotefromDavid(Danny)Blanchflowerinthesectionbelowtitled‘LendingSlowdown’,p.231.AndalsoA.Monaghan,‘Debtcrisis:UKhousingslumpwilldeepen,warnsIMF’,Telegraph,19July2012.http://www.telegraph.co.uk/finance/financialcrisis/9413200/Debt-

http://www.nytimes.com/2012/10/05/business/mortgage-rates-fall-to-a-record-low.html

http://www.nytimes.com/2013/01/30/business/home-prices-up-5-5-from-a-year-ago.html

http://www.guardian.co.uk/money/2013/jan/29/house-prices-creep-up-2012-land-registry

http://www.independent.co.uk/voices/comment/house-prices-are-booming-again-but-the-bust-thats-bound-to-follow-will-cost-us-dear-8793316.html

http://www.telegraph.co.uk/finance/financialcrisis/9413200/Debt-crisis-UK-housing-slump-will-deepen-warns-IMF.html

crisis-UK-housing-slump-will-deepen-warns-IMF.html

70.E.J.LevinandG.Pyce,‘ThedynamicsofspatialinequalityinUKhousingwealth’,DepartmentofUrbanStudiesdiscussionpaper,UniversityofGlasgow,p.19.http://www.academia.edu/775502/The_dynamics_of_spatial_inequality_in_UK_housing_wealth_Housing_Policy_Debate_Vol._21_No._1_January_2011_99-132

71.Seetheleadingquoteatthestartofthesectionimmediatelybelow,‘London’,p.176.

72.LloydsTSBPrivateBanking,‘£34,000extratolivenearEngland’stopstateschools’,pressrelease,10September2012,reportedinawidevarietyofmedia.http://www.propertyreporter.co.uk/view.asp?ID=10154

73.N.O’Brien,‘Anothercountry:London’sseparatenessfromtherestofBritainbecomesmorepronouncedeveryyear’,Spectator,14April2012.http://www.spectator.co.uk/features/7779258/another-country/

74.A.Ashworth,‘IsatectonicshiftmovingNewcastletotheMidlands?’,SundayTimes,15February2013.http://www.thetimes.co.uk/tto/life/property/article3688460.ece

75.J.Mathew,‘UKhousepricesfallinSeptemberamidheatwave’,InternationalBusinessTimes,16September2013.http://www.ibtimes.co.uk/articles/506331/20130916/rightmove-uk-house-price-forecast-london.htm

http://www.academia.edu/775502/The_dynamics_of_spatial_inequality_in_UK_housing_wealth_Housing_Policy_Debate_Vol._21_No._1_January_2011_99-132

http://www.propertyreporter.co.uk/view.asp?ID=10154

http://www.spectator.co.uk/features/7779258/another-country/

http://www.thetimes.co.uk/tto/life/property/article3688460.ece

http://www.ibtimes.co.uk/articles/506331/20130916/rightmove-uk-house-price-forecast-london.htm

76.Althoughwhatthereiscanbeacute,includinghomelessnessinblue-colouredtentcities,butorderedhomelessinacountrywithabouthalftheflatlandofEnglandandmorethantwicethepopulation.

77.J.Waterson,‘Tokyotopscostoflivingtable–butLondonrisestosixteenthplace’,‘CityA.M.’website,5February2013.http://www.cityam.com/latest-news/tokyo-tops-cost-living-table-london-rises-16th-place

78.J.Grainger,‘Superhomes–inaleagueoftheirown’,RiponGazette,12February2013.http://www.ripongazette.co.uk/lifestyle/home-garden/property-news/superhomes-in-a-league-of-their-own-1-5350104

79.B.Wassener,‘BuilderstraveltoAsiatocourtbuyersfornewLondonhomes’,NewYorkTimes,14February2013.http://www.nytimes.com/2013/02/15/greathomesanddestinations/15iht-property15.html

80.D.Dorling,‘Britain’sautumnstatement:thebutterflyeffect?’,Economistblog,7December2013.http://www.dannydorling.org/?page_id=3893

81.Meanwhile,thosepartsofsouthernEuropetendtohaveverylowbirthratesandmightbenefit,inthelongterm,ifthathousingcurrentlyusedbypensionersfromthenorthofEuropeinsteadhousedyoungfamiliesfromfurthersouthandeast,fromjustoutsideofEurope.AsimilarcasecanbemadeforsomuchofthehousingbuiltinIrelandand

http://www.cityam.com/latest-news/tokyo-tops-cost-living-table-london-rises-16th-place

http://www.ripongazette.co.uk/lifestyle/home-garden/property-news/superhomes-in-a-league-of-their-own-1-5350104

http://www.nytimes.com/2013/02/15/greathomesanddestinations/15iht-property15.html


currentlylyingunusedasyoungadultsleavethatislandandthepopulationages.

82.RichardDonnell,quotedinP.Collinson,‘Houseprices:guidetopropertyhotspots’,Guardian,30March2012.http://www.guardian.co.uk/money/2012/mar/30/house-prices-guide-property-hotspots#

83.D.Hipwell,‘OutragegreetsRICS’callforactiontolimithousepriceinflation’,TheTimes,14September2013.http://www.thetimes.co.uk/tto/business/economics/article3868899.ece

84.A.Gentleman,‘Thewomanwholivesinashed:howLondonlandlordsarecashingin’,Guardian,9May2012.http://www.guardian.co.uk/society/2012/may/09/london-landlords-desperate-tenants

85.GeoInformationGroup,‘NewShedBaseMapping’,pressreleasesenttotheauthor,12March2013.http://www.geoinformationgroup.co.uk/uncategorized/new-shed-base-mapping#more-4544

86.No‘outhouse’canbeusedtohousepeoplewithoutthepermissionoftherespectivecouncil.SeeEalingCouncil’sadvice,accessedDecember2013.http://www.ealing.gov.uk/info/100007/housing/1385/illegal_outhouses

87.Staffreporter,‘Bedsinshedsprogrammeuncoversmorethan200suspectedproperties’,SloughObserver,26June2013.http://www.sloughobserver.co.uk/news/roundup/articles/2013/06/26/90679-beds-in-sheds-programme-uncovers-more-than-200-suspected


http://www.thetimes.co.uk/tto/business/economics/article3868899.ece

http://www.guardian.co.uk/society/2012/may/09/london-landlords-desperate-tenants

http://www.geoinformationgroup.co.uk/uncategorized/new-shed-base-mapping#more-4544

http://www.ealing.gov.uk/info/100007/housing/1385/illegal_outhouses

http://www.sloughobserver.co.uk/news/roundup/articles/2013/06/26/90679-beds-in-sheds-programme-uncovers-more-than-200-suspected

88.P.Collins,‘LeaveLondonandyou’llfindfantasyisland’,SundayTimes,15February2013.http://www.thetimes.co.uk/tto/opinion/columnists/philipcollins/article3688788.ece

89.AsIhavestatedpubliclybefore:D.Dorling,‘Letter:Borisisrighttofighthousingcuts’,LondonEveningStandard,1November2010,p.47.http://www.dannydorling.org/?page_id=1927

90.C.Spillane,‘BonuscutsleavelesscashforLondonluxury-homepurchases’,BloombergNews,28February2013.http://www.bloomberg.com/news/2013-02-28/london-luxury-home-cash-purchases-plunge-on-lower-bonus-payments.html

91.AccordingtoLucianCook,DirectorofResidentialResearchatSavills,quotedinB.Barrow,‘Ataleoftwonations:riseinvalueofaLondonflatenoughtobuyahouseinthenorth’,DailyMail,1March2013.http://www.dailymail.co.uk/news/article-2286269/Rise-value-London-flat-buy-house-North.html

92.C.Whitehead,etal.,Housingintransition:understandingthedynamicsoftenurechange,London,ResolutionFoundation,8June2012.

93.A.Harrison,‘Helpelderlydownsizehousing,saysDemos’,BBCNews(EducationandFamily),12September2013.http://www.bbc.co.uk/news/education-24050607

http://www.thetimes.co.uk/tto/opinion/columnists/philipcollins/article3688788.ece


http://www.bloomberg.com/news/2013-02-28/london-luxury-home-cash-purchases-plunge-on-lower-bonus-payments.html

http://www.dailymail.co.uk/news/article-2286269/Rise-value-London-flat-buy-house-North.html

http://www.bbc.co.uk/news/education-24050607

6SLUMP

1.T.Slater,‘Grievingforalosthome,revisited:the“BedroomTax”anddisplacement’,UniversityofEdinburgh,SchoolofGeosciencesblogentry,23September2013.http://www.geos.ed.ac.uk/homes/tslater/bedroomtax.html

2.A.Morton,‘HowtotackleBritain’sNIMBYsandendcrisisinnewhouse-building’,‘CityA.M.’website,9September2013.http://www.cityam.com/article/1378688019/how-tackle-britain-s-nimbys-and-end-crisis-new-house-building

3.Wecannowfindoutinaninstanthowmuchourpropertyisworthon‘Zoopla’or‘Rightmove’,thetwinoligopoliesoftheonlineUKpropertyworld.Itissurprisingsomanysurveyorsstayinbusiness,giventhese‘tools’.Maybeinthesamewaythattheadventofschoolleaguetablescausedparentstomovetowardstheareaswithsupposedlybetterschools,theseonlinetoolsnowsteerbuyerstowardsareaswheretheythinktheyshouldfitin,areasofthecitywithintheirprecisepricebracket.

4.J.Joyce,‘“Shoeboxhomes”becometheUKnorm’,BBCNews,14September2011.http://www.bbc.co.uk/news/uk-14916580

5.R.Tunstall,‘Whatshouldweworryaboutwhenweworryabouthousingproblems?’,inaugurallecture,UniversityofYork,2012.

http://www.geos.ed.ac.uk/homes/tslater/bedroomtax.html

http://www.cityam.com/article/1378688019/how-tackle-britain-s-nimbys-and-end-crisis-new-house-building


http://www.slideshare.net/djgb500/inaug-slides-final

6.Whichitistokeengardeners,buttheyareaminorityinmanyareas.Youcantellfromthegardens.Manypeopleimaginethattheywillbemoreinterestedingardeningthantheyturnouttobeuponbuyingahomewithagarden.Manyotherswithoutagardenlongforoneandwoulduseitwell.

7.Incaseyouarewonderingaboutthemillion-pluspeoplewhodonotliveinhouseholdsinEnglandandWales.Bedsandbedroomsincommunalestablishments,hallsofresidence,prisons,hospitals,carehomesandhotelsarenotcountedhere.Alltheseratiosareforthe‘householdpopulation’.

8.Thesefiguresareonlyforpeoplelivinginflatsandhousesandarefoundinthe2011censustablesKS101EWandKS403EW:rooms7,425,253;bedrooms,3,647,493;householdresidents3,011,182.

9.Ibid.:rooms126,176,638;bedrooms63,088,319;householdresidents52,059,931.

10.AsProfessorRebeccaTunstallexplainedinherinaugurallectureasthenewDirectorfortheCentreforHousinginYork;seenote5above.

11.Wehavetosay‘appeared’becausethecensusrecordsonlythosepresentinahomeatthetimeitistaken,notthosewhomighthavedecidedtoextendthathome,sellitandmoveon.

http://www.slideshare.net/djgb500/inaug-slides-final

12.D.Dorling,‘Underclass,overclass,rulingclass,supernovaclass’inA.Walker,A.SinfieldandC.Walker(eds.),Fightingpoverty,inequalityandinjustice,Bristol:PovertyPress,2011,Chapter8.http://www.dannydorling.org/?page_id=2446.

13.RedrawnfromD.Dorling,‘FairnessandthechangingfortunesofpeopleinBritain’,JournaloftheRoyalStatisticalSociety(A),Vol.176,No.1(2013),pp.97–128.http://www.dannydorling.org/?page_id=3597

14.R.Tunstall,‘Relativehousinginequality:ThedeclineandreturnofhousingspaceinequalityinEnglandandWales,1911–2011’,personalcommunication(Figure6).

15.Intriguingly,asofSeptember2013,the‘Wikipedia’entryonthisreadsexactlyasifitwereeditedbycivilservants,notbyindependentmembersofthepublic;butitdoesgivethecorrectdatesofintroductionevenifitisalittledisingenuousabout‘underoccupyingtheirhome’(youcanofcourseeditthissource).http://en.wikipedia.org/wiki/Local_Housing_Allowance#Bedroom_Requirement

16.B.Thomas,personalcorrespondencewithBethanThomas,whokindlysuggestedthesereasonsatatimewhenshethoughtshewasnotthinkingclearly,butatleastfarmoreclearlythanme!

17.C,SpillaneandN.Callanan,‘Sultan’staxdiscountonLondonhouseshowslawfavoursrich’,BloombergNews,25October2012;



http://en.wikipedia.org/wiki/Local_Housing_Allowance#Bedroom_Requirement

alsoreportedintheIndependent.http://www.independent.co.uk/news/uk/home-news/sultans-tax-discount-on-london-house-shows-law-favours-rich-8229543.html

18.Theytendnottooverlapgreatlywiththosewhoseetaxationasthepriceyoupayforcivilization.ThenearestorganizationinBritaintotheTeaPartyistheTaxPayers’Alliance,agroupthatappearstobefundedbyatinynumberofpeoplewhoavidlydislikepayingtaxes.

19.Ramesh,‘Localauthoritiesexpecthalfofpoorresidentstorefusetopaycounciltax’,Guardian,15October2012.http://www.guardian.co.uk/money/2012/oct/15/local-authorities-residents-council-tax[notetheestimateoftwomillioncomesfromdividing£500millionby£5and52weeksinayear].

20.C.Brown,‘Londoncounciltomakeupcounciltaxbenefitloss’,‘InsideHousing’website,1November2012.http://www.insidehousing.co.uk/care/london-council-to-make-up-council-tax-benefit-loss/6524474.article

21.N.Triggle,‘Whatthecaponcarecostsdoesn’tdo’,BBCHealthNews,11February2013.http://www.bbc.co.uk/news/health-21411148

22.G.Morgenson,‘TheBritish,atleast,aregettingtough’,NewYorkTimes,7July2012.http://www.nytimes.com/2012/07/08/business/barclays-

http://www.independent.co.uk/news/uk/home-news/sultans-tax-discount-on-london-house-shows-law-favours-rich-8229543.html

http://www.guardian.co.uk/money/2012/oct/15/local-authorities-residents-council-tax

http://www.insidehousing.co.uk/care/london-council-to-make-up-council-tax-benefit-loss/6524474.article

http://www.bbc.co.uk/news/health-21411148

http://www.nytimes.com/2012/07/08/business/barclays-case-opens-a-window-on-wall-st-fair-game.html

case-opens-a-window-on-wall-st-fair-game.html

23.J.Waldron,‘Homelessnessandtheissueoffreedom’,UCLALawReview,Vol.39(1991),p.322.http://faculty.washington.edu/pembina/all_articles/Waldron%201991.pdf

24.G.Esler,‘Canlocalsbepersuadedtobacknewhousingintheirarea?’,Newsnight,9January2013.http://www.bbc.co.uk/programmes/b01psky9

25.Itusedtobeaminimum10%discountbutnowsomelocalcouncilshavenodiscounttotrytoreducetheamountofpropertythatisempty,suchasinGwynedd,inWales.Others,suchasCountyDurham,plantoincreasethecounciltaxonsecondandholidayhomessubstantiallytoavoidcutselsewhere.InCamdentheywillsoonbe‘chargingcounciltaxat150%forpropertiesemptyfortwoyearsormore.Intotaltherearemorethan7,000emptyandsecondhomesintheborough.’Source:M.Katz,‘Rebuildthetaxbasetofundservices’,letter,Guardian,13March2013.http://www.guardian.co.uk/money/2013/mar/12/rebuild-tax-base-fund-services

26.G.Eaton,‘LabourwillsoonpledgetoscraptheBedroomTax,saysScottishwelfarespokesman’,NewStatesman,14September2013.http://www.newstatesman.com/politics/2013/09/labour-


http://www.bbc.co.uk/programmes/b01psky9

http://www.guardian.co.uk/money/2013/mar/12/rebuild-tax-base-fund-services

http://www.newstatesman.com/politics/2013/09/labour-will-soon-pledge-scrap-bedroom-tax-says-scottish-welfare-spokesman

will-soon-pledge-scrap-bedroom-tax-says-scottish-welfare-spokesman

27.FalseEconomy,‘OurresearchintheIndependent:BedroomTax–50,000peoplefaceeviction’,‘FalseEconomy’websiteblog,18September2013.http://falseeconomy.org.uk/blog/our-research-in-the-independent-bedroom-tax-50000-people-face-eviction

28.M.Pennycook,‘Thecoalition’swelfarecutsmeanadramaticriseincounciltaxforthepoorest’,31January2013.http://www.resolution-foundation.org/blog/2013/Jan/31/coalitions-welfare-cuts-mean-dramatic-rise-council/alsopublishedintheNewStatesman.

29.Z.Conway,‘Oneinthree“behindonrent”sincehousingbenefitchanges’,BBCBusinessNews,19September2013.http://www.bbc.co.uk/news/business-24149763

30.Reuters,‘Luxuryhome-builderreportsarevenuegainof41%’,NewYorkTimes,22August2012.http://www.nytimes.com/2012/08/23/business/toll-brothers-reports-revenue-gain-of-41.html

31.AlsoaboardmemberatForbessinceJune2010:http://www.forbes.com/profile/douglas-yearley/

32.BBC,‘Whatisquantitativeeasing?’,BBCBusinessNews,7March2013.

http://falseeconomy.org.uk/blog/our-research-in-the-independent-bedroom-tax-50000-people-face-eviction

http://www.resolution-foundation.org/blog/2013/Jan/31/coalitions-welfare-cuts-mean-dramatic-rise-council/also


http://www.nytimes.com/2012/08/23/business/toll-brothers-reports-revenue-gain-of-41.html

http://www.forbes.com/profile/douglas-yearley/


33.Staffreporter,‘Homepricesinregionstayflat’,LosAngelesTimes,17December2013,p.B1.

34.S.Fleming,‘RecordpropertypricesboostUSconfidence’,TheTimes,31July2013.http://www.thetimes.co.uk/tto/business/industries/construction-property/article3829959.ece

35.G.Topham,‘Helicoptercrash:strictrulesgovernLondonairspace’,Guardian,16January2013.http://www.guardian.co.uk/uk/2013/jan/16/helicopter-crash-strict-rules

36.S.Hamilton,‘RightmoveraisesUKhousepriceforecastaftersummerlull’,BloombergNews,16September2013.http://www.bloomberg.com/news/2013-09-15/rightmove-raises-u-k-house-price-forecast-after-summer-lull.html

37.W.D.Cohen,‘WhyWallStreetloveshousesagain’,Atlantic,19September2013.http://www.theatlantic.com/magazine/archive/2013/10/why-wall-street-loves-houses-again/309454/

38.Ibid.39.A.Hilton,‘Thesuper-richarepushing

workersoutofthecapital’,EveningStandard,4February2013.http://www.standard.co.uk/comment/comment/anthony-hilton-the-superrich-are-pushing-workers-out-of-the-capital-8480115.html


http://www.thetimes.co.uk/tto/business/industries/construction-property/article3829959.ece

http://www.guardian.co.uk/uk/2013/jan/16/helicopter-crash-strict-rules

http://www.bloomberg.com/news/2013-09-15/rightmove-raises-u-k-house-price-forecast-after-summer-lull.html

http://www.theatlantic.com/magazine/archive/2013/10/why-wall-street-loves-houses-again/309454/

http://www.standard.co.uk/comment/comment/anthony-hilton-the-superrich-are-pushing-workers-out-of-the-capital-8480115.html

40.J.KolleweandR.Neate,‘LondonpropertyoffersstableinvestmentforwealthyEuropeans’,Guardian,1June2012.http://www.guardian.co.uk/uk/2012/jun/01/london-property-stable-investment-europeans

41.M.West,‘Capitallosses:theinteractivemapthatshowstheLondonboroughswherehousepricesareactuallyFALLING’,DailyMail,18September2013.http://www.thisismoney.co.uk/money/mortgageshome/article-2423620/The-London-boroughs-house-prices-falling-just-like-rest-country.html

42.M.BrignallandH.Osbourne,‘Londonpropertyboomleavessuper-richscratchingaroundforanewpad’,Guardian,20September2013.http://www.theguardian.com/business/2013/sep/20/london-property-boom-super-prime-market

43.Staffreporter,‘Britain’smostexpensivebeachhutsellsfor£170,000’,Telegraph,18June2012.http://www.telegraph.co.uk/news/newstopics/howaboutthat/9340653/Britains-most-expensive-beach-hut-sells-for-170000.html

44.Goingupinincrementsof£100,000atatime,buthadhisspeechwriterbeenquickerhecouldhavecalleditthe‘J2Opolicy’andaddedsomequipaboutthisparticularbrandofjuicebeinggoodforyou.

45.D.Dorling,‘CounciltaxAtoZ’,letter,LondonEveningStandard,24September

http://www.guardian.co.uk/uk/2012/jun/01/london-property-stable-investment-europeans

http://www.thisismoney.co.uk/money/mortgageshome/article-2423620/The-London-boroughs-house-prices-falling-just-like-rest-country.html

http://www.theguardian.com/business/2013/sep/20/london-property-boom-super-prime-market

http://www.telegraph.co.uk/news/newstopics/howaboutthat/9340653/Britains-most-expensive-beach-hut-sells-for-170000.html

2012.http://www.yppuk.org/2012/09/readers-letter-of-day.html

46.R.WilkinsonandK.Pickett,Thespiritlevel:whyequalityisbetterforeveryone,London:Penguin,2010.

47.N.Nowatzki,‘Wealthinequalityandhealth:apoliticaleconomyperspective’,InternationalJournalofHealthServices,Vol.42,No.3(2012),pp.403–24.

48.T.ShipmanandJ.Salmon,‘MortgagesfromtheBankofNanandGranddad:NickCleggrevealsplanforpensionpotstohelpyoungergenerationgetonthefirstrungofthehousingladder’,DailyMail,23September2012,storyupdated24September.http://www.dailymail.co.uk/news/article-2207367/Lib-Dem-conference-Nick-Clegg-reveals-plan-pension-pots-help-younger-generation-rung-housing-ladder.htm

49.S.Hughes,‘Handsoffourhomes:fromLondontotheLakeDistrict,thewealthyarebuyingpropertiestheyrarelyuse.Councilsneedpowerstopreventthis’,Guardian,24September2012.http://www.guardian.co.uk/commentisfree/2012/sep/24/homes-for-living-in


http://www.yppuk.org/2012/09/readers-letter-of-day.html

http://www.dailymail.co.uk/news/article-2207367/Lib-Dem-conference-Nick-Clegg-reveals-plan-pension-pots-help-younger-generation-rung-housing-ladder.htm

http://www.guardian.co.uk/commentisfree/2012/sep/24/homes-for-living-in


51.EstateOffice,‘Newtaxbreakforoverseaspropertyinvestors’,‘LondonPropertyConsultants’website,21January2013.http://www.estate-office.com/news/new-tax-break-for-overseas-uk-property-investors-254.htm

52.S.Jenkins,‘ThedetailofEdMiliband’smansiontaxisdaft’,Guardian,15February2013.http://www.guardian.co.uk/commentisfree/2013/feb/15/ed-miliband-mansion-tax

53.SimonWood,RupertFastandNicoleSochor,letters,Telegraph,20February2013.http://www.telegraph.co.uk/comment/letters/9881083/Ed-Milibands-mansion-tax-policy-threatens-Britains-historic-homes.html.

54.P.Krugman,Thereturnofdepressioneconomicsandthecrisisof2008,London:Penguin,2008,p.171.

55.BethanThomasandIwereoriginallyquotedhigherfiguresthanthese,butovertimethepricesdrop.http://data.gov.uk/forum/general-discussion/property-price-paid-data-for-£50k

56.E.Hammond,J.K.AllenandC.Jones,‘LondonfuelsrecordgrowthinUKhouseprices’,FinancialTimes,17September2013.http://www.ft.com/cms/s/0/0d15ebae-1f8f-11e3-8861-00144feab7de.html

57.NewYorkTimesNewsService,‘London’sfinancialcenterahubtoscandaloflate’,‘TheLedger’website,13July2012.

http://www.estate-office.com/news/new-tax-break-for-overseas-uk-property-investors-254.htm

http://www.guardian.co.uk/commentisfree/2013/feb/15/ed-miliband-mansion-tax

http://www.telegraph.co.uk/comment/letters/9881083/Ed-Milibands-mansion-tax-policy-threatens-Britains-historic-homes.html

http://data.gov.uk/forum/general-discussion/property-price-paid-data-for-50k

http://www.ft.com/cms/s/0/0d15ebae-1f8f-11e3-8861-00144feab7de.html

http://www.theledger.com/article/20120713/NEWS/120719712?p=1&tc=pg

58.‘AheatwavecausedhousepricestotumbleinSeptemberasbuyersandsellersweredistractedfromthehousingmarketbytheweather,accordingtopropertywebsite“Rightmove”.’I.Silvera,‘Rentssoartoeleven-yearhighdespitehouse-pricedip’,InternationalBusinessTimes,23September2013.http://www.ibtimes.co.uk/articles/508315/20130923/house-prices-rents-buy-mortgage-london-barnard.htm

59.ITN,‘Morepeoplestrugglingtopayrentasarrearsgrow’,ITVNews,18January2013.http://www.itv.com/news/update/2013-01-18/more-people-struggling-to-pay-rent-as-arrears-grow/

60.ITN,‘BedroomTaxblamedforforcingfamiliesintoarrears’,ITVNews,19September2013.http://www.itv.com/news/central/update/2013-09-19/bedroom-tax-forcing-families-into-rent-arrears/

61.AccordingtoLSLPropertyServices,betterknownthroughitssubsidiaries:severalcharteredsurveyorbusinesses;andtheestateagentsYourMoveandReedsRains.Thereportwaspublishedinnumerousplaces,includingon17Februaryathttp://www.mortgagestrategy.co.uk/housing-market/rents-rise-in-january-for-first-

http://www.theledger.com/article/20120713/NEWS/120719712?p1tcpg

http://www.ibtimes.co.uk/articles/508315/20130923/house-prices-rents-buy-mortgage-london-barnard.htm

http://www.itv.com/news/update/2013-01-18/more-people-struggling-to-pay-rent-as-arrears-grow/

http://www.itv.com/news/central/update/2013-09-19/bedroom-tax-forcing-families-into-rent-arrears/

http://www.mortgagestrategy.co.uk/housing-market/rents-rise-in-january-for-first-time/1046371.article

time/1046371.article.Perhapsbycompletecoincidencethesamecompanyreporteda6.3%riseinLondonhousingpricesjustoversixmonthslater.http://www.ftadviser.com/2013/09/04/mortgages/mortgage-data/ftb-market-is-bubbling-nicely-lsl-property-ulTofnIX54WPSeQ41HEwYM/article.html

62.D.Newman,‘Tenantsfeelthefestivepinchdespiterentalreprieve’,LSLPropertyServices,report,18January2013.http://www.lslps.co.uk/documents/buy_to_let_index_dec12.pdf

63.D.Harvey,Rebelcities,London:Verso,2012,p.32.

64.Staffreporter,‘Businessthisweek’,Economist,9February2013.http://www.economist.com/news/world-week/21571489-business-week

65.D.Leigh,H.FraymanandJ.Ball,‘Revealed:therealidentitiesbehindBritain’ssecretpropertydeals’,Guardian,26November2012.http://www.guardian.co.uk/uk/2012/nov/26/indentities-behind-secret-property-deals

66.Hehasmadethispredictionmanytimes;in2013itwasfirstreportedinS.O’ConnorandC.Giles,‘Housepricesseenasstilltoohigh’,FinancialTimes,1January2013.http://www.ft.com/cms/s/0/416dca4c-5407-11e2-bb50-00144feab49a.html#axzz2LrMKpj2l

http://www.ftadviser.com/2013/09/04/mortgages/mortgage-data/ftb-market-is-bubbling-nicely-lsl-property-ulTofnIX54WPSeQ41HEwYM/article.html

http://www.lslps.co.uk/documents/buytoletindexdec12.pdf

http://www.economist.com/news/world-week/21571489-business-week

http://www.guardian.co.uk/uk/2012/nov/26/indentities-behind-secret-property-deals

http://www.ft.com/cms/s/0/416dca4c-5407-11e2-bb50-00144feab49a.html#axzz2LrMKpj2l

67.D.Bowie,‘Tacklingsqualour:thepivotalroleofsocialhousing’,Class:CentreforLabourandSocialStudies,policypaper,2013.http://classonline.org.uk/pubs/item/tackling-squalor

68.D.Dorling,Population10billion,London:Constable,2013.

69.BankofEngland,‘Trendsinlending:seasonallyadjustednetofcancellations’,January2013.http://www.bankofengland.co.uk/publications/Documents/other/monetary/trendsjanuary13.pdf

70.M.Chadbourn,‘USmortgage-lendingup38%,racialdisparitiespersist’,Reuters,18September2013.http://www.reuters.com/article/2013/09/18/us-usa-housing-idUSBRE9880X120130918

71.ThesourceofthefiguresusedhereistheFederalReservespreadsheet‘D.2:creditmarketborrowing’,foundat:www.federalreserve.gov/releases/Z1/Current/,latestfiguresJanuary2013.

72.OnhowthelatestfiguresreleasedbytheFederalReservecomparewithwhatitknewin2009orhowmuchborrowingwastakenoutin2006,comparetheirlatestestimatesof2006withthoseusedinFigure23,p.293,ofD.Dorling,Injustice:whysocialinequalitypersists,Bristol:PolicyPress,2010.

73.Staffreporter,‘NewHampshirehasthethird-highestpropertytaxinthecountry’,NewHampshireTelegraph,23July2012.http://www.politifact.com/new-

http://classonline.org.uk/pubs/item/tackling-squalor

http://www.bankofengland.co.uk/publications/Documents/other/monetary/trendsjanuary13.pdf

http://www.reuters.com/article/2013/09/18/us-usa-housing-idUSBRE9880X120130918

http://www.federalreserve.gov/releases/Z1/Current/

http://www.politifact.com/new-hampshire/statements/2012/jul/23/jackie-cilley/no-income-or-sales-tax-new-hampshire-does-rely-hea/

hampshire/statements/2012/jul/23/jackie-cilley/no-income-or-sales-tax-new-hampshire-does-rely-hea/

7SPECULATION

1.S.Hamilton,‘RightmoveraisesUKhousepriceforecastaftersummerlull’,BloombergNews,16September2013.http://www.bloomberg.com/news/2013-09-15/rightmove-raises-u-k-house-price-forecast-after-summer-lull.html

2.TwentyyearslaterIpublishedsomeofthosemapsinD.Dorling,Thevisualizationofsocialspatialstructure,Chichester:Wiley,2012.Ifyouareinterestedinwhattheanatomyofacrashlookslike,see:http://www.dannydorling.org/books/visualisation/Homepage.htmlandseeFigures5.12and5.13here:http://www.dannydorling.org/books/visualisation/Graphics/Pages/Figures.html

3.R.Neate,‘Rightmovetriplesitsestimateforhousingpricerises’,Guardian,16September2013.http://www.theguardian.com/politics/2013/sep/16/rightmove-triples-estimate-house-price-increase

4.K.Allen,‘Housepricescouldriseby8%nextyear,saysRightmove’,Guardian,16December2013.

5.A.Raval,‘PaceofUShousepricerisesslowsasmortgageratesclimb’,FinancialTimes,24September2013.http://www.ft.com/cms/s/0/9ade322a-251b-

http://www.bloomberg.com/news/2013-09-15/rightmove-raises-u-k-house-price-forecast-after-summer-lull.html

http://www.dannydorling.org/books/visualisation/Homepage.html

http://www.dannydorling.org/books/visualisation/Graphics/Pages/Figures.html

http://www.theguardian.com/politics/2013/sep/16/rightmove-triples-estimate-house-price-increase

http://www.ft.com/cms/s/0/9ade322a-251b-11e3-9b22-00144feab7de.html#axzz2ftukXFmB

11e3-9b22-00144feab7de.html#axzz2ftukXFmB

6.BBC,‘UShousepricesinbiggestannualriseforsevenyears’,BBCBusinessNews,24September2013.http://www.bbc.co.uk/news/business-24225746

7.A.Khouri,‘Homepricesinregionstayflat’,LosAngelesTimes,p.B1,17December2013.

8.D.Graeber,Debt:thefirst5,000years,NewYork:MelvilleHousePublishing,2013edition.

9.Shelter,‘1.4millionBritonsfallingbehindwiththerentormortgage’,pressrelease,4January2013.http://england.shelter.org.uk/news/january_2013/1.4_million_britons_falling_behind_with_the_rent_or_mortgage

10.L.Jansen,‘BritainwillbeThirdWorldeconomyby2014’,CNBCNews,reportingonLarryElliottandDanAtkinson’sGoingsouth:whyBritainwillhaveaThirdWorldeconomyby2014,London:PalgraveMacmillan,2012.http://www.cnbc.com/id/49568596/Britain_Will_Be_Third_World_Economy_by_2014_Authors

11.R.BurrowsandJ.Ford,‘Self-employmentandhomeownershipaftertheenterpriseculture’,Work,EmploymentandSociety,Vol.12,No.1(1998),pp.97–119;andJ.Ford,‘Casualworkandowneroccupation’,Work,EmploymentandSociety,Vol.3,No.1(1989),pp.29–48.

12.KenLivingston,formerMayorofLondon,quotedbyO.Wright,‘Angerontheleft:


http://england.shelter.org.uk/news/january_2013/1.4_million_britons_falling_behind_with_the_rent_or_mortgage

http://www.cnbc.com/id/49568596/Britain_Will_Be_Third_World_Economy_by_2014_Authors

anxiousLabourmainstreammovestodistanceitselffromhardliners’celebrationsafterMargaretThatcher’sdeath’,Independent,9April2013.http://www.independent.co.uk/news/uk/politics/anger-on-the-left-anxious-labour-mainstream-moves-to-distance-itself-from-hardliners-celebrations-after-margaret-thatchers-death-8565095.html

13.ThiswaswhenIwasunderthesupervisionofTonyChampionandhiscolleagues.Tonykindlyagreedtocommentonanearlierdraftofthisbook.Ihadlastworkedwithhimovertwodecadesearlier.Onsomeofthatearlierwork,see:D.DorlingandJ.Cornford,‘Thedistributionofnegativeequityin1993’,reporttotheLordsCommissionersofH.M.Treasury;laterpublished(withhelpfromChrisGentle)asC.Gentle,D.DorlingandJ.Cornford,‘Negativeequityin1990sBritain’,UrbanStudies,Vol.31,No.2(1994),pp.181–99.

14.BankofEngland,Trendsinlending,January2013,London:BankofEngland,2013.http://www.bankofengland.co.uk/publications/Documents/other/monetary/trendsjanuary13.pdf

15.L.Howard,‘Daysarenumberedforinterest-onlymortgages’,‘Moneysupermarket.com’websiteblog,30November2012.http://www.moneysupermarket.com/c/news/days-are-numbered-for-interest-only-mortgages/0015487/

http://www.independent.co.uk/news/uk/politics/anger-on-the-left-anxious-labour-mainstream-moves-to-distance-itself-from-hardliners-celebrations-after-margaret-thatchers-death-8565095.html

http://www.bankofengland.co.uk/publications/Documents/other/monetary/trendsjanuary13.pdf

http://www.moneysupermarket.com/c/news/days-are-numbered-for-interest-only-mortgages/0015487/

16.PressAssociation,‘WestBromwichBuildingSocietyhits“buy-to-let”borrowerswith2%ratehike’,DundeeCourier,23September2013.http://www.thecourier.co.uk/business/news/west-bromwich-building-society-hits-buy-to-let-borrowers-with-?2?-rate-hike-?1.134093

17.Shelter,‘1.4millionBritonsfallingbehindwiththerentormortgage’.

18.FromtheHousingRightsServiceinNorthernIreland,wherenegativeequityisworse:UTV,‘Homerepossessionsatcriticallevel’,webvideoreport,19February2013.http://www.u.tv/News/NI-home-repossessions-at-critical-level/ElsewhereintheUKtheratesofrepossessionweregoingdownatthesametime,butthatmaybetemporary.

19.Andasexplainedinmoredetailinthe‘HomeTruths’sectioninChapter3ofthisvolume,p.68.

20.StatisticBrain,‘Homeforeclosuresstatistics’.http://www.statisticbrain.com/home-foreclosure-statistics/RelyinginturnondatareleasedbyRealtyTrac,theFederalReserveandEquifax,15October2012.

21.Shelter,‘Evictionriskhotspotsrevealed’,pressrelease,14December2012.http://england.shelter.org.uk/news/previous_years/2012/december_2012/eviction_risk_hotspots_revealed

22.G.Lamarca,‘ResistingevictionsSpanishstyle’,NewInternationalist,April2013.

http://www.thecourier.co.uk/business/news/west-bromwich-building-society-hits-buy-to-let-borrowers-with-?2?-rate-hike-?1.134093

http://www.u.tv/News/NI-home-repossessions-at-critical-level/

http://www.statisticbrain.com/home-foreclosure-statistics/

http://england.shelter.org.uk/news/previous_years/2012/december_2012/eviction_risk_hotspots_revealed

http://newint.org/features/2013/04/01/sparks-from-the-spanish-crucible/

23.Mysourcewishestoremainanonymousbecausefinancialandhousinganalystswithingovernmentanditsnumerousagenciesliveinfearofbeingseenasresponsibleforsparkingacrash.Asaresulttheyissuenoseriouswarnings,andthepotentialbonfireofhopes,dreamsandunsustainablelendingmodelsgrowslarger.

24.R.Kitchin,etal.,‘Placingneoliberalism:theriseandfallofIreland’sCelticTiger’,EnvironmentandPlanning(A),Vol.44(2012),pp.1,302–26.

25.J.CurrieandE.Tekin,‘Istherealinkbetweenforeclosureandhealth?’,NationalBureauofEconomicResearchWorkingPaperNo.17310,2011.http://ideas.repec.org/p/nbr/nberwo/17310.html

26.Anonymouspersonalcommunication,2013:fromtheseniorpublichealthanalystwhohadbeenhighlightingthefigures,allofwhichareinthepublicdomain.InJuly2013theHealthServiceJournalpostedthereporthere:http://www.hsj.co.uk/Journals/2013/07/23/u/j/e/Weekly-and-monthly-provisional-figures-on-deaths-registered-in-England-and-Wales--16?th-July.doc.

27.PublicHealthEngland,‘Excesswintermortality2012–13’,15August2013.https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229819/Excess_winter_mortality_2012.pdf

http://newint.org/features/2013/04/01/sparks-from-the-spanish-crucible/

http://ideas.repec.org/p/nbr/nberwo/17310.html

http://www.hsj.co.uk/Journals/2013/07/23/u/j/e/Weekly-and-monthly-provisional-figures-on-deaths-registered-in-England-and-Wales--16?th-July.doc

http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229819/Excess_winter_mortality_2012.pdf

28.‘PHE[PublicHealthEngland]hasalsopublishedaletterfromitschiefknowledgeofficeraboutthedecisiontostoptheweeklyreportswhichhighlightedtheissue.’A.McLellan,‘PHEpublishesreportonexcesswinterdeaths’,HealthServiceJournal,15August2013.http://www.hsj.co.uk/news/hsj-live/hsj-live-?150813?-phe-publishes-report-on-excess-winter-deaths/5062297.article#.Uj1fStIqjzY.Then,inwhatwasdescribedasaunrelateddevelopment,OfficeforNationalStatisticssuggestednotproducingtheweeklyseriesatalltosavebetween£10,000and£50,000ayearincosts.http://www.ons.gov.uk/ons/about-ons/get-involved/consultations/consultations/statistical-products-2013/index.html

29.D.StucklerandM.McKee,‘Whyaredeathratesrisinginpeopleagedovereighty-five?’,‘BetterHealthforAll’websiteblogoftheFacultyofPublicHealth,23August2013.http://betterhealthforall.org/2013/08/23/why-are-death-rates-rising-in-people-aged-over-85/

30.TheUKwasoneofonlytwocountriesreportingthelowestleveloffluintensityduringthe2012/13seasonacrossallofEurope.ThismakesthesuggestionthattherisingmortalityintheUKisduetofluverydubious:EuropeanCentreforDiseasePreventionandControl,‘InfluenzainEurope:

http://www.hsj.co.uk/news/hsj-live/hsj-live-150813-phe-publishes-report-on-excess-winter-deaths/5062297.article#.Uj1fStIqjzY

http://www.ons.gov.uk/ons/about-ons/get-involved/consultations/consultations/statistical-products-2013/index.html

http://betterhealthforall.org/2013/08/23/why-are-death-rates-rising-in-people-aged-over-85/

season2012/13’,2013.http://ecdc.europa.eu/en/healthtopics/seasonal_influenza/PublishingImages/influenza-europe-weekly-infographic.jpg

31.InstituteofFinancialAccountants,‘Lifeexpectancyatretirementfallsformenandwomen’,‘ProfessionalAdviser(IFA)’website,quotingRichardWillets,6November2013.http://www.ifaonline.co.uk/ifaonline/news/2305397/life-expectancy-at-retirement-falls-for-men-and-women.Seealso:http://www.ons.gov.uk/ons/rel/subnational-health2/excess-winter-mortality-in-england-and-wales/2012-13--provisional--and-2011-12-final-/stb-ewm-12-13.html#tab-Final-EWM-in-2011-12-by-underlying-cause-of-death

32.D.Dorling,‘Inplaceoffear:narrowinghealthinequalities’,thinkpiece,CLASS:CentreforLabourandSocialStudies,21May2013.http://www.dannydorling.org/?page_id=3711

33.S-SChange,etal.,‘Wastheeconomiccrisis1997–1998responsibleforrisingsuicideratesinEast/South-eastAsia?Atime-trendanalysisforJapan,HongKong,SouthKorea,Taiwan,SingaporeandThailand’,SocialScienceandMedicine,Vol.68,No.7(2009),pp.1,322–31.

34.D.Stuckler,etal.,‘BankingcrisesandmortalityduringtheGreatDepression:evidencefromUSurbanpopulations,1927–

http://ecdc.europa.eu/en/healthtopics/seasonal_influenza/PublishingImages/influenza-europe-weekly-infographic.jpg

http://www.ifaonline.co.uk/ifaonline/news/2305397/life-expectancy-at-retirement-falls-for-men-and-women

http://www.ons.gov.uk/ons/rel/subnational-health2/excess-winter-mortality-in-england-and-wales/2012-13--provisional--and-?2011-12?-final-/stb-ewm-12-13.html#tab-Final-EWM-in-2011-12-by-underlying-cause-of-death


1939’,JournalofEpidemiologyandCommunityHealth,publishedonline24March2011.doi:10.1136/jech.2010.121376.D.Stuckler,etal.,‘Effectsofthe2008recessiononhealth:afirstlookatEuropeandata’,Lancet,9July2011online:378(9786):124–5.doi:10.1016/S0140-6736(11)61079-9.

35.S.Burgen,‘Spanishhelplinereportsriseinnumberofcallersconsideringsuicide’,Guardian,5September2013.http://www.theguardian.com/world/2013/sep/05/spanish-helpline-rise-callers-considering-suicide

36.A.Deaton,‘What’swrongwithinequality?ReviewofJosephStiglitz,Thepriceofinequality’,Lancet,Vol.381,No.9,864(2February2013),p.362.http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(13)60154-3/fulltext

37.InstituteofHealthMedicine,UShealthininternationalperspective:shorterlives,poorerhealth,Washington:NationalAcademyofSciences,2013.http://www.iom.edu/Reports/2013/US-Health-in-International-Perspective-Shorter-Lives-Poorer-Health.aspx

38.Ibid.,p.5.39.Onevictionssee:Neoskosmos,‘Greece

passeslawtohelpdebt-strickenhouseholds’,report,3August2010.http://neoskosmos.com/news/en/Greece-debt-relief-bill-papandreau-katseli.Andalsosee:

http://www.theguardian.com/world/2013/sep/05/spanish-helpline-rise-callers-considering-suicide

http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(13)60154-3/fulltext

http://www.iom.edu/Reports/2013/US-Health-in-International-Perspective-Shorter-Lives-Poorer-Health.aspx

http://neoskosmos.com/news/en/Greece-debt-relief-bill-papandreau-katseli

http://www.protothema.gr/economy/article/?aid=75847(inGreekbutcanbeautomaticallytranslated).

40.ProfessorTomokiNakaya,RismumeikanUniversity,Kyoto,Japan,personalcommunication,22December2013.SeealsoZ.Ward,‘GoodnewsforrentersinJapan:securitydeposits,keymoneyonthedemise’,JapanToday,30March2012.http://www.japantoday.com/category/opinions/view/good-news-for-renters-in-japan-security-deposits-key-money-on-the-demise

41.M.B.Veléz,‘Banksandtheracialpatterningofhomicide:astudyofChicagoneighborhoods’,InternationalJournalofConflictandViolence,Vol.3,No.2(2009),pp.154–71.http://www.ijcv.org/index.php/ijcv/article/viewArticle/3

42.D.StucklerandS.Basu,Thebodyeconomic:whyausteritykills,London:AllenLane,2013.

43.OfficeforNationalStatistics,‘Generallifestylesurvey’,2013.SeeTable7.1,‘Self-perceptionofgeneralhealthNo.1:2005to2011’.http://www.ons.gov.uk/ons/rel/ghs/general-lifestyle-survey/2011/index.html

44.See:http://www.property118.com/help-us-to-protect-your-tracker-margins/43709/,asaccessed26September2013.

45.C.Savage,‘WellsFargowillsettlemortgagebiascharges’,NewYorkTimes,12July2012.

http://www.protothema.gr/economy/article/?aid=75847

http://www.japantoday.com/category/opinions/view/good-news-for-renters-in-japan-security-deposits-key-money-on-the-demise

http://www.ijcv.org/index.php/ijcv/article/viewArticle/3

http://www.ons.gov.uk/ons/rel/ghs/general-lifestyle-survey/2011/index.html

http://www.property118.com/help-us-to-protect-your-tracker-margins/43709/

http://www.nytimes.com/2012/07/13/business/wells-fargo-to-settle-mortgage-discrimination-charges.html

46.G.Hiscott,‘Barclaystorefund300,000customersafterblunder’,DailyMirror,17September2013.http://www.mirror.co.uk/money/city-news/barclays-refund-300000-customers-after-2280151#ixzz2fX6xT1xl

47.Inthesection‘Recentinequality’,pp.24–6,S.Saulny,‘Whenlivinginlimboavoidslivingonthestreet’,NewYorkTimes,3March2012.http://www.nytimes.com/2012/03/04/us/when-living-in-limbo-avoids-living-on-the-street.html?ref=us&_r=1&

48.MortgagecompaniesarethefinancialservicesequivalentoftheNeutronBomb,thatatomicweapondesignedtoremovepeoplebutleavethepropertytheylivedinstandingtobereused.

49.S.Morris,‘Vulnerablepeoplefacingevictionaftercouncilcutssupportforhostelresidents’,Guardian,25September2013.http://www.theguardian.com/society/2013/sep/25/vulnerable-people-facing-eviction-bristol-hostels

50.J.Waldron,‘Homelessnessandtheissueoffreedom’,UCLALawReview,Vol.39(1991),pp.295–324.http://faculty.washington.edu/pembina/all_articles/Waldron%201991.pdf

51.QuotedinS.Saulny,‘whenlivinginlimbo’.Noteaswellthat,asthelargestlender,Wells

http://www.nytimes.com/2012/07/13/business/wells-fargo-to-settle-mortgage-discrimination-charges.html

http://www.mirror.co.uk/money/city-news/barclays-refund-300000-customers-after-2280151#ixzz2fX6xT1xl

http://www.nytimes.com/2012/03/04/us/when-living-in-limbo-avoids-living-on-the-street.html?ref=us&_r=1&

http://www.theguardian.com/society/2013/sep/25/vulnerable-people-facing-eviction-bristol-hostels


FargoisalsothelargestUSbankwhenallarerankedbymarketcapitalization.

52.‘Bob’,commentinresponsetoabovestorybySaulny,4March2012,Boonsboro.

53.Ifyouareinterestedinthatera,theresultingpaperscanbefoundonthewebifyousearchfortheirtitles:D.Dorling,‘ThenegativeequitymapofBritain’,Area,Vol.26,No.4(1994),pp.327–42;D.DorlingandJ.Cornford,‘Whohasnegativeequity?Howhouse-pricefallsinBritainhavehitdifferentgroupsofbuyers’,HousingStudies,Vol.10,No.2(1995),pp.151–78;C.Pattie,D.DorlingandR.Johnston,‘Adebt-owningdemocracy:thepoliticalimpactofhousingmarketrecessionattheBritishgeneralelectionof1992’,UrbanStudies,Vol.32,No.8(1995),pp.1,293–315;G.DaveySmithandD.Dorling,‘I’mallright,John:votingpatternsandmortalityinEnglandandWales,1981–92’,BritishMedicalJournal,Vol.313(1996),pp.1573–7.

54.A.Hill,‘Trapped:theformercoupleswhocan’taffordtomoveon’,Guardian,20November2012.http://www.guardian.co.uk/society/2012/nov/20/trapped-couples-partners-relationships

55.R.Whelan,‘Negativeequitymorewidespreadthanpreviouslythought,reportsays’,WallStreetJournal,24May2012.http://blogs.wsj.com/developments/2012/05/24/negative-

http://www.guardian.co.uk/society/2012/nov/20/trapped-couples-partners-relationships

http://blogs.wsj.com/developments/2012/05/24/negative-equity-more-widespread-than-previously-thought-report-says/

equity-more-widespread-than-previously-thought-report-says/

56.J.Christie,‘Californiacitybacksplantoseizenegativeequitymortgages’,Reuters,11September2013.http://www.reuters.com/article/2013/09/11/us-richmond-eminentdomain-idUSBRE98A0FN20130911

57.G.Morgenson,‘Howtofindweedsinamortgagepool’,NewYorkTimes,8September2012.http://www.nytimes.com/2012/09/09/business/how-to-find-weeds-in-a-mortgage-pool-fair-game.html

58.Thesagaisongoing:‘ResCapislikelytoenditsbankruptcythismonthafterwinningcourtapprovalofaliquidationplanthatresolvesmorethan$100billioninpotentiallawsuits.’SeeC.DolmetschandC.Smythe,‘ResCapaffiliatesuesUBS,SunTrustovermortgagesecurities’,BloombergBusinessWeek,17December2013.http://www.businessweek.com/news/2013-12-17/rescap-affiliate-sues-ubs-suntrust-over-mortgage-securities-1

59.OfficeforNationalStatistics,‘Consumerpriceinflation,August2013’,pressrelease,17September2013.http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/august-2013/index.html

60.R.Kitchin,S.O’Callaghan,S.andJ.Gleeson,‘UnfinishedestatesinPost-CelticTiger

http://www.reuters.com/article/2013/09/11/us-richmond-eminentdomain-idUSBRE98A0FN20130911

http://www.nytimes.com/2012/09/09/business/how-to-find-weeds-in-a-mortgage-pool-fair-game.html

http://www.businessweek.com/news/2013-12-17/rescap-affiliate-sues-ubs-suntrust-over-mortgage-securities-1

http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/august-2013/index.html

Ireland’,NorthernIrelandStatisticsandResearchAgencyWorkingPaperNo.67,2012,p.10.http://ebookbrowse.com/nirsa-working-paper-?67?-unfinished-estates-in-post-celtic-tiger-ireland-pdf-d312024595

61.D.Coleman,‘IrelandpreparestosaybyebyetoTroikaasFinanceMinisterMichaelNoonanwarns:thismustneverhappenagain’,IrishMirror,13December2013.http://www.irishmirror.ie/news/irish-news/politics/country-exits-troika-rule-finance-2924434

62.S.Castle,‘Irelandseekseasingofitsdebtterms’,NewYorkTimes,1March2013.http://www.nytimes.com/2013/03/02/business/global/ireland-seeks-easing-of-its-debt-terms.html

63.Staffreporter,‘Bargainhunterssplashout€13.7millionatpropertyauction’,IrishIndependent,2March2013.http://www.independent.ie/irish-news/bargain-hunters-splash-out-137m-at-property-auction-29104233.html#

64.T.O’Brien,‘NAMAoffers4,000homesforsocialhousing’,IrishTimes,18September2013.http://www.irishtimes.com/news/ireland/irish-news/nama-offers-4-000-homes-for-social-housing-1.1531855

65.D.O’Donovan,‘NAMAsaleof10,000apartmentstoshakeupthehousingmarket’,IrishIndependent,26September2013.http://www.independent.ie/irish-news/nama-

http://ebookbrowse.com/nirsa-working-paper-?67?-unfinished-estates-in-post-celtic-tiger-ireland-pdf-d312024595

http://www.irishmirror.ie/news/irish-news/politics/country-exits-troika-rule-finance-2924434

http://www.nytimes.com/2013/03/02/business/global/ireland-seeks-easing-of-its-debt-terms.html

http://www.independent.ie/irish-news/bargain-hunters-splash-out-137m-at-property-auction-29104233.html

http://www.irishtimes.com/news/ireland/irish-news/nama-offers-4-000-homes-for-social-housing-1.1531855

http://www.independent.ie/irish-news/nama-sale-of-10000-apartments-to-shake-up-the-housing-market-29611569.html

sale-of-10000-apartments-to-shake-up-the-housing-market-29611569.html

66.D.O’Donovan,‘FocusIrelandrejectedofferofproperties,revealsNAMA’,IrishIndependent,1December2013.http://www.independent.ie/business/irish/focus-ireland-rejected-offer-of-properties-reveals-nama-29798406.html

67.Whichcontinues:‘First,intheplacewherewelive,withtheknowledgethatwe’resurroundedbycapitalismeverywhere;andlater,inAndalusia,andtheworld.’See:Anticap,‘Protestoftheday’,20August2012.http://anticap.wordpress.com/2012/08/20/protest-of-the-day-142/

68.Staffreporter,‘Greekhousingmarketremainsextremelydepressed’,UnitedPressInternational,14September2013.http://www.upi.com/Business_News/2013/09/14/Greek-housing-market-remains-extremely-depressed/UPI-20891379183674/

69.Nigentesincasa,nicasassingente.D.Stelfox,‘HowtheCorralamovementisoccupyingSpain’,Guardian,4March2013.http://www.guardian.co.uk/world/2013/mar/04/corrala-movement-occupying-spain

70.A.Fotheringham,‘InSpain’sheart,aslumtoshameEurope’,Independent,27November2011.http://www.independent.co.uk/news/world/europe/in-spains-heart-a-slum-to-shame-europe-6268652.html

http://www.independent.ie/business/irish/focus-ireland-rejected-offer-of-properties-reveals-nama-29798406.html

http://anticap.wordpress.com/2012/08/20/protest-of-the-day-142/

http://www.upi.com/Business_News/2013/09/14/Greek-housing-market-remains-extremely-depressed/UPI-20891379183674/

http://www.guardian.co.uk/world/2013/mar/04/corrala-movement-occupying-spain

http://www.independent.co.uk/news/world/europe/in-spains-heart-a-slum-to-shame-europe-6268652.html

71.J.Christie,‘Californiacitybacksplantoseizenegativeequitymortgages’.

72.Referredtointhesectiononheathandevictionabove;seenote39onthereportbyNeoskosmos.

73.DepartmentforCommunitiesandLocalGovernment,‘Streamlininginformationrequirementsforplanningapplications’,pressrelease,27December2012.https://www.gov.uk/government/consultations/streamlining-information-requirements-for-planning-applications

74.L.Hanley,‘Livinginlimbounderfailedhousingrenewalplans’,Guardian,21September2012.http://www.guardian.co.uk/commentisfree/2012/sep/21/housing-renewal-plans-fail-living-limbo

75.ItwasDemocraticUnionistPartyministerNelsonMcCauslandwhostalledonimplementation.Ifyouareinterestedinwhy,havealookatthe22June2013entryofhisblog,whereheappearsmoreinterestedinparadingpastCatholicchurchesthanhousing:http://theministerspen.blogspot.co.uk/

76.SeeD.Dorling,‘Housingandidentity:howplacemakesrace’,BetterHousingBriefingPaperNo.17,RaceEqualityFoundation,March2011.http://www.better-housing.org.uk/briefings/housing-and-identity-how-place-makes-race;andespeciallyifyouareinterestedintheargumentsforhowsuchplanswouldreduce

http://www.gov.uk/government/consultations/streamlining-information-requirements-for-planning-applications

http://www.guardian.co.uk/commentisfree/2012/sep/21/housing-renewal-plans-fail-living-limbo

http://theministerspen.blogspot.co.uk/

http://www.better-housing.org.uk/briefings/housing-and-identity-how-place-makes-race

racisminhousing.IfirstdebatedthiswhengivingtheLordPittMemorialLectureontheseproposalsinMarch2011asthecrisiswasdeepeninganditwasbecomingclearthatnon-whiteLondonerswerebeingproportionatelymoredisadvantaged.See:http://www.raceequalityfoundation.org.uk/training/events/lord-pitt-memorial-lecture-how-place-makes-race

77.C.Shephard,personalcommunication,Sheffield,2013.

78.Whenitwascutbyafurther10%,andsowasabletohelpfewerpeoplethantheyearbefore,despitethedemandformoneyadviceandhousingadvicegrowing:CitizensAdviceBureau,‘CutsinCABfundingleavingthousandswithnowheretoturnforhelp’,6September2011.http://www.citizensadvice.org.uk/index/pressoffice/press_index/press_20110906.htm


80.D.Garvie,‘Areturntorevolving-doorhomelessness?’,‘Shelter’websitepolicyblog,9November2012.http://blog.shelter.org.uk/2012/11/a-return-to-revolving-door-homelessness/

81.DepartmentforCommunitiesandLocalGovernment,AplainEnglishguidetotheLocalismAct,London:DepartmentforCommunitiesandLocalGovernment,

http://www.raceequalityfoundation.org.uk/training/events/lord-pitt-memorial-lecture-how-place-makes-race

http://www.citizensadvice.org.uk/index/pressoffice/press_index/press_20110906.htm


http://blog.shelter.org.uk/2012/11/a-return-to-revolving-door-homelessness/

November2011.https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/5959/1896534.pdf

82.C.Brown,‘PMconfirmsagelimitplanforhousingbenefit’,‘InsideHousing’website,10October2012.http://www.insidehousing.co.uk/ihstory.aspx?storycode=6524142

83.J.Waldron,‘Homelessnessandtheissueoffreedom’,p.313,quotingfrom‘Doorsclosingasmoodonthehomelesssours’,NewYorkTimes,18November1989.

84.Shelter,‘Oneinfourisjustapaychequeawayfromhomelessness’,pressrelease,18December2012.http://scotlandshelter.org.uk/news/december_2012/one_in_four_are_just_a_pay_check_away_from_homelessness

85.K.Mercer,‘HomelessWestminsterfamiliesinfour-starhotels’,BBCNews,7February2013.http://www.bbc.co.uk/news/uk-england-london-21362391

86.Inotherwordsitisbasedonwhattherentsfortheveryworsthousinginanareatendtobeandnotonthemedianhome,andupratingwillnotincludethehousingelementofinflation!C.Shephard,personalcommunication,Sheffield,2013.

87.Fordetailsseehttp://www.socialfinance.org.uk/andclick‘Aboutus’tofindoutwhichhedgefundmanagersareboardmembers.Ihavetoadmitheretobeingsuspicious.Itmaybebecauseabusinessmodelisbeingusedthatsuchexactfiguresareincludedinthe‘SocialFinance’

http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/5959/1896534.pdf

http://www.insidehousing.co.uk/ihstory.aspx?storycode=6524142

http://scotlandshelter.org.uk/news/december_2012/one_in_four_are_just_a_pay_check_away_from_homelessness


http://www.socialfinance.org.uk/

website.Thenumber5,678estimateforpeoplesleepingroughjustquoteddoeslooklikesomeonetappingconsecutivekeysonthekeyboard,anditishardtogetatthemethodology.

88.Itisnotclearhowmanyindividualroughsleepershavetobecometenantsforproviderstoberewarded,forhowlongtheywillhavetoremaintenants,orwhatqualityofhometheyshouldlivein.

89.SocialFinance,‘ImprovingoutcomesforLondon’shomeless’,report,accessed29January2013.http://www.socialfinance.org.uk/homelessnessHowever,asofSeptember2013,thatreporthasbeenremovedfromtheirwebsite.Asfortheorganizationitself,TobyEccles,itsDevelopmentDirector,claimsthatitis‘interestedinaligningthesocialwiththefinancialratherthanfindingacleverwheezeformakingmoney.Weareincentivizedtoworkwiththecomplicatedandwiththosewillingtochange.’A.Travis,‘Willsocialimpactbondssolvesociety’smostintractableproblems?’,Guardian,6October2010.http://www.guardian.co.uk/society/2010/oct/06/social-impact-bonds-intractable-societal-problems.Scepticsremainunconvinced.

90.B.Thomas,‘Homelessnesskills:ananalysisofthemortalityofhomelesspeopleinearlytwenty-firstcenturyEngland’,Crisis,report,2012.http://www.crisis.org.uk/publications-

http://www.socialfinance.org.uk/homelessness

http://www.guardian.co.uk/society/2010/oct/06/social-impact-bonds-intractable-societal-problems

http://www.crisis.org.uk/publications-search.php?fullitem=371

search.php?fullitem=371orat:http://sasi.group.shef.ac.uk/publications/reports/Crisis_2012.pdf

91.E.Drabble,‘Shouldwebuildmorehomes?’,Shelter,GuardianTeacherNetwork,13December2012.http://teachers.guardian.co.uk/teacher-resources/11697/Should-we-build-more-homes-By-Shelter

92.DepartmentforCommunitiesandLocalGovernment,‘MarkPriskchallengescouncilstofindstablehomesforfamilies’,pressrelease,7June2013.https://www.gov.uk/government/news/mark-prisk-challenges-councils-to-find-stable-homes-for-families

93.MotherofthreequotedinR.Ramesh,‘IllegaluseofB&Bstohousehomelesssoarsby800%’,Guardian,18February2013.http://www.guardian.co.uk/society/2013/feb/18/illegal-use-bandbs-house-homeless

94.Staffreporter,‘HalfofallhomelessfamiliesforcedtoliveinbedandbreakfastsareinLondon’,EveningStandard,5September2013.http://www.standard.co.uk/news/london/half-of-all-homeless-families-forced-to-live-in-bed-and-breakfasts-are-in-london-8800303.html

95.BBC,‘Newrightsforthehomelesscomeintoforce’,BBCScotlandPolitics,30December2012.http://www.bbc.co.uk/news/uk-scotland-scotland-politics-20870160

http://sasi.group.shef.ac.uk/publications/reports/Crisis_2012.pdf

http://teachers.guardian.co.uk/teacher-resources/11697/Should-we-build-more-homes-By-Shelter

http://www.gov.uk/government/news/mark-prisk-challenges-councils-to-find-stable-homes-for-families

http://www.guardian.co.uk/society/2013/feb/18/illegal-use-bandbs-house-homeless

http://www.standard.co.uk/news/london/half-of-all-homeless-families-forced-to-live-in-bed-and-breakfasts-are-in-london-8800303.html

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-20870160

96.Staffwriters,‘NumberoffamilieslivinginB&Bsatten-yearhighinEngland’,‘Ekklesia’website,19September2013.http://www.ekklesia.co.uk/node/19086

97.L.Barker,‘Homelessbound?HomelessnessinLondon,thesouth-eastandeastofEngland’,NationalHousingFederation,report,13November2012,p.7.http://www.housing.org.uk/publications/find_a_publication/general/homeless_bound.aspx

98.DetailsonPickles’sdepartmentalwebpagesandalsotobefoundatChinditsHouse,ChinditsLane,Brentwood,EssexCM145LF.http://www.foyer.net/level3.asp?level3id=71

99.Formoredetailsofthisstory,searcharoundonthewebalittleusingEricPickles’snameandsee:http://www.brentwoodweeklynews.co.uk/news/9965532.Homeless_shelter_evacuated_after_chemical_scare/?ref=rss

100.E.Drabble,‘Shouldwebuildmorehomes?’.101.T.ChampionandJ.Goddard,‘The

containmentofurbanEngland’,chapterinaforthcomingbookcelebratingthelifeandworkofPeterHall,personalcorrespondence.

102.ForrealambitioninBritain,considerwhathasbeenachievedbytheLowImpactLivingAffordableCommunity(LILAC)inLeeds,wherethefirstresidentswhodesignedtheirownnewgreenhousingmovedinduringspring2013.http://www.lilac.coop/,butseealsop.302.

103.S.Rose,‘Squattersarenothomestealers’,Guardian,3December2012.

http://www.ekklesia.co.uk/node/19086

http://www.housing.org.uk/publications/find_a_publication/general/homeless_bound.aspx

http://www.foyer.net/level3.asp?level3id=71

http://www.brentwoodweeklynews.co.uk/news/9965532.Homeless_shelter_evacuated_after_chemical_scare/?ref=rss

http://www.lilac.coop/

http://www.guardian.co.uk/society/2012/dec/03/squatters-criminalised-not-home-stealers

104.H.Wilcox,‘Criminalizingsquatting–privatizingemptyspace’,‘NewLeftProject’website,13September2012.http://www.newleftproject.org/index.php/site/article_comments/criminalising_squatting_privatising_empty_space

105.BBC,‘JailedsquatterAlexHaigh’smothercallsforleniency’,BBCNews,28September2012.http://www.bbc.co.uk/news/uk-england-london-19759056

106.A.Arden,‘Anti-squattinglawshouldberepealed’,letter,Guardian,25March2013.http://www.guardian.co.uk/society/2013/mar/25/squatting-law-should-be-repealed

107.S.ClarkandC.Spillane,‘EastEndhasthousandsinillegalsqualornearOlympics’,BloombergNews,26July2012.http://www.bloomberg.com/news/2012-07-25/east-end-has-thousands-in-illegal-squalor-near-olympics.html

8SOLUTIONS

1.BBC,‘DavidCameronbringsforward“help-to-buy”scheme’,BBCNewsandPolitics,29September2013.http://www.bbc.co.uk/news/uk-politics-24319583

2.P.Mason,‘Thegraduatesof2012willsurviveonlyinthecracksofoureconomy:uniquely,thiscohortcanexpecttogrowuppoorerthantheirparents’,Guardian,1July2012.

http://www.guardian.co.uk/society/2012/dec/03/squatters-criminalised-not-home-stealers

http://www.newleftproject.org/index.php/site/article_comments/criminalising_squatting_privatising_empty_space


http://www.guardian.co.uk/society/2013/mar/25/squatting-law-should-be-repealed

http://www.bloomberg.com/news/2012-07-25/east-end-has-thousands-in-illegal-squalor-near-olympics.html


http://www.guardian.co.uk/commentisfree/2012/jul/01/graduates-2012-survive-in-cracks-economy?Thequotationcontinues:‘Forthegraduatewithoutafutureisahumanexpressionofaneconomicproblem:theWest’smodelisbroken.Itcannotdeliverenoughhigh-valueworkforitshighlyeducatedworkforce.Yettheessentialcommodity–adegree–nowcostssomuchthatitwilltakedecadesoflow-remuneratedworktopayforit.’PaulMasonnowworksforUKtelevision’sChannel4.

3.N.Mathiason,M.Newman,M.McClenaghan,‘Revealed:the£93millionCitylobbymachine’,‘TheBureauofInvestigativeJournalism’website,2012.http://www.thebureauinvestigates.com/2012/07/09/revealed-the-93m-city-lobby-machine/

4.Ibid.That£92millionfigureisestimatedbytheBureauofInvestigativeJournalists.

5.OfficeforNationalStatistics,‘Averageincomefallsinthelastyear’,pressrelease,20September2012.http://www.ons.gov.uk/ons/dcp29904_279770.pdfSeealsothefollowingwebsitewhichgivesagraphfor2001to2012foremployees:http://www.ons.gov.uk/ons/rel/regional-trends/regional-economic-analysis/changes-in-real-earnings-in-the-uk-and-london-2002-to-2012/art-changes-in-real-earnings-in-the-uk-and-london-2002-to-2012.html#tab-2--Changes-in-earnings-of-employees-in-the-UK-and-its-regions--2002-12

http://www.guardian.co.uk/commentisfree/2012/jul/01/graduates-2012-survive-in-cracks-economy

http://www.thebureauinvestigates.com/2012/07/09/revealed-the-93m-city-lobby-machine


http://www.ons.gov.uk/ons/rel/regional-trends/regional-economic-analysis/changes-in-real-earnings-in-the-uk-and-london-2002-to-2012/art-changes-in-real-earnings-in-the-uk-and-london-2002-to-2012.html#tab-2--Changes-in-earnings-of-employees-in-the-UK-and-its-regions--2002-12

6.P.Inman,‘HowMervynKingfinallygotBobDiamond’,Guardian,10July2012.http://www.guardian.co.uk/business/2012/jul/10/how-mervyn-king-got-bob-diamond?

7.J.Quinn,‘ChancellorfileslegalchallengetoEUcaponbankbonuses’,Telegraph,25September2013.http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10333831/Chancellor-files-legal-challenge-to-?EU?-cap-on-bank-bonuses.html

8.ShelterScotland,‘LettingagentfeesareunlawfulinScotland’,reclaimingform,2012.http://www.reclaimyourfees.com/

9.G.Brown,‘Parliamentfailstoaccommodategrowinghousingproblem’,Guardian,10May2012.http://www.guardian.co.uk/society/2012/may/10/parliament-accommodate-growing-housing-problem

10.ShelterScotland,‘Digitalawardfor“Reclaimyourfees”’,pressrelease,29November2012.http://scotland.shelter.org.uk/news/november_2012/digital_award_for_reclaim_your_fees

11.R.H.Tawney,Theacquisitivesociety,London:Collins,1961reprintof1921edition,p.26.

12.Oxfam,Theperfectstorm:economicstagnation,therisingcostofliving,publicspendingcutsandtheimpactonUKpoverty,Oxford:Oxfam,2012,p.24.poverty,http://policy-practice.oxfam.org.uk/publications/the-perfect-storm-economic-stagnation-the-

http://www.guardian.co.uk/business/2012/jul/10/how-mervyn-king-got-bob-diamond

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10333831/Chancellor-files-legal-challenge-to-?EU?-cap-on-bank-bonuses.html

http://www.reclaimyourfees.com

http://www.guardian.co.uk/society/2012/may/10/parliament-accommodate-growing-housing-problem

http://scotland.shelter.org.uk/news/november_2012/digital_award_for_reclaim_your_fees

http://policy-practice.oxfam.org.uk/publications/the-perfect-storm-economic-stagnation-the-rising-cost-of-living-public-spending

rising-cost-of-living-public-spending-?228591

13.F.Engels,‘Thehousingquestion.PartII:howthebourgeoisiesolvesthehousingquestion’,DerVolksstaat,1872,§I.http://www.marxists.org/archive/marx/works/1872/housing-question/ch02.htm

14.J.vonBrühl,‘WhytheGermansrentinsteadofbuy’,Süeddeutsche,10April2013.http://www.sueddeutsche.de/geld/immobilien-warum-die-deutschen-mieten-statt-kaufen-1.1645266.NotethatinJapanthehomelessarehighlyvisiblebutmakeuponly2peopleper10,000,whereastheUKhas‘oneofthehighestlevelsofhomelessnessinEuropewithmorethan4peopleper1,000estimatedtobehomeless’,morethantwentytimesasmanyasinJapan.Manysourcescanbefoundbuttheeasiesttouseis:http://www.homelessworldcup.org/content/homelessness-statistics(asofSept.2013)

15.R.Syal,‘UKIPtogiveprioritytocouncilhouseapplicantswithparentsbornlocally’,Guardian,19September2013.http://www.theguardian.com/politics/2013/sep/19/ukip-council-house-parents-local

16.R.Behr,‘Westminstermaydabbleinxenophobia,buttherealityisthatracismisn’tpopular’,NewStatesman,15August2013.http://www.newstatesman.com/politics/2013/08/westminster-may-dabble-xenophobia-reality-racism-isn%E2%80%99t-popular

http://www.marxists.org/archive/marx/works/1872/housing-question/ch02.htm

http://www.sueddeutsche.de/geld/immobilien-warum-die-deutschen-mieten-statt-kaufen-1.1645266

http://www.homelessworldcup.org/content/homelessness-statistics

http://www.theguardian.com/politics/2013/sep/19/ukip-council-house-parents-local

http://www.newstatesman.com/politics/2013/08/westminster-may-dabble-xenophobia-reality-racism-isn%E2%80%99t-popular

17.P.Toynbee,‘TonyBlair:godfatherofrealpolitik–andMurdoch’sdaughter’,Guardian,28May2012.http://www.guardian.co.uk/commentisfree/2012/may/28/tony-blair-rupert-murdoch-leveson

18.NationalAuditOffice,‘Thedecenthomesprogramme’,report,21January2010.http://www.nao.org.uk/report/the-decent-homes-programme/

19.P.Toynbee,‘Howtoturnahousingcrisisintoahomelesscatastrophe’,Guardian,18February2013.http://www.guardian.co.uk/commentisfree/2013/feb/18/housing-crisis-bedroom-tax-failure-to-build

20.ThatarticlealsorevealedthatapparentlythePrimeMinisterenjoysfeedinglambsandgrowingvegetables.Idon’tthinkhe’sintorenovatinghouses.Healsotendsnottothreatenbankers.AsofSeptember2013,heisopposingaproposedEuropeanbanonexcessivebankers’bonuses.SeeI.Oakeshott,‘CountryDavechampionsthegreenbelt’,SundayTimes,25March2012.http://www.thesundaytimes.co.uk/sto/news/Politics/article1001939.ece

21.A.Grice,‘LabourPartyConference:Labour“willbuild200,000homesayearby2020”,saysEdMiliband’,Independent,24September2013.http://www.independent.co.uk/news/uk/politics/labour-party-conference-labour-will-build-200000-homes-a-year-by-2020-says-ed-miliband-8835593.html

http://www.guardian.co.uk/commentisfree/2012/may/28/tony-blair-rupert-murdoch-leveson

http://www.nao.org.uk/report/the-decent-homes-programme

http://www.guardian.co.uk/commentisfree/2013/feb/18/housing-crisis-bedroom-tax-failure-to-build

http://www.thesundaytimes.co.uk/sto/news/Politics/article1001939.ece

http://www.independent.co.uk/news/uk/politics/labour-party-conference-labour-will-build

22.B.MacintyreandP.Orengoh,‘BeatingsandabusemadeBarackObama’sgrandfatherloathetheBritish’,TheTimes,3December2008.http://web.archive.org/web/20090120210653/http://www.timesonline.co.uk/tol/news/world/africa/article5276010.ece

23.Staffreporter,‘ObamatobankCEOs:“Myadministrationistheonlythingbetweenyouandthepitchforks”’,HuffingtonPost,4May2009.http://www.huffingtonpost.com/2009/04/03/obama-to-bank-ceos-my-adm_n_182896.html

24.B.Appelbaum,‘CautiousmovesonforeclosureshauntingObama’,NewYorkTimes,19August2012.http://www.nytimes.com/2012/08/20/business/economy/slow-response-to-housing-crisis-now-weighs-on-obama.html

25.NationalAuditOffice,‘TheMortgageRescueScheme’,report,25May2011.http://www.nao.org.uk/report/the-mortgage-rescue-scheme/

26.J.Birch,‘Rescuecall’,‘InsideHousing’website,25May2011.http://www.insidehousing.co.uk/blogs/rescue-call/6515707.blog

27.Staffreporter,‘Osborne’s“help-to-buy”schemecouldbeusedforsecondhomes’,YorkshirePost,22March2013.http://www.yorkshirepost.co.uk/news/at-a-glance/general-news/osborne-s-help-to-buy-scheme-could-be-used-for-second-homes-1-5519958

http://web.archive.org/web/20090120210653

http://www.timesonline.co.uk/tol/news/world/africa/article5276010.ece

http://www.huffingtonpost.com/2009/04/03/obama-to-bank-ceos-my-adm_n_182896.html

http://www.nytimes.com/2012/08/20/business/economy/slow-response-to-housing-crisis-now-weighs-on-obama.html

http://www.nao.org.uk/report/the-mortgage-rescue-scheme

http://www.insidehousing.co.uk/blogs/rescue-call/6515707.blog

http://www.yorkshirepost.co.uk/news/at-a-glance/general-news/osborne-s-help-to-buy-scheme-could-be-used-for-second-homes-1-5519958

28.Areferencetothelegislation,StatutoryInstrument2625of2012,isgiveninthesectiontitled‘Renovationsandreality’inChapter4,note30,p.335.

29.CommunityLandTrust,‘Community-leddesignweekendannounced!’,latestnewsarticle,5December2012,asreadinApril2013.http://www.eastlondonclt.co.uk/#/latest-news/4571131363

30.A.McGibbon,‘Ifwewantthegovernmenttotakehousingseriously,anationaltenantsunionisthefirststep’,Independent,18February2013.http://www.independent.co.uk/voices/comment/if-we-want-the-government-to-take-housing-seriously-a-national-tenants-union-is-the-first-step-8500068.html

31.A.Deaton,‘What’swrongwithinequality?ReviewofJosephStiglitz,Thepriceofinequality’,Lancet,Vol.381,No.9,864(2February2013),p.362.http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(13)60154-3/fulltext

32.N.Sommerlad,‘GreatToryhousingshame:thirdofex-councilhomesnowownedbyrichlandlords’,DailyMirror,5March2013.http://www.mirror.co.uk/news/uk-news/right-to-buy-housing-shame-third-ex-council-1743338

33.P.Inman,‘IrishpropertytaxpenalizesDublinresidents,warncritics’,Guardian,27January

http://www.eastlondonclt.co.uk/#/latest-news/4571131363

http://www.independent.co.uk/voices/comment/if-we-want-the-government-to-take-housing-seriously-a-national-tenants-union-is-the-first-step-8500068.html

http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(13)60154-3/fulltext

http://www.mirror.co.uk/news/uk-news/right-to-buy-housing-shame-third-ex-council-1743338

2013.http://www.guardian.co.uk/world/2013/jan/27/irish-property-penalise-dublin-residents

34.P.Inman,‘Couldwebuildabetterfutureonalandvaluetax?’,Guardian,16September2012.http://www.guardian.co.uk/society/2012/sep/16/’right-to-buy’-tax-revamp

35.G.Monbiot,‘Theresurgentaristocracy’,‘GeorgeMonbiot’website,4June2012.http://www.monbiot.com/2012/06/04/the-resurgent-aristocracy/


37.N.Nowatzki,‘Wealthinequalityandhealth:apoliticaleconomyperspective’,InternationalJournalofHealthServices,Vol.42,No.3(2012),pp.403–24.http://www.ncbi.nlm.nih.gov/pubmed/22993961

38.Thevariousschemescurrentlyinplacearelistedhere:D.Dorling,‘Housingandidentity:howplacemakesrace’,BetterHousingBriefingPaperNo.17,RaceEqualityFoundation,March2011.http://www.dannydorling.org/?page_id=582

39.Staffreporter,‘Homeloanaidprogrammeenrichesbanks’,MicrosoftNews,2012.http://money.msn.com/home-

http://www.guardian.co.uk/world/2013/jan/27/irish-property-penalise-dublin-residents

http://www.guardian.co.uk/society/2012/sep/16/’right-to-buy’-tax-revamp

http://www.monbiot.com/2012/06/04/the-resurgent-aristocracy


http://www.ncbi.nlm.nih.gov/pubmed/22993961


http://money.msn.com/home-loans/article.aspx?post=8255a2a0-c7d0-4e6a-8e52-88f153566447

loans/article.aspx?post=8255a2a0-c7d0-4e6a-8e52-88f153566447

40.P.Wintour,‘EdMilibandpromisesdrivetodoublerateofhousebuilding’,Guardian,16December2013.http://www.theguardian.com/politics/2013/dec/15/ed-miliband-housebuilding-labour-councils-developers

41.G.Parker,‘Milibandplansmansiontax’,FinancialTimes,‘PoliticsandPolicy’,14February2013.http://www.ft.com/cms/s/0/1a71aa26-7694-11e2-ac91-00144feabdc0.html#axzz2L5NrbYKa

42.J.Waldron,‘Homelessnessandtheissueoffreedom’,UCLALawReview,Vol.39(1991),p.322.http://faculty.washington.edu/pembina/all_articles/Waldron%201991.pdfThepassageIamparaphrasingreads‘whatwearedealingwithhereisnotjust“theproblemofhomelessness”,butamillionormorepersonswhoseactivityanddignityandfreedomareatstake.’Backin1991,itwasamillionintheUS,nowitishundredsofmillionswhoareprecariouslyhousedacrosstherichworld,whoseparentsdidnotknowsuchfear,butwhosechildrenaregrowinguptothinktheirhomesarenotsecure.

43.A.HullandG.Cooke,‘Togetherathome:anewstrategyforhousing’,p.53.

44.Whichthecontrolofrentitselfachieves(seeTable2,p.271above).

http://www.theguardian.com/politics/2013/dec/15/ed-miliband-housebuilding-labour-councils-developers

http://www.ft.com/cms/s/0/1a71aa26-7694-11e2-ac91-00144feabdc0.html#axzz2L5NrbYKa


45.AllPartyParliamentaryCyclingGroup,‘Britaincyclinginquiry’,HouseofCommons,pressrelease,18February2013.http://allpartycycling.org/inquiry/

46.D.Ballas,etal.,‘IncomeinequalitiesinJapanandtheUK:acomparativestudyoftwoislandeconomies’,JournalofSocialPolicyandSociety,March2013,pp.1–15.http://www.dannydorling.org/?page_id=3648

47.S.Alderson,Britaininthesixties.Housing:aPenguinSpecial,Middlesex:PenguinBooks,1962.

48.D.Bradly,‘LatentcoalitionsforegalitarianismmaybedormantinBritain,buttheyareasleepinggiant’,‘BritishPoliticsandPolicy’websiteblog,June2012.http://blogs.lse.ac.uk/politicsandpolicy/archives/24150

49.TheyoungermanwasRobertReich,thecurrentChancellor’sProfessorofPublicPolicyattheUniversityofCaliforniaatBerkeley.HewasformerlySecretaryofLaborinthe1990sunderClinton.

50.R.Reich,‘ThepoorandthemiddleclasswillsaveAmericayet’,30August2013.Conversationwithanoldfriendpostedat:http://www.alternet.org/visions/poor-and-middle-class-will-save-america-yet

51.S.Kraemer,personalcorrespondence,9March2013–containingyetanotherletterthatanewspaperfailedtoprintbutthatneedstoberead,paraphrasedherewithpermission.

http://allpartycycling.org/inquiry


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53.J.Mercille,‘TheroleofthemediainsustainingIreland’shousingbubble’,NewPoliticalEconomy,2013,DOI:10.1080/13563467.2013.779652.Asummarycanbefoundat:http://www.social-europe.eu/2013/04/the-role-of-the-media-in-propping-up-irelands-housing-bubble/

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two-speedhousingmarket’,FinancialTimes,18January2014,http://www.ft.com/cms/s/0/ea516116-7f92-11e3-94d2-00144feabdc0.html#axzz2qh9T0sM5.

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Acknowledgements

TomPennatPenguinbothcameupwiththeideaforthisbookattheverystartandradicallyrearrangedthefinalmanuscriptattheveryend,beyondnormaleditorialduties–thankyou.Myagent,AntonyHarwood,arguedin2012thattheideawasworthpursuingand,asever,Iamverygratefultohim.However,mygratitudegoesmuchfurtherbackintime,asIhavebeenlookingathousing,onandoff,foraquarterofacenturynow.ImustthanktheHousingandSocietyResearchGroupattheUniversityof

NewcastleuponTyne,andinparticularTonyChampion,forgivingmemyfirstacademicjobthatinvolvedresearchinghousing,in1991.MuchmorerecentlyIshouldthanktheRoyalIrishAcademyforinvitingmetoDublintolectureonthecrisisinearly2013andforgivingmuchusefuladvice,notleastfromMichaelHiggins,whotoldmeathingortwothatIdidnotknowabouteconomicsandtheIrishhousingcrisisaftermypresentationattheAcademy(whichIwishedhehadtoldmebeforehand!).Thisisnowamuchbetterbook

thanmyoriginaldraftbecausesomanypeoplehavehelpedtoedititandhavecommentedonearlierdraftsandlectures.TomPenncutoutagreatdealoftheoriginalhype,and

mademebefarclearerthanIotherwisewouldhavebeen.However,hiscommentscameonlyaftermanyotherpeoplehadhelpedtoorganizemythoughtsbetterthanIcouldalone.EditingstartedwithDavid,BronwenandAlisonDorling,whoreadthefirstdrafts.IamalsoverygratefultoCharlotteShepherd,HousingAidOfficeratSheffieldCityCouncil,andtoAndrewParfitt,HeadofHousingPolicyDivisionattheDepartmentofWorkandPensions,whobothcommentedinapersonalcapacity.IamindebtedtoJoe,TheoandothersattheSquatters’ActionforSecureHomes,whokindlyallowedmetopresentmyearlyfindingstoanopenhousemeetingofsquattersandwould-besquattersinsouthLondon.Iam

gratefulforadvicetoSarahBlandyandBenjaminHennig,boththenattheUniversityofSheffield;FernElsdon-BakeroftheInstituteofCommunityCohesion;CarlLeeatSheffieldCollege;TonyChampionofwhatwastheUniversityofNewcastleuponTyne(now‘NewcastleUniversity’);RobKitchenattheNationalUniversityofIreland,Maynooth;AlexFentonandChristineWhiteheadattheLSE;SebastianKraemeroftheTavistockClinic;KatSmithoftheUniversityofEdinburgh;BeckyTunstallattheUniversityofYork;GemmaThorpe,photographer,whotookalltheshotsusedhere;and,lastly,PaulColes,thenoftheUniversityofSheffield,whokindlyredrewallthegraphics.AndthankstoDavidDorlingand

StacyHewitt,whoreaditallagainattheendtocheckitstillmadesomesense,andthenreaditasecondtimeafterIcompletelyrewrotethefirsthalfyetagain,partlyduetoeventsinthehousingmarket!FinallyImustthankDonnaPoppy

forcopyeditingthemanuscriptandturningmyenthusiasticclaimsintomuchmorereadableprose,RichardDuguidforsteeringthefinalproductionsosmoothlyandKrishnaPrasadandcolleaguesatthetypesettersforworkingthroughtheChristmasandNewYearholidays.Allerrorsremainmyresponsibility,butIcouldnothavewrittenthisbookwithouteveryone’shelp.

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ALLENLANEPublishedbythePenguinGroupPenguinBooksLtd,80Strand,LondonWC2R0RL,EnglandPenguinGroup(USA)Inc.,375HudsonStreet,NewYork,NewYork10014,USAPenguinGroup(Canada),90EglintonAvenueEast,Suite700,Toronto,Ontario,CanadaM4P2Y3(adivisionofPearsonPenguinCanadaInc.)PenguinIreland,25StStephen’sGreen,Dublin2,Ireland(adivisionofPenguinBooksLtd)PenguinGroup(Australia),707CollinsStreet,Melbourne,Victoria3008,Australia(adivisionofPearsonAustraliaGroupPtyLtd)PenguinBooksIndiaPvtLtd,11CommunityCentre,PanchsheelPark,NewDelhi–110017,IndiaPenguinGroup(NZ),67ApolloDrive,Rosedale,Auckland0632,NewZealand(adivisionofPearsonNewZealandLtd)PenguinBooks(SouthAfrica)(Pty)Ltd,BlockD,RosebankOfficePark,181JanSmutsAvenue,ParktownNorth,Gauteng2193,SouthAfrica

PenguinBooksLtd,RegisteredOffices:80Strand,LondonWC2R0RL,England

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Firstpublished2014

http://www.penguin.com

Copyright©DannyDorling,2014

Themoralrightoftheauthorhasbeenasserted

Coverphotograph©GettyImages.

Allrightsreserved

TypesetbyJouve(UK),MiltonKeynes

AllphotographsbyGemmaThorpe.GemmaThorpeisafreelancephotographerspecializinginsocialdocumentary,withaparticularinterestinyouthissues,migrationandidentity.ShehaspublishedandexhibitedherworkintheUK,ChinaandEurope.Formoreinfosee:www.gemmathorpe.com

ISBN:978-0-141-97495-8

http://www.gemmathorpe.com