Housing in a socialist society and how do we get there?

by Will McMahon*

 

Source >> Talking About Socialism

In Britain, a socialist government would inherit a housing sector that has undergone a massive transformation of ownership and control in the last half a century. The state withdrew from supplying housing via Thatcher’s right to buy and Blairism’s stock transfer program. State housing assets were, for the most part, privatized.

In passing, it should be noted that New Labour privatized more housing than the previous Tory administrations (the post-war Tories having previously built more council houses than post-war Labour) with Blairism attempting to eradicate the concept of the benefits of council-owned housing from the public mind by associating it with the twin tropes of 20th-century traditional conservative thinking: the “underclass” and “problem families”.

There were many different rationales for Thatcher’s privatization of council housing, but a professed ideological belief was that council housing trapped aspiring working-class people, who, given the chance, would want to own their own home and “better” themselves. Thatcher aspired to release the libertarian property-owning inner petit-bourgeois she insisted exists in almost everyone.

The policy had twin objectives. The first was to create a Vendee of property owners as a reactionary bulwark for the coming Thatcher revolution. The second, and more hidden, was to open housing to global market forces which, of course, were uninterested in liberty, being more focused on capital accumulation and income streams. These objectives were in contradiction, and, in the long run, the latter triumphed and has fundamentally reshaped housing in Britain.

The outcome of the last half century has been to produce not a sea of petit-bourgeois property owners, fearful of a workers’ government, but the emergence of a rental sector that is slowly coming to dominate a deregulated housing market and is falling under the control of global investment companies. By 2040 it is expected that renters will outnumber owners.

There are four key issues that should inform the first phase of a socialist government’s response to the housing crisis.

First, the data on property ownership in Britain is notoriously and purposely opaque, but it is estimated that around one million houses are either empty or underutilized – as second homes, buy-to-leave-empty investment properties, long-term empty housing, and short-lets (aka Airbnbs) – while households living in temporary accommodation number around 110,000.

For example, in London, a hotspot of the housing crisis, there are around 100,000 short-let properties, 30,000 second homes, 25,000 long-term empty properties, and around 5,000 buy-to-leave-empty properties. In total, that comes to more than twice the 70,000 households living in poor, temporary rented accommodation in the capital. Rather than a housing shortage, in Britain there is a housing surplus. The problem, as Danny Dorling demonstrates in All that is Solid: The Great Housing Disaster (2014), is that the surplus housing is poorly distributed for social need.

Second, given the accelerating environmental crisis, it would be necessary to have a housing policy that focused on the three Rs – refurbishment, retrofitting and redistribution – rather than building more stock that would be surplus to requirement.

While it would be appropriate to complete nearly finished private housing projects, all agreed applications to build new private housing should be put on hold – the government would impose an investment strike on developers – with labour and materials supply refocused on bringing currently unused and dilapidated stock back into use through locally led community engaged programs of refurbishing and retrofitting for households living in temporary accommodation. Britain has some of the oldest and poorest housing stock in Western Europe, a lot of it empty, that could be made livable in short order, rather than the years it takes for new housing to be brought on stream.

There is an obvious synergy between the over-supply of housing, the numbers in housing need, and the need to meet the climate emergency by bringing under-utilized stock back into use.

Third, it is generally acknowledged that rents across the country are out of control. This is being driven by a housing model that has made property ownership unaffordable for most people under the age of 35. In the 1980s over half of 24- to 35-year-olds had a mortgage. By 2030 this is expected to be just one quarter. Seven in ten young people rent. Global housing investors are focused on income streams from assets they permanently own – there is no reason for investors to sell such lucrative assets for the sake of the millions who are forced to rent at high prices because they can never afford a mortgage. In addition to investing in building new housing stock, global hedge funds are also buying up older housing stock to grow rental portfolios for the long term.

Any socialist government worth its salt would introduce rent reductions through the introduction of local reference rents combined with a ban on eviction. This would, of course, bring two social blocs into confrontation – mainly the young who rent (although it should be remembered that a growing number of over-40s have never been able to own their home and are trapped in inferior quality and over-priced rental accommodation) would be confronting landlordism. In this social struggle the perils would all be faced by the landlords. The crucial aspect of housing is that it is an embedded investment that cannot be withdrawn – investors may flee the country but they cannot take their immobile, physical property with them. With an eviction ban in place, monitored by local committees of renters and government officials, landlords of all hues would face a fait accompli, with any compensation for loss based on proven need. Newly abandoned houses and flats identified by local communities could be sequestered by local authorities for new mixed-income council housing.

Fourth, and this is where the danger exists if the socialist government missed a step, landlords, both domestic and international, would, herd-like, exit the market, and a generalized house price crash would result, plunging present mortgage holders into negative equity and unable to sell their homes as the market in property transfer for exchange value seized up. Undoubtedly, opponents of a transition to socialism would focus their propaganda efforts on anxious mortgage payers and small property owners.

It is crucial to recognize that, irrespective of Thatcher’s beliefs, many became homeowners because that was the only financially viable option for them. By the mid-1980s housing waiting lists for council properties across the country were growing ever longer due to a combination of right to buy and the collapse in council house building programs, and rental properties were poor value compared to mortgages that were available at affordable prices.1

Today, many recent home buyers, having managed to escape the rental trap, are mortgaged beyond the hilt – first-time buyers are paying excruciatingly high mortgage costs for the privilege of owning the roof over their head. In Islington, for example, an average two-bedroom, starter flat costs more than £520,000, while an average couple looking to start a family will earn £70,000 between them and need a £25,000 deposit. They will need to pay the equivalent of two mortgages to own a small, often poorly built, flat. House prices have reached such dizzying heights that 50-year mortgages are mooted. As Ken Livingstone once said when being quizzed about his own ownership soon after he had been elected GLC leader: “Yes, I have a mortgage, but until I pay it off the house belongs to the mortgage company, not me.”

It also needs to be recognized that the desire to own in Britain’s current housing market, even at extortionate prices, has been reinforced by the lack of regulation within the rental market and the housing uncertainty that this brings. Not only is renting a financial trap in Britain, but it is also remarkably insecure in a way not experienced in the rest of Western Europe. Renters can be evicted with little notice. So, home ownership primarily reflects a desire for security in an unstable and price escalating housing market, in the absence of alternative non-market provision, rather than a petit-bourgeois view of one’s home as a financial investment – although, no doubt, such attitudes do exist.

The curiosity of the times we live in – with a pandemic and an inter-imperialist war producing a catastrophic energy crisis – is that bourgeois governments have had to take ostensibly bold financial steps to ensure economic stability. Steps by British Conservative administrations that were unthinkable in May 2017, when Theresa May, then Prime Minister, in response to a question at an election husting, intoned: “There isn’t a magic money tree.” The magic money tree of COVID furlough payments and energy price subsidies duly followed.

Rather than the bold step of furlough payments or energy subsidies, a socialist government could take the revolutionary step of confirming the use-value of the home to the permanent resident owner, stepping in to assuage their anxiety about negative equity, while voiding the previous exchange value by offering a government-backed mortgage, with payments reflecting that new lower market price. As a result, the buying and selling of homes between permanent residents would resume at much lower prices.

The losers in this scenario would be the mortgage companies whose balance sheet would be eviscerated. Their employees could transfer to the government mortgage authority. Properties purchased for investment purposes would not be covered by the scheme. This would split the property-owning bloc between those who own a home for use and investors – those with just one home outnumbering those with more than one by a factor of ten. This step should be taken at the same time as the introduction of local reference rents and the eviction ban. A social bloc supportive of the socialist government would be created comprising those enjoying lower rents with no risk of eviction, and those paying lower mortgage payments, who were not exposed to the gyrations of global markets.

With labour and materials targeted on refurbishment and retrofit of the low hanging fruit, those living in temporary accommodation could be rehoused within months rather than years. Even when households in temporary accommodation have been properly rehoused, that would still leave more than 800,000 properties without a permanent resident. This number would increase as the wealthy flee the country with their liquid assets.

The general fall in housing costs across the rental sector would also help those thousands of single people who are sofa surfing and the hundreds of thousands who are living in overcrowded conditions in multiple-occupation houses.

With individual mortgaged homes protected and their owners not looking for a return to the higher mortgage prices of the previous period, the socialist government could look to longer term planning.

In the longer term

There are five key principles for a socialist housing policy: environmental sustainability, quality of provision, diverse provision, local planning democracy, and equality of provision.

At present there is a direct contradiction between the environmental interests of humanity and developers. Despite attempts at greenwashing there is no getting around the fact that almost all new developments are carbon intensive and adding significantly to the climate emergency.

A period of no-growth in the building sector will focus the popular mind on how to make best use of the 800,000 surplus stock available, whether it be empty, second homes, short-lets, or buy-to-leave-empty investments. The governing principle is that every home should have a permanent resident with a portion of stock set aside for flexibility or social use (e.g., safe houses for victims of domestic violence and abuse, new entrants to the country, those moving between institutional care and community care).

There are around two and a half million properties that need substantial refurbishment and retrofitting for the future to make them less costly to both heat or cool. Local authorities should audit these properties with aim of completing their renovation within a decade. It is exceedingly difficult to retrofit homes while the residents are present, and people are understandably not anxious to leave their home they have lived in for some time, so retrofit on vacancy should be the principle applied – either when the owner or renter dies or moves. No empty home should be occupied until it has passed an environmental test, demonstrating it does not require retrofitting.

All rented housing would be subject to rigorous quality assurance procedures that would audit not only the physical state of the house but also how far the landlord manages the property in terms of safety and repair. The balance of social forces would be tipped decisively in favor of the tenant and encourage landlords to sell up.

At present there is a lack of diversity of provision – the principal model provides for a nuclear family comprised of a couple with children. Varieties of collective living are not encouraged, whether it be communal or co-housing. Living alone can be disproportionately expensive. There is also a near total failure to provide downsizing options for those who want less space as they grow older, bar handing over what is left of your pension to housing providers for the elderly, who are driven by profit. A socialist government would begin a national conversation about these issues – how different housing needs can be met for a truly diverse population over everyone’s lifetime. Support for democratically run housing cooperatives and co-housing would be increased to encourage a social mix of non-profit-orientated housing provision. It would also nationalize the current private retirement care companies, with care to be based on need, rather than ability to pay.

Central to a socialist government program would be the inclusion of local communities in planning the use of housing. Most planning in contemporary Britain actively excludes local communities from having any real control over the outcome of even small developments – it operates to obfuscate processes.

The role of government should be to set the general principles of environmental sustainability, quality of provision, diverse provision, local planning democracy, and equality of provision. Delivery should be left to local democratic mechanisms which would be shorn of the present dominant influence of developers. Years can pass as developers and local authorities agree plans. Education in democracy and discussion would be needed for local planning to become truly open and participative. As the response to the climate emergency unfolds most focus would necessarily be on the use of currently underutilized stock.

The challenge would be to bring “the technical experts” – architects, engineers, master planners, and the like – into discussion with the “non-technical” people, who will be directly affected by what is agreed. Having participated in the Community Plan for Holloway from 2016, a local campaign that was seeking to ensure that the housing developed on the site of the closed Holloway prison met local needs, I am convinced of the creative potential of such a discussion.

Through extended discussion, it is possible for local communities to take a leading role in planning and housing development. Analyzing spare stock and discussing the egalitarian principles by which it should be allocated would be a school for educating local communities in the kind of participative process that will be needed to plan new builds – once analysis at national and regional level has identified social needs within the constraint of environmental sustainability.

The governing principle would be equality and removing the cash nexus from housing. No one should be left without a roof over their heads. No household should be overcrowded. No one should be living in poor or unsafe conditions. No one should be living in danger for the lack of an alternative home (including one to which a perpetrator can be moved). The sale of rented stock should be permitted only to the government or to a permanent tenant or new permanent owner; never to a landlord.

Slowly but surely, through a combination of tax measures and government purchase, the rental sector should be transformed into socially owned homes. Given the surplus of stock, there is no need for a frontal assault on those who own one additional property for rent. Over time, as rents fell, they would exit the market via government-offered purchase. A more aggressive approach should be taken towards the big global investors. They have created the housing disaster we see today in Britain and they should be evicted entirely from owning or building housing.

*With thanks to the editors and publishers [Pluto Journals] of Journal of Global Faultlines, where this article was first published [13 Feb. 2023] as an open resource. https://www.scienceopen.com/hosted-document?doi=10.13169/jglobfaul.9.2.0235

  1. An anecdote from personal experience: as a single person in my mid-20s in late 1980s London I had no chance of a council flat and had resorted to paying a cheap rent for a poor-quality shared flat. Earning £13,800 a year in my first job, I saved by virtue of my cheap rent and bought a top floor flat for £38,000. While I did not think of home ownership as desirable, it did feel better than handing over rent to a landlord – cheap though it was – and it offered much greater privacy than sharing. Today, the flat is on the market for £400,000 in now desirable Stoke Newington. Had my £13,800 wage kept up with house price inflation, I would be earning £137,000 – three times my current income. []

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