The long read: As affordable housing in Britains capital is replaced by luxury towers, people on middle incomes are being priced out, while the poor are forced to pay extortionate rents for shocking conditions
The first time I met Ian Dick, the head of private housing at Newham council in east London, he took me on a walk to look for beds in sheds. It was 2011, and alongside criminal levels of overcrowding in private rental properties, there was a growing problem of people living in illegal structures in back gardens. It was not uncommon to find 10 or 20 people living in a room above a fried chicken shop, in a basement, or in ramshackle outbuildings. When we met again, five years later, he was happy to talk to me, not because these problems had disappeared, but because he was proud of the council’s private rented sector licensing regime. Introduced in 2013, it was the first such scheme in the country and had led to 800 prosecutions and 28 landlords being banned from renting property to tenants.
This time we met in Forest Gate, traditionally one of the most deprived parts of Newham. This is an area undergoing the most dramatic change the council doesn’t use the term gentrification, they use the term regeneration, he said as we strolled down a pleasant high street in the sunshine, looking up at Victorian facades renovated by the council. Along the road, hipster cafes and pubs were interspersed with clothing retailers, halal butchers, and phone shops. To show me the reality in some of the flats above, he took me around the back, where an entire street was accessed by a badly maintained private alleyway, with a huge pile of mattresses dumped at one end.
The mattresses were outside a property where, until the previous week, 20 people had been living in a makeshift structure in the yard outside. The landlord is under caution, he’s not arrested, has been housing people desperate for accommodation people were paying 400 a month to stay in this, Dick said. Further down the back alley, the entrances to a large number of flats were up dangerous-looking fire escape stairs, particularly hazardous for small children. In one of the properties a scooter stood at the foot of a rickety open stairway.
At the back of a large Victorian house, we were met with a smell of leaking sewage, and the once-white walls were now filthy and soot-stained. This must be illegal. That’s the thing about English housing there’s little that’s illegal but there’ll be breaches here, Dick explained, telling me that English property law does not target property standards, but that interventions can be made about public health. In this case, the breaches would be drainage and conditions detrimental to health.
This is the sort of private rented sector that still exists in 2016, even after all we’ve done, he said, noting details down in his notebook so that his officers could visit. The interior of one of the flats was visible through a grim-looking security gate at the back door. Through the bars, I could see a toddler and his mother. This was no place for a child or anyone to live, but it was also obvious that once they were evicted, their fortunes would not necessarily improve. There would be nowhere to go, and even if they qualified for social housing, they would most likely enter the world of substandard temporary accommodation.
Walking back down the high street we paused to look at some of them to let signs in the newsagent’s windows. One, in particular, stood out, offering a room share for four people for 160 a month per person: effectively a bed space in what may or may not be legal accommodation. Renting bed spaces, I had already heard from a number of sources, is becoming more common, with bunk beds visible in the front rooms of nearby terraces. While we sat having a coffee, Dick explained this was partly down to the increasingly common and highly profitable practice of what is known as rent to rent.
An estate agent will rent a house to an individual who will then let it out to others, who might also sublet. There’s a whole sub market in rent to rent. Its all done with no documentation, they don’t ask for references, and when we go round we might find 15 people there. There’s different levels of this going on everybody has to share because nobody can afford to rent, he said, adding that sometimes criminal gangs might rent 20 properties, then re-rent them at a 20% higher price. The council had prosecuted 25 agents, he said, and pointed to how to find them through ads in the local papers: Where you see agents offer guaranteed rent, there are no controls on lettings agents.
Adverts on hoardings all over London show a city populated by smart-looking people in luxury balcony apartments. The city is the destination of choice for foreign investors and the oligarchs, billionaires, and super-rich who make up the so-called alpha elites, all of whom are attracted by the UKs favourable tax environment. Entire neighbourhoods St Johns Wood, Highgate, Hampstead, Notting Hill Gate, Kensington have changed out of all recognition in the past decade. Estate agents refer to these centrally located, super prime areas as golden postcodes. They have long been wealthy places, but in the past, like most of London, they were also mixed. Now ultra-high-net-worth individuals have displaced even the wealthy from Kensington; they, in turn, displace others to suburban areas, creating a domino effect that ripples out through the city, with the consequence that average-income earners and the poor move to the periphery or out of the capital altogether, which places pressure on housing and pushes up prices around the country.
Londons skyline is being transformed by one of the greatest waves of new construction seen in the city, with plans for no fewer than 300 luxury residential towers. From Nine Elms up to Vauxhall and along to Southwark and Blackfriars bridges, mile upon mile of apartments in gated complexes have already been built. At Elephant and Castle the Australian property developer Lendlease is working with Southwark council to render the area unrecognisable, replacing the affordable housing that once characterised it with a forest of gleaming towers. Outside some of these buildings, metal spikes prevent homeless people from sitting or sleeping on the pavement.
There is a direct link between the wealth of those at the top and the capitals housing crisis which affects not just those at the bottom but the majority of Londoners who struggle to buy properties or pay extortionate rents. The 2008 financial crash created a new politics of space, in which people on low incomes are forced out of their homes by rising rent and the wealthy are encouraged to use property for profit. These trends are not limited to London. The same currents of global capital are also transforming San Francisco, New York and Vancouver, European cities from Berlin to Barcelona and towns and cities in the UK from Bristol and Manchester to Margate and Hastings. This isnt gentrification, its another phenomenon entirely. Global capital is being allowed to reconfigure the country.
Public housing accounted for a huge proportion of British accommodation throughout the 20th century. Since the 1980s, public housing stocks have been steadily eroded, through the combination of right to buy, which saw the sell-off of 2m council homes, and buy to let, which has resulted in 40% of those former council homes now being owned by private landlords, who rent them out for three and four times the amount that council tenants pay for the remaining local-authority-owned properties.
During the 1980s a decision was taken to cease building housing for those on lower incomes and to create instead a system whereby housing benefit would take the strain, rising to cover increases in rents. At the time it was predicted that the change in policy might lead to higher rents but nobody believed they would rise to the level they are today. The combination of right to buy and the decision to stop building council housing shifted social tenants into private rented housing. Research from the National Housing Federation shows that the amount of housing benefit paid to private landlords doubled from 4.6bn in 2006 to 9.3bn in 2016.
The shortage of affordable housing has given rise to a range of problems in private rented accommodation, from slum landlords and beds in sheds to middle-class Londoners under the age of 45 who can no longer afford to live in the city. A generation is being affected and our essential services, such as hospitals and schools, and the majority of our small and medium-sized businesses, are being undermined.
We think broadly a third of landlords are well-meaning and do a good job, said Southwark councillor Mark Williams, a third are well-meaning and do a bad job, and a third are rogue landlords. At the fringes of that, you have slum landlords and criminal human trafficking. Southwark, in south-east London, despite increasing areas of high-cost development, still includes large pockets of poverty. Williams told me that the council found a two-bedroom flat on the Aylesbury estate with 20 occupants, who were being bussed down to Bromley, 40 minutes away, every day to work in a sweatshop.