Homeowners?

In the absence of decent rented accommodation, thousands of people look to buy in order to get a roof over their heads. But this is a major problem for people. The Royal Institution of Chartered Surveyors estimates that affordability for first-time buyers has fallen by 351% over the last 10 years. Equally, repossessions were up 20% during 2007, which hit an eight-year high. This amounted to 27,100 people who had their properties seized during the year. In the first quarter of 2008, there was a further 17% rise in the number of repossession orders compared to the same period in 2007. With repossession orders rising, it is likely that the number of repossessions this year will dramatically increase. The Council of Mortgage lenders has predicted that repossessions would reach 45,000 this year — a rise of over 50% on 2007.

There is a myth that many people in Britain own their own homes. The reality is that the mortgage companies own most of these homes — the people in the houses are effectively paying a type of high rent, for most of their lives. What value is that ownership? They can hardly sell up, pocket the money and live in a tent! In reality, mortgages are rents paid as debts.

The total owed by the UK’s 11.6 million mortgage ‘home-owners’ is more than £1 trillion. This figure is massive and is nearly equal to the UK’s entire economic output. Nor will working people in their senior years be secure, when eventually the mortgage is paid off. The crisis of capitalism is now demanding that governments start charging for care for the elderly, rather than continue the care previously provided through the NHS and local council services. The bills will run into tens of thousands of pounds, and they are demanding payment based on the value of ‘home ownership’. Having paid surrogate rent all their lives through mortgages, these ‘home-owners’ will now be faced with losing their home in their remaining years to pay for care. Needless to say, this will not trouble the wealthy, but highlights sharply the con-trick of homeownership for working people in this society.

And before individual mortgages end, there are years of paying them off. In 2003, about a third of the take-home pay of a home-owner, on average earnings, was spent on mortgage repayments; by 2006 this figure was 42%. In 2008 first time buyers were spending 35% of their disposable income in mortgages — even with two people working! If we add to these payments the rocketing bills of other household expenses such as energy and food (where prices are rising at their fastest since records began), then we can understand that mortgagees are facing major problems.

If you want to move, you need to sell up. This means paying estate agents fees and tax to the government to purchase your alternative ‘new’ house. If you decide to stay and decorate or extend the home, that is also going to cost. The recent BCIS updated Property Makeover Price Guide for 2008 has estimated that the average cost of home improvement work has risen by 20% over the past two years. So much for wage increases below 3%!

Little Hope from New Labour

The shortage of decent housing, has been an eternal problem for working people; capitalism is simply not interested in people’s needs, only profits. However, even in terms of the historical crisis of housing, the situation has deteriorated over the last twenty five years, and further deteriorated in the last ten years under New Labour. The deterioration is a direct consequence of abandoning public sector housing and letting the market supply housing needs.

It is with some disbelief that after ten years of government, New Labour, who has given public sector housing no support, but instead has undermined it with a series of stealth privatisation measures, has introduced the Housing and Regeneration Bill, which passed the Commons and is currently in the House of Lords. The launch of the bill as the Housing Green Paper in 2007 set a target of building three million new homes by 2020, and two million of these by 2016. Note that the emphasis is on ‘targets’ for other people to reach, not a commitment by the government to actually build these houses. Such figures would be unrealistic for the market in the best of times, let alone in the current sub-prime mortgage crisis when house building is plummeting.

There is little that is positive in the Bill. The release of public sector land for housing is a further sell-off of public assets. The environmental spin about new carbon-neutral eco-towns sounds good, but is again targeted at the private sector, who will have to ‘bid’ for the projects. The Green Paper only plans for an extra 20,000 ‘social rented homes’, which is the spin word for ‘but not council houses’, with the details of how the building will actually happen left vague. In any case, the figure itself is a mere drop in a brickyard pond — millions of homes are needed, not 20,000! But what is critical in the Bill is a series of proposals which are set to further undermine public sector housing, attacking the security of tenure of tenants and opening the door to wider privatisation.

The presentation of the Housing and Regeneration Bill in early April caused one of the largest backbench revolts against Gordon Brown, as it was rightly seen as a direct threat to council housing. Twenty-eight MPs backed an amendment to soften the worst aspects of the Bill — but the revolt was defeated, not surprisingly by the Tories supporting the government.

The Madness of the Market

In 2001, the number of extra homes built was the lowest since 1924. Last year house building dropped 10% from the previous year to about 170,000. The situation has been bad for several years; but a sharper downturn began in 2006, so much so that in England, during the last quarter to December 2007, there were only around 37,900 building starts. This is expected to get much worse over the coming year as the credit crunch bites. In terms of council houses, successive government policies have created a situation where hardly any new council houses have been built for the last 20 years.

The housing shortage has led to very steep rises in house prices over the past few years, so that many people are now priced out of the house buying market. Even the projected 20% fall in the coming twelve months because of market failure, will do little to help people not on the ‘housing ladder’, and it will cripple many young people who bought houses over the last couple of years.

The failure of the pro-market New Labour government and the policies of the Conservatives before them is the failure of the market to meet housing needs. We need to be honest: the driving force behind the market is not the meeting of people’s needs, but the pursuit of profits by capitalists, who then ‘might’ meet people’s needs — if they can make money out of it. This point is important, because if there are no profits, then housing will not be supplied — regardless of need. If the capitalist can make more money by speculating on the stock exchange, or by keeping housing in short supply so the price goes up, then this will determine how many houses we have. The whole system is chaotic, unplanned, with booms and over-pricing followed by crisis. This process only benefits the wealthy, leaving the majority of the population homeless, or else paying high rents or mortgages. And in the twenty-first century millions continue to live in overcrowded and squalid conditions.

The Land — Who Owns It?

The other main factor affecting housing in Britain is the private ownership of land. The vast majority of land is in the hands of a few billionaire and millionaire landowners. These people are controlling the availability of land, often in prime building areas. The total of all homeowners (with and without mortgages) is around 17 million people; but they only own a total of 3 million acres of land. Most house owners, taking the size of the average terrace or semi-detached, and including both the house and garden, own only about 0.18 of an acre of land. This compares to 40,000 millionaire landowners who control over 28 million acres. For those interested, this figure does not include the 677,000 acres controlled and owned by the Royal Family.

If the land you want to build on is owned by just a few mega rich people, this can make it in ‘short-supply’, then the price they can charge under the market system goes up. It is not planning permission which is limiting house building, but the power of these land barons. Their control results in both increases in the price of houses for sale and in the cost of public house building; overall it limits how many houses are built.

All these facts and figures speak for themselves. There is a massive need for affordable housing for young single people, for families and for pensioners — but this need is not being met. The market has failed, and it is time for a change. We need a national planned housing policy designed and resourced to meet people’s needs.

Socialist Policies, Socialist Government

The Labour Party has been hijacked by tories-in-disguise, parading under the label New Labour. We just get ministers who promote big business profits and attack working people, undermining wages and ignoring housing issues. It is time to reclaim the Labour Party and select candidates who represent working people; not MPs who represent only themselves and the rich. We need a Socialist Labour Government.

Through our trade unions, and working through the Labour Party, we should be fighting to:

• Reject the chaos of the market, and fight for a planned and organised housing policy to meet people’s needs
• Put all the banks and finance houses into public ownership (Northern Rock should be the start); do away with market mortgage uncertainties; provide fixed stable loans for existing one-home house owners
• Employ the 1.2 million workers in the construction industry for a building programme of 500,000 new housing units per year, with affordable rents for single people, families and pensioners
• Begin an immediate programme to renovate and refurbish the existing public housing stock
• Fix the level of public housing rents to an agreed percentage of the tenants’ earnings, up to a maximum, based on a percentage of the average wage
• Take into public ownership the vast landed estates; free land for housing development and public recreational use
• Take into public ownership the construction industry, working in conjunction with a national housing plan
• Manage all public organisations of finance, construction and the housing stock based on the principal of democratic participation and control of those who work in those organisations, the tenants and the communities they are serving. We want democracy in our lives; and communities, not dictates from the boardrooms!