Housing Market


The UK relies heavily on the increase in property prices to create the impression of a growing economy. It is fair to say that some inflation in property prices is not necessarily a bad thing. As a property increases in value, the debt taken out to purchase the property is reduced as a percentage of the market value, which helps the owner of an asset offsets some of the interest payments made on the mortgage. The intrinsic problem with house price inflation is that the value bears no relation whatsoever to its actual physical bricks and mortar cost. There is something fundamentally wrong with a society that marketises that which is integral to quality of life and even to survival. It is so ingrained in our society we have stopped seeing the madness.

Once the increase in house prices outstrips most buyers ability to buy and where the demand outstrips supply, the market will tend towards a rental market where those with large amounts of capital can exploit those with little or no capital. A rental market is not a bad thing in itself, but it must be guaranteed by a good supply of properties and legislation that ensures reasonable protection of the tenant.

This section covers the domestic property market and how house inflation has become so integral to our economy that government policy defends the speculators to ensure the economy doesn't crash. The cost of keeping an overheating economy from collapse is a growth in substandard housing conditions, unmanageable personal debt and a market that threatens to bring the economy crashing down.

House price inflation

Figure 1 shows house price inflation by area 2010-18. The average for the UK is 27%, but this varies widely across the UK regions. Greater London has seen the highest house price inflation (61.53), as would be expected, while Scotland has seen the smallest increases at just 2.82%. The graph also includes where wages should have been by 2018[1][2], or rather how far they are behind where they would be if the economy had carried on growing. Residents of London are the hardest hit in terms of getting on the housing ladder as their wages have not kept up with general inflation while house prices have soared. Areas around Greater London have also seen fairly high house price inflation, which could be partly explained by increasing house prices in Greater London pushing more buyers further out from London.

In theory, under normal circumstances, there should be a natural house price correction. Once house prices reach an unattainable level there should be a slowing down in growth. This has not be seen due to a number of factors. Firstly the government through Quantatitive Easing has made vast sums of money available to the financial markets. It is in the interest of the financial sector to make mortgage loans with this money. While the money is made available to them at zero interest rates, they can loan the money out at much higher interest rates. This tends to lead to banks and building societies offering far higher multiples of salary to lenders to keep the money rolling. These loans then end up in the money markets where they multiple, based on the logic that prices will keep rising. Higher multiples, rather than helping lenders onto the housing market, tends to push up prices beyond what can be afforded. As the multiples increase the percentage of a lenders salary spent on mortgage repayments increases (see figure 3 for more details). Under the section Government purposely Inflating prices you can see how, when the government have detected a slowing of housing market, they have introduced measures to ensure continued inflation.

The other factor that has played a large part in house inflation has been a national shortage of housing stock. As demand has outstripped supply this had led to an increase in prices. This has been exacerbated by the buy to rent market where the wealthier can afford to buy up properties and there is a need to rent by the younger generation as houses prices have gone beyond their means. The buy to rent market has a place, but the investment by rich landlords and the lack of controls regarding the quality of that housing has led to an unbalancing of the market.

Figure 2 shows the actual real drop in wages if inflation is taken into account. [3] This shows a more realistic view of where wages are compared with 2010. The figure represents an average across all age groups and the figure is skewed by the older population seeing small drops in income. The loss in real income amongst the 30 to 49 year olds is much higher at over 7%. This amounts to £2100 reduction in salary. So in this respect the figure 2 graph understates the growing gap between wages and house prices. In the 30 to 49 age group though it may well be that they have managed to put savings aside to pay for a deposit. Also those in the 30 to 39 age group are more likely to be on or above the national average wage. Historically somebody buying a house at 30 would have expected wage growth over the following 10 years. This often meant that a couple would buy house prior to having a family and as their family grew so would their wage to ensure that the mortgage payments formed a smaller and smaller percentage of their income. With wage contraction this is no longer the case. A couple buying a house will find their income reducing as their costs rise. If there is any upward movement in interest rates, the markets are now heavily exposed to mortgage defaults. It is difficult to envisage that the UK housing market could weather a hard brexit. Any downturn in the UK economy where families are mortgaged up to the hilt could create a cliff edge collapse in housing prices.

Amongst the 22 - 29 age group wages have fallen by an average of 4.6%. In the past this would have been the age group that were first time buyers. However with falling wages and increasing house prices, it is much more difficult for this age group to purchase their first property. This age group tends to be about 25% below the national average wage at £21,408 per year. With rising student fees, this group would also be saddled with a very large debt. For a typical property, somebody in the 22-29 age group would require a loan of 10 times their salary and to find a deposit of £10,000. For an individual to purchase a property this would amount to 80% of their salary in mortgage repayments. This would obviously be reduced for a couple, but would still form a significant percentage of their combined salary, particularly if they have student debts.

In Figure 3 we see the impact on home buyers due to house inflation and declining real term wages. The table is based on national averages[4] and in some areas it will be worse than others. It is difficult to picture a scenario where it will be better. In the regions where house inflation has been lower, this is a reflection of poor job opportunities and well paying jobs are more difficult to come by. The table compares the situation for house buyers in 2010 with 2018.

Average Salary This is taken from Monster recruitment measurements of salary[5]. Typically it would reflect the salary received by somebody who has been working for up to 9 years. Average salary would historically have increased by £1000 per year. As we've seen this is not the case under austerity measures, with wage growth being stagnant.

Average House Price This is taken from the Nationwide House Price Index[6]. It is based on the UK wide average results. See figure 1&2 for regional variations.

Multiple of Salary This is the average house price divided by the average salary as used by building societies to determine their loan limit. In the past this was restricted to 2.75 times the applicant's salary. This was a good thing as it restricted house price inflation. In countries where it is worked out on 50% deposit and then a multiple of salary, house prices are much less volatile and more affordable.

Deposit This assumes a 5% deposit

Mortgage Year Typical mortgage repayments on the base mortgage rate. For those living in leasehold properties such as apartments, there will be a £2000 to £3000 annual fee on top of this.

Percentage of Wage The percentage of wage that is consumed in mortgage repayments. This is calculated on a single mortgage payer, whereas in many cases a property will be bought by a couple. However it is based on gross income before stoppages and is over 80% if tax, NI etc is taken into account. Even with two people buying a property a very large percentage of their income would be spent on the mortgage. The level of mortgage repayment leaves no leeway for change of circumstances such as one party of a couple losing employment or their hours being reduced. Our work place environment is highly unstable at the moment, imposing a large risk on lenders.

Government purposely Inflating prices

The UK's financial sector is reliant on housing market prices being on a constant upward trajectory. The 2008 financial crisis was primarily caused by deregulation in the financial industry. This permitted banks to engage in hedge fund trading with derivatives. Banks then demanded more mortgages to support the profitable sale of these derivatives. The banks increased the amounts that lenders can borrow to purchase a property. As the amount of money increased in the system and the amount extended to lendees house also increased, naturally house prices rose. Due to the nature of the derivatives system they are guaranteed against mortgages. The value of property in theory becomes a tangible asset to support speculation. Put simply, the value of property became the guarantor for the whole speculation bubble. Rather like playing poker and putting your house in the pot.

Figure 4 illustrates how the market crashed in 2008 and how it made a remarkable recovery.[1] It is historically unheard of for a market to collapse and then almost immediately recover to previous levels. In this instance, it was due to the financial sector pretty much carrying on as before with large swathes of cash being pumped into the sector, allowing it to recover and start the whole process again by using rising house prices to provide security for deriviatives. The banks were given public money which saw them survive the crash and then, through the introduction of Quantitative Easing, begin to gamble and to support the gambling by using mortgages as security.

As you will see from the graph, there have been a number of dips in house price rises since its recovery in 2009/10. It must be borne in mind that the dip of 2011 only saw house prices shrink for a short period of time. Since 2010 house prices have typically been in growth while wages have been in decline. When there has been an indication that house price inflation has reduced the government have stepped in to ensure that the prices do not begin to fall. They have always moved quickly to boost the demand side by offering subsidies to first time buyers. The first time this was offered was in 2013. As you will see in figure 4, at the start of 2013 price inflation was still recovering from the 2011/12 deflation.

Help to buy was first introduced in 2013 by then chancellor George Osbourne. The scheme provided 20% of the house price on new builds for first time buyers. At the time £10 billion was put aside for the scheme.

At the introduction of the help to buy scheme, the house builders saw a significant increase in profits due to them adding the 20% into the price of the house. The reality being that the help to buy scheme was a major success at propping up house price inflation.[2] Duncan Stott of the PricedOut group said at the time “Help to buy should really be called ‘help to sell’, as the main winners will be developers and existing homeowners who will find it easier to sell at inflated prices. Pumping more money into a housing market with chronic undersupply has one surefire outcome: house prices will go up.”

House inflation then increased to a high point in 2014 of 9%. House inflation then held fairly steady at above 5% until late 2016 when houses prices began to fall away again. It is a normal reaction of the market for price growth to steady as the multiples to wage become untenable. In 2017 Philip Hammond extended the help to buy scheme with the injection of a further £10 billion. This was despite warnings from Morgan Stanley that the previous help to buy scheme had done nothing to help house buyers, but had only pushed up new build house prices. However it was particularly important to the government to support house price inflation in 2017 as the London housing market was seeing deflation of prices. It is critical to the house of cards that the confidence in the London housing market is sustained. A reduction in the number of foreign investors in the new build market in London would see the whole structure tumble.

  1. HM UK Land Registry House Price Index - https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2018
  2. Guardian: Help to Buy mostly helped house builders boost profits 21st October 2017 - https://www.theguardian.com/money/blog/2017/oct/21/help-to-buy-property-new-build-price-rise

First time buyers

Much of the impact on first time buyers has been covered in sections House price inflation and Government purposely Inflating prices. However the trend we will see with the present model of house price inflation is First Time Buyers becoming Last Time Buyers. All properties across the spectrum have seen similar inflation except for flats which have seen a lower level of growth. A 5% inflation rate on a house valued at £200,000 will see the house price rise to £210,000 in a year, while the same percentage increase on a house valued at £300,000 will increase the price to £315,000. This creates an equity gap of £5,000 between the two properties. This has always been the case, but the difference now is that those in the buying window are not seeing the wage increases that allow this gap to be filled. You can see in figure 5 how house prices are running away from first time buyers and those who get on the housing ladder are chasing a larger gap to exchange their house and purchase something larger when they start a family.

The impact of higher and higher demand for starter homes at affordable prices with buyers who cannot move up the housing ladder should be a drop in the price of more expensive homes as demand falls away. As the rental market grows this has taken up the slack, with many larger homes being purchased by investors and converted into rental units. This of course raises the spectre of returning to the early 20th century where families lived in cramped conditions.

The other factor that has a serious negative impact on first time buyers is the level of foreign investors in the UK housing market. Not only does this push up the price of new builds (particularly in the South), it also forces longer commutes which again is a drain on incomes.

Extracting the asset

One of the ways the first time buyers could previously move up the ladder was by family assets becoming available as the older generation died. This wealth staying in the family was very important to those who were not wealthy as it provided a large boost to their financial prospects. One of the biggest assets has always been property. This has been particularly important when a generation could move up the housing ladder and accordingly create a more valuable asset to pass on to family members.

The government has began to target this asset as:

  • The structure of care homes means that families are having to fund the elderly family members care
  • Services like care in the home being cash strapped causing families to cover the gap

See the section Healthcare - Care Homes for more detail on the structure and subsequent financial failure of care homes.

The Conservative party also intended to make the families of those requiring care to pay from the value of their house. The plan being that the family could retain £100,000 of the value of the property. This would have meant once costs of sale were taken into account, it was likely that families would see the asset stripped. They backed down on this policy due to a negative public reaction. This is a completely unnecessary measure as the pension pot has sufficient funds to set up a decent and caring system. Cynically you could say it was a method of moving houses into the financial investment market to provide properties for their portfolio which would be broken down into smaller units. See the section Pensions to see why elderly needs can be fully funded.

In September 2019 the plan to charge the elderly for their care was re-introduced, again targeting their property to make them pay. In proposals by the Social Market Foundation[1] (SMF) the following was put forward:

  • People with assets topping £150,000 when they hit 65 should be charged £30,000 per year to fund social care
  • The levy, covering personal care rather than going into a home, would generate £7 billion a year, according to a report by think-tank the Social Market Foundation
  • It is thought around 233,000 people – or 41% of 65-year-olds – would have to pay it every year
  • Poorer people with houses worth over £150,000 but no cash in the bank would be able to defer the charge until after their deaths

It is also worth noting that once a policy like this is introduced it can easily follow the same route as student marketises fees, with the yearly amount increasing. This policy would in reality asset strip the elderly in our society.

  1. Social Market Foundation. Think tank proposing extraction of wealth from the elderly - http://www.smf.co.uk/

Who are the Social Market Foundation

The Social Market is just one example amongst a number of think-tanks lobbying the government to change policy to the benefit of the private corporations. They describe themselves as... "The Social Market Foundation (SMF) is a non-partisan think tank. We believe that fair markets, complemented by open public services, increase prosperity and help people to live well. We conduct research and run events looking at a wide range of economic and social policy areas, focusing on economic prosperity, public services and consumer markets. The SMF is resolutely independent, and the range of backgrounds and opinions among our staff, trustees and advisory board reflects this."

And let's look at what their Director, James Kirkup, said:

"British politics is in flux. The ideas of the radical centre need a champion. People – of all parties and none – who reject the strident extremes that too often dominate political debate today need a home. SMF will be that champion and offer that home."

So not only are they a think tank, of which we unfortunately already have many who are undemocratically influencing government, they clearly state that they are opposed to the policies of the Labour party of removing private companies from the provision of public services. They are described as experts in the media, but describe themselves as "radical centre", which sounds strikingly like an oxymoron. Rather like saying you are a radically wedded to being a couch potato. Maybe the term should be radically anti-radical.

Only a think tank - why should we care what they think? The SMF is not a think tank outside the bubble of Westminster. Its Executive body has a proportion of serving MPs. The very ones that are making the decision to take these policies to parliament sit on their Executive and influence government decision making. Many members are journalists that have access to the Westminster lobby. Most if not all appear to have been involved in denigrating the policies of the Labour party.

Here is their roll call:

Executive Post Name Outside role Comments
Chair Mary Ann Sieghart[1] Political Journalist, Presenter
Director James Kirkup[2] Political Journalist Political Editor of the Telegraph and then Executive Editor – Politics, overseeing and writing commentary and analysis on politics, policy and economics. Writer for the Spectator
Director of research Nigel Keohane[3] Supports Marketisation of the NHS. He has a BA and MA in history from Exeter University, and a PhD in Political History from Queen Mary.
Board Members
Professor Tim Bale[4] Professor of politics at Queen Mary, University of London

His main research interests are in the fields of British, European and Comparative politics, especially in relation to centre-right and conservative politics.

He was the founding convenor of the Political Studies Association specialist group on Conservatives and Conservatism, which brings together leading scholars with an academic interest in this area.

Rt Hon Nicky Morgan MP Conservative MP
Baroness Olly Grender MBE House of Lords Former Head of Communications for the Liberal Democrats and a party life peer.
Rt Hon Dame Margaret Hodge MP Labour MP!
Nicola Horlick[5] Investment fund manager.
Matthew d'Ancona[6] Journalist A former deputy editor of The Sunday Telegraph, he was appointed editor of The Spectator in February 2006, a post he retained until August 2009.He is chairman of the liberal Conservative think tank, Bright Blue.
Policy Advisory Board
Stephen Kinnock MP Labour MP!
Chris Leslie MP Ex-Labour MP
Chuka Umunna MP Ex-Labour MP
Baroness Kramer[7] Ex Lib Dem MP - HoL Liberal Democrat politician (Life Peer). She was Member of Parliament (MP) for Richmond Park from 2005 to 2010, prior to that having a career in infrastructure finance.
Stephen Dorrell[8] ex Conservative MP
John Rentoul Journalist
Norman Lamb[9] Liberal Democrat MP
Alison McGovern[10] Labour MP!
Tom Tugendhat MP[11] Conservative MP
John Woodcock MP Ex-Labour MP! Independent now

  1. Mary Ann Sieghart, Chair SMF - https://en.wikipedia.org/wiki/Mary_Ann_Sieghart
  2. James Kirkup, Director SMF - http://www.smf.co.uk/staff/james-kirkup/
  3. Nigel Keohane - SMF Deputy Director and Director of Research - http://www.smf.co.uk/staff/nigel-keohane/
  4. Professor Tim Bale - Board Member SMF - https://en.wikipedia.org/wiki/Tim_Bale
  5. Nicola Horlick, SMF Board Member - https://en.wikipedia.org/wiki/Nicola_Horlick
  6. Matthew d'Acona, SMF Policy Advisory Board - https://en.wikipedia.org/wiki/Matthew_d%27Ancona
  7. Baroness Kramer, SMF Policy Advisory Board - https://en.wikipedia.org/wiki/Susan_Kramer,_Baroness_Kramer
  8. Stephen Dorrell, SMF Policy Advisory Board - https://en.wikipedia.org/wiki/Stephen_Dorrell
  9. Norman Lamb, SMF Policy Advisory Board - https://en.wikipedia.org/wiki/Norman_Lamb
  10. Alison McGovern, SMF Policy Advisory Board - https://en.wikipedia.org/wiki/Alison_McGovern
  11. Tom Tugendhat, SMF Policy Advisory Board - https://en.wikipedia.org/wiki/Tom_Tugendhat

Private Finance and the extraction of housing assets

It is fair to say that social care comes at a price. The government has for some time stated that it is a price too high not to require additional input from the public. The problem is that the financial sector has long been stripping the money out of the social care sector.

In December 2017 Four Seasons Health Care, the country’s largest care homes operator, was in financial difficulty. The Care Quality Commission had to request creditors to agree to a standstill on debt repayments to prevent the business falling into administration. This happened only six years after the failure of Southern Cross, which at the time was the biggest company in the industry.

One of the causes is the pressure fees are under due to local authorities social care budgets having been cut. Possibly it has been more difficult to recruit due to fears over Brexit. But, in reality, the biggest cause of social care failure is due to the part the private sector plays in the provision. The involvement of private equity has created the situation where many care homes cannot balance their books. In the case of Four Seasons the private equity firm "Terra Firma" bought the care homes operator at such a high price that the interest payments consumed the company finances. It was always seen as a high risk and this exacerbated the situation with Terra Firma borrowing at high interest rates to make the purchase. Nils Pratley stated in the Guardian "The UK is awash with long-term pension fund money that would happily build and own care homes for modest real returns. Instead, we have a high-stakes financial game in which players aim for fatter rewards."[1]

It is easy to see that a cash strapped local authority is giving funds to a dysfunctional service. Funds that are already squeezed. This is the environment in which SMF is suggesting that more funds for social care comes from recipients. An environment where more money into the system would go to boost private company profits and not neccesarily improve care. It is stripping personal assets to build corporate assets. See the section Social Care for more details.

  1. A shocking way to fund UK care homes, Nils Pratley in the Guardian 12 December 2017 - https://www.theguardian.com/business/nils-pratley-on-finance/2017/dec/12/a-shocking-way-to-fund-uk-care-homes

Social Housing


In September 2018 Theresa May stated at the National Housing Federation (NHF) conference that from 2022 the Tory party would put an extra £2bn into social housing. This was picked up by the BBC as a major investment in ending the housing crisis.In reality it is a major reduction in funding that in practice brings the government commitment to solving the social housing issue to a halt.

If we step back in time to 2010, George Osbourne cut the annual capital funding budget for housing associations from £3bn to £450m. This amounts to a total cut of £ 15.3bn billion over the 6 year period that it was in force. in 2017 the Tories announced an "increase" to £7bn back dated to cover the period 2016 to 2021. This was increased to £9bn at the Conservative conference. This by historical standards was a fairly generous settlement coming in at £1.8bn per year, but still left a loss of £6bn for the period (worse if inflation is factored in) and for the period 2010-2021 a total loss of central government funding of £21.3 billion.

But worse still is the government announcement made in September 2018 that commits to spending an extra £2bn for the period of upto 2029. This amounts to an overall loss in the period up to 2029 of £30bn. It could be worse because there is no clarity in the statement from the Conservatives whether the commitment of money of £9bn will continue through to 2029. If inflation is factored in then the overall loss in funding to housing associations since 2010 is in the £34 billion range. At a time when local authority social housing budgets have been decimated and private rents are way above the reach of a large part of the population, this amounts to a end to support for social housing, not the much trumpeted idea that the government is investing in social housing. Even if the full 2 billion is channelled completely into house building, then the amount would at the best amount to 300,000 houses built over 10 years. This will not go near to meeting the housing need.

Over the years since the 1980s, successive governments have fostered and promoted an obsession with home ownership. George Osbourne’s Help to Buy programme or the gift that keeps on giving as it is referred to by private developers, has pumped billions into promoting home ownership, fuelling private developers’ profits and inflating the housing market. Loud and clear the message comes: buying is best, renting its poor cousin and social renting its destitute second cousin many times removed.
Alan Townshend Group Chief Executive at Southern Housing Group

The other factor is that the term Affordable Homes was used in Theresa May's speech to the National Housing Federation (NHF). Social housing and affordable housing are completely diffent and the 2 billion will be burned up very quickly if it is targeted at house builders for the affordable home market.

  1. Breaking the cycle of unjust stigma in social housing, Alan Townshend 19 September 2018 https://www.linkedin.com/pulse/breaking-cycle-unjust-stigma-social-housing-alan-townshend/

Funding Summary

  • The aditional £2 billion promised by the Conervatives over the next 10 years amounts to 200 million per year
  • This goes nowhere near to bringing funding back to 2009 levels leaving a gap of £30bn (£34bn if inflation is factored in)
  • Local Authority housing has declined at the same rate that housing association housing has increased
  • Housing Associations are now the main provider of social housing
  • No figures have been provided for the 2021 forward spending review so that this number could be lost in cuts in the overall budget
  • With right to buy and the provision of "affordable homes" much of this money will be lost to social housing and end up in the private sector
  • £24bn is paid to private landlords per year in housing benefit. A large increase in the budget for social housing would remove this cost and create a social asset
  • Housing benefit paid to private landlords amounts to approximately £350 billion by 2028 as compared with £21 billion for social housing
  • Private landlords receive more in one year in housing benefit than social housing will receive in 20 years
  • Much of the private stock of housing is of poor quality. Social housing could remedy this, providing good housing and making money for the state
  • There are more than 1.8 million households waiting for a social home of which there are 1.2 million in England alone
  • Many of those on housing waiting lists have been on them for five or more years.[1]

  1. More than a million on social housing waiting lists, 9th June 2018- https://www.bbc.com/news/education-44413766

Stalled building

No government since the 60s has a particularly good record on social housing. Whether it be the design and placement of social housing or the quantity built, governments have had a poor record. Although it was a Labour government that started the mass building of social housing, it is important to note that the subsequent Conservative government recognised the need for social housing and stepped up the building programme. From 1955 the pattern was social housing building was to increase under Labour governments, only to fall away again during Conservative governments. The collapse in social house building took place in 1980 at the time of introduction of right to buy. Social house building from 1980 fell off a cliff and by 1990 there was practically no social housing being built by local authorities. In 1990 Housing Association building was higher than local authority building for the first time, but has never come near to filling the gap with the loss of local authority building. However Housing Associations have often re-furbished houses that were no longer in use, bringing them back into the pool, although this has only partially closed the gap as many of the refurbished housing was already in use if of a substandard quality.

Private building increased sharply after the war and held up pretty well until the 2008 financial crash. Since the crash housbuilding was stagnant up until reaching pre-crash levels over the last 2 years.

The government have made a number of announcements over the last 8 years, indicating that recognised the need for new social homes, including the latest in September 2019 committing to a further £2bn over the next 10 years. Unfortunately none of these statements have turned into real action to resolve the crisis.

  • David Cameron's government resurrected the 'right to buy' scheme they promised to replace any increase in the number of social homes sold, with new homes. As of March 2018 there was 63,000 sales of social homes as opposed to just 16,000 new builds.
  • In the 2017 budget Phillip Hammond announced a large fund to increase social homes building. This fund was later retracted and used to prop up a failing NHS
  • Theresa May has said on a number of occassions that the Conservatives are building one for one (one house built for one house sold under the right to buy scheme). The true figures are 1 built for every 7 sold.

The true figures for house building are dramatic. The number of new government-funded houses built for social rent each year has plummeted by 97 per cent since the Conservatives took office in 2010, official statistics have shown. More than 36,700 new socially rented homes were built with government money in England in 2010-11 – the year in which the Tories came to power in coalition with the Liberal Democrats. By the 2016-17, financial year that finished in April, that figure had fallen to just 1,102.

In the same period the total number of affordable homes built with government money more than halved – from 55,909 to 27,792.[1]

The Conservatives were forced to U-turn during the the 2017 election campaign after Theresa May announced the Tories would deliver "a constant supply of new homes for social rent”. The Government was later forced to admit that the new homes would, in fact, be the significantly more expensive “affordable” homes.

The goverment still haven't grasped the seriousness of the housing crisis. In many respects it is unlikely they can. They are so wedded to austerity that they dare not make the money commitments required to solve the housing shortage. This is a false saving as they are wasting billions of pounds that is presently being funnelled into private landlords. Even their latest scheme of so called making more money available for housing has the words "affordable homes" attached where rents are 80% of the market rate. Government policy has always been to shore up the commercial market ensuring house price inflation. Money given by the government to the housing market has tended to worsen the shortage rather than remedy it.

Needed Homes to complete

To research in more detail >>

Most new Housing Association builds were leasehold or share buy properties. Even the latest Green Paper encourages 'affordable Social Housing' as in leasehold or share buy ignoring social rented affordable housing. 'Council housing breeds Labour voters'. Why else would the Tories hand back £281,000,000 to the Treasury in 2017 when we have so much homelessness, lack of affordable rented properties and poor housing stocks.

Land to Build

To Research >>> https://www.theguardian.com/public-leaders-network/2017/oct/06/councils-homes-theresa-may-public-land-sales

  1. Number of government-funded social homes falls by 97% since Conservatives took office, The Independent, 20 June 2017 - https://www.independent.co.uk/news/uk/home-news/social-housing-government-funded-properties-rent-falls-97-per-cent-study-homes-communities-agency-a7799116.html

Housing Associations

Over the last 20 years housing associations have taken over more responsibility for providing social housing. It is a mixed picture with some housing associations providing excellent service, while others have performed badly. As can be seen in figure 7 since 2004 there has been a practically identical growth in Housing Association provision to the fall in local authority social housing.

At the height of funding for housing associations they were still only building houses at half the target. This figure should be seen with some caution. Being given a target that is not achievable with the funds available should not be fully laid at the door of housing associations. However it is true to say that many housing associations do run with lage overheads which leaves less money for house building[1]

The official figures also reveal that on average housing associations spend 74p in the £1 on operating costs. This compares to some of the most efficient operators in the sector, who spend just 57p in the £1 on operating costs, and some of the worse examples, who spend more than 90p in the £1.

The problem with housing associations particularly those with charity status is that they are not answerable to government. This can mean that they have chief executives taking home six figure salaries. Housing associations have there place, but it is important that legislation ensures they work in the best interest of tenants. Certainly at the moment they are not filling the housing gap and local authority housing has the capability to create more ambitous capital schemes that serve a wider community at a faster turnaround.

Affordable Homes

Instead of socially rented homes that are typically available to vulnerable families at around 50 per cent of market value, the Government has prioritised the building of “affordable” homes for which rents can be charged at up to 80 per cent of market value. Critics say that, in many areas of the country, these rents are not genuinely affordable for people on low and middle incomes.

The Localism Act 2011 changed the rules on the length of tenancies for social renters. Social landlords can now let on short-term contracts of five years and, in some cases, as little as two years. While historically local authority social housing could mean a home of life, tenants now find themselves in a situation where there is instability in their housing provision.

It is important that those who rent from a social landlord have the opportunity of a permanent, secure home. However, the shortage of social housing means local authorities have to deal with the many thousands of households that are waiting, whether in temporary accommodation or in insecure private rentals, for the offer of a social home. Affordable homes are not the answer. Unlike social housing rents are much more subject to the market and as can be seen in the section Housing Market this is a sector that is seeing high inflation, way outside what the social tenant can afford. This instability in the market is leading to many families living in temporary accomodation, often away from their family and friends.

Shelter has campaigned for local authorities to carry on offering longer-term tenancies, where possible, to those households that are vulnerable and in need of a secure home; for example, households containing someone over 60 years of age, or people with a long-term medical or welfare need. They also recommend that families with children are offered longer-term tenancies so that their families can get the stability they need. It is unlikely that this will be welcomed by renters in the affordable homes space, as they will look to maximise profits by afford to pay the 80% of inflating rent prices.

Right to Buy

The Housing Act 1980, gave council tenants the right to buy the property they rented from the local authority.

Following the act home ownership grew from 55% of the population in 1980 to 64% in 1987. By the time Margaret Thatcher left office in 1990 it was 67%. 1.5 million council houses were sold by 1990, by 1995 it was 2.1 million and as a result of the Right to Buy the Treasury received £28 billion. Proponents of the Right to Buy argue that it gave working-class council tenants opportunities to get on the property ladder which they would not otherwise had had without the Act. However, by 2015-16, home ownership had declined from a high of 70.9% in 2003 back to 62.9%, the lowest level since 1985.[1]

Tony Belton, a Labour councillor in South West London claimed that, "Speculators have made millions out of exploiting public assets." In March 2013 the Daily Mirror reported that Charles Gow, the son of Mrs. Thatcher’s housing minister, Ian Gow, bought 40 of the 120 former council flats in one housing project in Roehampton, in South West London. Rents soared in investor-owned ex-council flats.

By 2013, some tenants who had purchased their council flats, sold them later to speculators, investors or property companies. By 2013, a one-bedroom council flat that sold for £50,000 in the early 1990s, for example, had a market price of £250,000. A tight housing market led to increased rent as construction of new homes decreased.

A Freedom of Information (FOI) search in January 2019 discovered damning data on the impacts of right to buy:[2]

  • More than 40% of council houses sold under right to buy in London are now privately rented
  • Tens of millions of pounds are being paid by local authorities to rent former council homes in order to house growing numbers of homeless families
  • Some councils have bought back their former homes at more than six times the amount they sold them for
  • Hundreds of private landlords now own five or more right-to-buy properties. There are several London boroughs where more than half the houses sold through the policy are now in the hands of private landlords. Private renters have to pay more than people living in council-owned properties.

Labour London assembly member Tom Copley said “Something has gone very wrong when tens of thousands of homes built to be let at social rents for the public good are now being rented out at market rates for private profit, sometimes back to the very councils that were forced to sell them,”

A serious flaw in councils being forced to sell off housing stock is that should they then become part of the private rental stock, where tenants are on housing benefit, the rent is now paid to private landlords rather than to the council. In a gig economy where more and more working people require housing support to provide a home this extracts wealth out of the economy and restricts councils from having the funds to expand and improve social housing.

  1. "Home ownership in England at a 30-year low, official figures show", "The Guardian", 2nd March 2017
  2. Ministers urged to halt right-to-buy scheme - Michael Savage, Guardian 19-Jan-2019: https://www.theguardian.com/society/2019/jan/19/ministers-urged-halt-right-buy-council-homes-rented

Housing Crisis

Hyper Gentrification

  • Council Estates are going through re-generation
  • Estates have become a target for private developers
  • Following redevelopment there are much less homes for council tenants
  • In London alone there has been a nett loss of over 4000 social homes in developments completed in the last 15 years
    • London schemes that have planning permission will result in the loss of 7600 social homes in the next 10 years
    • 118 estated are earmarked for or undergoing re-generation in the next 5 years, affecting 31,000 residents
    • Over 80 estates will be either fully or partially demolished
  • Example: Heygate estate was demolished and replaced by elephant park, a luxury apartment development. This lead to the loss of 3000 social homes of which only 82 were replaced
  • Profitability is the benchmark on whether the scheme will go forward, not the need for social housing

Student Accomodation

Inflation in the housing market has also impacted students. Along with student fee debts, the lack of a maintenance grant for students has lead to a growing number of students being in rent arrears. The situation is worsened as universities move away from providing student halls and private investors have moved in. Investors have focused on purpose built student accomodation, which is not suitable for the wider market. With the profit factor added to the supply, then prices will be set to attain the highest possible profit based on market conditions. It may well be that rent prices drop over the next few years as student numbers are falling away due to Brexit and less younger people.

More than 17,000 students living in university halls of residence fell behind with their rent payments in the year 2017, according to figures that suggest thousands more face financial hardship during their courses.

There has been a significant 16% rise in the numbers facing rental arrears in university accommodation, new statistics obtained under the Freedom of Information Act reveal. A small but rising number of students are also being evicted from halls or having their tenancies cancelled after falling behind with payments.

According to data uncovered by the Liberal Democrats (ironic to say the least), 97 students were evicted from halls in the last year, more than double the 40 who had their tenancies cancelled the previous year. About 17,300 students living in university halls have fallen into rental arrears in the 2017.

The data was based on responses from 90 universities in the UK. It showed that 21 had evicted a student or cancelled their contract due to failure to pay rent on time in the past five years. Average fees at halls from the universities surveyed have risen from £4,583 a year in 2012-13 to £5,208 in 2016-17, up 13.6%[1].

  1. More than 17,000 UK students face university rent arrears, Guardian 21 Jan 2018 - https://www.theguardian.com/education/2018/jan/20/17000-uk-students-university-accommodation-rent-arrears-debt


Definition of Homelessness[1]

Many people only associate homelessness with sleeping on the streets, but this conceals the range and scale of the problem.

Homelessness exists in many different forms. Shelter works to ensure that everyone has the right to a decent, secure and permanent home, not simply a roof over their heads.

The reality is that sleeping on the streets is the most extreme form of homelessness. The vast majority of homeless people are families or single people who are not sleeping rough.

Some may be staying with relatives and friends on a temporary basis. Others live in temporary accommodation, such as bed and breakfast hotels, hostels, night shelters and refuges. For many, this means living in poor quality accommodation that is detrimental to their health and well-being. And in all cases, not having a permanent home causes stress and countless practical difficulties.

Legal Definition

Broadly speaking, the law defines someone as being homeless if they do not have a legal right to occupy accommodation, or if their accommodation is unsuitable to live in. This can cover a wide range of circumstances, including, but not restricted to, the following:

  • having no accommodation at all
  • having accommodation that is not reasonable to live in, even in the short-term (eg because of violence or health reasons)
  • having a legal right to accommodation that you cannot access (eg if you have been evicted illegally)
  • living in accommodation you have no legal right to occupy (eg living in a squat or staying with friends temporarily).

Local councils have a legal duty to provide advice and assistance to people who are legally defined as homeless or threatened with homelessness. However, not everyone who falls within the legal definition necessarily qualifies for temporary accommodation.

Homelessness overall picture

Shelter has carried out the most thorough analysis of homelessness in England. Unfortunately both Scotland and Wales do not have the same level of analysis at this stage, so the section is broken down into the three countries, England, Scotland and Wales. Northern Ireland has not been included at this stage.


Shelter first carried a detailed study of the extent of homelessness in England in 2015 using the following criteria:

  • national government statistics on rough sleepers
  • statistics on those in temporary accommodation
  • the number of people housed in hostels
  • the number of people waiting to be housed by social services departments (obtained through Freedom of Information requests)

The charity insists the overall figure, 254,514, released to mark 50 years since its founding, is a "robust lower-end estimate". A further study in 2017 showed a large increase of homelessness to 307,000 an increase of 13,000 on the previous year. Studies prior to this were much more adhoc, but indicate a increase of approximately 15% in homelessness between 2012 and 2014 [1].

Martin Tett, the housing spokesman for the Local Government Association Housing, said in 2015 "that funding pressures, the lack of affordable housing, and rents that are rising above incomes were leaving many councils struggling to cope with rising homelessness across all areas of the country... Finding emergency housing for homeless people, particularly young or vulnerable people or those with families, is increasingly difficult for councils... Councils need powers and funding to address the widening gap between incomes and rents, resume their historic role as a major builder of new affordable homes and join up all local services - such as health, justice and skills. This is the only way to deliver our ambition to end homelessness" [2]. The Department for Communities and Local Government said "the government is investing over £500m during the course of this parliament to tackle homelessness. This includes protecting £315m for local authority homelessness prevention funding and £149m for central government funding." The figures for Social Housing and Housing Market show that this money was poorly planned and poorly spent. The outcome can be seen in a 17.1% increase in homelessness in 2 years and a 29% in homelessness since 2012.


To to be researched


To to be researched

Homelessness children


Homeless children in temporary housing saw a drop of about 6 thousand (7%) from 2010 until the end of 2011, following the trend of previous years. From 2012 to 2014 the increase in homeless children began to gain pace, increasing by 15% percent in two years. From 2014 until Q1 2018 the increase in child homelessness was a massive 32%

“But I think it’s important for all those who heard her question to be aware of this. She talks of 2,500 children in Wandsworth are waking up homeless on Christmas Day. Anybody hearing that will assume what that means is that 2,500 children will be sleeping on our streets. It does not. It does not mean that."

Theresa May responds to point raised on the number of homeless children at Christmas 2017

The overall increase in child homelessness since the Tories came to power in 2010 is 61% from 74,610 in 2010 to 131,000 in Qtr 4 2018 [1][2]. Of the homeless children 7% are living in Bed and Breakfast, 7% in hostels, 26% in nightly paid accomodation, 20% in HA stock, and 32% with private landlords.

When we look at the number of children in these types of accomodation, it is important to rememember these are not your holiday B&B. The accomodation is often sub-standard, overcrowded and with a lack of even a short term permanance. See the section Social Housing for more information of the 1.6 million children in Britain live in housing that is overcrowded, temporary, or run-down.


To be researched


To be researched

  1. Child homelessness in England rises to highest level in 12 years, new figures show, Independent, 13 December 2018: https://www.independent.co.uk/news/uk/home-news/homeless-children-england-poverty-austerity-housing-crisis-figures-a8681281.html
  2. 130,000 homeless children to be in temporary lodgings over Christmas, Guardian, 5 December 2018: https://www.theguardian.com/society/2018/dec/05/130000-homeless-children-to-be-in-temporary-lodgings-over-christmas

Rough Sleepers


There has been a large increase in rough sleeping since 2010. This can be attributed to cuts in mental health services, a decline in social housing with growing waiting lists and thee overall unaffordability of housing. The yearly goverment survey [1] provides a snapshot for rough sleepers on a given night.

  • The autumn 2017 total number of rough sleepers counted and estimated was 4,751
  • That was up 617, or 15% from the autumn 2016 total of 4,134
  • The number of rough sleepers increased by 173, or 18% in London and 444 or 14% in the rest of England since autumn 2016
  • London represented 24% of the England total rough sleepers in autumn 2017. This is up from 23% of the England total in autumn 2016
  • 14% of rough sleepers were women, 20% were non-UK nationals and 8% were under 25 years old

Chart 1 provides an interesting insight into the overall trend in rough sleeping since 2010, but doesn't provide the whole picture. Research carried out by the Greater London Authority show much higher levels of rough sleepers.

Of those rough sleepers who had a support needs assessment recorded, 44% had alcohol support needs, 35% drug support needs and 47% mental health support needs, with 14% having all three needs and 23% having none of these three needs. No support needs assessment was recorded for 32% of rough sleepers.

Chart 2 from [2] shows much a higher number of rough sleepers. These figures represent Greater London alone. These figures are gathered over a much longer period and by constant monitoring by groups that support rough sleepers.

The Chain Dataset figures, while not showing the same increase in rough sleepers between 2016 and 2017 as the government figures, does show the same overall trend. Also the Chain dataset is looking at a more nuanced picture than simply who is on the street on one given night. It may well be that if shelter options are becoming overstretched that you will see an increase in those sleeping rough in one report on one night, while a report covering a larger period will see a much more even trend upwards as shelter options ebb and flow throughout the year.

The key thing to note is that the Chain Dataset shows that in London alone, the homeless figures are over 7 times the recorded government figures.


It is more difficult to provide the rough sleepers numbers for Scotland as there are no groups carrying out extensive research into the numbers. It does appear from official figures that rough sleeping saw a steady decline from 2010-15 before then seeing an increase of 10% within 2 years to 2682 by 2017. As rough sleeping measurement is not proactively recorded, but rather relies on the individual reporting themselves homeless, these figures could be understated.[3]


Data for Wales on rough sleeping is sketchy. The figures taken for 2017 as against 2016 show a approximately a 10% increase in a single year from 313 to 345. These numbers were very much a snapshot of those who came to the attention of care agencies and it should be viewed with scepticism that it records the full numbers. The figures show again a large swing upwards in rough sleepers.[4]

The only other official figures are for 2008 which showed an approximate number of rough sleepers as being in the range of 128 to 165 people. If we take the mid figure 146 we caan see that homelessnesshas more than doubled in the last 10 years.

Vunerable Women

There are only 6 women’s probation hostels providing a total of 112 beds (compared to 95 men’s hostels with 2100 beds). Women released from custody on licence who pose a higher or very high risk of serious harm will be placed in these hostels. However, women’s hostels also take medium-risk offenders because they need extra support and would benefit from the services available. These medium risk women currently make up a quarter of the residents in women’s hostels and so women’s hostels have a very different offender composition compared to the men’s hostels. Most residents in men’s hostels have served lengthy custodial sentences for serious violent and/or sexual offences.

Homeless women are among the most marginalised in society and many feel unsafe in the temporary housing provided by most charities, the charity St Mungos says. "Our recent peer-led research, ‘On My Own Two Feet’ highlighted that many homeless women do not want to stay in the only (mixed-sex) accommodation offered to them, so instead choose to sleep rough," Glew added. They are also more vulnerable to exploitation and tend to be more hidden when homeless. The charity is now calling on the government to deliver a new rough sleeping strategy that "understands and invests in women" [1][2].

  1. Women and Rough Sleeping, Joanne Bretherton and Nicholas Pleace, 2018: https://https://www.mungos.org/app/uploads/2018/10/Women-and-Rough-Sleeping-Report-2018.pdf
  2. Women’s Hidden Homelessness, Homeless Link, Margaret Williams, 27 February 2018: https://www.homeless.org.uk/connect/blogs/2018/feb/27/women%E2%80%99s-hidden-homelessness

Real Life Suffering

Homeless woman Anne, 62, moved to a tree in a park 6 miles away 'because her bags made city centre look messy' before an arts event Daily Mirror, on twitter

Article: Why are councils so creative in making life unbearable for homeless people? [1]

Rental Market

Tenant rights[1][2]

As a tenant, you have the right to:

  • live in a property that’s safe and in a good state of repair
  • have your deposit returned when the tenancy ends - and in some circumstances have it protected
  • challenge excessively high charges
  • know who your landlord is
  • live in the property undisturbed
  • see an Energy Performance Certificate for the property
  • be protected from unfair eviction and unfair rent
  • have a written agreement if you have a fixed-term tenancy of more than 3 years

If you have a tenancy agreement, it should be fair and comply with the law

Legislation 2016

In 2016 Conservative MPs voted to reject a proposed rule that would have required private landlords to make their homes “fit for human habitation”. The vote was on proposed amendment to the Government’s Housing and Planning Bill – a raft of new laws aimed at reforming housing law. The Labour-proposed amendment was rejected by 309 votes to 219, however. Communities minister Marcus Jones said the Government believed homes should be fit for human habitation but did not want to pass the new law that would explicitly require it. The Government said the new law would result in “unnecessary regulation”.

Parliament’s register of interests show that 72 of the MPs who voted against the amendment are themselves landlords who derive an income from a property. The Homes (Fitness for Human Habitation) Bill would have updated a law introduced in the 19th century that requires homes under a certain rent limit to be “fit for human habitation”. That rent limit has not been updated since 1957, however, and the rule currently applies to all properties with an annual rent of below £80 in London and £52 elsewhere. The weekly average weekly rent in London is currently £362 and practically zero properties currently fall under the legislation [1].

MPs that rent out property that voted against making homes fit for human habitation

Nigel Adams

Stuart Andrew

Victoria Atkins

Jake Berry

James Berry

Bob Blackman

Robert Buckland

Alun Cairns

David Cameron

Alex Chalk

James Cleverley

Geoffrey Clifton-Brown

Therese Coffey

Geoffrey Cox

Mims Davies

Philip Davies

Richard Drax

James Duddridge

Alan Duncan

Philip Dunne

Jane Ellison

George Eustice

Mike Freer

Richard Fuller

John Glen

Robert Goodwill

Chris Grayling

Dominic Grieve

Chris Heaton-Harris

Peter Heaton-Jones

George Hollingberry

Kevin Hollinrake

Philip Hollobone

Nick Hurd

Stewart Jackson

Margot James

Sajid Javid

Joseph Johnson

Simon Kirby (teller)

Greg Knight

Brandon Lewis

Julian Lewis

Craig Mackinlay

Tania Mathias

Karl McCartney

Anne Marie Morris

Sheryll Murray

Robert Neill

Sarah Newton (teller)

Jesse Norman

David Nuttall

Neil Parish

Owen Paterson

Rebecca Pow

Jeremy Quin

Jacob Rees-Mogg

Laurence Robertson

Julian Smith

Royston Smith

Mark Spencer

John Stevenson

Desmond Swayne

Derek Thomas

Anne-Marie Trevelyan

Andrew Turner

Shailesh Vara

Theresa Villiers

Ben Wallace

David Warburton

Craig Whittaker

John Whittingdale

Nadhim Zahawi

  1. Did MPs vote against forcing homes to be made fit to live in?, Fullfact: https://fullfact.org/economy/did-mps-vote-against-homes-having-be-made-fit-live-in/

Cost of renting

Figure 9[1] shows the increase in rental price between 2011 and 2018 with 2011 being 100. Between February 2015 and February 2016, Between January 2011 and August 2018, private rental prices in Great Britain increased by 16.2%; this was strongly driven by growth in private rental prices within London. When London is excluded from these figures, private rental prices increased by 12.8% over the same period.

If you take an area like the West Midlands, rents from 2010 to 2018 have risen on average by £804[2]. This is against a background of wages dropping by on average by 2.1% and for those typically in the rental market of approximately 8%[3].

The trend in rent price increases is nothing new. Rental prices have been increasing year on year at about the same yearly rate since the sale of council housing in the 1980 Right to Buy legislation. The government raised billions in revenue when council houses were sold, but as this was not used to build more homes and as the social homes often ended up being owned by private landlords, they spent much more in housing benefit than was ever raised.

Although as seen in Figure 10 private rental prices have seen a slight decline in London during the period 2017-18, this is against a backdrop of rapidly increasing prices for the period 2011-18. London has also seen the biggest drop in wages since 2010, meaning that rents are less affordable. London has also seen a large decline in social housing.

The government spends over £20 billion per year on housing benefit to landlords. If social housing was in place this money would go directly to councils to help them grow their housing stock and improve properties [4].

Part of the reason there may have been a large increase in South West and South East rents could be due to the push away of people away from the capital as properties have been bought up by foreign investors and local communities can longer afford the rents. There is a view that London is dying as a vibrant city as more communities leave the city. The destruction of social housing will continue to push people away from the centre and with commuting being expensive will mean it will drive families apart and make it more difficult to find workers for jobs outside of the overheated financial markets.

Rent Controls

Rent regulation covered the whole of the UK private sector rental market from 1915 to 1980. However, from the Housing Act 1980, it became the Conservative's policy to deregulate and dismantle rent regulation. Regulation for all new tenancies was abolished by the Housing Act 1988, leaving the basic regulatory framework was "freedom of contract" by the landlord to set any price. Rent regulations survive among a small number of council houses, and often the rates set by local authorities mirror escalating prices in the non-regulated private market.

Regulation for all new tenancies was abolished by the Housing Act 1988, leaving the basic regulatory framework was "freedom of contract" by the landlord to set any price. Rent regulations survive among a small number of council houses, and often the rates set by local authorities mirror escalating prices in the non-regulated private market.

Rent regulation appears to work well as a stop gap to reduce rent increases over a short time span, but has been found to be ineffective in controllig rents or ensuring decent accomodation over the longer period. The most effective way to control rents is to ensure the supply of housing meets the demand.

Quality of rental stock

To complete

Housing Campaign Groups

StART is a group of Haringey residents and workers who want to see the St Ann’s Hospital site used permanently for the good of all our local communities. We have initiated a community-led and transparent process for a housing development, which puts local people in control while providing genuinely affordable homes, promoting health and wellbeing, and creating a green neighbourhood.

Two-thirds of the St Ann’s Hospital site was due to be sold for private housing development, with only 14% of the homes classed as “affordable”. The proposal took no account of the needs of local people at a time of severe housing need.

Earlier in 2018 the GLA purchased the land from the hospital, and we are currently working with the GLA to influence a community-led development on the site.

For an in-depth overview of our plans for the St Ann’s site, read our Masterplan - Our Vision Takes Shape.

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