The Rent Is Too Damn High
Housing is driving the cost of living crisis, with private rents in England the highest ever recorded. That will only change through a struggle of renters against the rentiers.
Rent is not just an economic phenomenon: it’s a reflection of the prevailing political order, and the struggles that define it. (Daviles / Getty Images)
In June 2020, in the midst of the Covid-19 pandemic, rent prices hit record highs, averaging £700 a month across England and £1,425 in London. Some eighteen months on, these figures — staggering as they were then — seem quaint. Average rental prices outside of London are now over £1,000 a month; in the capital they’re over £2,000. In just three months leading up to December 2021 rents in central London rose by almost 10 per cent. As Tory broadsheet the Telegraph recently noted, ‘landlords have the power.’
Amid this backdrop, the notion that tenants should spend no more than 30 per cent of their income on rent sounds like a bad joke. This ‘30% rule’ has its roots in American president Lyndon B. Johnson’s ‘Great Society’ programmes, when, following 1968’s Housing and Urban Development Act, legislation was passed capping rents in public housing at 25 per cent of residents’ income. This in turn was raised to 30 per cent in the 1980s.
If we were to look further back in time to the 1920s, even rents at these levels would have seemed scandalous to the interwar residents of Red Vienna. For residents of this mass house-building programme, characterised by radical social-democratic politics, modernist architectural design, and holistic planning, rents corresponded to around 4 per cent of income.
Rent, in other words, is not just an economic phenomenon: it’s a reflection of the prevailing political order, and the struggles that define it. Rentiers today are in the ascendancy. Renters are very much not. How did we get here?
Capital Untrammelled
To understand housing today we need to study the profound political and economic shifts of the post-war period — where the UK represents an exemplary case study. From Keynesian, social-democratic demand-management to Thatcherite privatisation and privation; from the second most equal country in Europe in 1979, to one of the least equal today.
Perhaps nowhere is this shift clearer than in the area of housing. Attlee’s post-war Labour government, determined to ‘win the peace’, as their 1945 manifesto put it, recognised the importance of high-quality public housing. A mass programme of slum clearances was coupled with the building of council housing at a vast scale. Not only was the purpose of state-provided housing altered — no longer housing for the ‘poor’, but, per Bevan, to be ‘drawn from different sections of the community’ — but both the number and proportion of housing completions undertaken by the state increased markedly.
The story of the Thatcherite counter-revolution is well known — from the abolition of rent controls to the introduction of Right-to-Buy. Comparing trends across these periods tells a stark story. Between 1946 and 1979, 50 per cent of all houses completed in the UK were council houses. Between 1979 and 2020, that figure drops to 5 per cent. I was born in 1993. More council houses — over 800,000 — were built by the Labour government between 1945 and 1951 than have been built by councils and housing associations, combined, in my entire lifetime.
A Peculiar Political Economy
Having taken this path, Britain today is left with a rather distinctive political economy. One aspect of this concerns the relative value of the minimum wage. At close to 60 per cent of the median wage, it is among the highest relative minimum wages of anywhere in the world. While on measures of income inequality the UK has far more in common with the United States than much of continental Europe, its relative minimum wage — which has risen 20 per cent since 2000 — is double that found in America. At the same time, however, private tenants have some of the worst protections afforded to renters across the developed world, with effectively no mechanisms by which to resist eviction or rent increases.
On top of this, where reforms have effectively abolished public housing in the United States, the UK retains a significant social housing sector. Under resourced, disparaged, demonised — but, crucially, still providing affordable housing of significantly higher standards than the private rented sector. Britain is an increasingly rentierised economy — a ‘housing market with an economy attached’ — but one in which the embers of an entirely different model of housing have not yet been entirely extinguished.
The YIMBY Distraction
Amid this conjuncture, enter the ‘YIMBY’ (Yes, In My Back Yard). With the housing crisis increasingly impossible to ignore, an unholy alliance of right-wing think tanks, nominal ‘affordable housing’ campaigners, and ‘supply guys’ has coalesced. With an understanding of the tenure type and commodity form of housing absent, their analysis centres instead on quantity alone. There is, it must be admitted, a compelling simplicity in the tale they tell. Restrictive planning laws, a bias towards home-owning boomers, and overzealous regulations all do curb the supply of houses. Why can’t you afford a house? Why do you have to rent a dilapidated hovel? Simple: we don’t have enough!
The solution? Change zoning laws, drop the need for cumbersome planning applications, wrench the cold hand of bureaucracy off the tiller, and abolish minimum space requirements. Ten-square-metre micro-apartments in Tokyo are more in vogue among this coalition than spacious social housing. Aesthetically this is a vision of housing more inspired by Blade Runner than the Barbican. More importantly, it is a programme based on a misdiagnosis of the dynamics of housing in Britain. This is because the crises of housing afflicting the UK are not solely driven by a shortage of homes. Critically, the condition under which homes are regulated and rented is central: their commodity form. The NIMBY vs. YIMBY debate — a myopic focus on supply to the detriment of all other determinants — provides not just the wrong answers, but is ultimately premised on the wrong questions.
The Market Won’t Save Us
Indeed, the signs are already there that there is no market solution to the housing crisis. A wave of good-quality, affordable, energy efficient homes aren’t being held back by some impenetrable buffer of county council planning committees. Numerous attempts have been made to engineer various forms of public-private, market-based answers to the housing crisis, with the era since 2010 defined by a proliferation of various housing ‘products’.
Help-to-Buy is the most notable of these. By 2023, £29 billion will have been spent on this scheme, which appears primarily to have pushed up house prices to levels beyond the subsidy provided by the government and predominantly helped those who could already afford a home.
Following in its footsteps is the ‘First Homes’ scheme, which claims to help first-time buyers by providing homes at a 30 per cent discount. However, research by the housing charity Shelter has shown that across 96 per cent of the country someone on the average salary couldn’t afford one of these properties, even when taking into account the 30 per cent discount.
Indeed, for all of the talk from the YIMBY contingent about overzealous regulations, what often goes unmentioned is the fact that new builds in the UK already are the smallest in Europe. Permitted development rights — welcomed by parts of this coalition — allowing for the conversion of offices into flats have created a plethora of dingy, isolated hovels. Close to 80 per cent of these fall below space standards and only 3.5 per cent have access to outside space. Perhaps, despite the pleas of the YIMBYs, the profit motive may not be the best mechanism to solve the housing crisis.
Prospects
Far from 25 or 30 per cent — let alone 4 per cent — for much of the 2010s, private tenants have handed over more than 40 per cent of their income to their landlords. With average rents across England now over £1,000 a month (and double that in London) coupled to a wider macro picture of rocketing energy prices, falling real wages, and precipitous falls in living standards, the possibility that more and more tenants will be forced to pay ever greater shares of their wages on rent is likely.
We need to reckon with this reality. But we also need to recognise that Britain’s unique historical trajectory has left us with a physical reminder in almost every town and city of an entirely different form of housing, centred not on rent extraction but on the provision of decent housing for all.
In England in 1949 close to 140,000 council houses were built. In 1999 this number was fifty. Solving the housing crisis requires not just reversing these trends, but re-embedding and re-asserting the vision which, as the writer John Broughton notes in Municipal Dreams, has long defined social housing: ‘the visible manifestation of a state which took seriously its duty to house its people decently.’