As long as capitalism prevails, housing will always be a commodity or investment for some whilst others live in misery
Engels, The Housing Question
The coronavirus crisis has been defined by class. The last few months have seen working-class people forced out to work in dangerous conditions to keep us safe whilst the rest of society has looked on.
One of the main areas where the crisis visibly exposed the class divide is housing. Housing was an acute issue in Wales before the crisis, and the pandemic has illuminated the extent to which housing precarity impacts savagely on working class people across the whole of Wales.
The root of the housing crisis is that under capitalism, shelter – a fundamental human necessity – has become a commodity, an investment. Whilst a global elite has turned property into a financial asset to be bought and sold at will, those without access to property now not only have to sell their labour power to survive, but increasingly have to hand over huge amounts of their wages to landlords – a class of people who profit from doing nothing other than owning multiple properties – simply to keep a roof over their head. Because of the commodification of shelter, thousands of people remain locked in a cycle of housing precarity, forced into regular moves, living in substandard rental accommodation, or having to choose between shelter and other necessities such as heating and food. Precarious, poor quality housing also has a hugely detrimental impact on people’s mental and physical health, hence the current campaign by tenant group Acorn #housingishealth.
The most dystopian manifestation of the housing crisis is the amount of households being threatened or actually made homeless in Wales because of a lack of secure social housing. The rate of households being threatened with homelessness is rapidly increasing year by year, with nearly 12,000 households made homeless in 2018/19, the highest rate since the introduction of the housing act (Wales) in 2014. A significant amount of these households contain children, who will be experiencing huge trauma as a result of this precarity. Contrary to the narrative of personal failure which surrounds homelessness (which focuses on things like addiction, mental health issues, etc), the majority of households become homeless because of housing issues such as rent arrears, debt, or problems with private landlords, i.e., because housing is simply not affordable or secure for ordinary people in modern Wales.
The Welsh Government has shown neither the ambition nor the political will with which to solve the housing crisis over the last 20 years. In 2016, the Welsh Government committed to building 20,000 ‘affordable’ houses by 2021 despite Wales needing at least 14k per year to keep up with demand. Despite the huge amount of households being made homeless last year, only 2592 ‘affordable’ houses were built by the Welsh Government. At the time of writing the WG is six thousand homes short of even its own conservative target, and displays little urgency about the acute lack of affordable housing.
Moreover, as we will show, only a very small amount of the ‘affordable’ houses currently being built are actually ‘traditional’ local authority owned ‘council houses’ (which is what we need), and nor are many of these new houses actually ‘affordable’ in any way. What is being built is not owned by the state, it is not democratic, it is not affordable: it is certainly not ‘social’ in any way. The Welsh Government’s housing strategy is appallingly inadequate and is perpetuating misery. It is the moral duty of all socialists to immediately demand radical action on housing in Wales.
This blog post analyses the structural reasons behind the housing crisis in Wales before putting forward a series of policy demands to the Welsh Government that we call on all socialists to urgently unite behind and begin campaigning for. Although homelessness is a central part of housing, we do not discuss this here as it has already been covered. The issue of land ownership is also central to housing, but we discuss this separately in another forthcoming piece.
The private rented sector (PRS)
Those who rent their houses are some of the poorest people in Welsh society. 41% of private renters and 49% of social renters live in poverty compared to 13% of owner occupiers. Private renters spend on average 29% of their total income on rent, whilst owner occupiers average 9%. In many places, particularly in cities and in BAME communities, renters will spend more than 50% of their income on rent, with ONS statistics suggesting that the poorest households in Wales spend up to 68% of income on housing, whilst the richest spend only 14%. The average rent on a 2 bedroom property, both social and private, is unaffordable to the lowest quartile of earners in every local authority area in Wales.
Whilst house owners and landlords received a mortgage holiday during the COVID-19 crisis, renters (many of whom are the key workers that society depends upon) did not receive a rent freeze. This meant that many people who had lost their job during the crisis were still required to pay rent with money they did not have, for landlords who had themselves received a mortgage holiday on their rental property. For many tenants, paying rent would have been outright impossible or a straight choice between eating and maintaining shelter. Many NHS workers got evicted by PRS landlords scared of catching COVID-19.
In contrast to the decisive action taken in Wales on rough sleeping, the housing minister Julie James announced an eviction freeze in the PRS, but only for the duration of the crisis, and that rather than a rent freeze, tenants should instead negotiate rent holidays with their landlords on an informal, individual basis. This displayed an incredible lack of understanding of the true power dynamic that exists between landlords and tenants, portraying it as some paternal, mutually beneficial relationship where the kind landlord provides the grateful, lucky tenant with shelter; rather than one of terrified dependency and dominance.
As a result of this failure to act, many tenants across Wales have been pursued for rent they do not have throughout this crisis. Many are now in serious debt to their landlords, who may now in many cases have become de facto unlicensed money lenders through the encouragement of ‘informal’ arrangements. Many tenants will be being issued with eviction notices which will be destroying their mental health. We face the prospect of thousands of tenants being evicted as soon as the temporary ban on evictions is lifted. The ‘lucky’ ones who will not face eviction may emerge in thousands of pounds worth of debt which will make their lives a lot harder, particularly as unemployment increases. Research by the Joseph Rowntree Foundation during the crisis found that 50% of families who receive child tax credit are in arrears, whilst 70% have cut back on essentials such as food.
The neglect of tenants represents a divide which is frequently portrayed as generational, with millennials often being described as ‘generation rent’. A huge increase in property prices, a lack of social and affordable housing caused by right to buy coupled with stagnant wages, means that millennials are the first generation since the second world war to face huge obstacles to home ownership in the UK’s mythical ‘property owning democracy‘. 40% of millennials will still be renting by the age of 30, twice as many as ‘generation X’ (those now in their 40s and 50s) and it is expected that at least a third will rent into retirement, compared with 9% of retired people who currently depend on the sector.
But whilst there is certainly an intergenerational element to the property divide, this narrative too often disguises the fact that huge amounts of elderly people and families are already increasingly being forced to rent too. The private rented sector has grown rapidly across all ages as the amount of people buying houses with mortgages and social renters is declining significantly. In other words, this is not simply an issue of young vs old, but an issue of a rapidly increasing class of people with no stable housing and no prospect of obtaining it.
A class based explanation for the lack of political action on tenant’s rights in the UK would note how many of the political class, including the erstwhile progressive elements, are themselves landlords. Despite the narrative that Wales is smaller, friendlier, and that our political class is closer to the population, landlordism is prevalent across party lines in the Senedd. Even the politicians who are not themselves landlords are nonetheless completely ideologically committed to the neoliberal housing settlement, and cannot even conceive of a world where housing should be a right rather than a commodity, or where rising property prices are not an inherent good.
This is not just about personalities, however, but is a structural issue. Because of a lack of social housing and the perceived prohibitive cost of building social housing, Wales has rapidly and insidiously become reliant on the private rented sector to solve the housing crisis, including, unbelievably, solving homelessness through discharging homelessness duties into the PRS (with the sector now being used more than the social housing sector to relieve households under threat of homelessness), an arrangement which would have been unthinkable previously.
The PRS has grown rapidly in Wales, now accounting for an increasingly large share of the housing market, more than doubling in size since 1997 (15% of the total housing stock in 2018) as local authority owned housing and owner occupation has declined, its growth representing “the largest structural change observed in the Welsh housing market for at least two generations”. Incredibly, the PRS now houses around the same percentage of people as the social housing sector. As more people are forced to rent, so rents have risen as the desperate demand for housing means that landlords control the market and can essentially charge what they want. All the while, wages in Wales are stagnant, meaning more and more of the people forced to rent will be struggling.
Social landlords and social housing
‘Social housing’ in Wales refers to both ‘traditional’ council housing, meaning homes owned and managed by local authorities; and homes rented and managed by housing associations – private, independent organisations that are ostensibly run on a “not for profit” basis, now euphemistically referred to as ‘social landlords’. As a result of Thatcher’s ‘right to buy‘ scheme in the 80s, huge amounts of high quality social housing was sold off across Wales and the rest of the UK and not replaced, meaning that we now have far less social housing available than we did.
As well as having far fewer houses, the nature and management of social housing has also fundamentally changed. Two decades ago, almost all social housing was council housing. In 1981, only 1% of social housing in Wales was run by housing associations. In 2001, 15% of people in Wales lived in local authority owned homes whilst only 4% lived in homes owned by housing associations. By 2019, however, the picture had almost totally reversed, with 6% of people now living in council housing and 10% living in housing association owned homes. Social housing is now overwhelmingly run by housing associations rather than by local authorities.
The primary reason for this change in ownership of social housing stock was not Thatcher’s ‘Right to Buy’ but the “stock transfer” policy pursued by the Welsh Government towards the end of the first decade of devolution. In 2002, the Welsh Government introduced the Welsh Housing Quality Standards, a set of minimum standards all social homes were expected to comply with. Following a decade of underinvestment in existing social housing, many homes were in a poor condition and the standards were an attempt to improve this. However, it was clear that this would be a significant cost for the public purse, so in an effort to push the borrowing off the public balance sheet, the Welsh Government gave local authorities the right to transfer all their council housing to newly created housing associations, who would be free to borrow from the private sector to fund this work. Half of all Welsh local authorities transferred their entire stock, meaning they now own no council housing. This in effect represented a mass privatisation of social housing- albeit with a different name- almost overnight.
Furthermore, restrictions (only recently lifted) on how much money local authorities were permitted to borrow to build new council housing meant that even those local authorities who didn’t transfer their assets to the private sector became increasingly reliant on housing associations to build new social housing in their communities. Between 2006-07 and 2016-17 only 26 new council homes were built in the whole of Wales. Whilst the picture has improved a little in more recent years, only 81 were built in 2017-18 and 57 in 2018-19. In 2017-18, only 15 ‘true’ council houses were built in Cardiff, the area with the highest demand, with all other ‘social housing’ being built by housing associations.
Although housing associations are ‘not for profit’, they are nonetheless run along commercial lines, and function as large businesses seeking ‘value for money‘. Each HA has huge assets and turnover, each have their own CEOs and large numbers of comms and PR staff, and, increasingly, paid boards of directors. Social landlords also have commercial arms which are focused on acquiring more properties, making money from rent, and even selling properties. Although there are a dizzying amount of housing associations, a few large associations are increasingly creating regional monopolies.
Mirroring the increasing political influence of private landlords with the dominance of the PRS, social landlords are now key ‘valued partners’ of the Welsh Government and have extensive political influence in Welsh politics, with a powerful lobbying group, CHC. Because of their progressive image as ‘social enterprises’, (as opposed to private companies, which is what they actually are) the line between HAs and the Welsh Government has become blurred.
Rents increasing in social housing
It is not just in the private rental sector that rents are becoming increasingly unaffordable. The past decade has seen a series of above inflation rent increases in the social housing sector, a fact which has largely gone unnoticed. Between 2014/15 and 2018/19 social landlords (both housing association and local authorities) were permitted, by the Welsh Government, to increase their social rent by CPI inflation + 1.5 per cent, plus an additional £2 per week. This issue came to the fore in 2018/19 when a high inflation rate meant that thousands of tenants across Wales were faced with rent rises they simply could not afford. In part as a response to this, the Welsh Government announced that social landlords would not be permitted to increase their rents above inflation for 2019/20 whilst they awaited the findings of a Rent Policy Review. However, this real terms freeze proved to be a temporary reprieve for tenants, with the Welsh Government announcing a 5 year rent settlement for the social housing sector from 2020/21 which permits landlords to increase their rent by CPI inflation plus 1% every year. This meant that just as lockdown began to take effect in Wales, thousands of social housing tenants were receiving letters informing them that their rent would be increasing as of April the 1st.
One explanation for the ever increasing rents within the social housing sector is the increased marketisation of social housing finance. Historically new social housing had been overwhelmingly financed by the state either through direct construction of local authority housing, or in the form of the social housing grant which was paid to housing associations to build new homes on behalf of the Welsh Government. Since 1999, housing associations have received 1.5 billion pounds from the Welsh Government to build and run social housing. In recent years, however, the Welsh Government and housing associations have increasingly sought to find new “innovative” (i.e., private) forms of finance to construct new social housing whilst reducing the direct contribution made by the state. This has seen housing associations borrowing ever large sums of money from a range of private sector institutions such as banks, institutional investors and (especially in England) from the bond markets. This shift has increased the need for social landlords to boost incomes to service this debt, ultimately leading to pressure to increase social housing rent. The result of this process has been, in effect, to pass on the cost of constructing a new generation of social housing onto existing social housing tenants. With 49% of social housing tenants in Wales living in poverty, this means that the poorest in society are now paying a disproportionate price for the construction of new housing whilst wealthier owner occupiers and private landlords are unaffected.
Another factor that is contributing to the pressure to increase rents within the social housing sector is all the additional services provided by housing associations beyond the construction of new homes, maintenance of existing homes and managing tenancies. As a decade of austerity has battered local government finances, housing associations have stepped in to deliver many of the services that they used to provide, including managing community spaces, the provision of activities for local children, employability workshops and benefits advice sessions. This privatisation of public social services is paralleled in the homelessness sector with the huge growth in homelessnes charities running hostels, outreach services and supported accommodation instead of the state. Many of these services are provided effectively and do directly benefit some tenants. However, additional services are not cheap, and are funded through a mix of grant funding from the state and charitable bodies, and existing income, namely rents. This is another way in which some of our poorest communities are being left to disproportionately carry the cost of maintaining their local services.
‘Help to Buy’
Also included in the Welsh Government’s plan for affordable housing is their flagship ‘help to buy’ scheme, which was ostensibly designed to help people get on the property ladder through a joint equity scheme whereby the Welsh Government helps fund a deposit. Prospective buyers have to fund 5% of the mortgage themselves, and the Welsh Government then pockets a portion of the sale price. The scheme is limited to new builds. Since 2014, 8,731 people have bought homes through this scheme. Since 2018/19 the Welsh Government has spent approximately £220m on Help to Buy Schemes. An extra £210m was made available in March 2020 for a “self- build” fund, a move that was welcomed by Grand Designs magazine.
Whilst the Welsh Government gushes about this scheme, there are obvious, glaring flaws with it. Firstly, the fact the scheme was limited to new builds suggests that the real reason behind the scheme was to stimulate the economy through house building. Indeed Welsh Labour’s 2019 manifesto stated that the scheme: had “helped to stimulate growth in the house building industry and associated supply chains“. It is also likely that the Welsh Government view the scheme as a money-maker, calculating that they will make money when the houses that they have helped to secure are then sold on for a profit given the constant rise of house prices in Wales. This means in turn that the Welsh Government inevitably view rising property prices as an inherent good.
The rhetoric surrounding help to buy strongly implied that it was there to help first time buyers and low income people ‘get on the ladder’. However, there was no cap placed on the buyer’s household income, and nor was the scheme limited to first time buyers. Next, the Welsh Government’s definition of ‘affordable’ in practice included houses that cost up to 300,000 pounds, with the average house purchased through the scheme in 2019 costing 200k, as help to buy prices (like all houses) have skyrocketed across Wales since 2014 whilst wages have remained static. The houses included in the help to buy scheme are completely unaffordable to working class people in Wales, where the average wage is 25k but much lower in many cases.
Sure enough, when the figures are delved into, there has been a steady increase in the amount of high earners using the scheme. Incredibly, 24% of people using the scheme were not even first time buyers. Similarly, only 4.2% of people using the scheme last year earned less than 20,000 pounds, which is unsurprising given the average price of the houses involved in the scheme: 5% of a deposit for a 200,000 pound house is still 10,000 – a huge, unrealistic amount for most working class people.
The lack of limits on the house prices included in the scheme is particularly ridiculous when we consider that most mortgage lenders will only lend a maximum of 5 times an individual’s salary, meaning that single people earning below the average wage of £25,000 (or households where only one individual works) are normally only able to get a mortgage in the region of between £90-125,000. With their own 5% deposit and then the Help to Buy Deposit on top, the maximum house price most people with this type of household income would be able to afford would be about £140,000, but none of the help to buy houses are anywhere near this price bracket. This explains why so many working class people remain completely shut out of this scheme. In England, the Tories’ help to buy scheme was rightly criticised by socialists and renters’ groups as well as by the public spending watchdog for subsidising wealthy people and for creating record profits for the property developers associated with the scheme. By not strictly targeting the scheme at low earners, and by not capping the price of houses that were included in the scheme, the Welsh Government yet again simply copied the lead of the Tories in Westminster. Unsurprisingly, help to buy numbers have been steadily decreasing as house prices have continued to rise. This initiative has mainly benefited affluent households and public money has been spent subsidising deposits that have enriched developers, including prominent Tory donors.
Section 106 agreements
Another way that ‘affordable’ housing is delivered is through planning obligations, otherwise known as ‘section 106’ arrangements. Under these, when new housing developments are built (typically expensive or luxury flats or new build estates), an agreement is reached whereby in return for obtaining planning permission, 10% of each new development will be given over to social housing (as well as other social goods such as roads, parks, etc). So if a development has 500 houses, 50 would in theory have to be made ‘affordable’.
The problem is that in reality, developers frequently and routinely circumvent these agreements (because they have no interest in building affordable housing) and face no penalty for not holding up their side of the bargain. This is something that is common knowledge in housing circles in Wales, but which is rarely discussed outside of them. For example, whilst over 1800 affordable housing units were granted planning permission in Wales last year, only 604 – less than half – were actually built. This route is therefore extremely unreliable for obtaining new social or affordable housing units and as a strategy essentially gives developers carte blanche: planning permission is obtained with no responsibility, no trade offs. This is a strategy which benefits developers and few other people.
The crisis also witnessed the flare up of the long dormant issue of second homes in Wales. In the early days of the panic, thousands of wealthy second home-owners (as well as working class tourists en route to caravan parks), flocked to rural Wales.
The issue of second home ownership is at root an issue of class. In other countries of the UK and Europe, where the problem is similarly widespread, the issue of second home ownership is simply understood in terms of class and unequal power relationships, but in Wales the issue has been twisted and obfuscated so it is only framed in terms of nation, language and culture. Whilst these issues are of course important, they are layered upon class, which ultimately determines one’s access to the housing market. Wales’ scenic ‘rural’ areas (in reality, the first industrialised parts of Wales) are some of the most deprived in Europe. These areas have faced systematic disinvestment by both the UK and Welsh Governments and are left with poor infrastructure and few jobs, as opportunities have been centralised in Cardiff.
Young people leave these communities in droves because of a lack of opportunities, and also because they cannot afford to stay in their home community, in part because the second homes that lie empty most of the year have pushed house prices up. As a result, the Welsh language is increasingly precarious in its former strongholds, which have gotten poorer and poorer as well as hugely demographically imbalanced, with fewer and fewer young people.
Unlike Wales’ urban areas, however, housing poverty in rural Wales is not always down to a lack of housing stock. In many local authorities the houses that are needed to meet local demand are there, they are just empty, standing as haunting, daily reminders of the class and power inequalities that exist in our society, where some people can own multiple houses as working class people cannot afford one. There are now 24, 423 second homes in Wales, with the majority being concentrated in Wales’ Welsh speaking rural areas, with 4,900 in Gwynedd and 4,072 in Pembrokeshire.
More than any other issue, housing exposes the emptiness of the Welsh Government’s claims to be social democratic or ‘radical’. Despite their radical rhetoric, their response to the housing crisis before and during COVID-19 demonstrates the extent to which the Welsh Government is completely dominated by capitalist interests and the extent to which ‘progressives’ in Wales are ideologically committed to neoliberalism.
The Welsh Government’s housing strategy ultimately represents an attempt to form an alliance with big business (private landlords, large housebuilders, social landlords) in order to solve the housing crisis without spending public money. Their aim has been to increase ‘affordable’ housing by using the private sector (big developers) to expand overall supply and then including a small percentage of affordable houses in each development, so that as more new build developments are built, so the amount of affordable houses gradually increases. Developers get rich, local authorities get some affordable housing. Win win, in theory.
However, as we have seen, not only are these ‘affordable’ houses in practice ridiculously unaffordable and the flagship ‘help to buy scheme’ not been targeted at low earners, they are also not being built at a scale which would have any impact on the supply crisis even if they were affordable.
On top of the deficiencies of the ‘affordable housing’ strategy, the ‘social housing’ in Wales which is being built has in effect been privatised and sub-contracted, wholesale, out to the ‘not-for-profit’ sector which is in reality increasingly commercialised. Housing for the poorest in society has been passed from the state to these unelected, poorly regulated bodies, who operate like big businesses, who are reliant on private finance to build and manage their houses, and who have scandalously raised rents for some of the most vulnerable residents and who also routinely evict residents with no consequence. Social housing as it is currently conceived in Wales is undemocratic.
Because social housing has been privatised by the Welsh Government, and ‘affordable’ housing is not affordable, because no one can get a mortgage, huge amounts of working class people in Wales are increasingly forced to rely on the dog eat dog world of the private rented sector. Because of a lack of social housing, the sector is also now a key ‘partner’ in the Welsh Government’s anti-homelessness strategy, despite it being clearly inappropriate for this purpose.
The Welsh Government’s strategy of forming an alliance with capital to achieve Wales’ housing needs has been a catastrophic failure by any measure. Nowhere near enough housing has been built, and what has been built is unaffordable or removed from democratic control in the hands of housing associations. The housing crisis remains acute.
By relying on private landlords and big property developers to solve the housing crisis, the Welsh Government have entered a faustian pact: capitalist interests have no interest in solving the housing crisis because affordable housing is neither profitable or desirable to them. When demand is high (desperately so) as it is now, then developers and landlords are in complete control. They can charge as much as they want for often very poor quality housing because people have no other option, because the alternative is homelessness. If supply rose to keep up with demand, and if everyone had access to shelter, they would struggle to make a profit. It is therefore in their interest to keep supply low and to actively suppress the amount of affordable housing being built – this is why they continually wriggle out of s106 agreements or refuse to build affordable housing and complain about health and safety regulations being added to new build houses. This sector is continually lobbying the Welsh Government to ‘cut red tape’ (i.e., health and safety considerations) and to limit even the Government’s modest demands on inclusion of affordable housing within developments, because these basic requirements impact on profits.
The state is now the junior partner in housing and is entirely dependent on the private sector for solving the housing crisis, but as we have seen, the private sector has no interest in solving this crisis. Because the Welsh Government is dependent on landlords and developers, it is now inevitably unable or unwilling to stand up to landlords and developers when it comes to things like tenants’ rights or affordable housing. It has, through its own short-termism, become a hostage to capitalist interests. With their rapidly increasing share of the housing market, landlords have grown more powerful and influential in Welsh public life. Even if one hypothetically accepted that the PRS did have to be used as a short term solution to the housing crisis (which no socialist should), a pragmatic, fair, short term response would have been to simultaneously introduce rent controls to help tenants, given that the sector is now in effect being used to fulfil a ‘social housing’ function. However, because of their structural dependence on the PRS, Welsh housing ministers have instead openly factored in the ‘concerns of landlords‘ into policy making when discussing issues such as evictions and rent controls. They have abandoned tenants and given landlords carte blanche, with their only attempt to regulate the sector so far being the useless ‘light touch’ ‘rent smart’ scheme. The Welsh Government’s approach to tenants’ rights during the crisis was similarly governed by their desire to not upset PRS landlords (and which a rent freeze would have done).
The issue of housing demonstrates how the issues facing the working class of Wales, regardless of where they are, what language they speak or the colour of their skin, stem from the same root: neoliberal capitalism. In cities we call the issue of housing disenfranchisement ‘gentrification’, but what this process refers to is simply working class people everywhere being unable to secure the safe, stable shelter that everyone deserves, as land and housing has been turned into a commodity to be sold for profit. In Cardiff, this manifests itself as property developers and the council pricing a disproportionate number of working class BAME people out of their neighbourhoods which have been systematically neglected, so gentrification can then be justified and described as ‘improvement’. In rural Wales it manifests itself as working class locals having to leave their communities because there are no jobs or houses, as their communities then become seasonal playgrounds for the rich. The root cause is the same even if it manifests itself differently in different places.
What is to be done?
In the UK, whilst most people rightly want the NHS to stay in public hands and recognise that universal healthcare is a human right, we do not extend the same logic to housing, despite it being just as central to our health and society. Shelter is a human right, and people should not live in misery just to keep a roof over their head as others profit off their struggle. Everyone deserves stability and security. Just as universal healthcare should be free at the point of use and free of market forces, so housing should be completely removed from the logic of capitalism and the profit motive.
The Welsh political class, regardless of party, are not faced with housing precarity. They do not have to rent their houses. Because of their class and their material wealth, they are completely removed from the struggles that their constituents face around housing. This is why the housing issue isn’t a political priority in Wales. It is our duty to force it to become an issue, and to change the common sense around housing – to make people think of it as a right and not a luxury or asset to be fetishised.
The housing crisis could be easily and rapidly solved by a socialist government, as it is a simple issue of supply. We have the technology and expertise to build sustainable, eco-friendly homes for all. The first step towards doing this is for a truly state-owned mass-campaign of social house building on top of the repossession of all vacant houses and second homes. By doing this, Wales will be able to break its reliance on capital to fulfil this basic human need. It is the first, necessary step in removing the profit motive from housing. It is imperative that social housing is built and owned by the state, not by big developers or social landlords, and not achieved through concessions like 106 agreements. Building social housing on a mass scale will create a virtuous circle that will impact far beyond the social housing sector. By lessening demand, it will lower rents in the PRS and house prices in the short and medium term. It is also necessary if we wish to solve homelessness.
In the medium to long term socialists should be aiming to drastically cut the amount of people reliant on the private rented sector for accommodation, particularly families and the elderly. The PRS must not be a destination for homeless people, because it is unsuitable. In the short term this sector must be heavily regulated. No more public money must be handed over to private landlords and rent caps must be introduced immediately. Land is also central to this fight – if public land continues to be sold off to developers by local authorities, it will be a lot harder for citizens to resist developers’ plans to build unaffordable housing on public green spaces. We must resist the narrative that it is a choice between green fields or affordable housing, especially when the houses that are being built are not affordable, and when so many houses lie empty. Land must be owned by the community, and the community – not capitalists – must democratically decide how it is used.
The Welsh Government will doubtless protest that their hands are tied, and say that their ‘alliance’ with their ‘partners’ in big businesses is the only feasible approach due to its limited borrowing powers and the inadequacies of the Barnett Formula. However, a quick glance at the Welsh Government’s budget shows that there are millions already within its housing budget that could more effectively be spent if it were serious about constructing new social housing in a progressive way. The Welsh Government’s budget for 2020/21 makes £223m available for Social Housing Grant, an increase on the £138m that was made available in 2019/20, and the £207m that was available in 2018/19, but there are millions more that could still be invested. As we have seen, they have already spent £220 million on their useless help-to-buy scheme and earmarked more for a similarly idiotic self-build scheme. This money could have built a significant amount of ‘true’ council owned properties.
Moreover, the Welsh Government is currently throwing huge amounts of public money at short-term fixes. For example: a pilot scheme launched last year whereby the Welsh Government acted as a letting agent and rented out PRS flats on behalf of landlords in a crude PFI scheme where the state shouldered all the risk and landlords took huge profits and got grants to make their properties liveable. Similarly, and unlike all other countries, the Welsh Government is pursuing its ‘anti-homelessness’ ‘housing first’ strategy through the private rented sector because it doesn’t have an adequate supply of social housing, one of the pre-requisites of the scheme. It is now instead handing huge amounts to private landlords in the form of financial incentives encouraging them to take part, including 6 months rent in advance and continued sweeteners throughout the tenancy.
This ludicrous situation demonstrates how desperate the Welsh Government still is for housing stock, and how short sighted its alliance has been with developers. Their alliance has been a false economy designed to chase headlines which has left them dependent on developers and landlords and has ultimately not helped the housing crisis in any meaningful way.
The COVID-19 crisis presents an unique opportunity to significantly ramp up the construction of new social housing through direct state investment. Mass building social housing will break the stranglehold of big developers on the housing market, and many of the big private developers are unlikely to be constructing at scale in the near future anyway as they await the housing market to “recover” from the economic shock of the pandemic. Working with private developers is therefore unlikely to produce anywhere near the amount of houses Wales needs and their lack of activity means there are likely to be many workers in the construction industry who may find work hard to come by in the short to medium term. It will therefore greatly boost the Welsh economy. To enable the procurement of new builds, we must utterly reject the Welsh Government’s rebranded PFI scheme, the ‘mutual investment model’, and instead establish direct labour organisations, (state owned construction companies) to carry out the task of mass building and renovation (not to mention other infrastructure works) rather than outsource the work to the private sector, as we currently have to. These organisations would provide high quality apprenticeships and jobs for thousands of workers. Moreover, there will be huge job opportunities involved in retrofitting existing social housing to make them carbon neutral, and in the manufacturing supply chain of the modern houses we need, building things like solar panels and insulation materials.
There has already been some talk that the Welsh Government could seek to increase its borrowing powers as it seeks to deal with the outcome of the crisis. Bar green and digital infrastructure, there are unlikely to be many investment opportunities for the Welsh Government that could provide the economic and social benefit of constructing a new generation of genuinely affordable social housing. Now is the time to be truly bold.
Housing policy demands
In light of the above analysis, we demand:
- A mass campaign of social house building by the state, in the form of classic, high quality, low carbon state owned council houses. There must be 14k homes a year minimum, avoiding greenfields. 100% of all housing is to be social housing or truly affordable, with the complete removal of the market from housing.
- All housing associations to be dissolved, and their properties brought under the democratic control of local authorities. All frontline staff to be brought over during this process of re-nationalisation. This can be easily achieved by the Welsh Government simply no longer handing the social housing grant to social landlords.
- Instead, houses are to be built and renovated through direct labour organisations.
- The decision making around housing needs to be democratic and transparent. Citizen’s assemblies may be required so social tenants and others have a direct say and role in all decisions.
- An immediate repurposing of all empty properties. Local authorities are currently unwilling or unable to use the powers they have to do this, so the Welsh Government needs to allocate funds and strict guidelines for each local authority for this task.
- A total ban on second homes. All second homes to be repurposed for social housing. In the short term, close loopholes which allow second homes to be used for tax breaks.
- Punitive taxes on houses which are used primarily or exclusively for AirBnB.
- Change the definition of affordable housing so that it is in line with the Welsh average wage of 25k.
- Scrap Help to Buy.
- Ban evictions from all providers of housing. Ending homelessness is not possible without banning evictions.
- Immediate rent controls in the PRS, as has been done in Berlin.
- Implement ‘rent smart’ robustly in all local authorities, and ensure that bad landlords are fined and struck off the landlord register and their properties forfeited.
- Homelessness duties must not be discharged through the private rented sector. Housing First must be implemented through state run social housing. No more public money must be passed to landlords.
- In rural areas, ensure that housing lists are closed and that local people get priority.
- Rewrite the national planning strategy to ensure proper oversight and that local communities are genuinely included in planning decisions.
- Establish a community land trust fund for local communities to use to buy land.
This is a companion discussion topic for the original entry at https://undod.cymru/en/2020/07/03/tai-housing/