Thursday 8 December 2011

The Great British Property Scandal – The Real Scandal

This week, Channel4 has been running a series of programmes entitled The Great British Property Scandal, dealing with the fact that there are 1 million empty homes in Britain, 350,000 of them for more than 6 months, a figure equal to the number of homeless people in the country. That is indeed a scandal. That a rich country like Britain – and Britain is a rich country despite what the Liberal-Tory Government tries to convey with its austerity agenda – should have ANY homeless people, should be an indictment of the Capitalist system, and a source of shame for all UK politicians. However, the programme does not deal with this. On the contrary, it is based upon the same false premises that every other TV property programme has been based upon during the whole period that the current housing bubble has been blown up. The real scandal is that many of the people in these series of programme, are the same people who for the last ten years or more have helped blow up the current unsustainable property bubble, which is, in reality the main reason why both these homes are empty, and why so many people cannot afford a home, and in turn why so many people are homeless. In fact, what the programmes do is not address that fundamental problem, but perpetuate it.

For example, one of the proposals is to establish an “Empty Homes Loan Fund”. The premise of this was demonstrated in a programme, in which George Clarke looked at some empty homes, where the owners were not renting them out, because they needed money spending on them to bring them up to rentable standards. The idea was that such Landlords would be able to get cheap loans from this Fund to do the work so they could be rented out. He examined one house in particular where the owner had re-married, and moved into the house of his new wife, leaving his old house empty. He was paying, and had been paying for some considerable time, £500 a month mortgage on this empty house. The obvious response of an economist in such circumstances, and in the current economic climate would be something along the lines of “What a muppet! Sell the house for what you can and save yourself £500 a month!!!” To be fair Clarke did ask why the owner was not selling, to which the answer came back, “Its not the right time to sell!” This presumably means that the owner is under the delusion spread by papers like the Daily Express, and fostered by all those TV property programmes over the years, that the price of houses always goes up except for temporary set backs, and so house prices are likely to rise sharply in the future.

But, of course, they are not. Not only are house prices in an historic bubble, but even if they were not, then in conditions where the economy is facing at best no growth, and more potentially a severe recession, its likely that house prices will be falling significantly. The delusion of the owner is typical of that held by people towards the end of such a bubble going back to the Tulipomania and beyond. But, surely a programme which claims to be dealing with the Great Property Scandal, should have been setting him straight, surely it should have been attempting to undo some of the damage all those TV Property Programmes have done over the years in helping to create the current situation! But, no.

Instead, what was proposed was a continuation of the very things, which have created the current scandal. It was proposed to provide the owner with a cheap loan to do up the house so that it could be rented out. In other words, a relatively well-off property owner is further subsidised by the provision of cheap credit, in order that they can exploit some future tenant, rather than have to face reality, and sell their property at a more reasonable price than that they expect to receive. But, it got worse from there. Having made the house suitable for renting, a new tenant was found. This was a young woman with several kids, who was living in terrible conditions. Unfortunately, she seemed to have no visible means of support, and was considering going to University, where she would no doubt have to run up, further huge debts, as with other students.

Herein, of course, lay the reason she was living in sub-standard accommodation in the first place – inadequate income to be able to rent somewhere decent. But, given that the owner of the property was paying £500 a month mortgage, BEFORE they took out the additional loan to do the house up, how on earth was this unfortunate woman expected to be able to pay a sufficient level of Rent to cover the costs of the owner? It was inevitably setting up the woman to either go into serious debt, or be evicted when she could not pay, or else for the owner of the house to have to be making a monthly loss on the rental income received compared with the mortgage paid out!

This was a similar story in another example, in which Phil Spencer did up some empty properties, and flats over shops, into which were moved a number of homeless people, who had been living on the streets etc. But, again, the real reason these people were homeless was because they did not have a sufficient income to be able to rent or buy somewhere to live! It is like the situation with famine. The reason that people in parts of the world die from starvation is not because there is insufficient food. On the contrary, the world is able to produce, and does produce, far more food than is required to feed all of its population. The reason people starve is because they cannot afford to buy the food they need. The same is true with homelessness, and the inability of other people to buy a house. It is because house prices are too high. If these programmes wanted to deal with the Great British Property Scandal they would be doing everything they could to crash house prices, rather than perpetuate the current bubble.

More than 80% of the properties that are empty in Britain are privately owned. The reason the owners do not sell them is because they are under the delusion that prices will not fall drastically. If they felt that prices were going to fall by 70-80%, which is how much I believe they will fall, and is consistent with the kinds of falls we've seen in the US, Ireland, Spain etc. where similar bubbles were blown up, then the owners of these properties would be likely to rush to sell them tomorrow. It would mean, at those kinds of prices that many people now unable to buy would be able to do so. It would put strong downward pressure on Rents as current renters, would be able to buy. That would mean that many of the homeless would then be able to move into these rental properties at more reasonable levels of rent. Moreover, it would put strong downward pressure on land prices, meaning that a large component of the cost of building new houses would be reduced. It would also be an incentive for those builders holding on to large land banks in the expectations of rising land prices, to sell them, or get houses built on them quickly.

It would also mean that ordinary workers could begin to form their own housing Co-ops to build houses for themselves to be owned and controlled Co-operatively. It would mean they could begin to provide employment for some of those within their communities, who are unemployed, with work building those houses, even if only initially in unskilled work. It would prove the basis for setting up proper training and apprenticeships for young workers in these communities, and so on.

But, of course, its unlikely that any TV property programme is going to advocate such measures. It would call into question all those other programmes they have made that helped blow up the current bubble, which in turn has caused the problems of so many millions of people. And, of course, no doubt they too hope that the current falls in prices are only temporary. Then they can get back to their old ways concentrating on those programmes that fool people into the belief that rising house prices are a good thing rather than a cause of misery.

2 comments:

Jacob Richter said...

"It would also mean that ordinary workers could begin to form their own housing Co-ops to build houses for themselves to be owned and controlled Co-operatively. It would mean they could begin to provide employment for some of those within their communities, who are unemployed, with work building those houses, even if only initially in unskilled work. It would prove the basis for setting up proper training and apprenticeships for young workers in these communities, and so on."

This is one of the few areas where I think co-op "self-help" positions are applicable. From the get-go, all participants have no radical illusions in housing co-op activity.

Policy-wise, apart from this co-op stuff, the rest is up to enormous pressure on the state - the combating of residential gentrification and speculation by first means of expanding resident association guarantees beyond the privilege of homeowners and towards the formation of separate tenant associations, limiting all residential writs of possession and eviction for the benefit of private parties to cases of tenant neglect, and establishing comprehensive tax and other financial preferences for renting over home ownership.

Boffy said...

The majority of workers who are involved in any kind of association, including Trades Unions, Tenants Associations and so on have no radical illusions. The form does not determine the content. It can only facilitate the work of Socialists in providing that content via generalisation of experience.

I don't understand what you are trying to say in your final paragraph, but it seems to grossly overestimate the extent to which workers are able to apply pressure upon the Capitalist State. In reality, we have Tenants Associations and so on, and their role has been merely to negotiate within the system with the local state for concessions. Real pressure for change rather as Engels says about Trades Unions and Wages, arises not from the ability of these organisations to exert pressure on that State, but comes from material changes in the relations of Supply and Demand via the market.

If you want to exert control you have to have ownership, and, as Trotsky says, we should not deceive workers into believing otherwise. In reality, movements in that direction have only been means of the TU and otehr LM tops being incorporated by the bosses and their state, and thereby all the better containing workers struggle.