After five years, I am back in the UK – and the poverty I observed then is getting worse

Over the past two decades, we have witnessed a housing crisis across Europe and the United States. These affluent countries used to have a much better profile in terms of access to adequate housing for their residents, but when I came to UK in 2013 I saw the housing crisis at its worst – or so I thought. This week, new statistics reveal that the number of children in absolute poverty has risen by 200,000 in the last year to an astonishing 3.7 million.

The rise in child poverty, alongside the deepening housing crisis, is no coincidence. This trend comes as a result of a powerful paradigm shift, in which housing, more than a place to live with dignity, became a financial asset. This has distorted the functioning of land and property markets, as well as generating an increase in homelessness and an imbalance between housing costs, incomes and quality of living.

In the UK in 2019, many residents are spending half their salaries on housing rents or mortgages, but are inadequately and insecurely housed. These expenditures are mainly raising the asset values and incomes of land, property owners and owner-occupiers. Consequently, housing prices are inflated and inequality and poverty continue to rise.

In Britain, the housing crisis is experienced in different ways, depending on which city or region a person lives. The worst situations are found in London – the UK’s richest city – among low-income precarious labour workers and young people.

The crisis, and its specificity in each group, is the result of a combination of several factors. But if we place the UK case within a global picture, one of the most important engines for the crisis was the shift initiated by Margaret Thatcher to detach housing from social policies. She allowed the selling of social housing to sitting tenants and shifted subsidies from helping councils and housing social providers to build and maintain their stock at low prices, towards the promotion of home ownership through credit.

At the same time, as those were part of larger measures aiming to reform welfare systems into asset-based welfare, the whole banking system became highly dependent on inflated house values as collateral for loans. As a consequence, many homeowners became dependent on house price escalation to finance their consumption and old age. As a result, Britain, with internal variations, has the greatest long-run escalation of average house prices among wealthier countries.

In cases like London, those inflated prices were aggravated further by the fact that residential property became an investment for transnational wealthy elites, transforming houses and apartments in “safe deposit boxes” to park their surplus capital.

Since I visited the UK as UN special rapporteur on the right to adequate housing in 2013, the situation has worsened significantly. The UK government strategy has been to support the building of more houses for sale in the open market.

Although it is true that more houses need to be built, and that public land can be an important input to that, if we examine what resulted of those strategies we notice two things. Firstly, most of the houses built in the last years were sold to the better off. Low-income people – who need them the most – were simply not able to afford them. The term “affordable” means 80 per cent of the market rate, which is less expensive but still unaffordable for those who don’t have a place to live.

Secondly, local and central government have sold public land, but they have done this by selling to the highest bidder, driving up the price of land and houses. Only one in five of the new homes to be built on sold-off public land is likely to be classed as “affordable”, and as little as six per cent of new homes are likely to be social housing.

Now it is time to rethink those policies: an important part of the housing needs requires the de-financialisation of housing, which includes introducing rent control cap. The right-to-buy by council and housing association dwellings must also end in order to deliver public land to council, cooperatives and community land trusts to provide social housing.

Housing is not an ATM – it is a place to live. Until Britain begins to refocus its view of housing and act on it, the housing crisis will continue.

Raquel Rolnik is the former UN Special Rapporteur on adequate housing. Her UN report on housing was released in 2013. Her 2018 book Urban Warfare: Housing Under the Empire of Finance​ is available here.