Why London is unliveable Housing is a cross-party disaster

Something awful has happened to London. I was born in this city 36 years ago. Back then, my parents were able to buy a two-bedroom terraced house for us on a single income, sometimes unstable and never especially high. My dad was an illustrator, a job where work can always come and go. Despite this, my parents could still borrow money from a building society and pay the equivalent of £750 a month to clear off their debt. Friends I grew up with in East London had similarly working-class parents: they worked in shops, garages, hospitals and the transport network. But they all had homes, some rented from the council, some purchased by their family. Nobody knew who lived in which, and nobody cared very much. We all had kitchens for birthday parties, gardens to play in, and bedrooms we shared with — at most — a single sibling. 

Today, all of that is gone. Now, the only families who have homes and space in London are the ones who are very rich, and an ever-decreasing subset of the poor who have managed to cling on in social housing. Everyone else, especially the children, are overcrowded. Their families rent rooms in houses, they don’t have gardens and one in every 20 doesn’t have a home at all. Instead, they bounce from one temporary homelessness accommodation to another, a miserable, distressing journey through badly maintained rented rooms and hotels. Down the street I grew up on, it costs £1,000 to rent a single room. 

In three and a half decades, then, we have undone a century of progress on housing. Yet if this process began in the Eighties, with Margaret Thatcher’s planned destruction of council housing and deregulation of the private rented sector, every politician who has had responsibility for housing and for London in the years since shares some of the blame — with vast consequences for the city’s skyline, school system and even its broad culture.

Even before she came to power, Thatcher had a vision: we would no longer rely on the public sector to house people who couldn’t afford to buy, by offering council homes at local rents. Instead, we would let these people choose a private rented home and allow people to claim benefits to make up the difference. We shifted, essentially, from a welfare system based on bricks to one based on benefits, with “Right to Buy” the jewel in the monetarist crown. 

At the same time, Thatcher made changes to the private rented sector: abolishing both rent control and security of tenure, which guaranteed tenants a new lease once the old one expired. Now, private landlords could raise rents as quickly as they liked and evict their charges at the end of a short-term tenancy for no reason at all. This was the beginning of the end: the security and community working class Londoners had built up was based on council housing. Thatcher’s moves would destroy those communities. 

The Conservative reforms came at the worst possible economic time for two reasons. First, the rapid deindustrialisation of the economy, and the construction of a new financial sector in London, meant that the capital had become the centre of the country’s wealth and employment. After enduring a steady decline in population for decades, the city’s population started to rise, and rapidly too, as people moved here for work. The number of Londoners has increased every year since 1988, neatly chiming with the financial Big Bang.

Then there was the global fall in interest rates, which occurred in the Nineties after Thatcher had moved on. This did several things. The first was to wreck people’s pension plans. No longer would their savings pay out enough for retirement. So they looked for another, secure destination for their money instead. And thanks to low rates, and a new financial product called the “buy-to-let mortgage”, created with the knowledge and blessing of government, there was an easy option: property in London. Millions began flowing into buying up homes in the capital: not to live in, but to rent out to the city’s growing population. I remember watching the numbers in the property section in the local paper rise to almost silly-sounding amounts: £100,000, £200,000, £300,000. How could anyone possibly afford these sums, just to live in? 

Then Tony Blair arrived, with a big Labour majority, in 1997. Things might have changed. We could have moved away from the Thatcherite focus on benefits and private landlords, back to the tradition of the 20th century: the construction of social housing on a large scale. But we didn’t. Tony Blair oversaw some of the lowest rates of council building since the “Addison Act” created the model of local authority-owned housing in 1919. New Labour did, to be fair, pump money into upgrading some social homes: but this came with strings attached. 

For one thing, councils had to transfer their homes to private social housing providers, or set up private management bodies to get hold of it. And though the money might have offered nice new kitchens and bathrooms, it didn’t address the fundamental problems with the fabric of ageing housing estates. Strapped for cash, councils turned to another option: knocking them down and selling the sites to private builders to pay for a rebuild at higher density, with higher rents and more private housing. South London’s Aylesbury Estate — where Blair gave his first speech as leader — was slated for demolition in 2005. 

Meanwhile, the rest of the city was also changing. The arrival of a London mayoralty led to the elevation of Ken Livingstone. A veteran of local politics, Livingstone had been leader of the Greater London Council, until its abolition in 1986. This time around, Ken’s biggest idea was to build upwards. On his watch, dozens of new skyscrapers were signed off: The Gherkin, The Cheesegrater, The Shard — all these icons of capitalism started their journey under the auspices of Red Ken. 

But this caused a problem. As skyscrapers became increasingly common in London, the value of land on which they could be built exploded, jumping by 30% since the financial crisis alone. No longer would developers build rows of family-sized housing, as they had well into the 20th century. The land was just too expensive to make this model work any more. And with planning laws preventing the city from expanding outwards — the Green Belt has become a kind of religion for politicians of all parties — it would instead densify: with gargantuan office and apartment blocks popping up from Victoria to Croydon. The cost of building these towers, and indeed buying the land, meant they were never going to be affordable for families: even those who didn’t mind living in the clouds. 

All the while, London’s population was growing at an even faster rate. Blair, his confidence in free market absolutism, opted against a transition period for the “free movement of people”, when the EU expanded in 2004. Now, workers from all around Europe could come to what was one of the continent’s foremost economic centres. But there would not be housing for them when they arrived. So, instead, they piled into the private rented sector, driving the value up even higher for landlords and encouraging them not to rent out houses. Rather, they split them up into rooms to maximise their income. A house in London was now an extraordinarily valuable asset, with millions of cheaply-priced loans chasing every new “opportunity”. How could normal families, who just wanted somewhere to live and school for their kids, hope to compete? 

Then came the financial crisis and another opportunity to reset. The model we had followed to this point was plainly broken: wasn’t it time to try a new one? Instead, we would double down on our mistakes. The Bank of England responded to the crisis by cutting interest rates to historic lows and pumping money into the economy via quantitative easing. This meant that money rushed to safe assets, and property investors could borrow cheaply. Property in a Western capital with high demand for housing was the new gold. Speculative developments began to pull in billions from investors all around the world. A wall of investment money crashed into London’s market, sending the value of prices soaring yet higher. Suddenly, it was very easy to get stinking rich from building private housing in London and selling it off-plan in Hong Kong. 

But what these investors did not want was “affordable housing” — which cut their profits and lowered the attractiveness of the asset to investors. David Cameron’s coalition government obliged, introducing a system of “viability” which gave property developers a way to avoid their legal commitments to building affordable housing. Residential tower blocks piled up in the London skyline with hardly a unit of social flat in sight. Boris Johnson, as Livingstone’s successor as mayor, enthusiastically encouraged this trend: signing off projects boroughs had refused for containing too little affordable housing, selling off public land to private developers, and turning over government cash to help private developers build on new sites. 

At the same time, Cameron went further than Thatcher had in dismantling social housing. Grants for new social homes were cut to a third of even the historically low post-Thatcher rates. Budget cuts were also forced through ,which pushed social landlords to junk much-needed capital investment. Property increasingly fell into disrepair. A revitalisation of Right to Buy saw the remaining decent stock sold off, and new build housing was let under a new “affordable rents” regime — which was still too high for the poorest to afford. Social housing, in the traditional sense, was completely residualised, while waiting times for a council home in London boroughs stretched into decades. 

And where Thatcher had elected to move from bricks to benefits, Cameron went a step further: cutting benefits as well. He prevented claimants from receiving anything more than the lowest third of the local market rate, and then froze that rate. This meant that as rents rose, the number of properties someone on benefits could afford rapidly shrank, even as many claimants were also holding down jobs. More and more families were duly evicted, and found they had no options for somewhere else to live. 

The city started to sink into a permanent crisis, as young families escaped elsewhere. And if the London they left behind was physically unrecognisable from that of their parents — a cityscape of ugly prefab towers, built from plastic and steel — the capital’s housing crisis is now having a broader societal impact. So few young families can afford to live here, for instance, that the school system is collapsing. According to one recent study, London accounted for nine out of the ten areas nationally with the biggest drop in primary-age students, with Westminster Council closing three schools over the last five years. 

And even for those working-class Londoners clinging on, the situation is grim. These days, residents typically spend a stonking 41% of their incomes on rent. And if that inevitably has a stark economic impact, London’s culture has arguably been harmed too. Long gone are the days when struggling artists could find cheap digs in the city centre — leaving plenty of time for music or writing or whatever else they had set their sights on. 

Over recent years, meanwhile, Covid has piled on even more pressure. In its aftermath, rents soared yet further, as a sudden surge in immigration due to post-Brexit reforms, a rise in international students, and an uptick affluent families seeking more space converged at the same moment — all while landlords were less willing to put their properties on the market. Sadiq Khan has done more than Boris to reverse the decline, starting off the first genuine programme of council housing construction in the city since Thatcher. But he too has faltered, his build numbers dropping and his electoral promise of 50% affordable housing in new developments long forgotten. 

As for Khan’s colleagues in Whitehall, Labour has few answers either. New rental reforms will offer longer term security, but do little to help those who simply can’t pay the rent anymore. Extra money for social housing construction is welcome, but given the size of the challenge, it is too little and too late. The larger chunk of funding won’t be available until after 2030, which in practice means new homes are a decade away. That speaks to a broader failure: notwithstanding Keir Starmer’s pledge to build 1.5 million new homes nationwide by the end of this Parliament, planning approvals lately dropped to a record low. And so we have the London of today: unaffordable, atomised, sterile. Its communities dead or dying, the keys handed over to private landlords and property developers, my parents’ dream a distant memory. 

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Homesick: How Housing Broke London and How to Fix It, was published on 25 September

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