'Generation Rent' looks less like a passing phase created by a short term 'bubble' and more like a long term change in the housing market, writes Alastair Stephens.
A recent report from the Resolution Foundation reveals that the number of under 35s in the low to middle income group renting from private landlords has more than tripled - from 14% at the end of the 1980s to 47% today. At the same time the number who own a house has fallen from 51% to 34%.
The “right to buy” council houses brought in by the Tories in the 1980s was not matched by any programme of building to replace them. In fact councils were prohibited by law from doing so. This has meant that for the vast majority of people growing up since then, the only route to having a stable roof over their heads is buying one.
Lack of house-building and buy to let mortgages has meant, however, that more and more people are chasing fewer and fewer available houses. This led to an upward spiral in house prices. By the late 2000s, this was putting them beyond the means of a large part of the population.
In 1991 the average low and middle income household would have to save for four years to get a deposit on a house. That figure is now 22 years - and in London it is even higher.
The average deposit needed to buy a house has increased ten times over the same period whilst wages have stood still in real terms for most people. For some they have actually gone backwards. The average deposit for a first time buyer is now some £30,000.
Few young people can afford to buy a house now without a big handout from their parents, something that is often possible only for the more prosperous. Home ownership is threatening to become hereditary, just as it was a hundred years ago.
The only other people who can afford to purchase houses are buy-to-let landlords, who then rent the properties out to the people who can’t afford to buy them. Rents have continued to rise. Owning a house is now estimated to be 17% cheaper than renting. Those who can least afford it are being forced into the more expensive housing option.
The private rented sector was something that had almost been eliminated by the end of the 1970s. Now it houses millions of people again. Most tenants feel trapped there, 40% of them are over the age of 40. Many are now seeing any prospect of having a home of their own disappear completely.
Now increasing numbers of older people and families are stuck in impermanent and often poor quality housing. The changes in housing laws by the Tories in the 1980s meant that tenants lost most of their rights. Landlords can evict whenever they like without even giving a reason (a so-called Section 21). Children are continually moved on from one home to another, and on from one school to another disrupting their education.
Most countries which experienced a housing boom then recession have seen a slump in housing prices, apart from Britain. Here there was no such “readjustment” and the government has continued with the same policies that caused the housing crisis in the first place. A housing crisis has become yet another means by which wealth is transfered from the poor to the rich.
Alastair Stephens has been a socialist his whole adult life and has been active in Unison and the TGWU. He studied Russian at Portsmouth, Middle East Politics at SOAS and writes regularly for the Counterfire website.