Every morning, I walk to work past the old Mount Pleasant sorting office in Islington, north London. Until recently, it hummed with activity as red Royal Mail vans chugged in and out. But like its parent company before it, half of it is now being sold off. In a few years’ time, this glorified car park will become 681 highly desirable flats.
On 2 October, London’s mayor, the Great Blond Hope himself, handed down a ruling: 24 per cent of the new flats should be affordable. He says he wants Londoners to benefit from new housing developments, not “oligarchs from the Planet Zog”.
But what is “affordable” when we’re talking about a prime slab of Islington real estate? Now, this is the point at which I advise readers of a nervous disposition – or those who bought their house before the great boom; or those living in social housing; oh, and anyone north of Watford – to sit down. An “affordable” four-bedroom flat in the development could cost up to £2,800 in rent a month. (That comes from confidential figures submitted as part of the planning process, obtained by the Guardian.) In order for housing costs to make up no more than a third of your income, as experts recommend, a family would need a combined salary of £100,000 a year to afford this “affordable housing”. To rent at market rates, you’d need double that.
Affordable housing has become a very voguish idea in the past few years, as it implies that there is an easy way to circumvent the insane demands of the property market in popular areas without relying on council (sorry, “social”) housing. The idea is that a big developer will build you lots of lovely new houses, at no cost to the taxpayer, in return for beneficently letting some people on average incomes live there.
Unfortunately, as the Mount Pleasant example shows, linking affordable rents to market rents works only if market rents aren’t absurdly high. On the site, the subsidised houses will cost 44 per cent of the market rate on average, although that can go up to 60 per cent. According to Islington council’s housing lead James Murray, a social rent in the area is just 20 per cent. Of course, you’ll be lucky to pay that, because the waiting list is currently 18,000-strong.
What strikes me about what happened at Mount Pleasant is not just the madness of calling £2,800-a-month rent affordable, but the tangled web of policies, perverse incentives and loopholes that encouraged this situation to arise. The Greens have rightly pointed out that until a few months ago the Mount Pleasant site was owned by the taxpayer: the profit from turning it into flats could have been ours; equally, all of that land could have been earmarked purely for new social housing. Islington’s Labour-controlled council is angry because the planning decision was taken out of its hands by the mayor in January. The council says he just wants more ribbons to cut, and has ignored its target for all new developments to be 50 per cent affordable.
But there’s a bigger problem lurking behind all this: the concept of affordable housing itself. Like tax credits propping up poverty wages, affordable housing is only needed because, in many places, the private rental market is otherwise out of reach. The problem is particularly acute in the south-east but it manifests in different ways all over the country.
If you ever want to depress yourself thoroughly, read the National Housing Federation’s Broken Market, Broken Dreams (you know things are bad when policy reports start having titles that sound like Céline Dion ballads). We’re building only half the 245,000 homes a year that we need, and the average home now costs seven times the average salary, compared to 4.5 times in the 1960s. Adjusted for inflation, a first-time buyer now needs double the income and ten times the deposit she would have needed in the 1980s. And the government’s outlay is getting bigger, too: “the total housing benefit bill in England – accounting for inflation – has risen by almost 150 per cent from £8.7bn to £21.5bn in 21 years”.
The report also shows why we have made a fetish out of home ownership: for the younger generations locked out of buying, the consequences are catastrophic. On average, homeowners with a mortgage spend 20 per cent of their income on paying it. Private renters spend 40 per cent of their income on housing costs.
Now, a confession. I rent in the private sector, and a selfish, irrational part of me thinks that affordable housing isn’t fair. Why should some people who aren’t entirely on their uppers get to live in Zone 2 without paying the crushing rent that I do? On an intellectual level, I know all the arguments about mixed communities, and the horrifying example of the banlieue of Paris, and I’ve walked past One Hyde Park and seen how few lights are on in the evening because those aren’t flats, they’re bank accounts. I don’t want to live on the edges of a theme park for the rich.
But there’s still a stab of resentment, not helped by reading another well-heeled middle-aged Londoner moaning that Labour wants them to pay tax on the mansion they bought for thruppence-ha’penny in 1975 and that’s now worth millions. Envy is a dark and powerful force in politics, and one easily exploited by cynical populists. My generation is easy prey.
So any reform of our housing market has to help private renters – whether by offering them a truly affordable home through a housing association, or by increasing supply in the private sector to ease prices. Oh, and there is one thing I forgot to mention about Mount Pleasant: it is expected that most of the flats will be bought off-plan by foreign investors – so-called buy to leave. Another victory for the oligarchs from the Planet Zog, whatever Boris Johnson might claim.