The housing crisis happened by design, not accident.
In the 1970s, private landlords were a dying species. Only 16.6 percent of Londoners were renting privately (versus 45.5 percent twenty years ago). Furthermore, the Conservative Policy Council had argued that 'within a generation' they would be 'as extinct as the dinosaur'.
Why? Council housing. Getting one was not too difficult, and there was only a short delay. Furthermore, these council houses were roomy and the rents were not too high. Why then rent privately?
By the 1980s, as a result of the decline in London's population, there was even too much social housing! For example, in 1981, Lambeth had 3,100 empty council properties, Islington had 2,800, Southwark had 2,700, and Hackney had 2,300.
Students could join a queue at 9 a.m. and become council tenants by the afternoon. What a difference from today, when the student loan does not even cover the cost of the rent!
What then happened was not by accident but by design.
In 1981, the Conservative government introduced 'Right to Buy'. Council tenants who had been living in a property for at least three years could buy it at a 33 percent discount. Furthermore, for each additional year that tenants had lived in the property, there was a further 1 percent discount up to 50 percent.
By 1990, there were 26,258 homes being sold a year in London - a third of the nation's total sales. Furthermore, the 3-and-4-bedroom houses were the ones that got sold. As a result, there was also a decline in the number of homes suitable for families. Furthermore, the housing stock was also not replaced. By the 1990s, capital spending on council housing had declined to a third of what it had been in the 1970s.
This also shifted the social composition of those in council housing. In 1980, 41 percent of the tenants were 'skilled or semi-skilled manual' workers, and 42 percent were 'economically inactive' (including pensioners). However, by 1990, only 26 percent were 'skilled or semi-skilled manual' workers, and 61 percent were economically inactive.
As council housing declined, private landlords came back from the dead! Furthermore, they were able to charge the 'market rent,' which was funded by housing benefit. Before Thatcher, £21.3 billion a year was spent on new social housing and only £1 billion a year on housing benefit. By 2001, however, only £4.1 billion a year was spent on new social housing and £15.4 billion on housing benefits.
This happened by design, not accident. In 1991, the housing minister George Young stated that 'housing benefit will underpin market rents - we have made that absolutely clear. If people cannot afford to pay that market rent, housing benefit will take the strain'.
In a functioning market, house prices in London reflect what average working people can afford to pay to live in them. Is the market functioning? No. According to analysis by campaign group Generation Rent, average London rents were 106 percent of a teaching assistant's wages, 90 percent of a pharmacy assistant's, 76 percent of a chef's, and 49 percent of a primary school teacher's.
Housing in London (and also in the United Kingdom) is broken. However, how it happened was not by accident but by design.