Housing (London)

Debate between Diane Abbott and Glenda Jackson

Wednesday 5th February 2014 Westminster Hall

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing this debate. As colleagues have said, housing is the most important issue facing Londoners. To those on either side of the House who think that the solution to the housing crisis in London is market-based mechanisms like more supply, I say that we have to start from the basis that the housing market in London is broken. Normal market remedies will not fix things.

The housing market is broken because of the limitless flood of non-domiciled buyers who are buying properties in zone 1, where upper middle class or even middle class Londoners once lived. They are being driven out into areas like Hackney, Walthamstow and points beyond. People who would never have dreamt of living in Hackney 30 years ago are buying three-bedroom family houses there for upwards of £1 million, and that means that I could not buy a family house in Hackney on an MP’s salary if I was starting out now.

In some cases, the non-domiciled buyers leave these properties vacant. Last week, we all read about the millions of pounds of unoccupied property in The Bishops avenue, where 12 houses in a row are completely unoccupied. One of the residents said he thinks that only three houses in the avenue, one of the most expensive roads in London, are occupied all the time, all year round. There is a limitless supply of such buyers, but what is the effect of that and why do they want to buy in London? Yes, London is a fantastic place to live, but those buyers know that even if they do not occupy the house or do anything to it, they will make a profit year on year because of increasing land values. Homes in London and in zone 1 are becoming land banks, investment vehicles for overseas buyers who, if we are lucky, come here a few weeks a year, but if we are unlucky, do not come here at all.

[Glenda Jackson]

I entirely agree with my hon. Friend, but the issue of absentee landlords is not limited to the top end of the market. In my constituency since the right to buy was introduced, many properties originally built as affordable, with a social dimension, have been changing hands again and again. Nine times out of 10, the landlords do not live in this country and have no interest whatever in maintaining the properties, with any responsibility handed over to managing agents. There is also a constant surge in tenants, with the rent going up every time the tenant changes.

[Ms Abbott]

I was of course talking about the top end of the market to illustrate how the effect ripples out to the homeless in Hackney or homeless families in Greenwich. There is constant pressure driving up house values in London, and that is what is behind the spiralling cost of rent.

Colleagues have spoken about what is happening in the rental market—my hon. Friends the Members for Eltham (Clive Efford) and for Lewisham East (Heidi Alexander) did so with particular vividness—and about spiralling rents which mean that families do not have security of tenure.

As for the social cost, London is increasingly becoming a city in which people have to be extremely wealthy or quite poor to live. That leads to a society that is inherently unstable. If we leave it to the market, to live in Islington or Hackney people either have to be able to afford a house that is worth upwards of £1 million, or be so poor that they are eligible for what social housing there is. That is an essentially unstable society and one in which it is extremely difficult to recruit public sector workers.

In Hackney, there is a generation of head teachers who originally bought at the end of the 1970s or beginning of the ’80s and who are now approaching retirement. Now, head teachers of that calibre, willing to stay for as long as they have stayed, will be hard to recruit, because no one can now buy a house in Hackney on a teacher’s salary. Young teachers who are very committed to Hackney and similar areas find themselves having to move outside the M25 in order to own a family house.

The housing problem is not only about bricks and mortar or destitution, but about what sort of society we want to see in London. How do we ensure that that society is stable? How do we recruit for the public sector in future, if increasingly people on an average public sector worker’s salary are scarcely able even to rent in the centre of London, let alone buy anything?

What is the answer to the problems that my colleagues and I have set out? We have to begin with what is happening in the private sector and at the high end of it. Something needs to be done about the non-domiciled overseas buyers—by looking at some sort of levy perhaps—and at the same time we need to make it easier for British buyers to buy off plan, although this is not the whole answer, of course. Let us remember that even flats in Dalston are being bought off plan by buyers in Hong Kong, but British buyers who wants to buy off plan two years ahead cannot get a mortgage. We need to look at the availability of mortgages to people here who are prepared to buy off plan one, two or three years in advance; otherwise, they will always be crowded out by foreign buyers who are able to get mortgage finance, which will continually drive prices up.

We need to have a financial levy on the non-domiciled buyers, but we also need to look at private sector landlords and how they are managed. It would be sad indeed if the boom in the right to buy was to turn into a new Rachmanism. Rachmanism gave private rented housing a bad name when I was a child in north Paddington. It would be extraordinary if, half a century later, through an unwillingness to exercise the right controls on the private sector, we went back to the bad old days of Rachman. I am not saying that we are there yet, but that is where the cycle is taking us. Furthermore, although the idea is unpopular, we also need to have rent controls. I do not care what we call them, but we have to bear down on spiralling rents.

My colleagues and I are saying that the crisis in London is a crisis not only for the homeless and for those who are having to rent for longer and later in life than they might otherwise have done, but for perfectly well housed people who are worrying about whether their children will ever be able to afford a house within the M25. Government could do a range of things, and Labour Members are shocked by the unwillingness of Government and of the Mayor of London, Boris Johnson, to take effective action to fix for the well-being of ordinary Londoners a London housing market that is broken.