Sajid Javid was right, the housing market is broken. But Tory plans will ensure it stays broken and supply lucrative second jobs for Tory MPs, writes SOLOMON HUGHES
Communities Secretary Sajid Javid admitted this month that “the housing market is broken.”
But this is his plan to fix it.
In London, you can rent a really expensive flat from a company run by a Tory MP — who is himself a former housing minister.
A one-bedroom apartment will cost you £450 a week (yes, that is per week, not per month).
Is that too expensive?
You could go for a “studio apartment.”
That is just £375 per week. London wages are higher than the rest of the country — but that’s still between 55 per cent and 67 per cent of average earnings.
You might be paying the property development firm called Essential Living £23,400 a year.
But the government doesn’t think that’s enough.
In 2015 it arranged for the Homes and Communities Agency to join with the Royal Bank of Scotland and invest around £51 million in Essential Living.
The agency is a government department which “helps create successful communities by making more homes available to the residents who need them,” which somehow means giving millions to a company charging £450 per week for a one-bedroom flat.
A company which in turn gives Tory MP Mark Prisk £20,000 a year to be its “strategic adviser.”
He says he gets this money for eight hours’ work a month, so he can still be an MP.
He is on around £208 an hour from Essential Living, so he could afford one of its overpriced flats.
Prisk was housing minister until 2013, so, he is presumably able to “strategically advise” Essential Living on how to attract this government finance.
The investment was for a tower block in Archway, north London where the £375 per week “studio apartments” can be found.
That’s a lot for a studio but don’t worry. Essential Living says: “Renting a studio doesn’t necessarily mean you don’t get a bedroom.
“Ours are designed to have a sense of privacy and division between the living room and bedroom” — which, I think, really does mean you don’t get a bedroom, but with a partial wall “to create the feel of a one-bed apartment” In the same way, Javid has created “the feel” of a housing policy, without actually creating a policy.
Javid said a sign of the “broken housing market“ included both “the first-time buyer who’s saving hard but won’t have enough for a deposit for almost a quarter of a century” and “the couple in the private rented sector handing half their combined income straight to their landlord.”
But that is what his government is funding with Essential Living.
The reason is this: Javid says the “root cause” of the broken housing market “is simple.”
“For far too long, we have not built enough houses.”
This is completely true.
But his policy has been to try to persuade private developers to build houses.
Unfortunately, developers can do perfectly well not building enough houses.
Short supply means a crisis with rising prices. So they can just build fewer, more expensive homes.
As his white paper admits, developers might just leave land that is ready to be built on in a “land bank,” so they can cash in by building on it in the future, when we are desperate enough to pay their high prices.
With the failure of developers to build houses to buy, Javid now wants to try to persuade developers to build flats to rent instead.
He said: “We will encourage institutional investment in the private rented sector” — meaning subsidising developers like Essential Living.
But again, we can see the simple truth, from a firm advised by his fellow Tory MP and a former housing minister.
Just as private developers charge too much to sell houses, so they charge too much to rent houses. Their priority is profit, not housing.
Javid thinks it is a regulatory failure — the green belt, planning law. But it is a market failure.
Something Javid — a fan of crackpot free-market fundamentalist Ayn Rand — can’t admit.
The thing that has changed isn’t regulation — it’s social housebuilding. Private housebuilding has always been a market failure in Britain.
Only social housebuilding — councils building houses — will work.
Only they will build enough houses at genuinely affordable rents.
For reasons best known to themselves, the Guardian and Mirror headlined their first reports of Javid’s white paper by announcing councils would be “told to build houses.”
But the white paper doesn’t have any real proposal to make this happen.
Instead, councils will be told to make it easier for developers to build houses.
So the housing market can continue to be dysfunctional, and continue to supply lucrative second jobs to Tory MPs.
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