Drivers of the London Housing Crisis: The Neoliberal Nexus of Ideology,

Policy, and Capital

Julia Frances Alice Everett

Abstract

Keywords: Housing crisis, London, Neoliberalism, Political Economy, Homelessness

The question of housing is one of primary importance in the study of global political economy due

to its fundamentality in our daily lives. It is difficult to deny that the effects of the housing crisis

government policies and in turn facilitates global investment in the London housing market at the

expense of the intee of egla Londone. Neolibealim i a loaded and coneed oic, b

it generally signifies a certain set of political and economic practices and policies such as

privatisation, deregulation, and financialization (Edwards, 2016: 224) which facilitates the

reconstruction of power dynamics in favour of international capital (Eagleton-Pierce, 2018). This

issue is one which is filled with complexity and numerous interlinking factors, not all of which

can be adequately discussed here. This paper will begin by asking whether this issue can genuinely

be considered a crisis as opposed to simply a continuing and intensifying trend. It will then turn to

the root ideology which underpins government policy and the UK economy; that of neoliberalism.

Then it will explore how this ideology has impacted government policy and how it has in turn

as it represents not simply a single transaction but a contractual relationship with the state,

landlords, or financiers. Therefore, the dialectically opposed classes of worker and capitalist are

brought closer together in an ongoing and antagonistic relationship (ibid: 1). As a result, housing

struggles and crises have proven to be an enduring feature of late-capitalist society (Gallent, et al.,

2017: 2205). Paul Watt and Anna Minton (2016: 204) argue that the current era of conflict can be

traced back to the 1980s, which coincides with the rise of neoliberal ideology, and Margaret

the neoliberal era can be considered a qualitative development in the capitalist system, and as such

could possibly mark a new stage in the housing struggle. As will be argued throughout this paper,

neoliberal policy plays a role in reinforcing the conditions which facilitate the housing crisis.

is seriously affecting livelihoods around the capital. The contradictions surrounding housing and

property which arise under the capitalist mode of production can be argued to be intensifying.

There has been a seven percent decline in home ownership since 2003 despite government focus

on encoaging a oe oning democac (Gallen, e al., 2017: 2206), hich gge ha

geing on o he hoing ladde i no longe enable fo man in he caial. Fhe eidence of

intensified contradictions in housing can be seen in activist groups which are currently being

formed and gaining traction. An example of these groups is Focus E15 which was arose when

young homeless people including mothers and children were evicted from the Focus E15 hostel

after funding was cut by Newham Council. The solution provided by the council was private

housing outside of the capital as far as Manchester, uprooting young vulnerable people from any

question: Why is there a housing crisis in London?

The Ideological Roots of the Crisis

Neoliberalism has been the underpinning ideology of UK governments since the 1980s, which has

been reflected in concrete policy actions as well as in terms of the popular political psyche of the

UK. A eiol efeed o, hee i he agmen ha he neolibeal ea mak a fndamenal

change in the development of capitalism. Multiple dimensions are involved in the phenomenon of

neoliberalisation as it transforms social, economic, and political spheres and as such reproduces

itself through these channels. It has been argued that this process is underpinned by

explored below. Ideologically and socially, neoliberalism has penetrated popular discourse and

conceptions about housing and its provision because it redefines the relationship between the

We can see that neoliberal hegemonic ideology has had an impact on the housing system. After

the Second World War there was an ideological and political move towards the welfare state and

the idea that housing is a social good which should be available to all through state provision

(Minton, et al., 2016: 257). This implies the idea of collectivism in which the interests of society

are elevated above those of the individual. Neoliberalisation swept away these ideas and replaced

between state and society have been transformed by neoliberal hegemony. Neoliberalism has

impacted popular attitudes towards housing, as it is now seen as a privilege which is worked for

as opposed to a right. Thus, the idea arises that people who cannot afford to live in London are in

such a situation as a result of their own individual failings instead of the failings of collective

society to provide for them, and as such they are left to deal with the consequences alone. These

conceptions in turn facilitate such policies which, as I argue, lead to a dialectical and mutually

reinforcing relationship between government policies and public perceptions of the housing

system.

Post-Thatcher Government Housing Policy

It has already been argued that the new stage in the capitalist economy of neoliberalism has social,

economic, and political dimensions; thus, neoliberal ideology is reflected in policy towards

of working-class housing as that provided by local councils became a high priority although

concil hoebilding nee eached he goenmen aim and a hen lahed afe he

dealaion cii of 1947 (ibid: 9). Hoee, Thache elecion adicall aleed he diecion of

governmental housing policy, tearing down a core pillar of the post-war welfare state (Minton, et

al., 2016: 257). To understand how neoliberal housing policy has contributed to a housing crisis

in London as well as around the UK, the rest of this section will examine certain aspects of post-

Thatcher governmental housing policy and its consequences for the London housing market.

Figure 1- UK annual completions of dwellings by developer type 19462012 (Edwards, 2016, p. 226)

One of the most prominent features of neoliberalism is the importance of privatisation and

responsibilities for local authorities have been reduced to almost nothing in recent years. Housing

associations are non-profit organisations which provide social housing in lieu of the state. Publicly

owned land is therefore seen through a neoliberal lens as a group of assets which should be

managed through financial principles rather than as a public service (Edwards, 2016: 223). The

growth of housing associations has been a result of the limitation of local councils in the provision

of ocial hoing ch a he Hoing Ac 1988 hich edced he concil oe and

responsibilities in housing (Watt & Minton, 2016: 207). However, housing associations have not

been able to fill the vacuum left by local councils and there has been a contraction in social housing

going on since 1981 (Watt & Minton, 2016: 209-210). Figure 1 supports this argument as we can

see that far fewer homes are being built since the mid-1970s by housing associations than were

boroughs which involves reconfiguring an area to suit middle class tastes whilst squeezing out the

working class further into the peripheries of the city. This process is facilitated again by neoliberal

hegemony as council estates which house the most deprived in society, are stigmatised and dubbed

idea that tower blocks produce crime and should be replaced by low rise housing which has more

clearly defined private boundaries of ownership (Minton, et al., 2016: 257-258). This thinking

demolished in 2014 and was replaced by mostly luxury apartments which were overpriced and

therefore pushed out old tenants from the immediate area (Watt & Minton, 2016: 212). This is the

process of state-led genificaion o ocial cleaning in acion and i no a unique case. Fine and

workers in favour of global capital through its collaboration with the state. Gentrification can be

seen as an aspect of this because it benefits the upper classes at the expense of the working class.

Th, genificaion and egeneaion hich eflec neolibeal idea hae been a ke faco in

interests of global capital (Fine & Saad-Filho, 2017). Financialization can be interpreted as being

a part of this neoliberalisation process as it is argued to be a fundamental change in recent capitalist

history which has not only led to a stark growth in the financial sector but has also impacted how

non-financial firms and individuals think and behave (Edwards, 2016: 223). It has already been

said that housing is a fixed asset which has historically been used for wealth creation (Gallent, et

al., 2017: 2206). But in the past decades this has intensified as the real estate market has become

a way for global capital to find risk free investments which give back high returns. Watt and

Minton (2016: 206) argue succinctly that the London housing market has been used as a

eclaie en-eeking inemen ehicle fo global caial. London i a he cene of his

because of its status as a global city resulting in unwillingness by the state to regulate these

housing market, who they are and the consequences of their involvement. Glucksberg outlines a

typology of these investors. The most relevant of those include those who buy to invest, who are

often based in the Far East and finance new build properties which are then rented out but are often

priced far above affordable levels and are usually not social housing. Furthermore, those who buy

for their children are those wealthy central London homeowners who sell up and buy smaller

properties for their children. These people are being priced out of the most elite postcodes so are

moving further out which leads to gentrification and price increases. Moreover, others buy to leave