Steve Arnott is the Highlands and Islands organizer of Solidarity and a member of the Democratic Green Socialist editorial board.

This article first appeared in the DGS here

Housing Policy

A few years back I was asked to draft the 2007 Holyrood election manifesto policy pledges for Solidarity’s election campaign. The article that follows is partially based on the housing section from that draft manifesto and also partly based on my own draft contribution to a general left debate on the housing problem in Scotland about six months earlier.

The originals were written against a background of Labour failure on social housing both in Holyrood and at a UK level but they were written at a time prior to the banking crisis and the recession. If anything, four years on, the housing problems within Scotland are even more acute. The SNP government in Scotland has ended the right to buy but there has been no commensurate commitment to serious levels of new council house building. In the private sector first time buyers now have to have a significant deposit in order to get a mortgage, and mortgage lending remains low. The private rented sector remains scrupulously exploitative and the UK Con-Dem planned cuts to housing benefit may leave many individuals and families exposed to homelessness. At a time of continuing sluggish growth in the economy and fiscal slash and burn from the Tory-Liberal government, there is a clear progressive left Keynesian argument for a program of significant social housing build to add to all the other reasons the public sector should be building quality affordable homes.

This article is not intended to represent any kind of final word on housing policy. It is an attempt to make an early input into our discussions on the left on housing in the run up to the Scottish Parliamentary elections and to suggest some new points of departure which will not just separate us out from the timid and “free” market-dominated thinking of the mainstream bourgeois parties, but also our those on the left content to simply repeat the housing slogans of the past. At the outset it is necessary to state that while the end of the right to buy is undoubtedly correct at the present time due to the lack of available council housing stock, it has to be acknowledged that in the minds of many working class people this was one of Thatcher’s most popular and successful policies. Any housing policy of the left that is to be successful, while promoting both the necessity and desirability of social housing for rent, cannot ignore the reality of the aspirations of a new generation of working class people to own their own home.

It seems to me that there are several key areas of national social need in relation to housing that are now were acute prior to the recession and are now in even deeper crisis. The general nature of the housing problem is exacerbated in areas where spiraling house price rises and lack of affordable mortgages, an increasing lack of public sector rented accommodation and consequent sky-high rents in the private rented sector combine. Such areas in Scotland are becoming more and more common. It may not be an exaggeration to say that this is broadly the picture that now faces a large minority, if not an outright majority, of the population.

Official homelessness tells only half the story. Many low to medium income workers, people on benefits, and young people are trapped in unsuitable and insecure private rented accommodation with little or no prospect of achieving housing stability either through buying or renting – with all of the concomitant stresses such a long term position entails.

Those “lucky” enough to have got their feet on the so-called property ladder are mired in high levels of mortgage debt, and although they have been spared the worst consequences of the 207-2009 crisis so far, with base rates pegged at an unsustainable 0.5%, their already squeezed disposable incomes are extremely vulnerable to upward fluctuations in interest rates.

Mortgages used to be easier to come by before the crisis – too easy perhaps. It was common for banks and building societies to offer unsustainable mortgages at 4-5 times an individual’s annual salary, because house prices were (and are) so artificially high due to a restricted market, the paucity of the affordable public rented sector, changing work life patterns and speculative capital acquisition engendered by a buy-to-rent epidemic (itself a consequence of pension uncertainty, where property is seen as the best ’investment’ for retirement). Regrettably, though the banks getting their fingers burned in the 2007-2009 crisis has meant it is now extremely hard to get a mortgage that has not been accompanied in any significant fall in the cost of securing an owned house to the person in the street. Although a significant section of the banking system is now publicly owned there seems to have been no attempt by this government or the last to use that ownership as a lever to reduce banking bonuses and profits, reduce housing iniquity, or to stimulate real Keynesian growth in the housing, renewables, and new technologies sectors.

The left needs to offer a set of policies – either wholly or largely achievable in the context of the Scottish Parliament – that offer a redistributionist, interventionist solution as a midway or “transitional” point between the immediate defensive demands of opposing council stock sell-offs, or back door privatisations through leasehold deals, demanding the end of right to buy means something by a significant net building of new council homes, and calling for the cancellation or write off of existing Council Housing debt, and a ‘maximum’ program (e.g. affordable housing to rent or buy for all in an independent socialist Scotland, through the taking of the banks, building societies and major construction companies into public ownership and a national strategic housing plan.)

Such a set of policies should have the following aims

• To radically amend the current housing shortage within a space of 5-10 years
• To create public sector housing to buy, as well as rent, at affordable prices
• To redistribute a percentage of bank, building society and mortgage company profits to do so
• To legally define “affordable” as a percentage (I would suggest somewhere between 50% and 75%) of the current private market price in any given area
• To create the necessary funding and auditing institutions to make such a process work
• To place legal obligations upon democratically elected councils and other public sector housing providers in relation to such a program
• To stabilise out of control house price rises and their close cousin, rent levels in the private rented sector, by using a reinvigorated public sector to create a downward price pressure to combat the runaway private market. We need to build affordable homes to buy and rent, not create another housing bubble

How could this be achieved?

I suggest the following measures, the first of which are familiar, the rest of which are radically new.

• Cancellation of all council housing debt and the release of capital from council house sales to enable an immediate program of council house building, renovation and repairs
• The right to have a percentage of your rent put towards a personal future house purchase fund
• No right to buy of houses created for the rented sector. Give local authorities the right to build separate affordable houses for sale as a proportion of total house building, say 25%
• Legislation to enable tenants in Housing Associations the right, conditional on a democratic ballot, to return collectively or individually to municipal council control
• Legislation to require and enable councils, through the planning application process, to demand that 20% of new builds in any new private housing development are provided by the building contractor to the council at a cost price basis*  to meet local social need on an affordable rent or buy basis . (*i.e. the cost of building the houses plus legitimate administration, not the market sale price.)
• “Affordable”, in relation to the public sector, to be legally defined as no more than two-thirds of the current private market price for like housing to rent or buy in the local geographical area
• A legal requirement on councils to take social need and relative income into account in compiling waiting lists for properties to rent or buy.
• The creation of a public Scottish Housing and Land Bank (perhaps as part of a wider Scottish Investment Bank created from the nationalised institutions) to enable councils and other public sector housing providers to fund such programs at an operating  cost only/non-profit level of interest and, after an initial period, to lend directly to members of the public on a low interest basis (a sort of all-Scotland “Buildings and Loan” from It’s a Wonderful Life)
• The Scottish Housing and Land Bank to be funded directly from taxing (at a sustainable level to be determined – perhaps 20%) of all audited annual mortgage profits on individual and corporate property and land sales within Scotland.
• The creation of a Scottish Housing Audit Office with regulatory powers to ensure a) councils are meeting their legal obligations b) public sector housing built to rent or buy under the new program comes up to the highest quality standards and c) private banks and building societies DO NOT pass on the their new tax liabilities on their mortgage profits to individual house owners.
• A national strategic target of 30,000 new affordable homes within the lifetime of Parliament and 100, 000 new affordable homes within 10 years

All of these measures taken collectively would surely achieve, and perhaps even surpass, all of the policy objectives outlined above. Clearly some detailed research on the kind of figures we would be talking about on the capital realisable by a public Housing and Land Bank through such ring fenced taxation of private lender’s mortgage profits would be helpful, as would an educated estimate of the amount of new build for public rent or sale achievable through the measures suggested.

It is also clear that while some of these measures could be instigated by legislation within the current powers of the Scottish Parliament, some measures are perhaps in a more grey area, while some would require increased or new powers.

Even stopping short of the achievement of full independence for Scotland, however, the bulk of this program could possibly be achieved (and certainly argued for) – particularly if full fiscal autonomy was settled on as the result of a future multi-option referendum.

While the left will not, of course, form the next government, there is nothing to stop raising such a bold and radical program for housing, demonstrating that we are capable of joined up thinking that meets social and aspirational need, creates jobs and new wealth, gives a progressive left and Keynesian alternative to Tory and Liberal cuts in a immediately realisable Scottish context, and demonstrating we are capable of moving on from the old council/private, rent or buy dichotomies and debates.

Anyone for a property owning socialist democracy?

Steve Arnott

October 2010