17 Feb 2012, 11:13am
rant:
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  • I was too poor to live in London, so I moved out. What’s so hard to understand?

    The good old Grauniad had a bleeding heart article about the housing benefit cap squeezing the poor out of London.

    I was there, once. I was born in London, grew up there, went to school there, and then went to university at Imperial College, in South Kensington (seriously upscale part of London for those who don’t know the city). I rented in sleazy dives in Earl’s Court, and for a while I rented a basement bedsit from a doctor which was behind Harrods, where I’d get my milk. Curiously enough, Harrods’ milk was a halfpennny cheaper than elsewhere in the neighbourhood, but it only lasted a couple of days without a fridge.

    Then I looked for work. I worked in Beckenham, and then at the BBC in Television Centre. I shared a house with four other guys, then shared with two others, then settled on a bedsit in Ealing. London is probably even more damned expensive because it is holding the entire capital wealth of Greece embodied in its housing stock at the moment, but it was still dear way back in the 1980s.

    It really, honestly, never occurred to me that what should happen is for the taxpayer to subsidise my rent. I looked around me, came to the conclusion that I couldn’t afford to buy a house, even on a reasonably okay wage. It was obvious to me, getting on for nearly a quarter of a century ago, that I would never be able to afford to buy a house or rent somewhere big enough to bring up a family. So guess what I did?

    I moved out of London

    It’s not hard, is it? 25 years ago it was obvious to me that Central/West London, where I’d have liked to live, somewhere near Bloomsbury, if you please, though Ealing would have done me too, was out of my reach. To be honest the place where my parents lived, 15 miles out and in sarf London, was out of my reach. I needed both a better paying job and cheaper houses. So why the hell are there any ordinary families at all in Westminster, which is a damned expensive part of the city? Not only are they competing with Greek shipowners, Russian plutocrats and general old money, the area is also prime commercial and office space. You don’t find ordinary Americans living in Beverley Hills or Manhattan, or ordinary Germans living in central Berlin.

    And above all, why should the rest of us pay for people to live where it’s too dear for them? I wanted to live in London but it was too bloody expensive, so I moved out. Yes, in the end ordinary workers won’t be able to live in travelling distance of London, in which case the people that do live there will just have to stump up through their council tax to raise wages enough or pay for essential services privately. They are presumably rich enough to do that.

    Look at some of the rents in the article. £812pw, £525 pw. Crikey, I couldn’t afford to pay that on rent right now, at the peak of my earning career, well, not if I wanted to do much else. Think about it. £812pw is £42,224 p.a. You have to earn £53,000+ to be able to pay that after tax. Why are we subsidising familes to the tune of twice the national average household pretax income to live in Westminster?

    The whole benefits thing seems to have got out of hand, with presumptive rights accruing to people to mask organic change from them. It is the job of the parents to look around them and put their families in a place where they can afford the rent. Had they done this before they had lots of children, they wouldn’t have to disrupt their precious children’s education by moving when the taxpayer says enough is enough. If they were rich enough to be able to afford the rent, they wouldn’t have to move.

    It’s hard to find any sympathy for people who didn’t look around them and move, but took the easy option. This change happened slowly, over time, and should have been adapted to. As a young man I could just about afford to rent a bedsit, it’s been obvious for years that London is out of the reach of someone on the average UK wage. Benefits are there to help people that suddenly fall on hard times due to a short-term (couple of years) change in circumstances. They are not there to enable people to improve their standard of living at the taxpayer’s expense. If you can’t afford to live in London, then move the hell out like I did!

    At least the Graun showed us the logical conclusion of what they want to happen.

    Ben Denton, Westminster’s strategic director of housing, regeneration and worklessness, said: “Is it fair for the state to provide subsidy for people to live in places that are the most expensive? Is it correct for the state to support anyone to live wherever they want to live? That’s the philosophical question. If the answer is, anyone can live anywhere, then the state and the taxpayer has to subsidise that.”

    and the last word to Westminster Council

    The philosophy behind the new cap seems to be “if you can’t afford to live here, don’t expect to live here”. “To live in Westminster is a privilege, not a right, because so many people want to live here,” a Westminster council press officer explains.

    Too bloody right. There are lots of things I’d like to do, but can’t afford. What happened to making do, changing your expectations or doing without?

    [...] Simple Living in Suffolk talks frankly about London living. [...]

    Barmy, isn’t it?

    There might (I stress ‘might’) be a debate to be had about whether unrestrained overseas buying / internal buy-to-let should be allowed, given that we as a nation aspire to home ownership ourselves and it is becoming unaffordable for many young people.

    But a debate that says I have to pay for people with no money who do not work to consumer housing goods that they cannot afford and that I have put off buying myself for 10 years and saved like a demon instead — just because they fancy it — is so obviously wrong, it could only be made in The Guardian.

    Coming soon: “Why should it be that only people who work and get money can buy the better things!”

    Marx must be chortling in his grave in (unaffordable) Highgate!

    The welfare state has gone from an unequivocal good, meeting an unquestionable need and improving our nation, to a mixed blessing causing an increasing amount of damage to the nation and the people – in the space of three generations or less.

    A clear, legally enforced definition of its (limited) purpose is essential – to assist those who are unable (not unwilling) to help themselves for as long as necessary; to assist those who fall on hard times through a limited transition period; and never to encourage people to become welfare slaves.

    It should also exist as an enabler (education, training, etc.) as required.

    Along with this, a rational definition of poverty is required. One that does not fit with the definition of ‘need’ I saw yesterday (on Mr Money Moustache’s site?) – “Need is simply American (I’d add British) slang for want”.

    The landlords might be hurting if you told them their tenants are moving out because they can’t afford the rent… just saying that it’s not only the tenants that are winning with the subsidy.

    [...] I was too poor to live in London. So I moved – Simple Living in Suffolk [...]

    The more I hear about welfare in England, the more I think of trying to get citizenship. Wow, and they subsidize you to live in toney neighborhoods too ? How do I get in ? Welfare where I come from might pay for a room in a run-down boarding house ( unless you are a single mom with kids in which case you might live in an apartment or in rundown social housing. By the way, you can’t get welfare without an address. If you’re out on the street, you’re likely to stay there. Get used to it ! Order up my Skye TV, I’m coming soon ! :)

    @Monevator I’m beginnig to suspect that where we went wrong is showing up on the first day of work. It all went horribly wrong from then on :)

    Take your point on BTL/foreign ownership. It always struck me as rough that BTLers get to charge their mortgage interest to tax ;) And that the Greeks don’t get to pay stamp duty or Council tax.

    @Nerode, it’s down to calling the difference between the deserving and undeserving poor again. That’s hard to draw a clear line, though paying people £40k to live in London is clearly well over that line! I think Cameron did okay at calling it that you shouldn’t get more from benefits that the average household income. We can try and work down from there :)

    @George, they should be hurting! They are part of the problem, heck these rapacious guys are the lot that kicked me out of the city 25 years ago, and I’d love to see them take a hit. London is dear, because it’s where all the work is, 10% of the population of the UK lives there, and it makes most of the wealth. It shouldn’t be so damned expensive, and the subsidy of people that otherwise couldn’t afford to live there inflates the cost for the rest of us by artificially inflating demand. I have no desire to live in London now, but it would be nice to think I could if I wanted to.

    @g Start right here – I was greeted by a remarkable pair of hooters of the Kardashians when I fired that link up, just to set the scene. You may have to bring your family with you if you want the nice neighborhoods, otherwise the Grauniad is telling us you’ll be packed off to Hull. Which, of course, is a violation of your yuman rites but that’s just the way the cookie crumbles at the moment. Sky is still available up there, but it is cold relative to London ;)

    Excellent article!

    It really does make you wonder, and even more to wonder at the Liberals and Labourites that don’t see how wrong it all is.

    The key thing for, for places like Westmister, is that when all is done, the markets will even things out. That may be with higher or lower prices from here, but ultimately the people that can afford to live there will live there, or the people who want to own there will buy, and as you say, to get the services they need they’ll have to pay for them, or get lower services.

    But propping up the prices with welfare claimants just gives the landlords easy money. If all that disappeared, prices might actually come down. I recall (somewhere) reading about a guy who’d made millions from property purchase of buy to let properties who overextended himself and was getting in to trouble. So he just approached the councils to offer housing for rent, charging what he was charging before, and they lapped it up, as they don’t have enough of their own housing stock any more, or they have housing that those on benefits don’t want to stay in !!

    Enforce strict property standards to buy to let properties and in the end we’ll have a fair market. Maybe not a cheap one, but as you say, eventually something gives and council workers will have to get paid more to travel in.

    Your point about schools and moving the kiddies is a great one too – how kmany times do you see someone saying they can’t move as they don’t want to disrupt the kids. Well, tough. I travelled from Camberwell to North Surrey to go to school (due to Labour shutting the Grammer schools, another matter!) by bus, train and walk. Never in my life got a lift from mummy.

    Yes, it will be a disruption, and it is indeed unfortunate for people to have to move, but wrongs of the past should not be perpetuated.

    The question, though, is will the Government who are still very reliant on their coalition partners actually have the balls to go through with all these reforms? I bet in the end they don’t.

    TNT

    19 Feb 2012, 10:03pm
    by Mosschops


    Isn’t this just a legacy of right to buy though? Places like South Kensington and Westminster did have provisions of social housing that was sold off/bought by tenants since the 1980s leading to a shortage of social housing in those boroughs. This of course wasn’t replaced in the name of lower taxation, the effects of which is now being felt. So now we are going to get the ghettoisation of areas as people are forced out of areas like Central London, which can have terrible social consequences (rioting anybody?). It’s a classic example of cutting budgets in fact leading to long term increases, much like the rail privitisation.

    @ Ermine, another good article.

    I have lived and worked in London and the South East; I now live in East Yorkshire, for similar reasons as yourself. Plus if I want/need to get to London I can do so by train [off peak, in under 3 hours].

    As you say the trouble is foreign buyers, and the BTL brigade, who may or not be foreign buyers.

    But all BTL are not that bad, we have friends we stay with who live near Kings Cross and bought a four-storey town house with a basement leading onto the garden, some thirty plus years ago. Over time they converted the top floor into a one bed-roomed flat, then rented it out. Did the same on next the floor, this time, two bedrooms until they got to the ground floor. This was done using their own savings and hard work as a lot of the work was done by themselves, only paying for people to do work that they could not do themselves.

    The Basement flat they still live in as it overlooks their garden, not massive, but a little oasis. Once work was complete on these flats, they used the rent to pay off their original mortgage and to then build up a pension fund for themselves.

    Now like my self they have joined the retired generation, who apart from State Pension, and before anyone says it heating allowance don’t take anything else from the Government.

    The reason why I have rattled on about my friends in KX. Is we have talked about housing problems, he used to be a surveyor for Islington Council. We have come to the conclusions as to why we are in such a mess.
    1] Cheap money, this as led to people speculating on both BTLs and Hedge Funds on shares.
    2] The sell-off of most of the Council Housing stock over the past 25+ years and it still goes on now. If a Housing corporation builds new housing etc, the tenant as the right after two years to buy this house at a discounted price. In some cases less then the mortgage that the Housing Corporation raised. to build the property [they borrow against the total value of ALL their property portfolio. This is economic madness.
    3] Next you get the large House builders, selling their houses at 70% of valuation, even though the property is overvalued in the first place. Then allow you to buy, borrow extra later on to purchase the remaining 30%. If people did not do this, or the government provide cheap loans to the builders, these properties would remain empty
    4] You mention Greeks etc not paying Council tax on their property, if the property is empty after six months the owner must pay the Council Tax due on that property. But there is a loop-hole, isn’t there always, only if the property is habitable. So the owner removes the toilet, bath etc. Therefore property is no longer habitable, hence no Council Tax to pay.
    5] You mention old money. In Westminster at around the turn of the previous century 1890’s to 1910. The Duke of Westminster and Lord Grosvenor built tenements to house the poor and also for servants who worked in the Big Town Houses but did not live in. As they saw that these people were needed to do the menial work for their betters?
    Unfortunately in the 1940’s these where taken into Public Ownership, as they were getting a bit run down. They were then modernised for there tenants, but as the tenants died off, they were sold on the open market? And to other interested parties?
    Their descendants fought a legal campaign to get them back as they had a covenant on them as they were to be kept for the poor? But to no avail they lost the case.

    That’s the reasons dealt with, now the cure,
    1] Scrap the right to buy, I know that a lot of people have benefited, but this as led to the reduction in Social Housing.
    2] Build more sheltered housing for the over 60’s. Subsidised if need be, but it as two advantages, a] it is cheaper to provide health care for the elderly if they live in close proximity to each other. And b] there is a lot of single old people who live alone in 3 or 4 bed roomed houses who should be encouraged, not forced, to give up their homes. These could be sold on, or rented out.
    3] Scrap the Council Tax, it only pays 20% of what the Council spends on services, both statutory, and discretional. If wages had to rise to keep staff in London, the rest of us taxpayers would only end up paying.
    4] In place of Council Tax, introduce a Property Tax of 1% of the value of the property, habitable or nor, paid by the owners of the property, not the tenant. It would a] encourage the refurbishment of empty derelict properties, either by the owner, or sold on to someone else who would then do it.
    Reason, some property speculators buy property in a area allow it to become derelict, this in turn drives property values down in the area, allowing them to buy even more property, till it becomes worth their while to redevelop the area and make a financial killing. In the mean time ordinary people can’t get mortgages because the area is so run down. If the speculators had to pay 1% Property Tax, it would help discourage this practice
    Also, if Banks etc foreclosed on properties they to would have to find this 1% also and it might discourage quick foreclosures.
    5] The money raised by Property tax to be split three ways. a] only the money that was raised by Council Tax [historicaly] is spent on Local Governments, b] the balance is split into two. One part is used to pay off the National Debt. Whilst the other part is used to finance the purchase of housing by first time buyers, only if a] they have saved 10% of their monthly income for 12 months and b] they can only borrow 3-3.5 times their proven earnings this would be a repayment mortgage over a maximum of 25 years.
    These monies would be ring fenced just for this purpose. It could be called a] National Debt Repayment Fund, and b] The Peoples Mortgage Society, who would take the monthly 10% savings to prevent any fiddles and would pay savers a reasonable rate of %. Say MLR + 2% whilst borrowers would pay MLR + 3% [in both cases variable] this was the case in the old fashioned Building Societies, prior to being computerised and having big posh overheads and highly paid management.
    Well I’ve had my say, got it all off my chest, it is now up to the younger generation to push the Political Classes into action.

    Another good post, and food for thought. I live in Westminster (yes! there are normal people living here – though we could not afford to buy our place if we had to pay current prices) so I get a close-up perspective on what is happening here.

    Westminster is an interesting mix of all sorts of social, cultural and ethnic elements – some of which works well, the rest less so. There is a chronic shortage of social housing, not helped by the fact that under the buy to let arrangements many council property tenants bought and then immediately rented out their places to the council, while they went to live somewhere cheaper. There is a real problem with existing council tenants illegally renting out their flats and not actually living there – again, they live somewhere cheap and coin it in from their illegal sub-letting. An estimated 35% of council properties are illegally sub-let (though I don’t know how they estimated that).

    I’m not sure that there are so many foreign landlords letting to the council – the foreign owners tend to be high-end, and let to the moneyed private renters. Lots of council renting is done through housing associations, plus private landlords – corporate and individual (usually British residents, and living in other parts of London).

    The information in the newspaper article about the effect on Westminster schools is an interesting one – what readers perhaps don’t realise is that at the moment state schools in Westminster are acutely oversubscribed, with a massive shortfall in the number of primary school places (where I live, they have started to use old shops for nursery and primary school classes) and not enough places for older children, who are often taught in mobile classrooms. So a reduction of 20% might not be an entirely bad thing, for the children or for the hard-pressed schools of Westminster.

    Also, why are these people assuming that schools in outer boroughs will somehow not be as good? The reality is that they are often better – not as crowded and with a less strong concentration of social problems to deal with.

    @ermine Wow and it’s cold too ! Just like home ! :)

    This is the first article I have read of your blog, so it may be a bit early, but I am in complete agreementfind it refreshing to finally read an article that actually hints towards the actual problem rather than follow the convenient approach favoured by the former government and Daily Mail: to vent upon the fable of it being the fault of non-EU immigrants (particularly those claiming asylum.)

    If somebody offers one an unbelievably subsidized house in an area where the average house price exceeds that of the accumulated lifetime gross earnings of a well-off individual, then why would they turn this down?

    Additionally, the welfare system is severely lax in areas which the unscrupulous would exploit. This is to the detriment of those that genuinely require the assistance. Oddly enough those that do exploit the system are very often those ‘patriots’ that gladly wave their St George flags and complain about the infestation of foreigners.

    The major failing is that of the councilors, and the government who are too apathetic to make sincere changes, and lack accountability to care. Instead it is easier to point fingers, scapegoat, and talk tough.

    This may work well in passing the buck, and fulminate against a nameless group. Ultimately though we are left with a system that undermines ones desire to make something of their selves and circumstances, robs them of their dignity and esteem, and instead venerate materialistic ephemera whilst regarding other ‘groups’ with needless suspicion.

    This is one of the many issues the riots in part could have illustrated had those with the power to change not been so sidetracked by self-interest.

    [...] without taking into account desirability of location, it’s advantageous for the physician to set up shop in the sticks for both a higher pay and lower [...]

    Question time tonight (which in my eye’s has deteriorated massively in intellect) asked the same question tonight.

    Very odd to see see an American/Canadian in the audience struggling with the concept of taxpayers providing the money to support these people!

    The rest of the audience clapping as if they approved of the knee jerk and emotive language of “ethnic cleansing” to acknowledge the fact that Newham council can no longer pay commercial rents for people that live on benefits, but somehow have a “Right” to live where they cannot afford too!

    Tis a strange world we live in these days 8(

    [...] I could have bought a detached house in the stockbroker belt of London. I couldn’t even afford to buy a house in London – the damage Thatcher perpetrated to the housing market in 1980 had already had that effect [...]

    […] fair I could never buy a house etc etc, just like Generation Rent do now – and eventually identified my problem and got the hell out of London. Generation Renters might want to observe that buying a house soon after that on such a high income […]

    […] If I lose internal reference I drift towards the second list. As a younger Ermine (20-40) I had more characteristics from the first list, particularly 1,4 and 9, although I was weak on 5, tending to blame circumstances though fighting them nevertheless. And as far as the right royal shafting I took from the housing market I had 1 and 2 off the second list in spades – I could whinge like the best housepricecrash.co.uk-er, just 20 years early But at least I did do something about it. […]

    […] Belling pie heater. And I thought to myself there has to be a better way, and that was the day I realised that I was too poor to live in London. So I […]

    […] I left to come to Suffolk and work for The Firm, at the time a premier research facility for a FTSE100 company. Fantastic […]

     

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