All those who bought property in the capital as a safety deposit box are about to get a shock, writes Danny Dorling
Britain in 2025 will be very different from Britain in 2018, House prices have been falling in London since August 2016; they fell first and hardest in the more affluent postcodes. For the highest paid CEOs, salaries have fallen by around £1 million per man. They have fallen a little less for the few women in such posts, but this is only because of a decline in gender inequality at the top.
In April 2018, the European Banking Authority revealed a 10 per cent drop in the number of bankers in Europe being paid €1 million in 2016 alone. Almost all of this was income lost by bankers working in London. The pound had fallen; but more importantly it was almost exclusively the London banks that began paying their ‘top talent’ less. By 2016, even before the vote for Brexit could have had any effect, London had passed peak banker pay. It has slumped further since.
If you are a London-based architect and were wondering why the commissions were a little thin on the ground, it is because there is less money out there and house prices are falling. Fewer people might ask you to come and redesign their ground floor and bedrooms, knock all the walls out here and put an extra basement room in there. Suddenly they start to worry about the equity. Suddenly it’s not play money anymore.
The effect of economic changes on London housing has been witnessed throughout history. London’s housing today reflects the tribute received at the heart of the world’s largest empire. This allowed the first great underground train system to be built here and Metroland to expand. The last time London hit a peak of income inequality was in 1913. Back then, monied families would arrive in the capital for the season, installing their servants in the basements and attics of their grand townhouses.
Then everything changed. It was not just the First World War, the agitation of trade unionists, the rent strikes or the Depression: it was everything at once. Soon the most common job for women in England ceased to be a servant. In fact, within just a few decades there were almost no servants. And almost no gentry.
In turn, London housing was transformed. By the 1960s and 70s many of the grand houses were subdivided into flats. New housing was being built for families to be allocated on the basis of need rather than ability to pay. Most of London’s social housing came late to the capital in comparison to the rest of England. By the end of the 1970s, housing across the UK was distributed as fairly as it had ever been. There was the least overcrowding, as well as the fewest unused bedrooms and empty properties. And income equality was at its highest.
But then people forgot what they had won, and inequality began to rise again. During the affluent 1980s, social housing began to be sold off to tenants who, in turn, sold it on to new private landlords. Suddenly, a maisonette that had been a home to a family of four became the rented living space for a single person. Inefficiency in the use of housing increased greatly. By the time of the 2008 crash, the flats had often been knocked though, and the grand houses restored, although more often than not for someone who flew in from Qatar or Moscow for the season, with servants in tow.
Now, the UK government is running out of money and history risks repeating itself, but never quite as before. In the 1920s and 30s, the government found money through a very high income tax. Today, with more money locked up in wealth than income, there will need to be new, different taxes.
Property taxation is the most obvious way to tap the wealth. There are plans to equalise council tax levies across London so you no longer pay the least if you live in the poshest borough. Council tax banding will be extended up to Z. Empty homes could be double- or triple-taxed. Tenants could be given guaranteed three-year tenancies.
This would be a good first step, but only the first step. In many other European countries, private tenants have far better rights than in the UK and housing cannot be used by so many speculators. All those people who brought property in the capital as a safety deposit box are about to get a shock.
The 1960s and 70s were a time of young families. The future, more equitable London will be a city of older people and more people living alone, akin to today’s Tokyo or Stockholm. London’s mansion blocks will morph accordingly. They will be divided into smaller, more affordable spaces that can be owned by a more equal society. They will be rented out at fair rents. Unlike today, the quality will have to be high.
This raises numerous questions as to how the architecture of London housing can be adapted. How do you fit all the doors that are needed onto the front of a former mansion block, to accommodate entrances to the subdivided spaces? How do you connect them to the lifts that will be required to take an ageing population to their comfortable liveable pockets? And what do you do with all the subterranean basements, home cinemas and swimming pools?
We are at the very start of a positive change. We are beginning to leave a time of madness, in which one could earn more money by simply owning property than by working for a year. We are realising that the market is the most inefficient way of allocating housing, leaving thousands sleeping rough and millions in dwellings unfit for habitation. If you want something to think about, take a walk along Bishops Avenue, just to the north of Hampstead Heath, and consider – what would be the best use of this space in the future?