No Second Homes in Leeds

July 2022 was an exceptional month in the UK. Boris Johnson reshuffled his cabinet one last time before resigning, the number of reported Monkeypox cases topped 2,000 and the country set new records as it experienced an unprecedented heatwave. Over half of the UK’s weather stations recorded their hottest days as 40ºC temperatures were reached across large parts of Britain for the first time.

But those weren’t the only reasons July 2022 was exceptional. Between the back of Leeds railway station and the river Aire is a four-storey building constructed of claret-coloured bricks, sleek tinted windows, and a black corrugated metal roof. It’s all very modern, and one could be excused for thinking it is the HQ of a hi-tech start-up. It’s not – it is the HQ for the 150-year-old Leeds Building Society (LBS).

LBS is a mutual, which means it is owned by its members and run exclusively in their best interests. The organisation has been helping its members ‘own their own homes and save for the future’ since the late 1800s, and by 2022 one in three of their mortgages was to first-time buyers. That figure was worryingly low to LBS, demonstrating that the UK housing market is stacked against first-time buyers. Home ownership is the least affordable it’s been in the last 100 years. According to a March 2022 Office for National Statistics note, the average full-time employee can typically expect to spend around 9.1 times their workplace-based annual earnings on purchasing a home in England.

LBS wanted change, and in July 2022 it took the bold decision to withdraw from second-homes lending. Richard Fearon, the forty-something CEO, announced that the mutual intended to put home ownership within reach of more people:

We’ve taken this decision after a great deal of thought as we don’t believe support for second homes is compatible with our purpose to put home ownership within reach of more people.”

LBS’s decision to act was timely. Over the last four decades the UK housing market – across owned, rental, and social – has been corrupted by the few at a cost to the many. Increasingly houses are viewed as stock generating yields, rather than as homes providing the most prized of human needs – shelter and security – or they are viewed as a consumable analogous to a two-week holiday.

In the same year LBS withdrew from second-homes lending, 2.1 million UK households reported owning at least one second property. Most of the second properties were let as private rentals, but 480,000 were second homes in the UK, a little under half of which were deemed ‘in-use.’ The over fifty-fives represented fifty-five percent of second homeowners, while the under thirty-fives represented just ten percent. Most households owning a second home were couples without dependent children. The most popular reasons for owning a second property were as a holiday home (45%) or as an investment (35%).

Second homes reduce the number of properties available for people to live in. In addition, any home other than a main residence usually lies empty most of the time, which does not serve the local community or contribute to the local economy” Fearon concluded. 

One Million Empty Homes

Fearon was on to something – the UK is plagued by empty residential properties, estimated at almost one million in 2023 by campaign group Action on Empty Properties. Their maths is simple: there are approximately 260,000 unfurnished second homes, classified by the government as unfurnished-empties, and another 680,000 vacant residential properties, 200,000 of which are exempt from paying council tax, and 250,000 of which have been vacant for more than six months. Empty properties make for empty homes.

Sadly, there are approximately 300,000 people In England – or one in every 180 people – currently  locked out of secure housing according to UK charity Shelter. Of these, 3,000 are unhoused, 20,000 are living temporarily in hostels or supported accommodation and the remaining 280,000 – a third of whom are children – are living in temporary accommodation.

On discussing the findings, Polly Neate, chief executive of Shelter, said: “The housing emergency is out of control. Chronic underinvestment in social homes has left people unable to afford skyrocketing private rents and plunged record numbers into homelessness. It is appalling that the government has allowed thousands of families to be packed into damp and dirty B&B’s and hostel rooms, which are traumatising children and making people desperately ill.” 

The Housing Emergency

The Joseph Rowntree Foundation is a charity of 150 permanent staff with a big mission – ending poverty in the UK. From their York office they have mapped out what they believe to be the trigger points of the housing emergency which Polly Neate identifies.

Darren Baxter, Senior Policy Adviser with the foundation, explained that if the 1979 rent controls and availability of social housing and housing benefits had remained untouched, they would have generated renter subsidies of approximately £45 billion a year. Instead, rent controls were removed, social housing was sold off and housing benefits were reduced, wiping out the equivalent of £15 billion a year in renter subsidies.

Baxter continues: “Had these subsidies not been reduced, housing affordability for renters would have been largely unchanged relative to 1979.”

The Rise of the Private Landlord

Of Baxter’s trinity, two factors came together to create a boom period for private landlords at the expense of renters. First, councils across the country were encouraged to sell off their social housing under central government’s right-to-buy scheme. Councils proved unable to build new units at the speed at which older ones were being sold off, shrinking the number of council-owned properties by almost 480,000 in the twenty years ending 2020.

Second, the 1988 Housing Act removed rent regulation, allowing landlords to charge whatever they liked for a property for the first time since 1915. Houses became decoupled from homes and were re-fashioned as investment instruments.  

Today about 4 million households live in social housing – 1.6 million in council homes and 2.4 million in properties run by housing associations.

The private rental sector comprises 2.7 million landlords and 5.6 million properties, or 19% of all UK dwellings.

In July 2023, the Renters Reform Coalition released its ‘Windfall Calculation.’ Its research concluded private landlords in England had earned sufficient profits over the previous three decades to build 3 million council houses.

Protesters at a Property Awards Dinner (Real Media)

No Fault Evictions

Even those in rented accommodation remain at risk of becoming unhoused.

Also included in the 1988 Housing Act is a vicious clause that strips renters of the basic right of abode. Section 21 of the Act gives private landlords the ‘right to recover possession of their rental property by serving two months’ notice.’ The clause, casually referred to as ‘no-fault evictions’, does not require landlords to provide a reason for why they wish the tenants to leave.

A Bill was presented in parliament to abolish no-fault evictions, but the reading of the Bill was delayed and it is feared any future proposed legislation will be watered-down. The Bill is currently due to begin its Report Stage this month but many remain sceptical it will ever be presented.

The most recent statistics from the Ministry of Justice highlight the continued use of Section 21 evictions with the overall number of eviction claims made over the period between July and September 2023  increasing by 19% to 24,938.

Matthew Desmond is Professor of Sociology at Princeton University, Director of Eviction Lab, and the author of Evicted: Poverty and Profit in the American City, which follows two families as they deal with the psychological, legal and discriminatory aspects of eviction. It’s a compelling read which speaks to the structural flaws of the US housing market through individual stories and experiences. Much of what is revealed can be applied to the UK. Housing insecurity fuels a cycle of poverty which can become intergenerational, as an intractable system discriminates against precarious renters. Desmond’s book is a plea for policy reform, an end to economic exploitation and a reversal of the commoditisation of where we live, of where we call home.

While he advocates for policy change, one is left wondering whether Desmond will be heard amongst the hubris of landlords and pro-business politicians, or whether a more direct form of action is required. In the coming weeks we will meet various individuals and groups from across the UK who are fighting for housing security. Each is using different methods; all are seeking the same outcome – a fairer housing market.

©2024 – Sul Nowroz, staff writer