Victorian_Housing_London

One family’s story shows how much has changed in East London’s housing market

"My mother spends the majority of her pension on rent. And I feel really conflicted about the wealth we've acquired through property."

London is one of the most diverse and ever-changing cities in the world. But for some families, it's been their home for generations... and yet it's becoming harder and harder to keep those communities together.

We spoke to Coleen, whose family have been in East London since the late 1930s, about her story of London housing, and whether she feels her two year old grandson will be able to stay in the borough their family has called home for so long. Here's her story.

1940s

"I was brought up in social housing in Tower Hamlets, built in the 1930s. My mum’s family moved there around 1939. My parents got a flat in the same block, very close to their family, and moved to a new council block nearby in the mid 60s. My mother still lives in a flat in the same block,which she rents – it’s run by a housing association now. The majority of her pension goes on her rent, actually. She’s 85 this year.

My parents never bought their flat probably because they were risk-averse and didn’t like to be in debt. My mum thought about it but for her it just seemed like an enormous risk and she didn’t like the idea of it being leasehold.. although if you asked her what a leasehold was, she probably wouldn’t have understood the details.

1980s

I’ve always lived in Tower Hamlets, apart from a few years at university and travelling. When I returned home my partner and I found a two bedroom flat in a 16 storey block in Tower Hamlets under the Greater London Council’s ‘Hard to Let’ scheme. That property was actually sold by the council for a penny or something, because there was a problem with the concrete cladding.

It’s called Keeling House, and was designed by Denis Lasdun, a well-known architect. The building has been restored now, and the flats are, you know, million pound properties.

Keeling House

So we lived in this brilliant flat for about two years until 1982, which was considered ‘hard-to-let’. The quality of the place was amazing. Wood floors, beautifully designed. Meanwhile we managed to save enough money to put down a deposit on a Victorian house in Bow where there was a scheme available to help people upgrade properties which needed repairs and facilities like bathrooms and indoor toilets. We had to spend a certain amount of money, and the council gave us a substantial grant, around 80 per cent of the cost.

The house cost us something like £27,500, and we got around £10,500 to upgrade it, which was just an enormous amount, relatively speaking. You had to have some spare funding for the initial outlay which you then claimed back, but other than that I don’t remember needing any particular qualifications - you just submitted a grant application.

Things were so different then. It was still pretty tough to get the money. But say we had a wall which needed to come down. We’d have to secure the builder but they’d be quite relaxed about payment because they knew we had this grant. In some cases he was prepared to wait for payment because he knew the council was going to release the funding.

And you knew the manager of the building society, where you applied for the mortgage because you went in there to pay into your savings account. Unlike nowadays, where it’s all done by computers and algorithms making decisions.

When I compare what it was like for us, and how it is now… we were never given any money, we don’t come from families who had passed on any wealth, and yet it was perfectly possible for us to buy somewhere by being frugal, and then getting what comparatively was a huge grant.

Columbia_Roa
Colleen's house is close to Columbia Road Flower Market, one of East London's most famous tourist sites.

My cousins didn’t go to university, and many of them moved into Peabody properties. There was quite a nepotistic reference system back then. If you had a family member who lived in them, you’d almost certainly get somewhere to live.

2010s

It doesn’t work like that anymore. You can put your name down, I guess, on a social housing list, but there are really strict criteria, much more based on need. This almost certainly means you’re not going to be able to stay where your family is.

Obviously it makes sense that it’s needs-based, but the previous system did keep communities together. Younger generations seem to rely much more on their peer group and friendship circle for access to housing. But on the whole everyone has to be a lot more individualistic, in a way.

My son, who is 30, he lived at home until a few of years ago, because there was no way he could have afforded to have moved out. He still has quite a low-paid job, and doesn’t have any hope really of saving up enough money for a mortgage.

Economic pressures have such a huge impact on family building. My mum didn’t have to worry about childcare because her sister looked after me. I had the support of my husband’s sister for a while. But that is really fading for families. Now you’d just have to go to ‘the market’ to find out what’s available. And there seems to be very little through public provision if any. It’s all about the bloody market. I think it’s really disheartening.

Younger generations seem to rely much more on their peer group and friendship circle for access to housing. But on the whole everyone has to be a lot more individualistic, in a way.

We live very close to my son and his partner, and I do some of the child care for them, so she can work, to earn enough money to put down a deposit on a larger flat. But she wouldn’t be able to do that if she was paying out for care - at the minute I look after him 3 days a week, 10 hours a day. The cost would be enormous. So it’s not just about housing, is it? It’s about all the support that you get from a community.

The next generation

I feel really strongly connected to where I live. We don’t want to move elsewhere, or sell the house. For my grandson - and I hate to think about this actually, I feel really conflicted about it - the wealth we’ve acquired through property means that in relative terms it’s colossally more valuable than the house we bought, and I feel like that wealth has got to be protected for my grandson to have any chance of living anywhere that he’s got a connection to.

In terms of understanding the market, there’s so much of what my husband calls ‘just puff’ about house prices.... and it seems to me too that a load of it is just lies. It’s marketing. So I’m very sceptical about what I read about places and the value of properties. I feel there’s a real gap in terms of people’s expectations and reality."

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  • Macrocompassion

    Look to who owns the land of Greece and why they are not using it properly!

    Discover how much the value of the land is being speculated in by holding it unused and the resulting lack of opportunity. Why can’t small scale farmers begin their own production of farm produce and the selling of it to local suppliers for domestic consumption?

    Adam Smith (“Wealth of Nations”,
    1776) says that land is one of the 3 factors of production (the other 2 being
    labor and durable capital goods). The usefulness of land is in the price that
    tenants pay as rent, for access rights to the particular site in question. Land
    is often considered as being a form of capital, since it is traded similarly to
    other durable capital goods items. However it is not actually man-made, so rightly
    it does not fall within this category. The land was originally a gift of nature
    (if not of God) for which all people should be free to share in its use. But its
    site-value greatly depends on location and is related to the community density
    in that region, as well as the natural resources such as rivers, minerals,
    animals or plants of specific use or beauty, when or after it is possible to reach them. Consequently,
    most of the land value is created by man within his society and therefore its
    advantage should logically and ethically be returned to the community for its
    general use, as explained by Martin Adams (in “LAND”, 2015).

    However, due to our existing laws, land is owned and formally registered and its
    value is traded, even though it can’t be moved to another place, like other
    kinds of capital goods. This right of ownership gives the landlord a big
    advantage over the rest of the community because he determines how it may be
    used, or if it is to be held out of use, until the city grows and the site
    becomes more valuable. Thus speculation in land values is encouraged by the law,
    in treating a site of land as personal or private property—as if it were an
    item of capital goods, although it is not (Mason Gaffney and Fred Harrison:
    “The Corruption of Economics”, 2005).

    Regarding taxation and local community spending, the municipal taxes we pay are
    partly used for improving the infrastructure. This means that the land becomes
    more useful and valuable without the landlord doing anything—he/she will always
    benefit from our present tax regime. This also applies when the status of unused
    land is upgraded and it becomes fit for community development. Then when this
    news is leaked, after landlords and banks corruptly pay for this information,
    speculation in land values is rife. There are many advantages if the land
    values were taxed instead of the many different kinds of production-based
    activities such as earnings, purchases, capital gains, home and foreign company
    investments, etc., (with all their regulations, complications and loop-holes).
    The only people due to lose from this are those who exploit the growing values
    of the land over the past years, when “mere” land ownership confers a financial
    benefit, without the owner doing a scrap of work. Consequently, for a truly
    socially just kind of taxation to apply there can only be one
    method–Land-Value Taxation.

    Consider how land becomes
    valuable. New settlers in a region begin to specialize and this improves their
    efficiency in producing specific goods. The central land is the most valuable
    due to easy availability and least transport needed. This distribution in land
    values is created by the community and (after an initial start), not by the
    natural resources. As the city expands, speculators in land values will
    deliberately hold potentially useful sites out of use, until planning and
    development have permitted their values to grow. Meanwhile there is fierce
    competition for access to the most suitable sites for housing, agriculture and
    manufacturing industries. The limited availability of useful land means that the
    high rents paid by tenants make their residence more costly and the provision
    of goods and services more expensive. It also creates unemployment, causing
    wages to be lowered by the monopolists, who control the big producing
    organizations, and whose land was already obtained when it was cheap. Consequently
    this basic structure of our current macroeconomics system, works to limit
    opportunity and to create poverty, see above reference.

    The most basic cause of our continuing poverty is the lack of properly paid
    work and the reason for this is the lack of opportunity of access to the land
    on which the work must be done. The useful land is monopolized by a landlord
    who either holds it out of use (for speculation in its rising value), or
    charges the tenant heavily for its right of access. In the case when the
    landlord is also the producer, he/she has a monopolistic control of the land
    and of the produce too, and can charge more for this access right than what an
    entrepreneur, who seeks greater opportunity, normally would be able to afford.

    A wise and sensible government would recognize that this problem derives from
    lack of opportunity to work and earn. It can be solved by the use of a tax
    system which encourages the proper use of land and which stops penalizing
    everything and everybody else. Such a tax system was proposed 136 years ago by
    Henry George, a (North) American economist, but somehow most macro-economists
    seem never to have heard of him, in common with a whole lot of other experts.
    (I would guess that they don’t want to know, which is worse!) In “Progress and
    Poverty” 1879, Henry George proposed a single tax on land values without other
    kinds of tax on produce, services, capital gains etc. This regime of land value
    tax (LVT) has 17 features which benefit almost everyone in the economy, except
    for landlords and banks, who/which do nothing productive and find that land
    dominance has its own reward.

    17 Aspects of LVT Affecting Government, Land Owners, Communities and
    Ethics

    Four Aspects for Government:

    1. LVT, adds to the national
    income as do other taxation systems, but it replaces them.

    2. The cost of collecting the LVT is less than for all of the production-related
    taxes–tax avoidance becomes impossible because the sites are visible to all.

    3. Consumers pay less for their
    purchases due to lower production costs (see below). This creates greater
    satisfaction with the management of national affairs.

    4. The national economy
    stabilizes—it no longer experiences the 18 year business boom/bust cycle, due
    to periodic speculation in land values (see below).

    Six Aspects Affecting Land Owners:

    5. LVT is progressive–owners of
    the most potentially productive sites pay the most tax.

    6. The land owner pays his LVT regardless of how his site is used. A large
    proportion of the ground-rent from tenants becomes the LVT, with the result
    that land has less sales-value but a significant “rental”-value (even
    when it is not used).

    7. LVT stops speculation in land prices and
    the withholding of land from proper use is not worthwhile.

    8. The introduction of LVT initially reduces the sales price of sites, even
    though their rental value can still grow over a longer term. As more sites
    become available, the competition for them is less fierce.

    9. With LVT, land owners are unable to pass the tax on to their tenants as rent
    hikes, due to the reduced competition for access to the additional sites that
    come into use.

    10. With LVT, land prices will
    initially drop. Speculators in land values will want to foreclose on their
    mortgages and withdraw their money for reinvestment. Therefore LVT should be
    introduced gradually, to allow these speculators sufficient time to transfer
    their money to company-shares etc., and simultaneously to meet the increased
    demand for produce (see below).

    Three Aspects Regarding Communities:

    11. With LVT, there is an
    incentive to use land for production or residence, rather than it being unused.

    12. With LVT, greater working opportunities exist due to cheaper land and a
    greater number of available sites. Consumer goods become cheaper too, because
    entrepreneurs have less difficulty in starting-up their businesses and because
    they pay less ground-rent–demand grows, unemployment decreases.

    13. Investment money is withdrawn from land and placed in durable capital
    goods. This means more advances in technology and cheaper goods too.

    Four Aspects About Ethics:

    14. The collection of taxes from
    productive effort and commerce is socially unjust. LVT replaces this extortion
    by gathering the surplus rental income, which comes without any exertion from
    the land owner or by the banks–LVT is a natural system of national income-gathering.

    15. Bribery and corruption on information
    about land cease. Before, this was due
    to the leaking of news of municipal plans for housing and industrial
    development, causing shock-waves in local land prices (and municipal workers’ and
    lawyers’ bank balances).

    16. The improved use of the more
    central land reduces the environmental damage due to a) unused sites
    being dumping-grounds, and b) the smaller amount of fossil-fuel use, when
    traveling between home and workplace.

    17. Because the LVT eliminates
    the advantage that landlords currently hold over our society, LVT provides a
    greater equality of opportunity to earn a living. Entrepreneurs can operate in
    a natural way– to provide more jobs. Then earnings will correspond to the
    value that the labor puts into the product or service. Consequently, after LVT
    has been properly introduced it will eliminate poverty and improve business
    ethics.