The UK Housing Emergency: A Failure of Capitalism

Britain is in the grip of a housing emergency of unparalleled scale. Recent charity figures show that over 354,000 people in England – including 161,500 children – are homeless on any given night. In London the situation is truly dire: a staggering one in 47 Londoners now has no home

These are not marginal numbers or anomalies: they shock the conscience and defy any claim that the crisis is a blip. Instead they expose a nationwide catastrophe of stable homes disappearing. Across the country ordinary workers – even those in full-time jobs – are being shoved into the private rental sector or onto the streets as housing costs skyrocket. Far from an accident, this is the predictable outcome of decades of policy choices under capitalism.

The roots of the crisis lie in the financialisation of housing that began in the 1980s. Thatcher’s Right to Buy policy sold off council homes at huge discounts, selling around 2 million public homes to private owners. Government promises to replace those homes one-for-one were empty; in practice new social construction was starved of funds and council stock “has plummeted since the 1980s”

By the 1990s, councils had little incentive to build new homes only to sell them cheaply, so social housing construction ground to a halt. At the same time the banking and mortgage sectors deregulated, and housing associations began raising private capital. The 1988 Housing Act even created assured shorthold tenancies, deliberately tempting speculators with rental income

The result is predictable: a recent analysis finds that over 40% of former council homes are now in private hands, rented out on the open market

In effect, homes that used to shelter the working class have been turned into cash machines for investors. The public lost at least £75 billion in lifetime revenues from these fire-sale policies and we have suffered the consequences: fewer genuinely affordable homes and more pressure on the system.

The statistics tell the same story. Housebuilding rates have collapsed; we are barely half-building what we need. Analysis by the Home Builders Federation warns that new housing supply in England will fall below 120,000 homes a year – less than half the government’s stated target of 300,000.

Such output is “the lowest level in decades,” meaning a huge shortfall of new homes accumulating every year. Meanwhile, existing housing has become far less affordable. UK rents have surged: official figures report average monthly rents jumped 9% in the year to February 2024 – the fastest increase since records began

Mortgage costs rose even faster with interest rates, but even before rate hikes home ownership was beyond most young people’s reach. A recent Resolution Foundation analysis finds that if every UK household paid true market rents (including “imputed rent” for homeowners), they would have to devote 22% of their spending to housing – far above the OECD average of 17%, and higher than all but one other rich country

In other words, British people spend much more for less space and worse homes than almost anyone else. It should be no surprise that homelessness is spiking under these conditions: soaring rents and a lack of supply inevitably leave more people out in the cold.

You will often hear politicians or pundits imply that homelessness and housing stress are individual failings – “if they worked harder, they could afford a home” – but the evidence rejects that narrative. As housing charity Shelter bluntly puts it, the surge in homelessness is driven by “soaring private rents, rising evictions and a chronic lack of affordable social housing”

In other words, it’s not that people aren’t trying; it’s that the system won’t allow them to stay housed. Every eviction we see is more a failing of policy than a failure of character. The fact remains: the market has not built homes for today’s people, while rents rise relentlessly. Blaming the poor for their plight obscures the reality that the economy is stacked against them. A system is set up in which finding a home is treated as an uphill battle against unaffordable costs and profit-hungry landlords, not a basic right. This structural squeeze destroys lives and childhoods – and it happens under policies that specifically favor profiteering.

Who is winning under this system? Clearly not first-time buyers. With new supply stalling, much of the available housing has been gobbled up by investors and buy-to-let landlords. Once there is little hope to buy, many people are forced to rent – which in turn was liberalised to entice investors. Notably, the Help to Buy scheme – sold to the public as a way to help first-timers – mostly served to pad out builders’ profits and push prices higher for everyone else. The National Audit Office found that around 20% of Help-to-Buy buyers were not first-time buyers, and that many could have bought without government aid. The scheme “pushed up property prices and handed cash to the relatively wealthy,” according to media analysis of the audit.

In fact, big developers publicly thanked Help to Buy for boosting their margins. Meanwhile, ordinary people remain locked out: today’s first-timers are deeply indebted or still saving for a deposit decades longer than their parents did. Every apartment block snapped up by a landlord is one less available for a young couple, and every trendy urban buy-to-let tower is money drawn out of housing stock, not added to it.

The fallout from housing unaffordability ripples throughout society. Household budgets are squeezed by sky-high rents and mortgages, which undercuts spending in other parts of the economy – slowing growth. Many families delay or forgo having children because housing is out of reach: as one recent Guardian report noted, for many Britons “having children has become an unaffordable luxury” under the current housing regime

In practical terms, this means population growth stalls and the social contract frays. Older generations can no longer rely on their children for support in the ways they once did, since the next generation can’t even get on the ladder, let alone move back in. Public services and social care come under extra pressure as family networks shrink. The right to a home used to be considered a bedrock of welfare; now it has become a luxury reserved for those who can treat housing as an investment. This twists the fabric of society – undermining everything from community stability to the willingness of people to put down roots. In short, the housing squeeze isn’t just one more bill at the end of the month; it’s reshaping our economy and our culture, and not for the better.

There are no simple fixes. Piecemeal schemes like capping rents or tweaking taxes can help a bit, but they leave the core problem intact: the market. The UK’s housing shortage is not a natural disaster or a quirk of geography – it is manufactured by a system that treats homes as profit opportunities rather than basic needs. Small reforms under capitalism will always be outmaneuvered by rent-seekers. Until we change who owns the land and how homes are allocated, the same cycle will repeat: credit booms, house prices spike, and then people suffer when the bubble thins. Genuine long-term solutions would involve putting housing beyond the whims of profiteering: massive public investment in social and council housing, strict controls on speculation, and perhaps a cultural shift toward housing as a human right, not a commodity. 

Anything less is a temporary relief at best – we’ll simply lurch from one crisis to the next. This is not to say there aren’t useful policy steps (of course we should build more homes!), but such measures will fall short if the profit motive still dominates. The scale of Britain’s housing disaster demands structural change – in effect, a socialist rethinking of housing policy. Only by wresting control of land and property away from unfettered markets and investing in homes for people (not for profit) can we end this emergency. Anything else is just rearranging deckchairs on a sinking ship.