Downstream: You Will Rent Forever. Here’s Why. w/ Peter Apps

**Aaron Bastani** (0:08)
You hear the word crisis a lot when it comes to politics and media. There's a climate crisis, there's a crisis of inequality, there's a crisis of masculinity, there's a crisis of technology, automation and the future of jobs. But a crisis that really does affect millions of people in Britain already in the here and now is housing. That's been the case for more than a decade. The housing crisis is here and it's only getting worse. But if the housing market in this country is broken and we want to fix it, we have to start by saying, when did it break? When did this problem start? And how might it just begin to get a tiny bit better? Today's guest is really a master when it comes to these issues. He's a journalist at Inside Housing. He's from Newham, like one Gary Stevenson, dare I say he's the Gary Stevenson of housing journalism. His first book, Show Me The Bodies, How We Let Grenfell Happen, was published in 2022
It won the Orwell Prize for Political Writing a year later. Last year, we saw the publication of his book, Homesick, How Housing Broke London and How To Fix It.
A one-stop shop in terms of understanding how housing went wrong in the capital from before Margaret Thatcher all the way through to Right To Buy, Tony Blair and austerity. So much important stuff is here.
Like I say, Peter is a London boy, so he's also writing from experience. He's a West Ham fan. I won't hold that against him. Peter, welcome to Downstream.

**Peter Apps** (1:43)
Thank you for having me.

**Aaron Bastani** (1:45)
We're talking to you today about housing. I mean, you are one of the best in the game when it comes to housing journalism. We've got Homesick, How Housing Broke London and How To Fix It. Let's start right from the top, probably with the most important political question in Britain right now, which is, why is housing so unaffordable?

**Peter Apps** (2:06)
I mean, I think that's probably a question that could take up the whole of the 90 minutes, to be honest, but I think there's just, it's unfortunately like a lot of the things, like a lot of the complex political questions that we have, it's not something, it's something that evades a simplistic answer.
A lot of people would tie it to a historic lack of supply because it is true that the British population has grown faster than we've built houses over the last 40 years or so, and that has an impact. But I think that certainly sitting alongside that, and I'd argue probably more important, is what's happened housing financially during that time, and the kind of removal of the almost pressure valve of public housing and council housing as a way to relieve the pressure that people feel. So, you know, when I was born in London, buying a house was something which was available to people with very ordinary working class salaries.

**Aaron Bastani** (3:05)
When were you born?

**Peter Apps** (3:05)
I was born in 1988, which funnily enough is the year when Margaret Thatcher's second big housing act was introduced. So I'm pretty much the last generation of people born into a London which is affordable.
You can't really overstate how much London has changed in that following period of time and the change is housing because you see the banks change their focus after that period from most bank lending before Thatcher was to businesses, grow businesses, take loans out, start growing your business profits and pay the loan back.
Since then, the banks have moved much more into providing mortgages to people to buy homes and obviously, banks create, they just create mortgages for people and it creates this mechanism by which house prices can always be lifted because there's always available credit. So lending on housing is much less to do with what people can afford or even how many deposits the bank holds. It's just a gamble that the bank is taking on the fact that over 25, 35 years and the day keeps getting pushed out, people will be able to repay a loan or the house prices will grow so that they can take the value of that loan back in a repossession. So because the banks start doing that, it creates this ratchet to send house prices up. And you can see that the house price growth always fluctuated throughout the 20th century. But it always stayed within a bracket of between three and five times earnings. That would be the cap because that's the end of where people can afford to pay. But once bank lending breaks that link between earnings and house prices, house prices can just accelerate. And that's what happened. I think you had 400% house price growth from the mid 1990s through to the financial crisis. And then what's happening secondary to that is the interest rates are falling around the world, including in the UK, which means that people are not able to get enough saved through a kind of workplace pension scheme to retire comfortably. And so they start to move their investments towards property instead. And that happens, you know, pension funds do that at a large scale, sort of institutional purchasing of property, residential property. But people do it on an individual basis as well. And it only really starts from the mid 1990s. We have this incredible market in the UK of part-time landlords, sort of small time, you know, people owning three, four, five properties. That's the majority of our private rented sector. And before the 1990s, that didn't really exist. But if you think how much money people have poured into that, enabled by a banking system, which is always keen to get more mortgage lending on its books, then of course, the value of properties is going to rise, because what you're pricing now isn't the value of a home to someone who wants to live in it, family who wants to live in it over a period of time. You're pricing it as an investment asset, either to an investor who wants to grow a buy to let portfolio or a larger scale investor who wants housing assets to secure their investments over a long period of time. And so because UK housing is traded like that, and it's enabled by a banking system, house prices just grow and they don't really stop growing.