“The power of Generation Rent was felt for the first time”: did renters cost Theresa May her majority?

To let. Image: Getty.

As the dust settles on last week’s election results, attention has turned to trying to understand some of the demographic trends behind the results.

At Shelter, we’ve long had our eye on trends in housing tenure and how these might shape political outcomes. For context, mortgaged home ownership in England has fallen from 42 per cent to 29 per cent since 2000, while private renting has doubled in that time (to 20 per cent).

We will publish more data as it becomes available in the coming weeks, but here’s what we can piece together so far:

1. Private renters swung to Labour, home owners stuck with the Conservatives

New Ipsos data out today out today shows, in glorious detail, breakdown by demographic.

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Labour narrowed the gap with the Conservatives among mortgaged home owners slightly, while the Conservative lead among outright homeowners (people who have paid off their mortgage or cash buyers) remained similar.

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By the same token, social renters opting for Labour in big numbers is nothing new, and their lead remains roughly the same.

But what’s noticeable is the massive swing to Labour among private renters this time round around – up from a lead of 11 points to a lead of 23 points.

2. The impact of private renters was felt in key marginals

This nature of this swing in private renters towards Labour was felt in English marginals.

Both the raw number and overall proportions of private renters are strongly correlated with falls in the Conservative vote. The number of private renters in an area correlates even more strongly than, for instance, age to a fall in the Conservative vote.

An important point to make here is it’s often not just private renters who see their political attitudes shaped by housing – but also their older, more secure home owning parents worried about their children’s future, or seeing their communities impacted by an explosion in Buy-to-Let housing or HMOs.


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3. Private renters care about housing more

Of course, correlation is not causation. It could be argued that this is just a by-product of the fact private renters can tend to be under-45. or live in more urban areas.

However, private renters also consistently say they care about housing more – as they deal with the high rents, instability and poor conditions private renting often brings. For the public, housing tends to be a top five or six issue – but for private renters it’s a top three issue, on a par with Brexit and the economy. We also know it’s one of the few issues Labour had a lead on among voters.

It feels reasonable to say, then, that housing is at least one important driver of the block of voters which switched heavily to Labour in this election.

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4. The Conservatives found it particularly tough in marginals with low income private renters – a growing group

Indeed, the Conservatives seem to have found it hardest in marginal seats where low income private renters live – those most directly hit by the crisis.

We estimate there are around 1.3m hard pressed private renting households in England – those who fall beneath minimum income standard after paying the rent. As we argued in the election, these renters vote and often have the consumer habits of typical swing voters.

YouGov suggests there are 52 English marginals where this group of harder pressed private renters are disproportionately represented. The Conservatives lost eight of these seats they held, and made no gains in any of them held by Labour: all of their gains were in seats where low income private renters were under-represented.

This wasn’t just a factor in Remain voting marginals, but Leave ones too. Marginals where low income renters were especially heavily represented include Hastings and Rye, where the Home Secretary just held on; and seats Labour gained such as Crewe and Nantwich, Croydon Central, Bedford, Plymouth Sutton and Davenport, High Peak and Colne Valley.

Our research on this area, which we’ll publish in the autumn, also shows that two groups which swung heavily to Labour – 25-34s and 35-44 year olds – make up the largest chunks of low income private renter group.

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5. So what does all this mean?

Clearly, this election was more than just housing. But on this evidence we can say housing – and the impact of the housing crisis on private renters – is one of the key factors that helped polarise results on 8 June.

In some ways this is not surprising. Housing continues to be a key driver of inequality and, in some cases, hardship – as the shortage of homes, especially affordable homes, spreads to all corners of the country and impacts more people.

It’s not simply that home owners have an ‘asset’, but that their home provides them a stability and, comparatively at least, affordability that private renters do not currently enjoy. For instance, renters pay 41 per cent of their take home salary in rent; home owners pay 21 per cent of their salary towards their mortgage. Home owners can stay in their home for life they meet their mortgage payments; renters have six month contracts as standard.

The best response the new government can have to this is not to resile from the challenge in the face of tougher political circumstances, but to double down on efforts to fix things. It can be done.

Indeed, the irony is that a lot of what was in the Conservative manifesto was promising in this regard, and the people who put it together understood what needed to be done. Their promise to ban unfair letting fees for tenants, for instance, could save private renters an average of £350 each time they move; it has to be followed through on. Noises around introducing more security in the private rented sector were also positive – we’ve campaigned for introducing legislation to make 5 year tenancies, with rents linked to inflation, the new norm.

But fundamentally, this is about building more good quality homes that people can afford and can put down roots in, to bring prices and rents back within the reach of ordinary people. The Conservative manifesto promise to strengthen Compulsory Purchase Orders (CPO) is a key part to reshaping the private housebuilding market to achieve this, as our New Civic Housebuilding project made clear.

Beyond all this, we have called for a new generation of affordable homes at ‘living rents’ – to help the growing group of low income private renters falling through the middle of our housing market: not well off enough to afford home ownership or government schemes like shared ownership, but not in acute enough need to access social housing. This would provide stability and affordability that private renting does not, and could be combined with a ‘right to buy’ after a certain number of years.

Either way, the 2017 election was arguably the moment where the power of Generation Rent was felt for the first time. Without significant action to get to grips with our housing crisis, it’s unlikely to be the last.

Steve Akehurst is head of public affairs at Shelter.


How the pandemic is magnifying structural problems in America's housing market

Justin Sullivan/Getty Images

Long before Covid-19, the United States suffered from a housing crisis. Across the country, working class and low-income Americans struggled to pay rent, while the possibility of home ownership receded into fantasy. In hot markets, affordability became a struggle for even the middle class: In California, 41 percent of the population spends over a third of their income on housing costs. 

The coronavirus pandemic will only make these trends worse as millions are unable to work and the economy dives into a recession. Building could slow down in the medium term, as construction loans (risky bets in the best of times) become harder to come by. Unsubsidised affordable housing is often owned by small landlords, who are more likely to struggle during recessions, prompting flips to home ownership or sales to rental empires. 

New York Times reporter Conor Dougherty documented America’s longstanding housing crisis – and California’s efforts to battle it – in his book Golden Gates, which debuted just before the pandemic hit. “My sense is that right now coronavirus is magnifying a lot of things that were already happening,” Dougherty says.  

While Covid-19 adds new pressures, he says that many of the same issues we were facing still loom over the issue, from developers crowding the higher end of the market, to escalating construction costs, to stagnating wages and vulnerable service-sector jobs that leave ordinary Americans struggling to keep a roof over their heads. “That’s my larger message,” Dougherty says. “I think the structural problems continue to be a much bigger deal than the cyclical problem in housing.”

CityMetric spoke with Dougherty about how his thinking has changed since Covid-19, Donald Trump’s pro-suburban rhetoric, and the apparent exodus from San Francisco. 

I’ve really been struck by how strong the housing market seems to be despite the epic economic crisis we are facing. Costs seem to be higher everywhere. I've heard realtors talk about bidding wars like they haven't seen before in Philly, where I live. But perhaps that's just pent up demand from the big shutdowns?

What you have is an economy that has bifurcated. You have fewer middle-income jobs, more lower-income service jobs, and more higher-end jobs in software and finance. That's how our economy looks and that's a problem that is going to take the rest of our lives to solve. In the meantime, we have this housing market where one group of people have so much more money to spend than this other group. Cities reflect that. 

What's important about this bifurcation isn't just that you have gross inequality, but that these people have to live next to each other. You cannot be someone's Uber driver and telecommute. You cannot clean someone's house remotely. These lower-end service workers have to occupy the same general housing market as the super-high-end workers. 

All the pandemic has done is thrown that even more out of whack by creating a situation where one group of people is buying and expanding homes or lowering their home cost by refinancing, while another group are at income zero while trying to live in the same housing market with no demand for their services. When you see home prices booming and an eviction tsunami coming in the same newspaper, that tells you the same thing the book was trying to show you.

Does America writ large have the same housing shortage crisis as California and the Bay Area more specifically? There are other super hot markets, like New York City, Boston, or Seattle. But in Philly, or in Kansas City, is there really a lack of supply? 

There are three kinds of cities in America. There are the really out of control, fast-growing, rich cities: the Bay Area, Seattle, New York. There are declining Detroits and Clevelands, usually manufacturing-centric cities. Then there are sprawling Sun Belt cities. This book is by and large concerned with the prosperous cities. It could be Minneapolis, it could be Nashville. But the housing crisis in places like Cleveland is much more tied to poverty, as you pointed out. 

Those kinds of cities do have a different dynamic, although they still do have the same access to opportunity issues. For instance, there are parts of Detroit that are quite expensive, but they're quite expensive because that's where a lot of the investment has gone. That's where anybody with a lot of money wants to live. Then you have Sun Belt cities like Dallas and Houston, which are starting to become a lot more expensive as well. Nothing like the Bay Area, but the same forces are starting to take root there. 

I think that the Bay Area is important because throughout history, when some giant American industry has popped up, people have gone to Detroit or Houston. Now tech, for better or for worse, has become the industrial powerhouse of our time. But unlike Detroit in its time, it's very hard for people to get close to and enjoy that prosperity. There's a certain kind of city that is the future of America, it has a more intellectual economy, it's where new productive industries are growing. I think it's an outrage that all of them have these housing crises and it's considered some insane luxury to live there. 

A recent Zillow study seemed to show there hasn't been a flood of home sales in the pandemic that would signify a big urban exodus from most cities, with the glaring exception of San Francisco. Do you think that could substantially alleviate some of the cost pressure in the city proper?

On the one hand, I think this is about the general economy. If unemployment remains over 12% in San Francisco, yes, rent is going to be a lot cheaper. But is that really the reality we're all looking for? If restaurants and bars that were key to the city's cultural life remain shut, but rent is cheaper, is that what everyone wants? I bet you when this is all over, we're going to find out the tech people left at a much lower rate than others. Yes, they can all work from home, but what do you think has a bigger impact on a city: a couple of companies telling people they can work from home or the total immolation of entire industries basically overnight?

I don't want to make predictions right now, because we're in the middle of this pandemic. But if the city of San Francisco sees rents go down, well, the rent was already the most expensive in the nation. It falls 15%, 20%? How much better has that really gotten? Also, those people are going to go somewhere and unless they all move quite far away, you're still seeing these other markets picking up a lot of that slack. And those places are already overburdened. Oakland's homeless problem is considerably worse than San Francisco's. If you drive through Oakland, you will see things you did not think possible in the United States of America. 

Speaking of markets beyond San Francisco, you have a chapter about how difficult it is to build housing in the municipalities around big cities – many of which were just founded to hive off their tax revenues from low-income people.

That’s why you see Oregon, California, or the Democratic presidential candidates talking about shaking this up and devising ways to kick [zoning] up to a higher level of government. We've always done this whenever we've had a problem that seems beyond local governance. Like voting rights: you kick it to a higher body when the local body can't or won't solve it. 

But for better or for worse, this suburban thing is part of us now. We cannot just undo that. This notion of federalism and local control, those are important American concepts that can be fiddled with at the edges, but they cannot be wholesale changed. 

The first time I ever met Sonja Trauss [a leader of the Bay Area YIMBY group], she told me she wasn't super concerned about passing new laws but that the larger issue was to change the cultural perception of NIMBYism. We were living in a world where if you went to a city council meeting and complained about a multifamily development near your single-family house, you were not accosted for trying to pump up your property values or hoard land in a prosperous city. You were seen as a defender of the neighbourhood, a civically-minded person.

What is significant about YIMBYism is that the cultural tide is changing. There is this whole group of younger people who have absorbed a new cultural value, which is that more dense housing, more different kinds of people, more affordable housing, more housing options, is good. It feels like the tide is turning culturally and the movement is emblematic of that. I think that value shift will turn out to have been much more lasting than anything Scott Wiener ever does. Because the truth is, there are still going to be a bunch of local battles. Who shows up and how those places change from within probably will turn out to be more important. 

As you said, we've been seeing a lot of Democratic candidates with proposals around reforming zoning. How does Joe Biden's plan compare to the scope of the ambition in the field? 

There are two big ideas that you could pull from all the plans. First, some kind of renter's tax credit. It is obscene that we live in a country where homeowners are allowed to deduct their mortgage interest, but renters aren't. It is obscene that we live in a world where homeowners get 30-year fixed mortgages that guarantee their house payment pretty much for life and renters don't. If we think that it's a good idea to protect people from sudden shocks in their housing costs, that is as good of an idea for renters as it is for homeowners. 

I tell people that in this country, homeowners are living in the socialist hellscape of government intervention and price controls. Renters are living in the capitalist dream of variable pricing and market forces. Homeowners think they're living in this free market, but actually they're in the most regulated market – there are literally price controls propping up their market mortgages. 

Then there is Section 8 housing. Right now homeowners get access to the mortgage interest deduction. That programme is available to as many people as can use it, yet only about a quarter of the people eligible for Section 8 can get it. I think rectifying that is hugely important and a lot of the plans talked about that. 

The second big idea is using the power of the purse to incentivise people to more robustly develop their regions. You should have higher density housing in fancy school districts, near job centres, near transit. We're going to use the power of the purse to incentivise you, within the bounds of your own local rules, to do this right. Of course, that’s what Donald Trump is running against when he talks about Affirmatively Furthering Fair Housing (AFFH). 

When I was a local reporter in Philly, the city went through with that AFFH regulation despite Trump and HUD Secretary Ben Carson not being interested in enforcing it anymore. The city produced a fat report that maybe a few people read, but I don't think it changed policy. It's this phantom that Trump is running against, an ideal version of the policy that did not exist. It's also a phantom no one's heard of until Trump started tweeting about it. 

It’s been bizarre to watch. But Trump does seem to recognise that suburban politics don’t neatly fit into a red or blue construct. People who live in Texas and claim to want a free market system will turn around and erect local regulation to make sure nobody can build apartments near them. People in the Bay Area who claim to be looking for a more diverse place will use different logic, anti-developer logic, to keep apartments being built near them. 

People like that regardless of how they feel about things nationally. The bluntness with which Trump is doing it is discordant with the electorate and quixotic because people don't know what he's talking about. But the basic things he recognises – can I make voters feel like their neighbourhoods are threatened – he's onto something there. As with many things Trump, his tactics are so off-putting that people may ultimately reject them even if under the surface they agree.

You hear people on the left say the scary thing about Trump is that one day a good demagogue could come along. They're going to actually tax private equity people and they're actually going to build infrastructure. They're going to actually do a lot of popular stuff, but under a racist, nationalist banner. I think the suburban thing is a perfect example of that. There's a lot of voters even in the Bay Area who [would support that policy] in different clothing.

The world has changed completely since Golden Gates debuted just a few months ago. Has your thinking about housing issues changed as a result of the seismic disruptions we are living through?

The virus has done little more than lay itself on top of all of the problems I outline in the book. Whether we have an eviction tsunami or not, a quarter of renters were already spending more than half their income on rent. There's a chapter about overcrowded housing and how lower-income tenants are competing with each other by doubling, tripling, and quadrupling up for the scant number of affordable apartments. We now know that overcrowded housing is significantly more of a risk [for Covid-19] than, say, dense housing. If you live in a single-family home with 15 people in it, that's a lot more dangerous than 40 apartments in a four-story building.

Housing is just a proxy for inequality, it's a way of us building assets for one group at the exclusion of another. It is an expression of the general fraying of American society. I don't feel like that larger message has been affected at all, it's only been enhanced by the pandemic. With the caveat that this can all change, it just doesn't seem to me like there's some uber housing lesson we can learn from this – other than having a bunch of people crowded together is a really bad idea. 

Jake Blumgart is a staff writer at CityMetric.