to those in the urban formal sector. The great majority of the urban population works in the informal sector where incomes are generally even lower, so the situation was actually much worse. The lowest-paid security guards recorded by the JCTR – on K40,000 per month in 2002 – were better surrogates for many in this sector.13 Surveys in markets in 2004, when the basic needs basket costs had increased by a further 25%, found that in Lusaka’s largest market, Soweto, 64% of customers were earning under K100,000 per month. If the small amount of meat, eggs and dry fish were removed from the 2002 budget, it went down to K278,110 – still far beyond the means of most and leaving a diet seriously deficient in protein. These depictions of poverty in the city are completely rejected by the government, however, which produces its own figures that show far less urban poverty. Yet a key reason for this is that the housing element of the government’s urban household budget is based on costs in informal settlements. The JCTR, on the other hand, used the costs of renting modest accommodation in formal, legal, ‘decent’ housing. This was because, while it was true that the government’s approach was using more typical housing costs, these were characterised by conditions that any multifaceted approach to understanding poverty would factor in to the measurement of who is poor and who is not. Such multifaceted approaches are strongly promoted by all poverty experts and agencies across the world. And the Zambian government is not above knocking down the occasional informal settlement because it is ‘illegal’.14 In other words, the JCTR’s approach was that being unable to afford anything except very inadequate and insecure housing is incommensurate with being ‘not poor’.
In cities across the GS, the truth of hard limits on housing expenditure can be seen in other ways. In Harare, the average rent for one room in Kuwadzana, the city’s largest low-income housing project, remained at around 10% of the average income of a formal-sector wage worker in both 1994 and 2001. Rents were seen as burdensome and people complained about them rising but in real terms the share of income spent on rent was not changing much. The proportion spent on food did rise after structural adjustment started in the 1990s. But despite a shortage of housing, rents only kept pace with incomes – there was a cap effect on rents set by what people could afford. A similar situation was found by the urban development specialist Philip Amis in Nairobi in the 1990s,15 and there is evidence of this effect operating in the low-income rental sector in Buenos Aires and in Mexican cities, according to Professor Alan Gilbert of the Geography Department of University College London, who has long championed the importance of the rental sector in the cities of the GS.16 As Gilbert says, ‘however grasping landlords may be, poor people can only be exploited to a certain point’.17
But so what, it might be asked? The examples so far come from the GS and we all know that countries there are poorer than the societies of the GN. So perhaps it is to be expected that many urban residents there will not be able to afford ‘decent’ housing and are too poor to be a viable market opportunity for formal housing finance and developers. Surely this is a problem of developing countries (or emerging markets, as they are now sometimes called)? But it is not. This is a global urban problem, from the UK to the USA, not just in African, Asian and Latin American societies. Let us look at the situation in England shortly after the global financial crisis. In 2011, research in England using Valuation Office Agency private rental market statistics showed that the median rent for a two-bedroom home was more than 35% of local median take-home pay for full-time employees in 55% of local authority areas. Let us recall that a level of about 30% of income on rent is often used in housing studies as an affordable maximum. In other words, private-sector rental accommodation in most of England was unaffordable for any family, even if they had only one child, if only one income was being earned and that income fell in the lower half of the income range. Any family on such an income with two children who needed three bedrooms would be unable to pay the much higher rent necessary. In Haringey, in north-east London, which has many working-class families and is very ethnically diverse, a three-bed home in that year would have taken up 75% of median income. This is completely unaffordable – food intake and necessary expenditure on items such as clothes, utility bills and transport would have to be sacrificed. In other words, precisely the sorts of issues that are central to investigations and analyses of urban poverty in the GS would become evident. The centrality of the issue of norms about space and privacy in housing also become clear; this will be returned to in Chapter 3.
The housing affordability problem is much worse in the south-east of England because higher pay levels are far outweighed by higher rents. Median monthly rent for a two-bedroom home in London in 2010–11 was £1,360, equivalent to 60% of the median take-home pay; in Oxford it was 55%. Even in some poorer towns the problem was worse than the average because local pay was so low: in Blackpool 42%, of take-home pay was needed. Private-sector rents in London were already rising much faster than incomes by 2011: in outer London they rose three times faster in that year. Over a quarter of London’s population were renting from private landlords in 2013, up from 14% in 1991, so the problem was affecting more and more households. Perhaps it might be thought that the problem was mainly confined to households where there was only one worker who had low educational qualifications and was unskilled. But in the aftermath of the global financial crisis of 2008, incomes fell in real terms for most people, including key workers with professional qualifications: for example, they fell in 2011 by 1% for nurses and teachers. Being skilled and having two workers was not proof against the housing affordability dilemma in London. Using the 35% of net income cut-off, a net household income of over £40,000 (equivalent to £50,400 in gross wages) was necessary to rent a two-bed home in half of London’s 32 boroughs in 2011. This would have been unaffordable for a two-earner family consisting of a full-time prison officer and a part-time teacher.
The impossibility of affording private-sector housing for the millions in the UK on much less than median incomes was obvious from these data. In 2011 there were 6 million people who earned within a pound of the minimum wage (£6.19 per hour in UK for adults at the time). Full-time workers on the minimum wage had annual net earnings of £10,740 (£825 per month). Even if it all went on housing, it would not have covered the median rent in 28 out of 32 London boroughs or in nearly a fifth of England’s local authorities. Even for a family with two full-time workers on minimum wages, in those localities the median rent for a two-bed home would have taken up over half of their budget.
Five years later, the housing dilemma had worsened. Figure 2.2 illustrates the situation, showing the proportion of net income required to pay for different types of rental housing in England overall, or in London, in 2016. The graph uses UK Office for National Statistics (ONS) data on housing affordability across England and median net monthly pay combined with calculations for net monthly pay for full-time workers on the minimum wage. The ONS uses the normal 30% of net pay on housing as the affordability level and calculates the ‘gap’ between that and market rents. This gives a monthly rent of £550 for those at the mid-point (median) of wage distribution (point A on the graph). For a two-bed rented home – the minimum ‘decent’ standard for a family with one child (or two of the same sex) and the largest type of accommodation for which data were provided – the average UK rent was £760, so the gap was £210. Evidently the problem is far greater for those lower down the income scales: for every percentage point on the income distribution scale they fall below the median, the larger the gap. For full-time workers on or near minimum pay rates, the gap is huge at about £410, nearly double that for those on median pay. They would have to pay two-thirds of their net pay in rent (point B).18 Even some better-paid workers above the median pay rate would also find housing unaffordable. The scale of the housing crisis and the contemporary housing dilemma in the UK is thus exemplified – by far the majority of working people are affected. Yet even this underplays the problem because the housing dilemma under examination in this book is mainly about the issue in large cities where rents may be above the average. In Manchester, the gap for a worker on median pay was about the UK average at £221.23. However, in
