Tag: social cleansing

UK government housing policy is driven by greed, not human need

By Daniel Margrain

The creation of major housing asset bubbles is a consequence of deliberate Tory government policy geared towards satisfying the asset diversification needs of the super rich rather than meeting the human need for homes for ordinary people to live in. In other words, the key motivating factor shaping government housing policy is not to end the housing crisis, but to bolster the investment opportunities of the rich which will make it worse.

In January, 2016, former Tory PM David Cameron, announced the government’s decision to demolish what remains of council homes and replace them with private housing. The Housing and Planning Bill, which became law four months after Cameron made his announcement, enabled the government to set this process in motion. The legislation is forcing families living in social housing and earning £30,000-£40,000 in London to pay rents nearly as high as those in the private sector.

It is also compelling local authorities to sell ‘high value’ housing, either by transferring public housing into private hands or giving the land this housing sits on to property developers. The purpose is to create firm foundations for foreign investment funds and financial safe havens for billionaires.

It is this combination of factors that explains the exponential growth in the construction of new tower blocks throughout London and other major cities, vast swaths of which lie empty. The development that arguably symbolizes Britain’s housing crisis is the London sky-scraper, St George Wharf tower. Eighty-six per cent of the 214-units in the tower lie empty, while almost two-thirds of them are foreign-owned.

Meanwhile, rough sleeping estimates in England show an increase of 134 per cent since 2010. The most effective way to house people is through mass council house building. But this undermines the profits of private firms. One way investors do this is to hold onto land rather than developing it, so that prices are pushed upwards. As prices within the private rental market soar, more firms are trying to get their hands on the profits generated.

To help facilitate demand and attract investors, an assortment of private agencies that specialize in marketing and branding have emerged. “One of the things that attracts people to the UK is the relative stability,” said John Slade, CEO of BNP Paribas Real Estate in the UK. “The government remains absolutely committed to ensure that the UK remains one of the most open places for investment,” he said.

Bucking the market

But investment opportunities are undermined following any attempts to increase supply – a policy that Labour leader Jeremy Corbyn has publicly endorsed. “There is no convincing solution to the housing crisis that does not start with a new, very large, very active council house building project”, he remarked.

Corbyn’s intention is to buck the market by increasing housing supply. This partly explains why the elite media establishment – many of whom have extensive property portfolios – regularly attack the Labour leader in their newspaper columns.

Increasing supply would also adversely affect the investment opportunities of numerous politicians. The 126 MPs who declared that they receive rental income from property, represent over 19 per cent of the House of Commons, the vast majority of whom are Tories. It’s therefore in the joint interests of MPs and major property developers who lobby on their behalf to continue to push the market further into housing and to limit the building of affordable homes.

In the immediate post-war years (1945 to 1951) the Labour government built 1.2 million new council homes. In 1968, a record 425,000 homes were constructed, over 180,000 of which were local authority builds. The introduction, in 1980, of the Tories right to buy programme, reduced the existing council housing stock by 1.6m, while during the 13 years of the Blair and Brown governments, a paltry 7,870 council houses were built. In 1979, 42 per cent. of Britons lived in council homes. Today that figure is just 8 per cent. 

Filling the void

The impact on council house provision that stem from the policies of successive UK governments over the last 40 years has resulted in the gutting of the sector. With an in-work poverty rate in London of 58 per cent, and the average annual salary in the capital approximately one-twentieth of the house price average, the vast majority of the city’s workers can’t afford to buy their own homes. Private rented dwellings have filled the void.

According to 2015 research from Paragon PLC: “The private rented sector (PRS) is the second largest housing tenure, accounting for one-in-five homes in England alone, overtaking the social rented sector for the first time since the 1960s. This represents a significant increase in the number of households living in private rented homes.”

The report added:

“The PRS has more than doubled since 2001 and is now the second largest housing tenure…PRS is now home to 4.9 million households.”

But investors think that the change in numbers is down to the market reflecting what people want. Tory policy for housing focuses on getting people to buy houses. But this ideological drive is out of sync with the needs of capital. Investors need a political climate in which renting is encouraged.

But private market rents in London are not affordable for the vast majority of workers. The only option for many is housing associations. But government funds for this sector are drying up. In order to make money these associations are effectively forced to sell their properties to the private sector. The profits gained are then reinvested into their businesses reducing the overall availability of affordable housing stock. Essentially, housing associations behave like private companies.

Social cleansing

The consequences of the lack of availability of affordable housing are profound. It results in the effective social cleansing from major cities of the poor and those on middle incomes. Moreover, it reduces the demographic mix of locales, restricts social networks and undermines local economies upon which local businesses depend for their livelihoods.

The formal ordering and disciplining of the poorest within urban spaces has had the affect of pushing them to the periphery, out of sight and out of mind of urban powers for whom responsibility is increasingly disavowed. In this way, spaces are shaped by neoliberal economic forces which alter the landscapes of cities and re-package them under the banner ‘urban renaissance’. A Labour government under Jeremy Corbyn will begin to turn things around.

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People Socially Cleansed As ‘Dirty Money’ Floods Into London

“There is no place for dirty money in Britain”, so says UK Prime Minister, David Cameron, who has promised to crack down on dodgy offshore companies that buy up luxury properties in the UK. Cameron says he will introduce a public land registry of properties owned by foreign investors. Channel 4 News has access to the data which highlights the problem is particularly acute in London.

“London must not become a safe have for corrupt money from around the world”, says Cameron. “We need to stop corrupt officials or organized criminals using anonymous shadow companies to invest their ill-gotten gains in London property without being tracked down.”

The figures are staggering. Some £122 billion worth of property in England and Wales is owned by foreign companies. Around 100,000 UK property titles are registered to them. Most are in Greater London where almost 43,000 properties are owned by overseas firms. “There is no place for dirty money in Britain. Indeed, there should be no place for dirty money anywhere. That is my message to foreign forces. London is not a place to stash your dodgy cash”, he said.

Undercover reporters’ working as part of the Dispatches documentary, From Russia With Cash, discovered just how easy it is to buy property in London with no questions asked. Chido Dunn from Global Witness says that “the presence of corrupt money in the London property market props up corrupt regimes overseas and means that a lot of people are stuck in poverty and violence and don’t have access to education.

So concretely, how is Cameron proposing to deal with the problem?

In the Autumn, data will be released that will highlight which foreign companies are buying up property in England and Wales. Although the data already exists within the public domain, Downing Street says it will now be more easily available.

In Westminster, where one in ten homes are owned by foreign investors, Channel 4 asked  Transparency International about the changes that are being consulted on.  A TI spokesman said that if enacted, the proposals would require foreign owners to declare their interests at the same standard as UK companies. The unanswered question is why the discrepancy in the first place?

That aside, over last 10 years a suspected £180 million of laundered money has been investigated by the authorities. However, according to Global Witness, that’s merely the tip of a very large ice berg. What these new measures will do if enacted will be to identify where the corrupt money is and prevent it from coming in to the country in the future. Currently the government is able to identify who owns a property on an individual and company basis but crucially not who the real people are who hide behind these companies.

People can still use offshore companies to structure their investments in order to benefit from things like inheritance tax and capital gains tax. But, if the consultation process succeeds, people hiding money for a criminal reason will no longer be able to hide it in property.

This appears on the surface to be an important first step. The question is, should the proposals go through, will law enforcement be empowered to properly investigate the practice of money laundering in the UK?

In a speech to Muslims in Birmingham on July 20, Cameron said “that people can grow up and go to school and hardly ever come into meaningful contact with people from other backgrounds and faiths”.

But money laundering is a major contributory factor (as is the failure to tax property effectively) in house price rises which in turn results in the kind of social cleansing I discussed here. Any failure by Cameron to get to grips with the problem will increase the problem of social exclusion he claims he wants to redress.

As with much else in the area of social and economic policy, the UK government appear to be tugging at the coat tails of the United States. What applies across the Atlantic is of as much relevance in New York as it is London. But at least in the former, rent controls to some degree ameliorate the problem. That said, UK government policy is geared towards increasing the disconnect between the rich and poor in much the same way the United States is.

As George Monbiot astutely puts it:

“The rich disconnect themselves from the civic life of the nation and from any concern about its well being except as a place to extract loot. Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it.” We suffer the same curse: a ruling class whose wealth lies offshore, and which identifies more readily with a transnational elite than with the other people of this nation. On behalf of this elite, the government now gives away £93bn a year in corporate welfare: a sum bigger than the deficit. It champions the Transatlantic Trade and Investment Partnership; a graver threat to the interests of this nation than Islamic extremism presents.”

The failure to tax property effectively has fuelled a rise in house prices so severe that entire English regions are becoming almost uninhabitable to the poor. The situation is made all the worse by the announcement from the head of the National Crime Agency who said there is a direct link between money laundering in property and the massive rise in London house prices.