We all know that the British housing market is an absolute joke. It has become so distorted as to lock-in vast proportions of the national wealth in housing that is overvalued and of relatively low quality (British housing is notoriously cramped and energy inefficient by European standards). In the nation’s capital, the situation is even more surreal. Families of even the skilled middle class are being priced out of the city altogether, pushed out by slum landlords, chronic under-supply, amateur landlords, housing speculators, foreign owners and migrant workers with tragically low expectations. The average house price in the city is £449,500. That’s 18 times the median income.
As I’ve said, there are about half a dozen factors that have rendered London unaffordable for ordinary people. Ultimately, demand will force the city to grow further into the surrounding countryside (who fancies a daily Tube commute to the Square Mile from the suburban London Borough of Sevenoaks?) or a consistent policy response to ease, and even reverse, the capital’s recent population growth. By massive regionalisation of government and key industries, the pressure on a city that represents about 12% of the UK population- but most of its power- could be eased. In the future, London should not have the monopoly on the ambitious, the high fliers and the head offices: regional powerhouses like Manchester, Cardiff and Bristol must become just as important. Even clusters of “New Towns” could between them become economic centres.
But such an aim will take decades to realise, leaving the issue of soaring housing demand in London chasing a limited supply. It is the government’s responsibility to address this, as it can in three ways. It can curtail demand, boost supply or abandon housing to market forces, forcing the poor out of the city (or into ghettoes on its outer edges). The present government has chosen option three, slashing Housing Benefit to accelerate the process. The opposition is calling for a combination of options one and two.
Londoners must be given a real chance to buy or rent [new] homes.
We will stop developers advertising properties overseas first and ensure they are available for the people that really need them.
We will give councils proper powers to tackle ‘buy-to-leave’. We will consult on allowing councils to double the amount of additional council tax they can charge on empty properties, and close loopholes which mean homes are not considered empty if they are furnished with just a single table and chair.
Ed Miliband, Leader of the Labour Party
The principle is 100% sound. Why on earth would we sell homes to millionaires in Malaysia when there aren’t enough to go round for existing Londoners? This is not a debate about immigration: a large number of the new houses built in London are being sold to absentee owners who do not intend to move to the country; they are being purchased as investments. Besides, it is actual immigrants who are suffering the most due to London’s housing shortage. However, my concern with the policy is just that it doesn’t go far enough.
If the aim is to reduce artificial demand for homes caused by speculation, then no half-measures will be effective. Here’s how to end the scandal of houses left empty for profit while others go homeless:
- Hike Capital Gains Tax on houses. If somebody is looking to profit by sitting on an habitable house, they must pay towards the social costs. A standard rate of, say, 95% of the properties’ appreciation should be sufficient.
- Impose a residency test on home ownership. Nobody can own residential property unless they are a UK resident. Immigrants may buy their home, speculators who live elsewhere cannot.
- Multiply Council Tax on spare homes. In particular, it should be prohibitively expensive to own a third house. A second is questionable enough.
Some things are more important than appeasing speculators and fat cats. And I’m afraid that providing everyone with a decent, secure and affordable home is one of them.