“A single generation transformed London into a capital where no person with normal resources could hope to own a modest home.” So begins an article by Guardian journalist Deborah Orr on the ongoing problem of housing affordability in London and, increasingly, in the UK as a whole . Coincidentally, the Australian Federal Treasurer (equivalent to the Chancellor of the Exchequer) spoke out this week about similar problems in Sydney and Melbourne.
The “single generation” comment was particularly striking to me. It was only 23 years ago that as a single, second year schoolteacher I could afford to buy a two bedroom flat in Greater London when I was earning less than £20,000 a year. I was skint for nearly six months after moving into the flat and all my furniture was secondhand but the flat was mine and I could do as I pleased after years of living in shared accommodation. Such is the nature of the current housing market that the deposit I paid for that flat in 1994 would barely cover two months rent in the same area in 2017.
As with most financial problems, the housing affordability crisis can be placed firmly at the doorstep of a corrupt and rapacious “elite.” Whilst they are utterly useless at responding to issues that affect ordinary people – the hilariously incompetent NHS and the unwatchable drivel that passes for entertainment to the denizens of Jimmy Savile House spring to mind – the UK Establishment and their international buddies really are the technocrats they claim to be when it comes to accumulating wealth. In 2013, the top 85 richest people in the world owned as much wealth as the bottom 3,500,000,000, an average of $20,000,000,000 for the former group, $486 for the latter. And the rich are getting richer, in 2014 only 67 people equaled the bottom half of humanity.
Long term economic trends such as the deindustrialisation of the West and the rise of countries like China and India have served to push interest rates downwards since the peak periods following the Second World War. Falling returns on financial investments have led to rising prices for tangible assets; the price of housing has rocketed but this mad inflation has also affected the price of artworks and classic cars. In times of financial uncertainty, the rich like to invest in nonfinancial wealth – think of the buried hordes of coins from the time of the failing Western Roman Empire.
Some of the current problems in the UK housing markets are fairly easy to fix, others are extremely complex. Unfortunately the solutions will adversely affect the wealth of the UK Establishment and their super rich friends so the problems won’t even be acknowledged let alone discussed. I have four modest proposals that will at least make a dent in the problem even if they won’t be considered by the corporate shills who control most of the UK media.
Firstly, we need a moratorium (ten years?) on non-residents buying property in the UK. In the article cited above, it gives the example of one Manchester development where 93% of the flats were bought by foreign residents or companies registered overseas. It will make no difference how many new properties are built if they are simply snapped up by investors rather than sold to people who want to live and work in a particular area.
Secondly, the government needs to build affordable homes and sell them to residents at a fixed multiple of their salaries. I am forever reading handwringing articles about how teachers or nurses can’t afford to live in London. Well then, the government needs to build homes that can only sold to certain people at a multiple of (say) three times their current salary; so-called “market” prices would not apply to these government-built properties.
Buy-to-let investments must lose all tax advantages. The incomes from such properties must be heavily taxed; I propose a 50% tax on rental income for the owners of one property, 75% on those who own two and 100% for three. Any person who owns more than three buy-to-let properties would be hit by a 300% tax on the rental income. Anyone who wishes to avoid these taxes can sell their properties to the government at 1999 prices.
My fourth and final suggestion is the most radical. Any property in London that is not occupied for at least 187 days a year should be seized by the government and, this is the key point, no compensation should be paid to their owners. Anyone who can afford to keep an empty property in one of the world’s most expensive cities does not need more money. It is an obscenity that their are empty properties in a city where 8,000 people sleep rough and 85,000 children are in temporary accommodation.
Don’t like my solutions? Propose your own. All I would suggest is that affordable housing for working people is a far more important issue that the labels on public toilets, headscarves and racist statues.