If you lived in London in the early millennium, you would notice that house prices were considerably low. You could rent a 2 Bedroom apartment in Hither Green for roughly £650 per month. In 2017 in the same local it will cost you just about £1500. While this unprecedented growth may be exciting to some, it is simply unrealistic and unsustainable for what is basic human necessity.
The average city wage stands at a little over £25,000 per annum and has not risen with inflation. While some Government jobs pay London weighting the vast majority of private sector jobs, that is three quarters of the work force have to accept a meagre wage. So how can the many afford to pay rents that have skyrocketed more than 100% in just over a decade? Core Inflation which does not include housing has itself grown less than 3% over the same period meaning business who benefit from high prices have simply not been that well off to keep wages rising to meet the cost of shelter.
The end result is many tenants face evictions for not affording the rent. Migrants with larger savings push UK nationals out of their homes, parents of millennials have to re-mortgage to support children with deposits for mortgages, while lower income families have swelled the waiting lists for non-existent council houses that are now given as priority to asylum seekers. At the same time the Chinese, Russian and Middle Eastern owners of these properties continue to make handsome returns.
Don’t get me wrong, I am as progressive as they come but the reality is that we are ruining our society for the next generation. So what can be done?
I believe that using house ownership as a means of gaining citizenship is wrong. How to gain UK residency article.
The above BBC article shows the constraints of the regular non-EU migrant wishing to move to the UK and super rich non-EU migrants. If I am not mistaken with housing being an investment, the super rich simply need one or two Mayfair homes to qualify, this causes an influx of “we don’t want to know where the money came from” investment. This kind of investment should be restricted to individuals who are bringing certain type of business investments and skills rather than just being super rich.
This is the UK’s GDP growth rate over the past 3 decades with the exception of a few spikes in the 1970’s it has never really exceeded 3%; so what is all the fuss about the super rich? They simply add no value to the economy because of their tax hiding habits.
A welcome idea is rent controls and restrictions on the buy-to-let market. An individual should not be allowed to burrow money at exorbitant rates simply because someone will pay the rent. I am in favour of a fixed interest rate on buy-to-let mortgages and council led price caps on rent in London boroughs. There should also be accessibility for first time buyers to get on the housing ladder, meaning like the United States a mortgage should be a given and homeowners should be restricted from renting first homes for profit under these special mortgages. This will drive house prices down and the value of houses will rise in line with excess demand.
Councils should relax rules on greenbelt land similar to what is happening in Wales and encourage more innovative eco self-build projects on such land. Telegraph article on Greenbelt development.
This may seem far fetched but if we are going to solve the housing crisis in London we have to start thinking out of the box.