Many people hope that the UK Prime Minister’s rhetoric calling for a fairer society means she will address what is by far the biggest inequality in today’s Britain: the housing crisis. But a recent speech, in which she outlined her plan for Brexit, seems to indicate that she is unwilling to really tackle the issue.
It looks like the prime minister is laying the blame for the housing crisis, which has sent house prices out of reach for most ordinary first-time buyers, squarely at the door of immigration, simply ignoring other, more important factors.
Here is what she said in her speech this year:
In the last decade or so, we have seen record levels of net migration in Britain, and that sheer volume has put pressure on public services, like schools, stretched our infrastructure, especially housing, and put a downward pressure on wages for working class people. As home secretary for 6 years, I know that you cannot control immigration overall when there is free movement to Britain from Europe.
So it looks like it’s not a new idea. It looks like the prime minister has believed for at least a number of years that immigration is a big factor influencing the housing crisis. Here is what she said in a speech in 2012, when she was home secretary:
One area in which we can be certain mass immigration has an effect is housing. More than one third of all new housing demand in Britain is caused by immigration. And there is evidence that without the demand caused by mass immigration, house prices could be ten per cent lower over a twenty year period.
Perhaps it looks like she’s blaming immigration for the housing crisis because these two particular speeches were focused on immigration. If so, it would be interesting to hear a speech by the prime minister strictly on the issue of the housing crisis. It would help us to gauge how much she cares about the other, more important causes of the housing crisis in Britain.
There are certain factors that her Tory party have encouraged or indeed actively promoted that have made an already bad situation worse. Here is a list, by no means exhaustive:
— Selling off council houses under the dubious “right to buy” programme and not replacing them.
— Various programmes to prop up home prices, such as Help to Buy, which in London gives the buyers of newly built properties up to 40% of the property’s price in the form of an equity loan.
— Giving priority to buy-to-let purchases, by giving tax relief to buyers of such properties while allowing them to take interest-only mortgages; thus, while buy-to-let landlords accumulate “portfolios” of dozens of properties, first-time buyers simply cannot keep up, as they don’t enjoy the tax breaks and must take repayment mortgages, not interest-only ones.
— Keeping renters’ rights to a minimum, unlike in other Western European countries such as Germany, where they enjoy security of tenure, rent increases only in line with inflation and the right to make reasonable changes to their homes without asking the landlord’s permission; by contrast, in the UK tenants cannot hang a picture without asking the landlord for permission, and tenancy agreements usually last for six months to a year. This ensures virtually everybody wants to buy, since renting is such a bad experience. With 39% of Tory MPs landlords, they will simply not vote to make things better for their tenants.
— Allowing global oligarchs to hide their more or less licit wealth in UK property due to lax regulation that does not require the disclosure of the beneficial owner of a property; it is still possible to buy property in the UK anonymously, unlike in many other European capitals.
— Deliberately keeping property taxes at ridiculously low levels, encouraging rich foreign “investors” to buy residential property in London and keep it empty, banking on the continuous rise in prices.
— “Encouraging” the Bank of England to keep interest rates at record lows in order for banks to be able to lend more to homebuyers in order to keep prices appreciating, and also to help those — including buy-to-let landlords — who would struggle if interest rates were higher. As an illustration, the Bank of England’s interest rate is 0.25%, while inflation is 1.6%. That’s a real negative rate of 1.35%.
If and when the prime minister gives a speech about the housing crisis, watch out for what she says about these factors. If she doesn’t mention them or if she gives more weight to immigration than to these issues, then you can be sure she is willing to paper over the problem by blaming the same scapegoats her predecessors blamed.
So far, Theresa May has only spoken about immigration. This indicates she is unwilling to deal with the wider, structural issues that cause the housing crisis.