It is with some trepidation that I publish a few thoughts on this subject, knowing that Peter Black, my colleague over the other side of the Tawe, is an acknowledged expert. However, two or three items appeared in the media last month which I think are of interest and have not been widely picked up. Then of course there was the momentous vote for Andrew George's queue-jumping Affordable Homes Bill last Friday.
Who owns what?Chris Blackhurst in the Independent drew attention to companies, whose ultimate ownership and source of capital were obscure, buying up swathes of London property. He wrote:
According to an investigation by the Financial Times, more than £122bn worth of property in England and Wales is held by companies registered in offshore tax havens. Nearly two-thirds of the 91,248 foreign-company-owned properties in England and Wales are linked to the British Virgin Islands and Channel Islands. Most of that property is in London, much of it according to value (27 per cent) in Westminster. [...] our money-laundering laws are such that anyone wanting to do anything in financial services must show identification. But when it comes to buying property, involving substantial sums of money, it’s a free-for-all. Estate agents and solicitors are required to carry out due diligence when making a sale. But that only goes as far as the company buying the property – they often stop short of identifying the ultimate owner. The truth is that Britain, and the South-east of England in particular, is a world centre for dirty money. Central to that illicit flow is property.
The son of a friend of mine had a dispute with his landlord recently. When he finally got an address to contact from the Land Registry, it was in the British Virgin Islands.
So there are the immediate personal problems for tenants trying to get redress. Moreover, there is no incentive for these faceless companies to let to those London workers who most need accommodation. Those repositories of hot money can afford to keep flats empty until the right high-paying tenant - who may want only a second or third home - comes along.
This all feeds a distortion of the housing market. (It transpires that London is not alone in suffering such a bubble: http://thediplomat.com/2014/08/chinese-investors-fuel-california-housing-bubble/)
What happens when the bubble bursts?Michael Robinson, in the first two episodes of his recent Radio 4 series "Bricks and Bubbles", covers familiar territory - the negative equity trouble in England and later in Northern Ireland, the current disparity between the property boom in the south-east of England and the much lower prices in the rest of the nation, and the way that "buy-to-let" is favoured over direct ownership - but in the last two not only warns of unforeseen dangers of a market correction but also holds out some hope in a new form of public enterprise.
Hot money is mobile money. If a more attractive haven than London property appears, then the bubble described by Blackhurst and Robinson will probably deflate rapidly. Good, one may say, for would-be owner-occupiers for whom target accommodation suddenly becomes affordable - but politicians would not like it, because it would almost certainly condemn another generation of voters to negative equity. So do not expect George Osborne to implement the reforms Blackhurst and Robinson call for, because that could frighten foreign investors away and prick the bubble. For the same reason, the chancellor will be hoping that interest rates will not rise in the near future.
The bright spots are the initiatives taken by progressive local authorities in England & Wales. Robinson highlights the work in the private rented sector pursued by Manchester City Council's Paul Beardmore. By funding mixed developments of housing for sale and to rent from municipal pension funds, the schemes overcome the need to make short-term profits which inhibits commercial developers and at the same time give the funds a steady guaranteed income over the long term. It helps that Manchester and other participating councils own land which can be put to use. I would guess that some of this is brownfield land which is not attractive to picky speculative builders or conservative financial institutions. (From my days on Neath Port Talbot council I recall this as a problem for the planning office.)
Andrew George's BillSome time ago, I suggested that the government would not lose face if it addressed the inequitable aspects, and those causing real hardship, of the unallocated rooms measure. It has been left to a back-bench member, Andrew George, who has consistently voted against the housing benefit cuts, to do that through his Affordable Homes Bill. After stripping out proposals which might have proved contentious and enlisting the support of the official opposition, the Bill (text as a pdf here) passed its second reading stage with a resounding majority last Friday.
Commenting on the vote on that evening's "Any Questions?", government minister Anna Soubry asserted that she had voted against any changes because housing benefit was "out of control", a view I have heard even from leading Liberal Democrats. Interestingly, we never hear that state pensions are out of control, even though they constitute half the welfare bill and are structurally less subject to control than housing. There are ways of making more homes available (some indicated above) but short of Himmlerian measures only nature can change the number of pensioners. But of course pensioners are more likely to vote than people shovelled incessantly from rented rooms to rented rooms.
Conservative MPs had been put under a three-line whip to vote against second reading, and virtually all ministers except those at the NATO summit in Newport duly obeyed. However, even allowing for the invalids and those with unbreakable prior commitments, a significant number stayed away* and one (Angie Bray, a Conservative MP for Ealing) actually voted for the Bill to continue. It could be, of course, that they are more interested in other affordable homes measures already contained in the Bill or likely to be introduced in committee and hope to nullify the unallocated rooms relief. Their motives, should they choose to reveal them to their local media or elsewhere, will be interesting. I should particularly like to know why Peter "dry as a" Bone did not join his fellow desiccatee, Phillip Hollobone, in the "No" lobby. I would like to think that enough of them had a social conscience not to hold up a much-needed reform. If so, there is a good chance of it becoming law.
* The roll-call so far as I have discerned it, excluding those I know to have been in Newport:
Conservatives who did not vote against second reading
Peter Bone (!)
Sir Peter Bottomley
Angie Bray (voted for the second reading)
Ken Clarke (in Newport?)
Glyn Davies (Montgomery)
Sir Gerald Howarth (in Newport?)
Anne Marie Morris
David Mundell (as the only Scottish Conservative MP, presumably supporting the No campaign)
Sir Jim Paice
Sir Malcolm Rifkind (in Newport or Edinburgh?)
Sir John Stanley
Sir Peter Tapsell
It is widely believed that all the Labour MPs were "Ayes". This is not quite true. Meg Hillier, who was originally against, was persuaded to change her mind, but Kate Hoey, a London Labour MP, did not vote.