Sunday, 18 August 2013

As the property market in the UK becomes ever more divided, politicians begin to wake up

The last post on this blog covered the scandalous state of the housing market in the UK. In London, where the problem was already at its most acute, all indications are that things have recently got even worse.

In August it was announced that the Buy-to-let market has surged, pushing ever more of the limited supply of properties into the portfolios of investors. This segment of the market is now larger than it has been since the financial crash and represents a far higher percentage of overall mortgage approvals than a decade ago.

Meanwhile, recent report have suggested, variously, that 'super-prime' properties in the London cost 10% more than they did before the banking crisis and up-market estate agent Savills has highlighted the fact that the most 'desirable' central London areas have been price crisis of 18% in a single year

Prices of homes in central London are now over £1.4 million on average. A huge driver of this has been overseas money, with figures indicating that 70% of new homes in the London were bought by foreign investors in the last two years. The knock-on effect means prices have risen across the south-east, as buyers are forced out of the capital. 

This blog has suggested proposed five solutions to the crisis:
  • Build more houses
  • Ban buy-to-let, or restrict it new-build developments
  • Introduce higher taxes on second homes
  • Bring in charges on homes left empty in the capital - legislation that exists in other countries.
  • Restricting the sale of property based on residency criteria or citizenship
Labour-run Camden Council has, in a rare sign that politicians are waking up to the crisis, proposed to pursue a hybrid of the third and fourth options - pushing the Government for the right to introduce a levy on empty second homes.

Let's hope that the Coalition makes the right decision. Despite the gleeful tones in which the media reports rising house prices, the fact is, as Faisal Islam recently put it, that in creating a housing bubble, "we're condemning a whole generation to paying absurd prices for what is a basic human need".

If the Government doesn't grant the Council (and other councils) the right to pursue similar policies, then we can expect the UK to become more unequal; a whole generation - excluding the offspring of the very wealthy - will be locked out of home ownership and our capital city will resemble more and more a physical bank account for wealthy overseas buyers.