Monday, May 23, 2016
The EU Referendum On Brexit. The British Housing and Rental Crisis.
Am I the only person in Britain who notices the sophistry and lies of our politicians? Throughout the period of debate that precedes the vote on our continued membership of the European Union the nature of that debate is truly indicative of the casual contempt our politicians hold us in. An example follows:
On Friday, the 21st of May I read two negative articles on the same page in the British press, on the consequences of Brexit (Britain leaving the European Union). The first, by the Chancellor of the Exchequer (George Osborne) said “A UK vote to leave would cause an ‘immediate economic shock’ that could hold back growth in house prices…by 2018 houses could be worth up to 18% less than if the UK voted to remain (in the European Union)”. But what this means is not what it initially sounds like. At current rates of growth, if we stay in the European Union then house prices (in London) will go up by an annualized rate of 30% or more by 2018 but only by 12% in that same period, if we leave the EU.
Any rate of growth approaching either magnitude of increase is unsustainable and potentially catastrophic for the British economy.
The second article by the Labour Party's shadow Chancellor of the Exchequer reported that “Councils could be given the power to limit ‘skyrocketing’ rent increases under new Labor proposals. Shadow Chancellor John McDonnell will pledge to help people who are ‘at the mercy of an unforgiving, unrestrained housing market.’”
HELLO. Skyrocketing rents are a direct consequence of failed government policy on housing construction. Both of them are also, a direct consequence of immigration strategy (whether ‘do nothing’ or otherwise) by governments and parties of all political persuasion.
The British housing market is highly subsidized by the state. Prices are kept artificially sky-high by huge government subsidies cleverly packaged as humanitarian aid to immigrants and the poor. By giving almost cart-blanche to local councils to pay out enormous sums of money to housing associations, in rents (actually an improvement over the limitless amounts that were paid out in the recent past) there is no market incentive for rents to ever reduce. And the rental market is driving the construction market, not as it should be, the other way round.
If a ‘correction’ is coming it will be catastrophic and it will be 100% the fault of the government and her loyal opposition. They have refused to offer an alternative model to the current housing finance model (which encourages buy-to-let) and its’ associated, artificially inhibited construction market.
If you refuse to alienate your environmental lobby, upper middle-class and rural voters - and make mass housing construction on green-belt land almost impossible to get through the planning application stage (which in any case, takes years to complete) then you have to build thousands of twenty story skyscrapers to house the estimated 323,000 net migration to Britain which is the latest figure we have for the year ending September 2015. Note, this figure may only include those people who according to the United Nations definition of a migrant; have been resident in the UK for at least 12 months. Note also that this net figure does not include illegal immigrants.
If you only build, nationally, forty thousand housing units every year, you have a growing deficit, a gawping, massive, unassailable abyss that has opened up between the available stock of housing and the requirement for affordable housing. The result is that prices will ‘skyrocket.’ It is called ‘supply and demand’ and that is something most high school student can tell you about – we do not need to be mislead by leading economists or politicians as to the reasons for the housing crisis.
If the government obligates all British local councils to pay the rental accommodation costs of all people living in its area (assuming they are unable to afford local accommodation) - irrespective of their legality or status, then you force local councils to encourage a speculative housing market. Anyone with excess funds and a sympathetic bank manager is able to buy up almost all the existing housing stock as soon as it becomes available. They then offer it for rent at ever-escalating and exorbitant prices because they KNOW the local councils must house everyone and will pay almost anything they are asked to pay in order to comply with central government’s diktat.
Now why do both the government and her Majesties ever loyal opposition then try to scare us all with the two aforementioned articles in the Press?
Is it because they think we are all both greedy and stupid?
They want us to vote affirmatively, to stay in the European Union on June 23, 2016 even though government policy (and that includes, but not exclusively, our membership of the EU) is responsible for our housing shortfall, for the ridiculous price of housing and for our insane rental costs. And they (the Labor Party, the Conservatives and the Liberal Democrats) have no intention of ever rocking that electorally popular housing boat.