One of the factors that fuelled Brexit in the United Kingdom was house price inflation so great that the possibility of owning a house was denied to a new generation of potential owners.
The Thatcherite ideal of creating a property-owning democracy withered and died in front of the eyes of many people. The culprit, so to speak, was another Thatcherite belief — that only a lightly regulated market economy would produce the wealth necessary to bring this about.
The truth is that the wholesale ditching of regulatory regimes brought about the conditions that led to economic collapse and depression from 2008 onwards.
Although better regulation has been restored to the banking industry, the United Kingdom and other European states need to carry out radical reforms if the economy is to work for all of us, and not just the rich.
The latest Pandora data leak underlines this. The UK’s laid-back attitude to its housing and property markets has been a major factor in house price *inflation. Possibly more than any other, it has put the dream of buying homes beyond the reach of many working people.
As far back as 2006, it was clear that money from abroad— much of it suspected to have been illegally acquired — was being used to buy up London’s housing stock. By 2011, it was reported that in some areas, 40 per cent of homes were being sold to owners not usually resident in the UK. More recent reports suggest 75 per cent of new homes in inner London were being snapped up by buyers from abroad.
One dreadful example in recent years of this was the development of the Walworth Estate in London, once a mixture of local authority and private housing. The private homes were compulsorily purchased with a promise that their owners could buy homes in the new development. The promise was not kept because most of the homes were sold to people abroad before local people even had a chance to buy them.
London is changing from a city where most people used to own their homes to one where the majority will be renting at inflated prices.
I’m happy for people from other countries to buy homes in the United Kingdom if they are going to live in the UK. But it should always be clear who is buying and where they obtained their money. And, their names should be a matter of public record.
We need to start treating the UK’s housing stock as a primary resource for those who have a right to live and work in the UK. That includes those fleeing persecution. Access to affordable housing must be seen as a basic human right.
Maybe the United Kingdom should follow the example of Denmark in these matters, making it a legal requirement for non-citizens to spend a minimum annual period in the country in order to buy a house.
Another reform would be to amend the law to prevent foreign politicians from buying any property in the UK or its overseas territories without the express permission of an independent government agency. That might stop the corrupt from buying property in the UK.
Given the high levels of corruption involved, there’s a good case to remove the special privileges we allow off-shore shell companies to buy homes in the UK. These shell companies are used to disguise ownership.
A Royal Commission or parliamentary inquiry needs to look at the whole issue of shell companies and the privileges they enjoy, especially in regard to property.
But before that, every local authority in the UK should be required by law to publish a register of home and property ownership in their area. This register should give details not only of homes people own in the area but elsewhere in the UK and abroad.
Where anonymous shell companies own the property, they should be given a grace period to provide proper details of ownership or risk action being taken against them.
The extent of that action is a matter for parliament but I hope it would include giving the Mayor of London, other Regional Mayors and local authorities elsewhere the power to require the sale of these properties where the basic requirements of ownership cannot be met. This might also include the right of tenants in good standing to buy them at highly discounted rates.
This register could be used to tax the super-rich who own multiple properties at local level, with the money raised being used to fund the building of affordable homes or subsidise rents.
I have no problem with people working hard to create wealth for themselves and others in a lawful way. But the rich must pay their fair share to society. The uncomfortable fact remains that no-one becomes rich without the help of other people.
What the Pandora leaks suggest is that we make it too easy for the corrupt and super-rich to hide their wealth.
Instead, we need to start using the law to root out corruption, and to make the sources of wealth transparent . And to use the information we obtain to create a fairer society which benefits more people.
After all, nearly 4 in ten children in London are living in poverty — a city where ten per cent of its inhabitants are at least notionally dollar millionaires. A city that has one of the highest concentrations of billionaires in the world.
That means putting corruption in political and economic life back at the centre of the political agenda. It means creating a United Kingdom that works for all people, including those with money and those without it.
Details of the Pandora Papers story can be found here:
https://www.bbc.co.uk/news/world-58780465
(*Note: there are other factors involved in house price inflation: including the low levels of building of new public housing by local authorities driven mainly by restrictions on using the money obtained from council house sales to fund new building programmes. Changes in banking practices in relation to mortgages and the increase in UK population also contributed to rising house prices. I’ll deal with these factors at a later date.)