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How To Solve London’s Housing Problems (And Canada’s)

2018 February 12
by Ian Welsh

So, two lovely facts about London’s housing market. First:

Londoners spend 72% of their income on rent.

Second:

Overseas buyers snap up majority of exclusive London homes

These two facts are related.

This is a problem with an obvious solution, do not allow non residents to buy housing in your country. Do not allow housing to be empty more than 3 months a year. If it is, and renovations are not actively ongoing (physically check to see if it is), then tax them at punitive rates (30% of the property value or more) and if after a year it still isn’t, simply expropriate it, with no compensation.

Further, smaller countries CANNOT absorb the excess money of larger countries busy printing money and/or creating billionaires. Canada and Australia I am talking to you with relation to China. You are pygmies and China is printing more money than every other major nation combined. You cannot allow Chinese to buy up real estate, or anything else in your countries, because they have enough money to buy everything at prices your locals cannot compete with.

This is obvious. It is stupidly obvious. But various speculators and builders are getting rich so it is ignored.

These housing price problems require more than just banning foreign buyers, but any solution starts there, and the problem cannot be solved without doing so.


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33 Responses leave one →
  1. Jeff Wegerson permalink
    February 12, 2018

    Nice micro solution but fails in the larger scheme. Placing limits on ownership is against international free trade regimes. What you need to do is present all the major pieces into one set of changed relations. I suggest you read Ian Welsh’s forthcoming pamphlet on structuring reality. Or something like that. Then you would have a better argument. 🙂

  2. jonst permalink
    February 12, 2018

    And who do you figure is going to enforce this stuff? The kind of tone deaf, greedy, incompetent bureaucrats that are in govt now? Give me the govt of 1940s America or Canada, and maybe, maybe, it might be doable. This prop0sal will just make the bribes flow more readily.

  3. hvd permalink
    February 12, 2018

    Correct for established year around economies. Not so good for economies wholly or largely dependent on seasonal tourism where you might allow purchasers from outside who use the property 3 months a year with higher taxes scaled by disuse.

  4. Hugh permalink
    February 12, 2018

    Free trade is great for kleptocrats, not so great for those in the societies they are looting. Jeff Wegerson provides a clinching argument against free trade. It can so limit a country’s sovereignty that even needed, obvious changes that benefit the country become “impossible,” off the table, not to be discussed at all.

    In the US, there may be some niche markets , like New York, that have seen a lot of foreign buying. But the bigger problem is buying houses as an investment, not for a residence. I read recently that there as twice as many vacant houses in the US bought as investments than there are homeless people. In an equitable society, this simply would not happen, but invoke capitalism, free trade, or whatever other meaningless catchphrase and it’s all jake.

  5. Bill Hicks permalink
    February 12, 2018

    It isn’t just the smaller countries. The same thing is also happening in the U.S., which is particularly infuriating given that idiotic American liberals persist in their arguments that working class people in rural America should be willing to pull up stakes and move to the cities even though one of the biggest obstacles is the insanely high rents in such areas. One day, residents of NYC are going to wake up and realize that the reason there are so many mostly empty luxury condo towers is the same reason that there is no one left to serve their coffee, wait on their table or collect their garbage.

  6. S Brennan permalink
    February 12, 2018

    “Placing limits on ownership is against international free trade regimes.”

    Fuck “international free trade regimes.”

    And I’ll add, I try not to use obscenities, but when faced with the Satanic verses of globalist/neocolonialist-neocons/neoliberals…I am left no other choice, I must requite an obscenity with a countering obscenity.

  7. February 12, 2018

    Or, at least, have fucking rent control.

  8. February 13, 2018

    This is what happens when people are too stupid to rebel.

  9. February 13, 2018

    Friend of mine has been a real estate agent in San Diego for past forty years and has come to hate his profession. Most of his deals are $1 million plus and are cash on the barrel. Majority are investors. Studio apartments in the city limits start at $1200/mth, one bedroom are $1700 and up.

  10. February 13, 2018

    At some point you really don’t OWN anything…………unless you can physically defend it.

  11. Mike permalink
    February 13, 2018

    This isn’t actually correct. The figures are 27% for the national average, and 49% for London. Still very high, but Richard Seymour has an agenda to prove.

  12. Mike permalink
    February 13, 2018

    PS source: http://www.bbc.co.uk/news/business-42179119

  13. synoia permalink
    February 13, 2018

    Declare non-occupied homes as “economically blighted” and take them as condemned.

    Blighted: Not occupied by owner, or rented for over 180 days per year. Owner must prove occupancy. Consumption patterns of utilities works well, especially sewer and water use.

    You can cheat, but it will not appear as human use.

    Pay a bounty, too.

    and

    You only rent real estate from the Government. You never own it outright.

  14. tony permalink
    February 13, 2018

    I’d like to ask you to write about a topic. Most of our problems are not that difficult. Making tap water drinkable is a solved problem, having cops not gun down people en masse is easy, not imprisoning people in huge numbers requires very little etc. However, a minority of countries can do these things.

    You mentioned Virtue in a previous post, I think, but that is too vague to be useful. Talking policy seems rather worthless if the country is unable to enact good policies. So what is it that makes the difference, why can some countries organize in a effective and productive ways while most fail?

  15. synoia permalink
    February 13, 2018

    Londoners spend 72% of their income on rent.

    After I graduated, I discovered I could only exist in the UK. I could only afford to go to work, to earn the money to exist and go to work.

    I emigrated to a time limited paradise.

  16. Peter permalink
    February 13, 2018

    Some wizards in London are planning to try this crazy idea of building to rent to meet the demand driven housing problems. They want 100 unit apartment blocks built by both the council housing and private investors to meet this need.

    This probably won’t deter the commie mobs who seek to displace the rich capitalist from their luxury homes. This is to show everyone that Stalinist confiscation can create a utopian vision much like the scene from Dr Zhivago where multiple peasnt families shared the Dr’s home.

  17. Mongo permalink
    February 13, 2018

    @ Stirling Newberry

    Well said.

  18. John permalink
    February 13, 2018

    https://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/
    There is a lesson in the B&W photos from the ’40’s.

    While not perfect, I believe the Germans have found a reasonable approach to keeping housing affordable and available. They got over some of their rapacious capitalist phase during the events of the late 1930’s and 1940’s. That redevelopment scheme left them with a bit of a housing shortage and they couldn’t indulge the whims of oligarchs to solve it. Their government understands that middle and working class angst can have a lot of bad consequences.
    Hopefully the Anglo-Saxon predatory economic model will get “woke” and not follow the same path.
    Greed is not good. It has always been a sin. And wise societies constrain it wherever it shows its ugly head.

  19. February 13, 2018

    Not just London, out here on The Oregon High Desert I can’t even rent a house in the town my family founded seven generations ago. Ain’t nothing here but ambiance.

  20. February 13, 2018

    A conditioned response, Stirling, bread and circuses.

    Do not despair. Back when I was training people how to control traffic I would try to explain how my philosophy for dealing with cars stemmed from having started my working life as an Oregon High Desert Buckaroo, a baquero, from the days of our Hispanic foundings, and I treat cars (and their drivers) like cows: they’re big, they can hurt you, badly, and ninety-nine times out of a hundred they will do exactly as you expect them to. It’s the one out of a hundred that gets you.

    I tend to view the humanoids, in general, as maggots. A few will metamorphose, escape, and perhaps even procreate, become Human. The vast remainder will consume the host and die.

  21. highrpm permalink
    February 13, 2018

    the low home ownership rates of the germans may be fueled by their low risk attitude to money.
    https://global.handelsblatt.com/opinion/germanys-investment-culture-makings-social-financial-crisis-2-880472

  22. February 13, 2018

    Aren’t you afraid of being called racist Ian? Go to Garth Turners Greater Fool and you can see the cuckservative view on display.

    It would be very easy to enforce a law requiring citizenship to own property and to limit citizenship as well as the number of properties one can own. (See Switzerland for an example. But that is not who we are!!!) If we have unrestricted immigration and unrestricted capital flows we will get the housing markets of Vancouver and Toronto.

    There is a fair bit of discussion about money laundering and Chinese immigration to Vancouver but this would racist to discuss when formulating policy.

  23. Hugh permalink
    February 13, 2018

    Re Germany, let’s remember the neoliberal Hartz reforms that pushed many Germans into insecure low wage jobs, increased the risk of poverty among them, decreased the number of high skilled jobs, and forced older Germans to keep working instead of retiring.

    Let’s remember that Germany’s mercantilist trade policies within the EU and the EZ has pushed the EZ into an ongoing, never ending train wreck, made Greece a basket case, –all in order to bailout German banks and the rich who own them–, continues to do substantial damage to the Southern Tier, has marginalized much of the Eastern Tier and fostered the spread of right wing governments among them, and resulted in Brexit, as stumbling and bumbling as it is.

  24. someofparts permalink
    February 14, 2018

    Actually, browsing apartment rental costs on Craigslist, prices in Montreal seem to remain reasonable. What’s up with that?

  25. someofparts permalink
    February 14, 2018

    If you want to see why our communities can’t solve problems even when the solutions are known and obvious, go watch the third season of the Wire. Watch what happens to a ranking police commander who actually executes a solution to the drug problem in his jurisdiction.

  26. John permalink
    February 14, 2018

    Hugh, you are absolutely right. The Germans definitely have a bad case of the Anglo Saxon economic disease,neoliberalism and empire through economics. But for a time since the war, they understood the natural monopoly aspect of shelter and regulated speculation out of that sector. They show it can be done.

  27. S Brennan permalink
    February 14, 2018

    And this from MOA;

    Rent a Slave…no kidding…from a mainstream publication:

    “Here’s how the program would work…Mary could expand her little business by hiring some workers, but no one in the area would accept [Mary’s unlivable wage]…Mary goes online—to [RENT-A-SLAVE]; She offers a room in her basement, meals and $5 an hour. (Sponsors under this program would be exempt from paying minimum wage.) Mary interviews a woman named Sofia who has endured hardships that few Americans can imagine. She is eager to earn some money… If things don’t work out, [RENT-A-SLAVE] agency that runs the website will find a new match for Mary. [one presumes, Sofia will be forced to pay for her failure at being a slave!]”.

    Only a few words were [changed] for brevity and clarity. Those who are “pro-immigration” should admit to themselves, if no one else, that immigration is being used to exercise social control. Social control that was lost during the no-immigration period of 1932-1965.

    https://www.politico.com/magazine/story/2018/02/13/immigration-visas-economics-216968

  28. tony permalink
    February 15, 2018

    I did not ask why we can not solve our problems because that is a worthless question. The Wire is based on the premise that things are the way they are and maturity is accept that, or something like that.

    I want to know why we can solve problems. Tap water is quite good in many countries, police treat people well, healthcare system might even have a positive net effect on society.

    However these are exceptions. The question what are these countries doing right. What are the drivers behind good policy. What drove the US to build what once was really a rich and free country .

  29. Hugh permalink
    February 15, 2018

    As this is an economics post, I wanted to point out that the BLS’s monthly report on real (inflated adjusted wages) came out on Valentine’s day. These data are generally only reported in seasonally adjusted terms. The take home is that average weekly wages for production and nonsupervisory employees (the bottom 82% of private sector workers) over the year increased by only 0.2%. This is in keeping with my previous analyses. And it leaves me scratching my head at all this talk that there is strong wage growth and that this had anything to do with the recent market correction.

    Re the shootings in Florida, we need to stop beating around the bush. The NRA condones and is complicit in the murder of children, as are the cynical cowardly politicians who take contributions from it and do its bidding.

  30. highrpm permalink
    February 15, 2018

    @hugh,
    of course, hollyworld has been right all along. perhaps they’ll finally fund legislation that passes. whitie can’t be trusted.

  31. nihil obstet permalink
    February 15, 2018

    tony, here’s my Western Civ. with gun and camera,

    The U.S. started from some unsustainable practices. When land was the key to most individuals’ independence and self-worth, the U.S. eliminated the original inhabitants and had cheap land for small farmers so that they could become commodity producers and bequeath a better life to their children.

    As for the real grunt work that no one wants to do, there was always someone less powerful who could be forced to do it. First, of course, slaves. This was eventually incompatible with the cheap land practice, since slave-owners could profit off all the land they could hold. The approach of “peak land” was one cause of the Civil War. After slavery, blacks could still be forced into the low-paying jobs, and along with them outside the South, more immigrants. It was no longer the land that could draw them, but the opportunity for upward mobility. The first generation did the crud work cheap and their children then got to ride upwards on the shoulders of the immigrants that followed them. (I’ve always wondered at people who thought stories of their immigrant grandparents working 18 hours a day were great. My reaction was always, “Are you glad they had to spend their lives doing that?” But I slander the great American work ethic.)

    With a reasonably high proportion of arable land, decent climate, and imperial plunder joined to the productivity advances of industrialization, European countries got rich, too, but they didn’t have the outlets that America had, the land and the immigrants. If they were to get goods produced cheaply, they’re the cheap labor. It gives you a whole different outlook. They had real revolutions.

    Slowly, fighting all the way, the European governments made political concessions to their people. When capitalism failed in 1929, the fear of Communism enabled the New Deal to prioritize good government. The Europeans generally swung right. Then World War II required mass armies, and that makes the masses more powerful. Afterwards, there was still sheer ruling class terror of Bolshevism, and that had to be offset by providing good public services.

    And so here we are. After the collapse of the Soviet Union, the Europeans have been moving towards more neoliberalism, but their history is that they have to do for everybody. That’s the model that the more successful Far Eastern societies have followed. The U.S. has been trying to reestablish its old unsustainable practices. Instead of cheap land, we now preach education, the key to upward mobility. Instead of immigrants, we now use immigrants without preaching them.
    We were really successful when we tried to do for everybody.

    In a word, Solidarity.

  32. tony permalink
    February 16, 2018

    Solidarity, or asabiyyah would have been my answer too, but I tried not to push people to a direction. However you anwer only provides one source of it, military competition. Threat of the SU causing a need to convince the population of the superiority of our system and gain the cooperation of the population for the military. However, a military competition with the survival of the species on the line is not a very attractive option.

    It arguably also fails to explain why some countries which face no military threats, Norway comes to mind, still have solidarity.

  33. Tom permalink
    February 17, 2018

    From an earlier comment: “At some point you really don’t OWN anything…………unless you can physically defend it.”

    At which point the question becomes is it worth the effort or should you ‘run away, run away,” Or is my tribe biggerr then your tribe?

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