The UK as it stands is currently going through a major housing crisis especially within the capital. One outstanding reasons for this is the knock on effects caused by foreign investment in to the current housing market.
Roger Burrows a lecturer at Newcastle University and expert in the topic gave a talk on the concept of super-gentrification within London. He has also carried out a number of studies with other leading researchers in the topic to the effects of this trend and potential policy recommendations to combat it, which will be discussed throughout this blog.
The integration of the capital market has seen great increase over recent decades in the more developed areas of the world and has had a significant spike since the end of world war 2. This is mostly down to the internationalisation of such markets which has resulted in a partial loss of governmental control of economic flows internationally, with the effects being most evident in major capital cities.
The housing market is one of which that has been mostly effected by this change. Burrows within his lecture spoke about this sever increase in the so called super-rich purchasing housing within global mega cities, with little intention of residing in these properties. Instead these investments are being made for glamour purposes turning these properties in to vacation homes. This can and often does lead to detrimental effects on the existing residents within these cities and the housing market as whole.
London is arguably the most definitive example of this process, and this comes down the unimaginable amount of wealth that is situated within the English capital. With 77 billionaires living in the city it is no shock that it has been named ‘the super-rich capital of the world’.
This intense relocation of the super-rich was termed by ‘Butler and Lees’ as super-gentrification, and as you can imagine had very similar effects to these areas as that of normal gentrification. People often displaced and areas changing to fit the requirements of the new classes moving in. However, the issue here is that where gentrification does somewhat integrate communities with one another, or at least attempts to, the super-rich often have no intention of integrating themselves within their surroundings and as such disjoints these areas.
‘Subtle, integrated’ housing (Source: BardCityBlog)
There is also the concern of areas being transformed in to, as stated by Atkinson and co, ‘ghost neighbourhoods’ where properties are bought up by the super-rich and left empty for most of the year. This is evidenced by the number of vacant homes in London’s super-prime investment areas, which was calculated at 5.4% from a 2011 census, comparably high to the rest of London at 2.9%.
With the country already in the midst of a housing crisis this process is only going to increase the demand for housing, with existing a new-build properties being snapped up by foreign investors and developers even catering their developments to the taste of these investors.
Recommended Policy Solutions
So how do we combat this process that is increasing levels of segregation and displacement across the capital? One of Burrows studies for the SPERI Global Political Economy Brief looked in to possible solutions within policy for this issue, as well as ways in which to alleviate the current housing crisis.
The first solution being the creation of an inclusive city fund that would be generated by putting a levy on sales of properties with worth of over £5 million by international buyers. This money would then go to providing social housing helping reduce housing demand.
The second suggests that tighter regulations and ruling is needed at an international level to stop money laundering through property investment, as in the UK for example the real estate and development control systems are not configured to pick up on this.
Their final solution gives specific policy guidance for planning legislation and policy makers to be more ambitious with the requirements for affordable housing as well as increasing the tax for un-occupied housing, to deter investors who have no intention of living within the property.
- Atkindon, R. Burrows, R. Glucksberg, L (2016). International Capital Flows into London Property. SPERI Global Political Economy Brief No. 2, Available at: http;//speri.dept.shef.ac.uk/wp-content/uploads/2016/02/Global-Brief-2-International-Capital-Flows-into-London-Property.pdf [Accessed 2 Jan. 2018].
- Simmons, B., Dobbin, F. and Garrett, G. (2008). The global diffusion of markets and democracy. Cambridge: Cambridge University Press [Accessed 2 Jan. 2018].
- Butler, T. and Lees, L. (2006). Super-gentrification in Barnsbury, London: globalization and gentrifying global elites at the neighbourhood level. Transactions of the Institute of British Geographers, 31(4), pp.467-487 [Accessed 2 Jan. 2018].