Financial Shelter vs. Human Shelter
In the years running up to 2007, Fergus and Judith Wilson were practically buying one house a day, gathering a hefty portfolio of over 1000 properties. In startling comparison, last year Halifax reported over a fifth (21%) of 20-45 year olds believe it is virtually impossible for first-time buyers to obtain a mortgage.
This week, the Wilson’s sold their extensive property portfolio to the tune of over £250 million, the buyer is reported to be a foreign multinational consortium. In a bizarre statement issued by Mr Wilson he said “Buy to let became an obsession for Fergus Wilson. He is a self-confessed BTL junkie. Each day I must have my daily fix. I look up prices and say to myself what a lucky man I am.” adding “Owning BTL became a hobby for Fergus Wilson that simply got out of control. He says BTL is the national hobby and is followed by millions. Whether you are a tenant or an owner occupier or indeed a BTL landlord you have an interest in the letting industry for letting industry is what it is.”
Now although back in 2014, The Wilson’s were the target of public outrage when they issued eviction notices to every one of their 200 tenants on welfare, they have said that this sale will make no difference to their existing tenants. However, with the UK property market increasingly being used as an investment for the overseas rich, what sort of effect does it have on tenants?
So as you well know, housing in the UK is in a bit of trouble; too much demand, not enough supply - and everyone has various people they think are to blame, one of which is foreign investors. Firstly, let’s explain why foreign investors come to England and in particular park their money in the capital.
David G Green & Daniel Bentley from the think tank CIVITAS put it down to the fact that in comparison to Asia, Russia, the Middle East and parts of Europe ‘(London’s) tax regime is preferable, the legal system is transparent and the property market has performed consistently well. The UK has been a relatively stable part of the world amid such uncertainties as the Eurozone debt crisis and the Arab Spring. The exchange rate for sterling also gives London property an edge for international investment portfolios. London is now the favourite city in the world for real estate investment opportunities among overseas investors, according to the latest annual survey by the Association of Foreign Investors in Real Estate (AFIRE)’.
This has led London to be described by American writer Michael Goldfarb as “a global reserve currency” adding that “the property market is no longer about people making a long-term investment in owning their shelter, but a place for the world’s richest people to park their money at an annualized rate of return of around 10%” and this is exactly what is happening in the capital.
These investors and their empty apartments have ended up pricing almost everyone but themselves out of the centre of London, leading to what Julie Stott described in The Guardian as the ‘exodus afoot in London’ in which London’s families are forced to relocate to Nottinghamshire, Hampshire and, The Wilson’s old stomping ground, Kent because the prices are just too high in the city.
Although Fergus and his wife have got something of a bad reputation due to their past, at least they were investing in homing people, even if they were a little too selective about it. The issue now is that these properties are being bought and left dormant in the hope of protecting the investment - making supply and demand continue to drop out of balance and thus making it very difficult for people to afford to live and work in the city.
Mr. Green and Mr.Bentley from CIVITAS sum it up all too well in saying ‘for too many (the capital) is providing financial shelter rather than human shelter.’
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