"We’re interested in working with anybody who’s got money and we don’t really care where it comes from"
So spoke Sir Edward Lister, chair of the government’s Homes and Communities Agency, who also happens to consult for real estate giant CBRE. He was addressing an invitation-only meeting at the Mipim property fair last week.
This year’s fair was the biggest ever. Over 4,000 property bosses descended on Kensington Olympia in west London looking to stitch up deals.
Local authorities and firms rented stalls on the conference floor to attract potential suitors, at a minimum cost of £3,645.
An individual ticket costs over £600—but Socialist Worker snuck in for free. At one stall heavy with cheese and wine, marketing executive Mark Wing told Socialist Worker how the deals are done.
“We’re involved in bringing parties together, marketing areas to attract the right kind of people to them,” he explained.
“We brand local authorities, industries and areas to make them attractive to investors.”
Next Socialist Worker shuffled through a back door into an invite-only “investors meeting”. There, bosses demanded the government do more to “risk-proof” their investments in the wake of Brexit.
“One of the things that attracts people to the UK is the relative stability,” said John Slade, CEO of BNP Paribas Real Estate in the UK. “But popularity is more important to politicians than the future of our businesses.”
News of minister for communities and local government Sajid Javid’s popularity came as a shock to Socialist Worker.
But he did his best to foster it among his friends in international finance at a behind-closed-doors “investors breakfast”.
“The government remains absolutely committed to ensure that the UK remains one of the most open places for investment,” he said.
It wasn’t enough for the crowds of property speculators.
Capita boss Richard McCarthy joined the chorus of free marketeers pleading with the Tories to hold their hands through the choppy waters of Brexit.
“Without de-risking, people will not put their money on the table,” he whinged. “People will not knock buildings down and build new ones.”
Bosses see housing as a way out of the crisis that is wracking the system. But they also know that the economic recovery since the financial crash of 2008 has been weak—and are scared of risking their money.
Javid stressed that the Tories are committed to providing “investment opportunities” to their mates. But there are debates at the top of society about how to do this.
If supply is going down, then that’s good news for investorsJohn Slade, CEO of BNP Paribas Real Estate in the UK
The Tories see infrastructure projects like HS2 and Crossrail as opportunities for bosses to cash in. The state foots the bill for construction, then firms jump in to develop the areas around new transport links.
HUB is one of those firms. Its managing director Steve Sanham told one meeting, “We’ve been successful by identifying parts of London which are soon to benefit from infrastructure upgrades.”
When asked why the firm was developing in Abbey Wood, east London, he said, “It’s at the end of the Crossrail and Crossrail is an absolute game changer.”
Socialist Worker gained access to another invitation-only meeting by virtue of getting there early to eat the free biscuits.
Bosses were arguing about how best to push the market further into housing and to loosen planning controls. It is not an answer to the crisis.
Edward Lister claimed that last year was the best year for housebuilding on record, yet just 140,000 homes were built.
In 1968 some 425,000 homes were built, over 180,000 of which were local authority homes. Mass council house building is proven to be the best way to house people.
Private firms are only interested in protecting their profits.
One way they do this is by holding onto land rather than developing it, in order to push up prices. Bosses at Mipim protested their innocence.
Liz Peace is chair of the Curzon Urban Regeneration Company, which has overseen regeneration around Birmingham’s proposed HS2 station.
She claimed, “Housing companies do not land bank. Once they’ve bought the land they want it developed.”
But the nine biggest construction firms are sitting on land which the Guardian newspaper estimated could be used to build 600,000 homes.
John Slade was blunt about it. “If supply is going down, then that’s good news for investors,” he explained.
But it’s not good news for the hundreds of thousands of people in Britain on waiting lists for council housing.
While ordinary people face cuts, there’s plenty for the housing vultures.
Chief Executive of the Regeneration Investment Organisation Tony Danaher summed up the government’s position. “We’d take money off the devil,” he said.
“The fact is we don’t need to. There’s a wall of capital available.”
Homes for whopping rents are the new way to make big bucks
Firms are falling over themselves to muscle in on the soaring private rental market.
According to 2015 research from Paragon PLC the private rented sector (PRS) has “more than doubled since 2001 and is now the second largest housing tenure”. Its report added, “PRS is now home to 4.9 million households.”
The increase is largely because council housing has been gutted and the majority of people can’t afford to buy their own homes.
But bosses and investors think that the change in numbers is down to the market reflecting what people want.
Tory policy for housing focuses on getting people to buy houses. But this ideological drive is out of sync with the needs of capital.
As one investor told Sajid Javid, “What’s making life difficult for us as investors is this fixation on home ownership.”
More firms are ploughing capital into building blocks of flats for rent.
It’s more profitable in the long term than selling developments on quickly.
One US investor obligingly explained to Socialist Worker how big international firms are looking to invest in Britain.
“International funds want to buy large units but there’s a problem with how ownership has developed in the UK,” he said.
At the Homes and Communities Agency we now just bypass these authorities that aren’t redevelopingSir Edward Lister
The Right to Buy policy of selling off council homes has created more mixed tenure housing areas.
This means the prospect of large-scale renting is more complicated here than in countries such as Germany.
There, private renting is the norm. Investment firms and pension funds can buy, sell and build whole blocks as long term investments.
Dan Wilkinson from the Generation Rent campaign told Socialist Worker that the market isn’t offering any solutions.
“In theory, investment in new homes to rent should be better,” he said.
“The problem is that the government is subsiding this instead of investing in social housing.”
Liz Peace was candid about why funds invest in PRS.
“They do it to make money,” she said.
We have politicians that ‘we can work with’
The Department for Communities and Local Government released its annual report into social housing selloffs as Mipim got underway.
Of the 21,992 dwellings sold over the past year, 12,557 were sold by local authorities and 9,435 by housing associations.
The local authorities figure is a 1 percent increase on last year. The housing association figure represents an 18 percent rise.
CEO of Notting Hill Housing Group Kate Davies told a meeting at Mipim, “Many housing associations are now developers. We’re making £120 million a year from selling homes to the private sector.” The government is giving housing associations less money for building one property.
“In 2004 it was £150,000,” Davis said. “Now it’s about £20,000.” This pushes housing associations to increasingly behave like private companies, reinvesting profits made from selling housing into their businesses.
The Tories’ Housing and Planning Act will accelerate privatisation. It forces local authorities to sell off council housing. The proceeds will be used to encourage housing associations to extend Right to Buy.
The government is bullying local authorities and county councils to accept redevelopment deals. As Sir Edward Lister crowed, “At the Homes and Communities Agency we now just bypass these authorities that aren’t redeveloping.”
Lister explained how councils can push through redevelopment projects. “It doesn’t actually matter if you don’t own all of the land if you’re a local authority,” he said. “You just need the willingness to acquire it and the commitment to get there.”
He bragged, “We’re linked to all the government departments, DCLG, the Treasury. We can draw on all these people and can pull the strings.”
Tony Danaher agreed. “We have a group of politicians in Whitehall we can work with,” he explained.
But where residents are organised they can throw a spanner in the profit machine.
Notting Hill is the developer of the Aylesbury estate “regeneration” project in Southwark, south London.
“The council did a very good job replacing all the social housing with social housing in addition to other tenures,” said Davis.
Except that isn’t what happened. Notting Hill is set to increase social rents if the redevelopment goes ahead.
“It’s a 20-year scheme, and on top of that we’ve got delays,” she said. “The secretary of state has stopped the council buying out leaseholders.”
This refers to the DCLG’s decision to overturn some of the compulsory purchase orders (CPOs) on the Aylesbury.
Jerry Flynn from the 35 percent campaign told Socialist Worker the decision is significant.
“It’s been a great shock to the council,” he said. “They’ve been using CPOs as a stick to beat leaseholders with.
“The decision could have far-reaching consequences.
“Southwark council should reconsider the Aylesbury regeneration before it goes any further. There should be an immediate halt on the demolition while it does that.”