Mipim UK and BNP Paribas: Property speculators are carving up our cities

By Daniel Margrain – 23rd October 2016 – follow Daniel on Twitter

Wed take money off the devil—meet the property speculators carving up your city

In a previous article, I outlined how the creation of a major asset bubble as exemplified by the rising cost of housing, is a deliberate government policy geared towards satisfying the asset diversification needs of the super rich rather than meeting the human need for homes for ordinary people to live in. In other words, the key motivating factor determining the Conservative governments housing policy, is not to end the housing crisis, but to bolster the investment opportunities of the rich which will make it worse.

To this end, the government under former PM David Cameron, almost nine months ago, announced its decision to demolish what remains of council homes and replace them with private housing. The Housing and Planning Bill, which became law in May, is forcing families living in social housing and earning £30,000-£40,000 in London to pay rents nearly as high as those in the private sector. It is also compelling local authorities to sell ‘high value’ housing, either by transferring public housing into private hands or giving the land it sits on to property developers. It is this combination of factors that explains the exponential growth in the construction of new tower blocks throughout London and other major cities.

Mipim UK Property Speculators Convention

A Tory housing policy focused on encouraging safe conditions for foreign investment funds and financial safe havens for billionaires, was the context for the Mipim UK Property Speculators Convention at Kensington Olympia in west London (19-21 October). Sir Edward Lister, chair of the government’s Homes and Communities Agency, explained “We’re involved in bringing parties together, marketing areas to attract the right kind of people to them…We brand local authorities, industries and areas to make them attractive to investors.”

“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.” “The government remains absolutely committed to ensure that the UK remains one of the most open places for investment,” he said. But investment opportunities are undermined following any attempts by the government to increase supply.

Increasing supply would not only have a detrimental impact as far as large investors are concerned, but will also adversely affect the property investment portfolios of politicians. The 126 MPs who declared that they receive rental income from property, represent over 19 per cent of the house, the vast majority of whom are Conservatives. It’s in the joint interests of MPs and major property developers who lobby on their behalf to continue to push the market further into housing and to loosen planning controls.

 Social cleansing & privatisation of space

The impact of the lack of availability of affordable housing (combined with the bedroom tax) is twofold: It results in the effective social cleansing from major cities of the poor and those on middle incomes, and alters former public spaces into sanitised privatised ones. This process not only reduces the demographic mix of locales, but it also undermines social networks and local economies upon which local businesses depend for their livelihoods.

More broadly, the hollowing out of large parts of cities changes our perceptions of what constitutes private and public spaces and for what use the state intends to put them to. The February 13 edition of the Guardian reported on a London rally that protested against the corporate takeover of public streets and squares. Protesters cited London’s Canary Wharf, Olympic Park and the Broadgate development in the City as public places now governed by the rules of the corporations that own them.

The main issues that underpinned the London protests relate to how economic conditions are re-redefining many urban spaces as cultural centres of production. This is leading not to diversification but rather to a uniformity in which the high street, airport, shopping mall, museum and art gallery are increasingly speaking corporate culture rather than aesthetic pleasure.

Privatised public zones are appearing throughout Britain. They include Birmingham’s Brindley place, a significant canal-side development, and Princesshay in Exeter, described as a “shopping destination featuring over 60 shops set in a series of interconnecting open streets and squares”. Intrinsic to the privatisation agenda is the Public Space Protection Order (PSPO). Introduced by the coalition government, the PSPO is another form of social cleansing that is intended to criminalise those sleeping rough and to drive them from towns and city centres.

In other words, the formal ordering and disciplining of the poorest within urban spaces has had the affect of pushing them to the periphery, out of sight and out of mind of urban powers for whom responsibility is increasingly disavowed. In this way, spaces are shaped by neoliberal economic forces which alter the landscapes of cities and re-package them under the banner ‘urban renaissance’.

Landscapes of power

Begun under New Labour, the ideology that underpins urban renaissance reflects a historical contradiction between planning in terms of social need and the process of competitive accumulation which is expressed in living and working urban spaces. This contradiction can be traced back to the 1947 Town and Planning Act. Although urban planners have often been cast in an heroic role protecting the public from shoddy contractors and the short-term drive for profit by speculators, town planning has been skewed historically by deeply undemocratic practices.

Under Theresa May’s government these undemocratic practices are manifested in the kind of supply-side strategies for urban investment outlined above. Examples are regeneration programmes predicated on place promotion and development with culture, heritage and conspicuous consumption in mind. This vision, in other words, is paradoxically linked to the ideology of progress as seen through the visual lens of economic power.

The expression of this power can be seen in terms of the redevelopment of waterside areas such as London’s Docklands. Although a regenerated or ‘cleaned up’ Docklands maintains some of the visual references of its past, it nevertheless is a space that has lost almost all the social and political symbolism it once carried. It is a view of the past that has lost all power to express what that past meant.

In effect, developers in these circumstances remove all ‘unsuitable’ symbols of the past within the urban landscape and replace them with superficial inauthentic post-industrial elements. They succeed in this ‘Truman Show’ totalitarian image-making by projecting the collective desires of the powerless into a corporate landscape of power.

Back at the convention

Meanwhile, back at the speculators convention at Olympia, Sir Edward Lister, chair of the government’s Homes and Communities Agency, who also happens to consult for real estate giant CBRE, claimed that last year was the best year for house building on record, yet last year under 40,000 new build registrations in the public and affordable sector were made. In the immediate post-war years (1945 to 1951) some 1.2 million new houses were built. In 1968 a record 425,000 homes were built, over 180,000 of which were local authority homes.

Mass council house building is the most effective way to house people but this undermines the profits of private firms. One way they do this is by holding onto land rather than developing it, so that prices are pushed upwards. As prices within the private rental market soar, more firms are trying to get their hands on the profits generated. According to 2015 research from Paragon PLC, the private rented sector (PRS) “is the second largest housing tenure, accounting for one-in-five homes in England alone, overtaking the social rented sector for the first time since the 1960s. This represents a significant increase in the number of households living in private rented homes.” The report added, the PRS has “more than doubled since 2001 and is now the second largest housing tenure…PRS is now home to 4.9 million households.”

Private – good, public – bad 

The increase in private rented dwellings is largely the result of the fact that council housing has been gutted and the majority of people can’t afford to buy their own homes. But 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. Investors need a political climate in which renting is encouraged. However, the Tories are ideologically tied to a house buying culture. This isn’t the case in countries such as Holland or Germany where government investment in social housing for rent is the norm.

According to the Department for Communities and Local Government annual report into social housing selloffs, of the 21,992 dwellings sold over the past year in the UK, 12,557 were sold by local authorities and 9,435 by housing associations. The local authorities figure is a 1 per cent increase on last year. The housing association figure represents an 18 per cent rise. Government funds for housing associations are drying up. In order to make money these associations are effectively forced to sell their properties to the private sector. The profits gained are then reinvested into their businesses reducing the overall availability of affordable housing stock.

Essentially, housing associations behave like private companies. This process is being accelerated as a result of the Housing and Planning Act which forces local authorities to sell off council housing. The proceeds are then used to encourage housing associations to extend Right to Buy which will reduce the amount of affordable housing stock even further. As long as the Tories remain in power, the likelihood local communities will remain stable and socioeconomically diverse in the not too distant future is remote.

https://www.cultureandpolitics.org/