In a city where super-prime properties and tenant evictions are both on the rise, the housing system is broken and many residents are looking for someone to blame. For Londoners, rent consumes nearly two-thirds of the typical tenant’s income, and it will take 46 years for the average single person to save for a deposit on their first home. With overseas buyers acquiring as much as three-quarters of all new-build housing in London in recent years, it is understandable that foreigners would be cast as the villains behind the housing crisis. As a result, the London mayor Sadiq Khan last week launched an inquiry into foreign investment in the city’s housing market.
Londoners are not alone in questioning the impact of global investors in local housing markets. The issue is being politicised in cities throughout the world. In Vancouver, Canada, where single-family homes cost around 21 times the region’s median income, the city introduced a 15% tax on non-resident foreign property owners this August. Australian states that encompass Sydney, Melbourne, and other cities have also introduced or raised taxes on house purchases by foreigners.
It’s important to understand how overseas investment shapes residential opportunities and neighbourhood life. Khan is right to draw attention to the ways that housing in London is intertwined with global financial flows.
But foreign ownership is only part of a complex story – one that involves many actors and institutions located much closer to home. Searching for meddling non-natives to blame is ultimately a distraction. The idea that the housing crisis can be pinned on foreigners is a politically convenient simplification that risks letting other culprits off the hook, while doing little to change the status quo.
Focusing on overseas investors allows British policymakers to obscure their own role in producing the housing crisis. Over the decades, politicians at all levels of government have played an active part in creating this situation. Ministers promoted market-centric reforms such as the right to buy and more flexible tenancies, welcomed institutional investors into the housing market, and pushed through budget cuts in the name of austerity. These changes undermined council housing and weakened tenants’ security while making housing a more liquid commodity. Councillors across greater London have given the green light to estate demolition and gentrification, and allowed developers to build expensive new projects without significant numbers of affordable housing units.
Without these actions, we wouldn’t even be talking about Russian or Chinese investors. National and local political elites in Canada, Australia, the US, and elsewhere likewise bear responsibility for promoting the financialisation of housing.
Pointing at foreigners is a way to pretend to address the housing problem while ignoring the demands of activists
Blaming overseas investors similarly ignores domestic ones. Foreign owners may be particularly disconnected from local knowledge and conditions, but if they were simply replaced by their native counterparts who pursue the same strategies, the housing crisis would remain.
Pointing the finger at foreigners is also a way to pretend to address the housing problem while ignoring the demands of activists. The movements that have been mobilising in opposition to developers, councils and national government are fighting against displacement and in favour of establishing housing as a universal right. Whether exploitative landlords and serial collectors of luxury flats are British or foreign is beside the point. No housing activist has ever carried a sign demanding “British mansions for British oligarchs.”
None of this is to say that foreign ownership doesn’t matter. But the real issue is the political-economic condition that makes it possible: the commodification of housing. This term describes the process by which housing comes increasingly to function as a financial instrument rather than as shelter. Foreign ownership only matters because it is fuelling this broader process.
Rather than lashing out at foreigners, who are an easy target, city-dwellers and politicians such as Sadiq Khan need to ask tougher questions. Whose interests are served by urban regeneration in its current form? Why are collective resources such as public housing being dismantled and sold off? What alternatives to deepening housing inequalities are possible?