Westminster is an interesting mix of all sorts of social, cultural and ethnic elements – some of which works well, the rest less so. There is a chronic shortage of social housing, not helped by the fact that under the buy to let arrangements many council property tenants bought and then immediately rented out their places to the council, while they went to live somewhere cheaper. There is a real problem with existing council tenants illegally renting out their flats and not actually living there – again, they live somewhere cheap and coin it in from their illegal sub-letting. An estimated 35% of council properties are illegally sub-let (though I don’t know how they estimated that).

I’m not sure that there are so many foreign landlords letting to the council – the foreign owners tend to be high-end, and let to the moneyed private renters. Lots of council renting is done through housing associations, plus private landlords – corporate and individual (usually British residents, and living in other parts of London).

The information in the newspaper article about the effect on Westminster schools is an interesting one – what readers perhaps don’t realise is that at the moment state schools in Westminster are acutely oversubscribed, with a massive shortfall in the number of primary school places (where I live, they have started to use old shops for nursery and primary school classes) and not enough places for older children, who are often taught in mobile classrooms. So a reduction of 20% might not be an entirely bad thing, for the children or for the hard-pressed schools of Westminster.

Also, why are these people assuming that schools in outer boroughs will somehow not be as good? The reality is that they are often better – not as crowded and with a less strong concentration of social problems to deal with.

I have lived and worked in London and the South East; I now live in East Yorkshire, for similar reasons as yourself. Plus if I want/need to get to London I can do so by train [off peak, in under 3 hours].

As you say the trouble is foreign buyers, and the BTL brigade, who may or not be foreign buyers.

But all BTL are not that bad, we have friends we stay with who live near Kings Cross and bought a four-storey town house with a basement leading onto the garden, some thirty plus years ago. Over time they converted the top floor into a one bed-roomed flat, then rented it out. Did the same on next the floor, this time, two bedrooms until they got to the ground floor. This was done using their own savings and hard work as a lot of the work was done by themselves, only paying for people to do work that they could not do themselves.

The Basement flat they still live in as it overlooks their garden, not massive, but a little oasis. Once work was complete on these flats, they used the rent to pay off their original mortgage and to then build up a pension fund for themselves.

Now like my self they have joined the retired generation, who apart from State Pension, and before anyone says it heating allowance don’t take anything else from the Government.

The reason why I have rattled on about my friends in KX. Is we have talked about housing problems, he used to be a surveyor for Islington Council. We have come to the conclusions as to why we are in such a mess.
1] Cheap money, this as led to people speculating on both BTLs and Hedge Funds on shares.
2] The sell-off of most of the Council Housing stock over the past 25+ years and it still goes on now. If a Housing corporation builds new housing etc, the tenant as the right after two years to buy this house at a discounted price. In some cases less then the mortgage that the Housing Corporation raised. to build the property [they borrow against the total value of ALL their property portfolio. This is economic madness.
3] Next you get the large House builders, selling their houses at 70% of valuation, even though the property is overvalued in the first place. Then allow you to buy, borrow extra later on to purchase the remaining 30%. If people did not do this, or the government provide cheap loans to the builders, these properties would remain empty
4] You mention Greeks etc not paying Council tax on their property, if the property is empty after six months the owner must pay the Council Tax due on that property. But there is a loop-hole, isn’t there always, only if the property is habitable. So the owner removes the toilet, bath etc. Therefore property is no longer habitable, hence no Council Tax to pay.
5] You mention old money. In Westminster at around the turn of the previous century 1890’s to 1910. The Duke of Westminster and Lord Grosvenor built tenements to house the poor and also for servants who worked in the Big Town Houses but did not live in. As they saw that these people were needed to do the menial work for their betters?
Unfortunately in the 1940’s these where taken into Public Ownership, as they were getting a bit run down. They were then modernised for there tenants, but as the tenants died off, they were sold on the open market? And to other interested parties?
Their descendants fought a legal campaign to get them back as they had a covenant on them as they were to be kept for the poor? But to no avail they lost the case.

That’s the reasons dealt with, now the cure,
1] Scrap the right to buy, I know that a lot of people have benefited, but this as led to the reduction in Social Housing.
2] Build more sheltered housing for the over 60’s. Subsidised if need be, but it as two advantages, a] it is cheaper to provide health care for the elderly if they live in close proximity to each other. And b] there is a lot of single old people who live alone in 3 or 4 bed roomed houses who should be encouraged, not forced, to give up their homes. These could be sold on, or rented out.
3] Scrap the Council Tax, it only pays 20% of what the Council spends on services, both statutory, and discretional. If wages had to rise to keep staff in London, the rest of us taxpayers would only end up paying.
4] In place of Council Tax, introduce a Property Tax of 1% of the value of the property, habitable or nor, paid by the owners of the property, not the tenant. It would a] encourage the refurbishment of empty derelict properties, either by the owner, or sold on to someone else who would then do it.
Reason, some property speculators buy property in a area allow it to become derelict, this in turn drives property values down in the area, allowing them to buy even more property, till it becomes worth their while to redevelop the area and make a financial killing. In the mean time ordinary people can’t get mortgages because the area is so run down. If the speculators had to pay 1% Property Tax, it would help discourage this practice
Also, if Banks etc foreclosed on properties they to would have to find this 1% also and it might discourage quick foreclosures.
5] The money raised by Property tax to be split three ways. a] only the money that was raised by Council Tax [historicaly] is spent on Local Governments, b] the balance is split into two. One part is used to pay off the National Debt. Whilst the other part is used to finance the purchase of housing by first time buyers, only if a] they have saved 10% of their monthly income for 12 months and b] they can only borrow 3-3.5 times their proven earnings this would be a repayment mortgage over a maximum of 25 years.
These monies would be ring fenced just for this purpose. It could be called a] National Debt Repayment Fund, and b] The Peoples Mortgage Society, who would take the monthly 10% savings to prevent any fiddles and would pay savers a reasonable rate of %. Say MLR + 2% whilst borrowers would pay MLR + 3% [in both cases variable] this was the case in the old fashioned Building Societies, prior to being computerised and having big posh overheads and highly paid management.
Well I’ve had my say, got it all off my chest, it is now up to the younger generation to push the Political Classes into action.

But only if you make very sure to save on the side, or can take advantage of low rates to arbitrage savings or investments.

The magic of compound interest is what I’m talking about

Take a £150k mortgage at current rates and put £260 a month in an ISA and over 25 years at 5% tax free (I know rates are below this at the moment but assuming a return to historic norms) and you double your money, and can pay off the loan.

I did this, and as I’ve raised my salary I’ve put more and more away, to the point I now have double my debt, but with a lucky low rate tracker I find I earn more in interest than the mortgage payments, so I’m not paying it down at the moment – much to Santander’s annoyance!

It does take discipline though.

TNT

*my* Together mortgage *is* a repayment product. I actually wouldn’t be able to sleep if it was Interest only!

IIRC, there was no requirement if you took the Interest Only option to prove that you were making provision to repay the capital at the end of the term. There was also no requirement to have life insurance to cater for a “worst case scenario”.

Oh, and that £115K they were willing to lend me? If I had wanted the Interest Only product, that went up to over £120K! Scary, very, very scary.

I worked for a multi-national financial services company at the start of the 2000′s, and we did mostly “sub-prime” stuff. I regret to say that I saw the economic disaster that was coming many years before the media started reporting it. And still people carried on borrowing at ridiculous, and unafforadable levels!

It really does make you wonder, and even more to wonder at the Liberals and Labourites that don’t see how wrong it all is.

The key thing for, for places like Westmister, is that when all is done, the markets will even things out. That may be with higher or lower prices from here, but ultimately the people that can afford to live there will live there, or the people who want to own there will buy, and as you say, to get the services they need they’ll have to pay for them, or get lower services.

But propping up the prices with welfare claimants just gives the landlords easy money. If all that disappeared, prices might actually come down. I recall (somewhere) reading about a guy who’d made millions from property purchase of buy to let properties who overextended himself and was getting in to trouble. So he just approached the councils to offer housing for rent, charging what he was charging before, and they lapped it up, as they don’t have enough of their own housing stock any more, or they have housing that those on benefits don’t want to stay in !!

Enforce strict property standards to buy to let properties and in the end we’ll have a fair market. Maybe not a cheap one, but as you say, eventually something gives and council workers will have to get paid more to travel in.

Your point about schools and moving the kiddies is a great one too – how kmany times do you see someone saying they can’t move as they don’t want to disrupt the kids. Well, tough. I travelled from Camberwell to North Surrey to go to school (due to Labour shutting the Grammer schools, another matter!) by bus, train and walk. Never in my life got a lift from mummy.

Yes, it will be a disruption, and it is indeed unfortunate for people to have to move, but wrongs of the past should not be perpetuated.

The question, though, is will the Government who are still very reliant on their coalition partners actually have the balls to go through with all these reforms? I bet in the end they don’t.

TNT

Take your point on BTL/foreign ownership. It always struck me as rough that BTLers get to charge their mortgage interest to tax And that the Greeks don’t get to pay stamp duty or Council tax.

@Nerode, it’s down to calling the difference between the deserving and undeserving poor again. That’s hard to draw a clear line, though paying people £40k to live in London is clearly well over that line! I think Cameron did okay at calling it that you shouldn’t get more from benefits that the average household income. We can try and work down from there

@George, they should be hurting! They are part of the problem, heck these rapacious guys are the lot that kicked me out of the city 25 years ago, and I’d love to see them take a hit. London is dear, because it’s where all the work is, 10% of the population of the UK lives there, and it makes most of the wealth. It shouldn’t be so damned expensive, and the subsidy of people that otherwise couldn’t afford to live there inflates the cost for the rest of us by artificially inflating demand. I have no desire to live in London now, but it would be nice to think I could if I wanted to.

@g Start right here – I was greeted by a remarkable pair of hooters of the Kardashians when I fired that link up, just to set the scene. You may have to bring your family with you if you want the nice neighborhoods, otherwise the Grauniad is telling us you’ll be packed off to Hull. Which, of course, is a violation of your yuman rites but that’s just the way the cookie crumbles at the moment. Sky is still available up there, but it is cold relative to London