Superrich distort London property prices

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Britain’s richest people are wealthier than ever before, as the May, 2014 publication of Sunday Times Rich List, a list of the 1000 richest families in the UK, found.

Almost 500 of the top 1000 richest UK families live in London, but just those families have almost a quarter of the wealth of the superrich in London, said Professor Danny Dorling, Speaking at the London School of Economics (LSE) earlier this mont

 

£32,000 is the household income of 90%

While the top 1 per cent have a median income of £420,648 per year, the bottom 90 percent have a median income of £32,863. The people in the bottom 10 per cent have an income of about £7,000  per year, mainly single people, and may well be pensioners.

“The Equality Trust and My Fair London (opposing inequality in London) are now trying to do something about inequalities because they’ve reached historical peaks.”

The growth of the number of supperrich in London changes what is seen as normal in the city, and has led to tax cuts for the superrich while other consumption taxes applied more generally, like VAT, have gone up, Dorling claims.

”The concentration and increase of massive amounts of wealth to this particular city has altered the housing market, the schools, the politics, because if you look at who is donating money to different parties, large amounts of money are coming from some of these people and they’ve been attracted in by growing inequality.”

“All three leaders of leading political parties are in the 1%,” He said. “Amongst our political elite there’s a concentration of ownership of property. A quarter of all MPs are landlords. We’re not represented by people like most of us anymore,” he said.

The housing benefits system for MPs moved London-based MPs away from understanding city dwellers’ housing difficulties.

Renting and crowding

Renting and property shrinkage is increasing in this country but it’s not due to supply and demand, as there are many vacant properties. “Nobody’s demolished housing. we haven’t had an earthquake,” said Dorling. “The best-off tenth now have five times more rooms in their homes than the worst-off tenth.”

“At the same time the population of Kensington and Chelsea fell,” he adds ,”There are less people living there. Our housing stock has become incredibly inefficient.”

“While an income of £116,000 gets a family into the top 10%, they don’t feel rich because they can just about get a mortgage on an average London house that costs half a million. I have yet to meet someone in the bottom half of the 1% who tells me they’re doing well.”

“We have no data to show that the 17% annual house price rises have yet slowed down.”

Taxation a solution

Inequality has grown from the late 1970’s until today, Doring goes on to say. Britain became an attractive place for the super rich on account of falling property taxes, and increased security of wealth.

In other rich European countries, like France and Germany, there is not the same income highs in households of the 1%, which see large amounts of wealth within the UK’s one per cent, and the median incomes were higher, Dorling found.

“We have over 2,200 bankers paid over a million pounds a year,” said Dorling, citing EU data. Other EU countries, like the Switzerland and the Netherlands, also have strong financial sector, but have many times less wealth allocated to the top 1% thanks to taxation. “They’re doing better because they control their 1% better.”

 

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Image credit: Data and Slide compiled by Danny Dorling,

Listen to Dorling’s speech: http://www.lse.ac.uk/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=2609

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