It is not a new concept, people who are getting drowned through greed, yet as the Guardian in a video shows us: (at http://www.theguardian.com/uk-news/video/2014/nov/21/new-era-residents-fight-us-owners-westbrook-london-estate-video), the dangers where greed will not turn people homeless. In addition, the people behind it, Westbrook partners are hiding behind walls and the law. Here is the first part I object to. The law is a shield of protection for victims, not a cloak of unaccountability for the greed driven. However, part of the article that is not shown is the fact that the UK government might have fumbled the ball in a massive way here. I reckon that David Cameron has to attack these issues immediately, because if left untouched, the move from all parties INTO UKIP might be one we have never ever seen before in the history of politics.
So what is actually the case?
Westbrook Partners has been buying real estate on a massive scale; London, New York and Tokyo have been met with a spending spree on acquiring real estate. Buildings have changed ownership, but this change has a difference. This is done for investors of American workers Pension funds (to name but one). They bought property as mentioned in Hackney (inner east London), the residents were told that the rents will now go to market value, this is stated to mean that rents will triple almost overnight, how is that even close to acceptable, moreover, how many will be left to afford such a rent? Consider a rent of 2,500 pounds a month, this comes down to $4,500, I have had decently good paid jobs in IT, but I cannot afford those levels of rent, not in the best of days. Hackney council is currently expecting Westbrook to issue eviction notices. This is worse than just a bad nightmare; dozens of homes will be uprooted for what? Replacement by high rise new building, offering a massive boost to Westbrook Partners, which by the way is a US firm with offices in the UK.
It is not just the immorality of it all, consider that investment firms are now focussing on lower yield options, lower yield locations. Is this because the American wells have dried up? Now, I know that for the most, these things are not an option (or were not an option) in Amsterdam. When Amsterdam saw the 70’s boom in London, they made sure that these dangerous times could not happen there, but it is not a given for all buildings in Amsterdam (outside of the inner city). Consider other places where governments have been lacks with affordable housing. With this I mean Melbourne, Sydney AND Brisbane in Australia, Rotterdam, Delft and Leiden in the Netherlands, Several places in Germany and a few other places. When Westbrook and companies like them start changing the game to this extent, what will happen to the population at large? San Francisco had some events in this direction as Google expanded its views, but this is only the tip of the iceberg, now it is not just housing for a large company, now it is about returns for investors, how long until that part collapses leaving people not just in a state of destitution, but homeless as well?
When we see the article, we see the American Workers Pension Funds, with an image of fire fighters, did these fire fighters know that they are not just saving people, but for their retirement, they are making them homeless too? So is there an issue? Well, Yes!
The issue is at present that what is being done in not illegal, but highly immoral. To force a population out of an area, because of income is like stating that the poor are not allowed in London in any way, how is that not discrimination?
More interesting is how Westbrook was unreachable by the Guardian, their website views like a two page joke giving no information at all. When has an investment firm hiding behind wall of unreachability ever been a good thing? Goldman Sachs has been bad news on a global scale, yet they at least remained reachable. This new era of Westbrook is something entirely different. To see just how dangerous this rent rise is, take a look at the image on this link http://www.theguardian.com/society/2014/nov/19/new-era-estate-scandal-london-families-international-speculators, even more interesting is how the New Era estates included a minority share by Conservative MP Richard Benyon, who is pulling out this month, when confronted with these levels of changes. We might think of blaming it all on London’s Westbrook Principle Mark Donnor, but is that fair? Consider that this mess is the continuation of a mess which I witnessed for well over 22 years! Prices in London have always been outrageous and now that the wells are drying up, rental spaces are one of the few low return yielding options. Both political parties should have harshly intervened long before 1995, but they decided not to, now we see a new iteration which could break the London infrastructure. If you wonder why, then let me explain.
London needs workers, they always needed them and most of them live a long way from London, yet now we see a new group, those on a ‘higher’ lower income like Nurses and some tradies who lived in places like Hackney, as they are evicted, they will move further away and they will try to seek work in a place that is not London, as London faces a rental crash, it will also face a workers crash as people are less willing to live 2-3 hours away from work, we see the need to find other avenues to contain their work-life balance, that means working somewhere else. You might think that this is exaggeration in regards to 92 households in Hackney, but do you think it ends here?
If we consider the quote “The letter said they had secured an agreement not to increase rents again until 2016. However, it added: “Since this week’s departure of the Benyon Estate we understand the council have now been informed that Westbrook no longer plan to honour that plan, and have been told that their plan is to refurbish the current estate in its entirety and then rent all the properties without secure tenancies at market rent levels, with no affordable housing”“, we get another view, we get the view of several investment firms seeing what could be acquired in London for refurbishment and upgrades to market value housing. Consider areas like Paddington and Kilburn, what happens when they get refurbished into market value? In addition, when we see “Councils are acquiring properties in Kent, Essex, Hertfordshire, Berkshire, Sussex and further afield to cope with an expected surge in numbers of vulnerable families presenting as homeless as a result of welfare cuts from next April” (at http://www.theguardian.com/society/2012/nov/04/london-boroughs-housing-families-outside-capital), is this perhaps just the beginning? What happens when the situation goes from 92 households, to 992 households? What will happen to the smaller businesses as these places are all upgraded? The London economy is an interaction of classes and groups, when the city changes the dynamic that has worked for decades, we see a change in culture and options for all workers involved, moreover, what can we expect to see when these locations start to lose the reliability it has had for so long towards an entire iteration of workers and traders. Once that is changed, other elements will become in play as well, then what will happen?
In my view, David Cameron will need to make large strides in changing a current approach, to allow for long term sustainability. If not, we will see entire areas no longer in a state of survivability. These events that Westbrook has started will also make a change to the policies that London Lord-Mayor Boris Johnson is trying to introduce. No matter how strong the need for a living wage is, as Westbrook is pushing for market values, we will see a living wage that needs to go from £8.55 to £18.55, which is something that is not just unrealistic, it will be totally unmaintainable. The fallout will be long term.
In the end the UK government did this by not acting and others might be in the same predicament soon enough. I will be honest and state right here that no one anticipated the fact that rent would ever become the preferred return on investment for investment companies, which is an entirely different conversation I will have with my readers at a later stage. A change none saw coming, but now that it is here, it will prove to be additional hardship on the Conservative party, whilst giving even more options to UKIP.