Corbyn will be bad for UK property industry

A huge number of the votes have already been cast in Labour’s leadership election and those who joined specifically to vote for him have already sent back their ballot papers. Forget Mandelson and Blair urging the lemmings to avoid the cliff edge; they have already jumped.

So we need to ask what a Corbyn government would mean for the UK and, in particular, the property industry. The signs are certainly not good. Those on the left believe you make the poor richer by making the rich poorer. Tax would be an early target. The top rate would be at least 60p and probably more. Before you gasp in disbelief, remember that Mrs Thatcher inherited 83p from a Labour government in 1979. She actually reduced it to 60p and it took her several years to get it down to 40p.

Corporation tax would be up and capital gains tax would rocket on the grounds that only the rich pay it. A key weakness of the hard left is their inability to understand how all taxation induces behavioural change.

At least in theory we tax alcohol and tobacco to cause people to consume less of it. We provide tax relief for pension contributions to encourage people to save for their retirement. But for exactly the same reason, in a globalised marketplace it is no longer possible to use taxation as a punishment.

A Corbyn government would, of course, tax the easiest targets of all: banks and bankers. I hold no candle for bankers, but of every million in bonuses they get, they already hand nearly half back to the Treasury. These are quintessentially mobile professionals. So love them or loathe them, more banks such as HSBC will simply leave the UK for more benign regimes. More bankers will take up residence in Zug.

In this hugely mobile world, these inevitable behavioural changes will destroy the UK’s and London’s reputations as the world’s best country and capital in which to conduct business and will devastate an economy whose principal source of earnings is professional services.

Rent control would be an early move for the hard left. It is easy to see the superficial attraction. Rascally landlords are holding poorer people to ransom by demanding unreasonable rents, so they must be forced to cap them.

But like so much of this rhetoric, it ignores an inevitable reality that Labour ought to have learned from, having tried rent control before, which is that the practical effect is to drive potential investors away from the lettings market. Thus there is less property, less well maintained available for those who need it.

The answer to the spiralling cost of housing, particularly in London, is the sclerotic planning system. Hard-left Labour is not going to reform it other than to set affordable quotas at 50% and give local authorities even more rights to extract cash from developers.

The effect? Fewer homes built, local authorities the only developers in the marketplace and legions of small private developers leaving the market all together.

Worry not, says Jeremy. Government will build all the houses we need and subsidise housing benefit while reversing the cruel cuts in welfare the vile Tories forced on the needy.

All this will be funded by printing more money from a renationalised Bank of England and scrapping much of our defence spending. Saying no to austerity funded by borrowing money and printing more. Thank goodness the last election proved that more voters than perhaps we realised understand that that sort of plan might sound plausible, but simply doesn’t work.
Corbynomics, like so much of Jeremy Corbyn’s politics, is proof that to all life’s intractable problems there is a simple, strident, one-sentence answer. And it is always wrong.

Steve Norris is chairman of the National Planning and Infrastructure Association and of Soho Estates