According to the Bank of England chief economist, high levels of immigration fuel Britain’s housing crises. He blamed skyrocketing rental prices on a lack of properties.
Huw Pill claimed that higher interest rates are not to blame for the record-breaking rise in rental costs. These increased by 9.2pc over the past year.
After net migration reached a record of 745,00 in 2022, he said that “quite large increases” in immigration were adding more pressure to Britain’s housing stocks.
In remarks made Thursday after the Bank of England kept rates at 5.25pc, for the sixth time in a row, Mr Pill stated: “The population grows.”
Rents reflect factors other than monetary policy.
Mr Pill explained that delays in the planning area are causing a shortage of homes, a problem which has been a concern for Britain’s largest developers for many years.
He shifted the blame to politicians by claiming that monetary policies are not responsible for the housing crises.
He continued: “We don’t build enough homes in this country.” The reason why we don’t have enough housing or houses in this country, is due to a number of planning issues.
“So, there is a constraint on the supply. I believe that it does not come from monetary policies, but from other policy decisions.
“And, at the same time, that’s facing – increasingly so – in recent times an increasing demand.”
Andrew Bailey, Governor of the Bank, had previously stated that higher tax rates have forced landlords to sell their property due to higher interest rates.
Rents have increased, increasing the financial burden on tenants.
UK Finance data shows that the number of arrears on buy-to let mortgages has more than doubled compared to a year ago.
Mr Pill acknowledged that the higher borrowing rates have reduced “incentives” to rent out property, but said that they also make investing in other assets more appealing.
The Centre for Policy Studies released a report this week warning of the fact that immigration levels at record highs have failed to stimulate the economy and worsened the housing crisis.
The report, backed by the former immigration minister Robert Jenrick said that migration accounted for approximately 89pc (or 1,34m) of the increase in England’s housing deficit.
The number of homes that the country has not built in the past 10 years.
Mr Pill claimed that the Bank has little influence on housebuilding. He suggested that politicians should do more in order to build more houses.
He said: “I believe that the best thing we can do is to do our jobs and let others do theirs.
What if their job is to ask: Should we revisit some of the factors that constrain supply? Should we examine planning regulations? Should we examine building restrictions?
“And, of course, it is a problem which will not go away as the drivers in the population will be very consistent.”
Office for Budget Responsibility (OBR), the government’s tax-and-spending watchdog, predicted previously that net migration, or the number of people entering the UK less those who leave, would average 350,000 in the next five-year period.
It is now higher than the 290,000 predicted just a few short months ago.
The number of adults will increase from 55m to 57m in the UK by the end of this decade.
Mr Pill said that the rental price was “a major” factor in domestic inflation.
He said: “We are very aware that rents continue to grow fast and have a lot of momentum. They still haven’t reached their peak yet.”
“And even though they may have reached a peak, they are still at a very high level. We need to lower them. “It’s part and parcel of our overall goal to bring headline inflation back to 2pc.”
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