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How basement-loving billionaires are undermining the housing market

The Guardian logo The Guardian 8/05/2018 Anna Minton
Property in Kensington: ‘As the English upper classes sell up in Kensington and Chelsea, they buy their children homes in once unfashionable places on the outreaches of the capital.’ © Getty Images ‘As the English upper classes sell up in Kensington and Chelsea, they buy their children homes in once unfashionable places on the outreaches of the capital.’

“I don’t want to expel any oligarchs. Their cranes are sprouting across the city, and it’s marvellous,” Boris Johnson said when he was mayor of London. The cranes were not just building the ubiquitous luxury apartment towers defining the city; they were also digging down, tunnelling underneath the most expensive streets to create multiple storey basements housing swimming pools, cinemas and even an artificial beach with a cascading waterfall.

Related: What lies beneath: the subterranean secrets of London's super-rich

There is an argument that the concentration of billionaires in certain areas of the capital has had little impact on the housing crisis and is in fact positive, providing jobs and services and stimulating certain parts of the economy. But this is not the main impact: instead, the glut of foreign capital creates soaring inflation, distorting the housing market and raising property prices and rents throughout the city.

This happens through a process of “trickle-down”. Wealth does indeed trickle down, but instead of benefiting the less well-off, as free marketeers claimed it would, it displaces them. This is true for the old English elites who can no longer afford to live in Kensington and Chelsea, and for the residents of social housing forced out of their homes as estates are demolished and luxury apartments go up in their place.

Researchers at Savills, the property company, identified this trend as far back as 2011. In a report, The Champagne Tower Effect, Savills wrote positively: “As billionaires displace multimillionaires from the top addresses, so they in turn displace millionaires … equity migrates to more peripheral areas of the capital and, eventually, out of the capital to the rest of the UK.”

As the English upper classes sell up in Kensington and Chelsea, they buy their children homes in once unfashionable places on the outreaches of the capital, which become property hotspots. In turn, middle-class families unable to afford their fast gentrifying areas are pushed out to cities like Bristol or south coast towns from Hastings to Margate, which are becoming a mix of priced-out London artists and creatives alongside a large homeless population in temporary accommodation.

So the extreme wealth of the basement billionaires is directly linked to plummeting levels of home ownership, high rents and poor conditions.

The study into luxury basements by Roger Burrows and researchers at Newcastle University’s Global Urban Research Unit, reported by the Guardian, found that more than 4,600 basements had been built in London in the last decade – and it is important because it becomes impossible to dismiss the trend as anecdotal evidence and the preserve of a statistically insignificant handful. One street in Chelsea boasts 22 approved basements, including 12 swimming pools and five cinemas. Six are described as “large”, which means at least three storeys deep.

‘As the English upper classes sell up in Kensington and Chelsea, they buy their children homes in once unfashionable places on the outreaches of the capital.’Photograph: Dan Kitwood/Getty Images

Many of the most opulent basements are to be found in the shadow of the charred hulk of Grenfell Tower, just a few minutes walk away. In Benjamin Disraeli’s novel Sybil, written in 1845, he described “Two nations; between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones or inhabitants of different planets.” The stark inequalities found in British cities ensure that Disraeli’s words continue to have contemporary resonance. Today, at the other end of the income scale to the owners of the super basements, some people are enduring subterranean living conditions of a very different kind – paying a high proportion of their low pay for glorified cellars, in damp, poorly ventilated rooms with no natural light. In one instance in 2015 a landlord in north London was forced to pay back £70,000 in rent for letting out “unsatisfactory and substandard” accommodation, with seven people living in one cellar.

The gulf between the lifestyles of the super-rich and the rest of us is vast. Grenfell wasn’t just a home for the poorest and most deprived living in ghettoised tower blocks. It was a mixed community of people in many occupations and from a variety of places, fighting poor housing conditions that they had repeatedly warned against, in the face of a lack of accountability that meant their voices went unheard. As well as safety standards, when the Grenfell disaster struck, local groups were also in the midst of campaigning against regeneration plans for the area which included the demolition of estates and the leasing of North Kensington library to a private school.

These economic processes, which some refer to as gentrification and others call social cleansing, are taking place throughout London and other British cities. They are the consequence of very large injections of unregulated foreign investment, in tandem with local authority-led regeneration strategies. Because the UK offers one of the most lax regulatory environments in the world, super-rich property owners can safely hide behind anonymous shell companies of dubious if not corrupt provenance – and many never occupy their luxury apartments or their gargantuan subterranean mansions.

Related: 'A pool in the basement is a clear marker of wealth': how the super-rich are digging down

It is difficult to argue that the presence of such large concentrations of extreme wealth is beneficial to any city, because wealth does not trickle down, it displaces. This is the collateral damage suffered; Grenfell Tower is one symbol of this social violence, the iceberg luxury basements are another.

• Anna Minton is the author of Big Capital: Who is London For? and a reader in architecture at the University of East London

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