Impact of skilled migration on access to housing and the housing market in the UK

NORFACE Migration Conference 2013

Christine Whitehead, Ann Edge, Ian Gordon, Kath Scanlon, Tony Travers

LSE London

Research question

• What effect does skilled migration from outside EU have on UK housing market—overall and in particular cities?

Background• Research commissioned in 2011

by Migration Advisory Committee

• Coalition government: target to reduce net migration to the ‘tens of thousands’

• LSE London: – Urban, metropolitan and housing

research

The Points-Based System (from 2008)

• Tier 1 visas:– Entrepreneurs (no limit)– Investors (no limit)– Exceptional talent (max 1000)

• Tier 2 visas:– Shortage occupations (minimum salary)– Resident labour market test (min salary)

• Overall limit SO + RLMT = 20,700 per annum

– Inter-company transfers• No numerical limit

• Migrants can generally remain 3 years + 2

What the literature tells us• Migrants in all income groups

– initially form fewer households than indigenous population

– are more likely to live in the private rented sector

– consume less housing than indigenous population

• But after a decade or so the differences are small

• Migrants tend to live in cities, and to cluster

• Economic migrants from rich countries more likely to return than those from poor countries

What do we need to know?

• How many Tier 1 and 2 migrants, and from which countries?

• How long do they stay?

• What types of household do they have?

• Where do they live?

• What is their income distribution? Do they receive employer help with housing costs?

• Does housing supply respond to this new demand (either tenure change or new construction)?

Existing data and limitationsNumbers relatively small: in 2009 Tiers 1 & 2 migrants = about 10% of all non-EU migrants

•Census•Labour Force Survey•English Housing Survey•UKBA administrative data

Methodology• Use Labour Force Survey to estimate

numbers of migrants, based mainly on qualifications and household types

• Use UKBA administrative data to infer residential locations

• Analysis (not modelling) of types and location of housing demand

• Qualitative interviews with estate agents and relocation agencies in relevant areas

Quantitative findings: how many?

Main visa holders

Visa type2011/12

Staying 12+ months

Tier 1exceptional talent 580investors 119entrepreneur 142

Tier 2general (salary< £150,000) 12,006general (salary > £150,000) 580intra-company transfer 16,918TOTAL 30,346

Dependents

Visa type2011/12

Staying 12+ months

Tier 1exceptional talent 585investors 144entrepreneur 115

Tier 2general (salary< 150,000) 56,510general (salary > 150,000) 273intra-company transfer 7,963All dependents 14,731All main visas 30,346All Tiers 1 & 2 L-T migrants 45,077

Total annual L-T migration (ONS) 586,000Tiers 1&2 as proportion of total 7.7%

Countries of origin

Tier 2 visa holders % of total

India 55 (75% of ICTs)USA 13Australia

2 – 3% each

Canada

ChinaPhilippinesPakistan

South Africa

How much do they earn?

Visa type Minimum incomeMedian 7/09 –

6/10Tier 1 exceptional talent None

No informationTier 1 investors From investments; no

specific minimumTier 1 entrepreneur From own business; no

specific minimumTier 2 general (salary < £150,000) £20,000

RLMT £29,000Shortage occupation

£23,000Tier 2 general (salary > £150,000)

£150,000

Tier 2 intra-company transfer (long-term)

£40,000 (o/w up to 40% from housing allowance)

£40,000

Tier 2 intra-company transfer (short-term)

£24,000 (o/w up to 30% from housing allowance)

Where do they work?District Number

(000s)% of

national total

As % of local jobs

1 City of London 11.2 12.1% 3.1%2 Tower Hamlets LB 7.6 8.2% 3.5%3 City of Westminster 6.4 6.9% 1.0%4 Southwark LB 2.8 3.0% 1.2%5 Camden LB 2.0 2.2% 0.7%6 Hillingdon LB 1.9 2.1% 1.0%7 Islington LB 1.9 2.0% 0.9%8 Edinburgh 1.6 1.7% 0.5%9 Suffolk Coastal 1.5 1.6% 2.5%10 Milton Keynes 1.4 1.5% 0.9%11 Leeds 1.3 1.4% 0.3%12 Reading 1.2 1.3% 1.2%13 Hounslow LB 1.1 1.2% 0.8%14 Birmingham 1.1 1.2% 0.2%15 Manchester 1.1 1.2% 0.3%

Where do they work?TTWA Number

(000s)As % of national

total

As % of employment

in area1 London 43.4 46.9% 0.8%2 Reading & Bracknell 2.9 3.1% 0.9%3 Guildford & Aldershot 2.1 2.3% 0.5%4 Ipswich 1.7 1.9% 0.9%5 Milton Keynes &

Aylesbury1.8 1.9% 0.7%

6 Edinburgh 1.6 1.8% 0.4%7 Wycombe & Slough 1.4 1.5% 0.5%8 Swindon 1.2 1.3% 0.5%9 Crawley 1.2 1.3% 0.4%10 Aberdeen 1.1 1.2% 0.4%11 Luton & Watford 1.1 1.2% 0.3%12 Cambridge 1.0 1.1% 0.4%13 Stevenage 0.8 0.9% 0.4%14 Norwich 0.9 0.9% 0.4%15 Bournemouth 0.6 0.7% 0.4%

What kinds of households?

Household type

Country-of-origin groupsAll

England

(2008)

Rich non-EEA India

Poor non-EEA

excluding India Total

Single person 13 12 20 14 29Couple only 38 33 25 32 35

TOTAL SMALL HOUSEHOLDS 51 45 45 46 64

Parent(s) and children alone 28 37 41 36 29Couple/family and other

adults7 5 6 6

8Other multi-adult household 15 12 7 11

TOTAL LARGE HOUSEHOLDS 50 54 54 53 37

Total 100 100 100 100 100

What kinds of housing?

Housing tenure

Country-of-origin groups

All England (2008)

Rich non-EEA India

Poor non-EEA

excluding India Total

Owner occupier 17 18 28 20 68Social renting 1 4 4 3 18Employer housing 3 6 4 5

14Other private renting 77 71 63 70Living with relative or rent free

3 1 1 1

Total 100 100 100 100 100

How does that change over time?

Housing tenure

Years since arrival in UKAll

England

(2008)

0 1 2 3 4 5 6 Total

Owner occupier 4 8 14 25 29 42 45 20 68Social renting 1 2 5 5 3 5 5 4 18Employer housing 2 6 5 3 5 6  0 5

14Other private renting 86 82 75 67 61 46 50 70Living with relative or rent free

6 2 1 0 2 1  0 2

Some implications

• 20% of these households do not fit the sixteen new household categories – which implies that large numbers share as multi-adult households

• Indian ICT workers—a major category—tend to be in this group

...• Migrant households initially

consume much less housing than equivalent resident households.

• As migrants become more settled their households change character and they consume more housing and become owners

• Therefore impact depends on how long migrants stay

How long do they stay?

Year of visa issuance

000s of households resident by year

2012 2013 2014 2015 2016 20172011/12 22.7 22.0 20.6 18.1 16.6 12.52012/13 22.7 22.0 20.6 18.1 16.62013/14 22.7 22.0 20.6 18.12014/15 22.7 22.0 20.62015/16 22.7 22.02016/17 22.7

TOTAL 22.7 44.7 65.3 83.4 100.0 112.5

Qualitative findings• Interviews with estate agents and relocation

agents in London & Aberdeen; survey of lettings agents

• Most such migrants rent flats—key factors are travel to work time and schools

• ICT migrants generally compete with other migrants because able/willing to pay higher rents

• High-income migrants benefit from relocation packages and housing allowances

• ‘Non-EU relocators’ made up at least 10% of clientele for all agents who responded—and in some cases over 75%.

• Most common nationalities American, Middle Eastern, and Russian

• Most looking for unfurnished houses or furnished flats

• Clients generally planned to stay 1-2 years in the rented property

• Certain neighbourhoods seen as attractive to particular nationalities:

Chelsea, Kensington – AmericansKnightsbridge, Mayfair – Arabs

Canary Wharf – Chinese• No consensus about whether demand

from such clients affected rents—30% said yes, 70% said no.

Conclusions• Numbers small in relation to overall

migration• Concentrations in certain areas,

especially London & SE, Ipswich, Aberdeen—but even there small % of housing markets

• Reading affordability model suggests very small impact on house prices—(much) less than 1%

• Greater effect likely to be on rents