1. 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

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

3. 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

4. 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

5. 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

6. 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)?

7. Existing data and limitations Numbers 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

8. 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

9. Quantitative findings: how many? Main visa holders Visa type 2011/12 Staying 12+ months Tier 1 exceptional talent 580 investors 119 entrepreneur 142 Tier 2 general (salary< £150,000)12,006 general (salary > £150,000)580 intra-company transfer16,918 TOTAL 30,346

10. Dependents Visa type 2011/12 Staying 12+ months Tier 1 exceptional talent 585 investors 144 entrepreneur 115 Tier 2 general (salary< 150,000)56,510 general (salary > 150,000)273 intra-company transfer7,963 All dependents 14,731 All main visas 30,346 All Tiers 1 & 2 L-T migrants 45,077 Total annual L-T migration (ONS) 586,000 Tiers 1&2 as proportion of total 7.7%

11. Countries of origin Tier 2 visa holders% of total India 55 (75% of ICTs) USA 13 Australia 2 – 3% each Canada China Philippines Pakistan South Africa

12. How much do they earn? Visa typeMinimum incomeMedian 7/09 – 6/10 Tier 1 exceptional talent None No information Tier 1 investors From investments; no specific minimum Tier 1 entrepreneur From own business; no specific minimum Tier 2 general (salary < £150,000) £20,000 RLMT £29,000 Shortage occupation £23,000 Tier 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)

13. Where do they work? District Number (000s) % of national total As % of local jobs 1 City of London11.212.1%3.1% 2 Tower Hamlets LB7.68.2%3.5% 3 City of Westminster6.46.9%1.0% 4 Southwark LB2.83.0%1.2% 5 Camden LB2.02.2%0.7% 6 Hillingdon LB1.92.1%1.0% 7 Islington LB1.92.0%0.9% 8 Edinburgh1.61.7%0.5% 9 Suffolk Coastal1.51.6%2.5% 10 Milton Keynes1.41.5%0.9% 11 Leeds1.31.4%0.3% 12 Reading1.21.3%1.2% 13 Hounslow LB1.11.2%0.8% 14 Birmingham1.11.2%0.2% 15 Manchester1.11.2%0.3%

14. Where do they work? TTWA Number (000s) As % of national total As % of employment in area 1London43.446.9%0.8% 2Reading & Bracknell2.93.1%0.9% 3Guildford & Aldershot2.12.3%0.5% 4Ipswich1.71.9%0.9% 5Milton Keynes & Aylesbury1.81.9%0.7% 6Edinburgh1.61.8%0.4% 7Wycombe & Slough1.41.5%0.5% 8Swindon1.21.3%0.5% 9Crawley1.21.3%0.4% 10Aberdeen1.11.2%0.4% 11Luton & Watford1.11.2%0.3% 12Cambridge1.01.1%0.4% 13Stevenage0.80.9%0.4% 14Norwich0.90.9%0.4% 15Bournemouth0.60.7%0.4%

15. What kinds of households? Household type Country-of-origin groups All England (2008) Rich non-EEAIndia Poor non- EEA excluding IndiaTotal Single person 1312201429 Couple only 3833253235 TOTAL SMALL HOUSEHOLDS 5145 4664 Parent(s) and children alone 2837413629 Couple/family and other adults 7566 8 Other multi-adult household 1512711 TOTAL LARGE HOUSEHOLDS 5054 5337 Total100

16. What kinds of housing? Housing tenure Country-of-origin groups All England (2008) Rich non- EEAIndia Poor non- EEA excluding IndiaTotal Owner occupier 1718282068 Social renting 144318 Employer housing 3645 14 Other private renting 77716370 Living with relative or rent free 3111 Total100

17. How does that change over time? Housing tenure Years since arrival in UK All England (2008) 0123456Total Owner occupier 4814252942452068 Social renting 1255355418 Employer housing 265356 05 14 Other private renting 8682756761465070 Living with relative or rent free 621021 02

18. 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

19. ... 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

20. How long do they stay? Year of visa issuance 000s of households resident by year 201220132014201520162017 2011/1222.722.020.618.116.612.5 2012/1322.722.020.618.116.6 2013/1422.722.020.618.1 2014/1522.722.020.6 2015/1622.722.0 2016/1722.7 TOTAL22.744.765.383.4100.0112.5

21. 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

22. ‘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

23. Clients generally planned to stay 1-2 years in the rented property Certain neighbourhoods seen as attractive to particular nationalities: Chelsea, Kensington – Americans Knightsbridge, Mayfair – Arabs Canary Wharf – Chinese No consensus about whether demand from such clients affected rents—30% said yes, 70% said no.

24. 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