High levels of immigration are fuelling Britain’s housing crisis, according to the Bank of England’s chief economist, who blamed skyrocketing rents on a shortage of properties.
Huw Pill said higher interest rates were not responsible for record hikes in rental costs, which jumped by 9.2pc in the year to March.
He said “quite large increases in immigration” were piling more pressure on Britain’s housing stock, after net migration hit a record-breaking 745,000 in 2022.
In comments made after the Bank of England held rates at 5.25pc for a sixth consecutive meeting on Thursday, Mr Pill said: “The population is growing.
“To some extent, the rents are really a reflection of supply and demand factors [and] reflect things that aren’t to do with monetary policy.”
A shortage of houses stems from delays in the planning sector, Mr Pill said, which has long been a source of concern for Britain’s biggest developers.
By arguing that monetary policy is not to blame for the housing crisis, he pushed responsibility towards politicians.
He added: “We don’t really build enough houses in this country. And the reason we don’t build enough houses or housing in this country is in large part [because] there’s a lot of issues around planning and so forth.
“So there’s a restraint on supply, which I think probably is not coming from monetary policy, it’s coming from other policy choices.
“And at the same time that is facing - and increasingly so - in recent times, increasing demand.”
His comments come after Andrew Bailey, the Bank’s Governor, has previously said that higher taxes have forced landlords to sell their properties in the face of higher interest rates.
This has increased financial pressures on tenants by driving up rents.
UK Finance data show the number of buy-to-let mortgages in arrears more than doubled in the first quarter of 2024, compared to the same period a year earlier.
Mr Pill admitted that “incentives” for landlords to rent out properties were reduced by higher borrowing costs, but added that higher rates had also made investing in other assets more attractive.
A report by the Centre for Policy Studies this week warned that record levels of immigration had failed to boost the economy while making the housing crisis worse.
The report, which was backed by former immigration minister Robert Jenrick, said migration now accounted for around 89pc of the 1.34m increase in England’s “housing deficit”.
This represents the number of homes the country has underbuilt in the last 10 years.
Mr Pill said the Bank had little influence over housebuilding, as he suggested politicians should do more to build more properties.