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assetrichcashpoor

Simple idea about how to provide council and private housing in the south east

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I've got an idea about how to increase the supply of council and private housing in the south east:

From my understanding of the situation a large percentage of the cost of housing is land with planning permission. I've seen estimates of it being upto 70% of the cost of a house in the south east. The south east also has large areas of agricultural land surrouinding cities that is of limited value for it's natural beauty or usefulness but it is designated as greenbelt so cannot be developed, thus forcing development to leap frog the greenbelt. There is also a shortage of council housing with no money available for councils to build new houses. There is a shortage of private housing in part due to the costs of land and the cost of gaining planning permission together with section 106 payments etc.

My idea would be for councils to compulsory purchase the agricultural land at agricultural prices. They then grant themselves planning permission on this land, increasing the value by ~150 times. They then sell off half of the land to private developers at the new price ~150 x agricultural land value. The council has then captured the planning gain. The developers can then build private houses and sell them off. The developers wouldn't have to make any section 106 payments or build affordable housing as the council has already captured the planning gain in the land sale.

The council then builds the necessary infrastructure for the new private development together with their own council housing on the half of the land they still own. Then within a few years a large number of private and council houses become available for little or no public money.

 

 

I believe the original town and country planning act of 1947 enabled councils to compulsory purchase land at it's exising value and then sell on or develop once planning permission had been granted. This option was removed very quickly though.

If a government was interested in actually building homes would a plan like this actually work? It seems to be very simple but I haven't seen it proposed anywhere so there must be something I've missed. I appreciate that the high prices we see today are not solely due to lack of supply, the ready supply of debt has been a big factor too. But I believe one of the reasons banks are willing to lend stupid salary multiples is that they know the housing supply is not there so they're unlikely to lose. If there was a concerted effort to build housing would this mean that bank lending became more prudent?

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Increase housing suppling in London/SE.

Easy.

1) Cap housing benefit to 500/month.

2) Stop housing and paying benefits to any non UK national in London.

3) Build on the green belt. The green belt is envrionmental desert. Houses with gardens will provide a much more diverse, nature friendly environment.

 

 

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1 minute ago, spyguy said:

Increase housing suppling in London/SE.

Easy.

1) Cap housing benefit to 500/month. - That would decrease demand but would have the same effect as increased supply.

2) Stop housing and paying benefits to any non UK national in London. - That would decrease demand but would have the same effect as increased supply.

3) Build on the green belt. The green belt is envrionmental desert. Houses with gardens will provide a much more diverse, nature friendly environment. - That's part of my suggestion.

Thanks for the comments. I'm not a fan of housing benefit specifically or paying in-work benefits in general. If people are working full time their salary should cover their basic needs without a top up from the state in my opinion. New Labour in particular seemed to favour state top ups rather than standing up to big business and making them pay a fair wage or taking steps to decrease the cost of living. Stopping housing and other benefits to EU migrants is unlikely to happen in the near future even with Brexit.

 

However what I'm more interested in is how can house building rates and specifically council house building be increased. All main political parties have said that more housing must be built but none of them have done anything about it. Would my suggestion work or is there something I've missed. If my suggestion is practical what are the barriers that would have to be overcome to make it happen?

The other thing I should have mentioned is that the council house building could be sub-contracted to the major house builders on a costs + 10% profit contract. It's not hard to work out how much materials or labour go into building a house so it would be hard to pull the wool over the council's eyes. And the major house builders would get guaranteed work for x number of years with a known profit. Given the volatility in the last 10 years or so I think a few of the main players would be interested.

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31 minutes ago, assetrichcashpoor said:

They then sell off half of the land to private developers at the new price ~150 x agricultural land value. The council has then captured the planning gain. The developers can then build private houses and sell them off.

It would be great for council fat cat pay and pensions.

Why bother involving developers for what would still be overpriced houses? The council should just build on the land but not for profit. Rentals only with no right to buy ever. The cost of each house paid for by rent spread over 25 years e.g. £50k unit cost then £2k a year rent linked to RPI. Maybe a couple of stipulations, only for people born in the UK, who have worked at least 10 years and once unemployed for 13 months they have to leave.

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14 minutes ago, assetrichcashpoor said:

Thanks for the comments. I'm not a fan of housing benefit specifically or paying in-work benefits in general. If people are working full time their salary should cover their basic needs without a top up from the state in my opinion. New Labour in particular seemed to favour state top ups rather than standing up to big business and making them pay a fair wage or taking steps to decrease the cost of living. Stopping housing and other benefits to EU migrants is unlikely to happen in the near future even with Brexit.

 

However what I'm more interested in is how can house building rates and specifically council house building be increased. All main political parties have said that more housing must be built but none of them have done anything about it. Would my suggestion work or is there something I've missed. If my suggestion is practical what are the barriers that would have to be overcome to make it happen?

The other thing I should have mentioned is that the council house building could be sub-contracted to the major house builders on a costs + 10% profit contract. It's not hard to work out how much materials or labour go into building a house so it would be hard to pull the wool over the council's eyes. And the major house builders would get guaranteed work for x number of years with a known profit. Given the volatility in the last 10 years or so I think a few of the main players would be interested.

You can also work on the fast trasnport into London, but thats more of a longer term project than building houses.

With decent modern electric trains and signalling, you ought to get a 40 mile commute into central London down to 30 minutes.

At the moment, commutes in are hit and miss and crowded.

Id also move all government back office public sector jobs  out of London.

 

 

Edited by spyguy

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Here's one for you. If the government are serious about savers and getting on the ladder. Well, firstly, if you are going to have unlimited immigration and spend all your infrastructure/transport budget around the big cities, tear up green belts. Simple. You can't have both. But since that won't happen, here's oone solution.

American style trailer parks, or park homes as we call them. You can put up a modern, warm, climate controlled home in a couple of weeks. It is far cheaper than brick/concrete construction. Allow building on green belt, since they don't have a fixed foundation, the environment footprint is minimal. With uber and the like, commuter coaches and bus services to town centre will spring up, no problem. Make the land super cheap for qualified buyers, on a fixed length lease period. Allow people to save with this cheap housing while the government building plans in town are in progress. 
 It won't happen because governments Wang crowding and high house prices. It would expose their hypocrasy in a very open way. Maybe some brave souls should join together and form a hippy style commune along these lines, claim they are a new age religion with human rights, freemen of the land or something. Get some human rights lawyers involved or just refuse to pay btl rent and camp out en masse in local borough housing offices.

 

 

 

 

 

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5 hours ago, assetrichcashpoor said:

Thanks for the comments. I'm not a fan of housing benefit specifically or paying in-work benefits in general. If people are working full time their salary should cover their basic needs without a top up from the state in my opinion. New Labour in particular seemed to favour state top ups rather than standing up to big business and making them pay a fair wage or taking steps to decrease the cost of living. Stopping housing and other benefits to EU migrants is unlikely to happen in the near future even with Brexit.

 

However what I'm more interested in is how can house building rates and specifically council house building be increased. All main political parties have said that more housing must be built but none of them have done anything about it. Would my suggestion work or is there something I've missed. If my suggestion is practical what are the barriers that would have to be overcome to make it happen?

The other thing I should have mentioned is that the council house building could be sub-contracted to the major house builders on a costs + 10% profit contract. It's not hard to work out how much materials or labour go into building a house so it would be hard to pull the wool over the council's eyes. And the major house builders would get guaranteed work for x number of years with a known profit. Given the volatility in the last 10 years or so I think a few of the main players would be interested.

As for INWork benefits.

A huge number of people do not earn enough in full time work to pay the rent and eat, never mind keep children. Housing and other top up benefits are in fact a subsidy to employers who dont have to pay anything like a real living wage.  The only reason the government does this for the employers (apart from hoping to become a member of the board after parliament) is so that staff dont live under bits of tin at the side of the road and become an eyesore for proper people.

 

As for your original proposition, that is almost the one that has sat in situ since before Maggie thatcher shat on social housing.  However the newly available land for house builders should not be marked up in price to current levels, new houses for people to buy should also be affordable for real people on normal UK  median wages for the area.

Building costs also are much cheaper than mass builders would have you believe, they have a massive mark up on the build cos,t way higher than the actual cost to build.

Arguments about the green belt are almost nonsense.  We (The government that is) have built up the population and will continue to do so as it is a way to increase  GDP growth without putting any thought into it. We could double the UK housing stock by using only around 1.5% more land and that is for houses.

Read this article:

http://www.bbc.com/news/uk-18623096

note this point:

The urban landscape accounts for 10.6% of England, 1.9% of Scotland, 3.6% of Northern Ireland and 4.1% of Wales.

Put another way, that means almost 93% of the UK is not urban. But even that isn't the end of the story because urban is not the same as built on.

In urban England, for example, the researchers found that just over half the land (54%) in our towns and cities is greenspace - parks, allotments, sports pitches and so on.

Furthermore, domestic gardens account for another 18% of urban land use; rivers, canals, lakes and reservoirs an additional 6.6%.

Their conclusion?

In England, "78.6% of urban areas is designated as natural rather than built". Since urban only covers a tenth of the country, this means that the proportion of England's landscape which is built on is…


Image copyrightTHINKSTOCK Image captionScotland and the North-East embrace paving

… 2.27%.

 

So the only reason left that we have not got proper housing stock at proper prices is becasue 'THEY' dont want us to have it.

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6 hours ago, spyguy said:

You can also work on the fast trasnport into London, but thats more of a longer term project than building houses.

With decent modern electric trains and signalling, you ought to get a 40 mile commute into central London down to 30 minutes.

At the moment, commutes in are hit and miss and crowded.

Id also move all government back office public sector jobs  out of London.

To complement this idea, you could incentivise companies to have a certain number of remote jobs. This would reduce the pressure on rents and housing in the big cities, and improve traffic and public transport. It might also slowly help companies spread out since labour would be more distributed. In my experience companies avoid having remote workers because it's more difficult to monitor them, but people actually work harder because (a) they feel the need to compensate for "staying at home", and (b) the line between work and leisure gets blurry. This would have other beneficial effects too (improved productivity, increased worker happiness, etc)

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9 hours ago, assetrichcashpoor said:

I've got an idea about how to increase the supply of council and private housing in the south east:

From my understanding of the situation a large percentage of the cost of housing is land with planning permission. I've seen estimates of it being upto 70% of the cost of a house in the south east. The south east also has large areas of agricultural land surrouinding cities that is of limited value for it's natural beauty or usefulness but it is designated as greenbelt so cannot be developed, thus forcing development to leap frog the greenbelt. There is also a shortage of council housing with no money available for councils to build new houses. There is a shortage of private housing in part due to the costs of land and the cost of gaining planning permission together with section 106 payments etc.

My idea would be for councils to compulsory purchase the agricultural land at agricultural prices. They then grant themselves planning permission on this land, increasing the value by ~150 times. They then sell off half of the land to private developers at the new price ~150 x agricultural land value. The council has then captured the planning gain. The developers can then build private houses and sell them off. The developers wouldn't have to make any section 106 payments or build affordable housing as the council has already captured the planning gain in the land sale.

The council then builds the necessary infrastructure for the new private development together with their own council housing on the half of the land they still own. Then within a few years a large number of private and council houses become available for little or no public money.

 

 

I believe the original town and country planning act of 1947 enabled councils to compulsory purchase land at it's exising value and then sell on or develop once planning permission had been granted. This option was removed very quickly though.

If a government was interested in actually building homes would a plan like this actually work? It seems to be very simple but I haven't seen it proposed anywhere so there must be something I've missed. I appreciate that the high prices we see today are not solely due to lack of supply, the ready supply of debt has been a big factor too. But I believe one of the reasons banks are willing to lend stupid salary multiples is that they know the housing supply is not there so they're unlikely to lose. If there was a concerted effort to build housing would this mean that bank lending became more prudent?

...bankers lending today should have their data stress tested to see if it is viable or just plain gambling to generate short term profits in the form of commissions and long term losses when the borrower falls at the first few hurdles....or later...

When the insurable value is 70% of the value of the house you have to make sure people are not insuring their land values through ignorance.. ..we need housing in city centres .....not green field sites....bring our cities back to life by being affordable......:rolleyes:

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Even easier and cheaper options, and no new building is required:

1. Land value tax.  And increased rates of it if homes are empty or land is not used.  Just to make sure there is no one sitting on their assets for 10 years hoping the value will go up all by itself

2. Tax on purchases by overseas and offshore buyers.  E.g + 10% or even 20% on top of stamp duty

I bet once all the investors evaporate, housing problem will be much less of on issue.  

 

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21 hours ago, assetrichcashpoor said:

I've got an idea about how to increase the supply of council and private housing in the south east:

From my understanding of the situation a large percentage of the cost of housing is land with planning permission. I've seen estimates of it being upto 70% of the cost of a house in the south east. The south east also has large areas of agricultural land surrouinding cities that is of limited value for it's natural beauty or usefulness but it is designated as greenbelt so cannot be developed, thus forcing development to leap frog the greenbelt. There is also a shortage of council housing with no money available for councils to build new houses. There is a shortage of private housing in part due to the costs of land and the cost of gaining planning permission together with section 106 payments etc.

My idea would be for councils to compulsory purchase the agricultural land at agricultural prices. They then grant themselves planning permission on this land, increasing the value by ~150 times. They then sell off half of the land to private developers at the new price ~150 x agricultural land value. The council has then captured the planning gain. The developers can then build private houses and sell them off. The developers wouldn't have to make any section 106 payments or build affordable housing as the council has already captured the planning gain in the land sale.

The council then builds the necessary infrastructure for the new private development together with their own council housing on the half of the land they still own. Then within a few years a large number of private and council houses become available for little or no public money.

 

 

I believe the original town and country planning act of 1947 enabled councils to compulsory purchase land at it's exising value and then sell on or develop once planning permission had been granted. This option was removed very quickly though.

If a government was interested in actually building homes would a plan like this actually work? It seems to be very simple but I haven't seen it proposed anywhere so there must be something I've missed. I appreciate that the high prices we see today are not solely due to lack of supply, the ready supply of debt has been a big factor too. But I believe one of the reasons banks are willing to lend stupid salary multiples is that they know the housing supply is not there so they're unlikely to lose. If there was a concerted effort to build housing would this mean that bank lending became more prudent?

Whenever you think of a scheme like this, you MUST then think "if I was corrupt how would I game the system now?"

 

unfortunately your scheme is wide open to abuse within the council.  And councils are a cesspit of corruption in the UK.  So you'd end up with a lot of very rich people, councils spending much more money than they can afford, and crappy build houses.

If there was a national scheme with a fully paid for anti corruption department running alongside, then yes, you may have a point.

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On 26/11/2016 at 3:45 PM, Democorruptcy said:

Why bother involving developers for what would still be overpriced houses? The council should just build on the land but not for profit. Rentals only with no right to buy ever. The cost of each house paid for by rent spread over 25 years e.g. £50k unit cost then £2k a year rent linked to RPI. Maybe a couple of stipulations, only for people born in the UK, who have worked at least 10 years and once unemployed for 13 months they have to leave.

I like this idea.

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On 26/11/2016 at 3:02 PM, assetrichcashpoor said:

I've got an idea about how to increase the supply of council and private housing in the south east:

From my understanding of the situation a large percentage of the cost of housing is land with planning permission. I've seen estimates of it being upto 70% of the cost of a house in the south east. The south east also has large areas of agricultural land surrouinding cities that is of limited value for it's natural beauty or usefulness but it is designated as greenbelt so cannot be developed, thus forcing development to leap frog the greenbelt. There is also a shortage of council housing with no money available for councils to build new houses. There is a shortage of private housing in part due to the costs of land and the cost of gaining planning permission together with section 106 payments etc.

My idea would be for councils to compulsory purchase the agricultural land at agricultural prices. They then grant themselves planning permission on this land, increasing the value by ~150 times. They then sell off half of the land to private developers at the new price ~150 x agricultural land value. The council has then captured the planning gain. The developers can then build private houses and sell them off. The developers wouldn't have to make any section 106 payments or build affordable housing as the council has already captured the planning gain in the land sale.

The council then builds the necessary infrastructure for the new private development together with their own council housing on the half of the land they still own. Then within a few years a large number of private and council houses become available for little or no public money.

 

 

I believe the original town and country planning act of 1947 enabled councils to compulsory purchase land at it's exising value and then sell on or develop once planning permission had been granted. This option was removed very quickly though.

If a government was interested in actually building homes would a plan like this actually work? It seems to be very simple but I haven't seen it proposed anywhere so there must be something I've missed. I appreciate that the high prices we see today are not solely due to lack of supply, the ready supply of debt has been a big factor too. But I believe one of the reasons banks are willing to lend stupid salary multiples is that they know the housing supply is not there so they're unlikely to lose. If there was a concerted effort to build housing would this mean that bank lending became more prudent?

Your idea is essentially how China has financed local government for the past 20 years.  Chinese local governments buy land, grant themselves development rights, then sell it on to developers at a huge profit.  It has lead to an increase in housing, though also allows corruption to run rife and massive over development.

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On 26/11/2016 at 3:21 PM, spyguy said:

Increase housing suppling in London/SE.

Easy.

1) Cap housing benefit to 500/month.

2) Stop housing and paying benefits to any non UK national in London.

3) Build on the green belt. The green belt is envrionmental desert. Houses with gardens will provide a much more diverse, nature friendly environment.

 

 

Wonderful ideas - they will never happen though.

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6 minutes ago, iamnumerate said:

Wonderful ideas - they will never happen though.

There's 3 ideas. At least 1 will hit. Hopefully 2.

 

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Just now, spyguy said:

There's 3 ideas. At least 1 will hit. Hopefully 2.

 

I hope you are right, I would probably vote for you if I could (although I am not sure what party would have you as a candidate).  I really hope that I am wrong.

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19 hours ago, richc said:

Your idea is essentially how China has financed local government for the past 20 years.  Chinese local governments buy land, grant themselves development rights, then sell it on to developers at a huge profit.  It has lead to an increase in housing, though also allows corruption to run rife and massive over development.

Again not wanting to sound stupid, as a county isn't Britain far less corrupt than China and people are more vocal so local officials are far less likely to get away with it. As far as I can tell the UK has never over developed even with the house building after the second world war so is over development an issue? When you look at other countries that joined in the recent housing bubbles such as the USA, Ireland and Spain they did over develop whereas the UK didn't. 

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The price of housing in the UK isn't dictated by some simple 'cost of land + cost of build + profit = price of house'.  Housing is priced on the availability of credit.  Only.

If you reduce the price/cost of land then the costs of all other elements will expand to fill the newly created space - the end price of the home will remain the same.

Increase the cost of credit (interest rates go up, tax perks go down, house purchase incentives are removed, anything) then house prices will change to compensate.

The problem we have in this country is that we've not introduced any counter cyclical elements to stabilise house prices.  We could have had sensible interest rate policies which raised the interest rate of mortgages as housing got hotter (perhaps as an additional 'risk to the economy' premium charged to banks.  Or a land value tax (effectively acting as a constant 'interest rate' factor, which wouldn't turn with as the economy turned).  Or housing benefit which rose by <100% as rents increased.  

But no, we have had crazy policies, where we encourage speculation during the good years but encourage speculation during the bad years.  Probably the worst possible mix.

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1 hour ago, assetrichcashpoor said:

Again not wanting to sound stupid, as a county isn't Britain far less corrupt than China and people are more vocal so local officials are far less likely to get away with it. As far as I can tell the UK has never over developed even with the house building after the second world war so is over development an issue? When you look at other countries that joined in the recent housing bubbles such as the USA, Ireland and Spain they did over develop whereas the UK didn't. 

I think your idea has a lot of merit.  It would be far better than the current system, but there probably would be some downsides at some point.

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1 minute ago, dgul said:

The price of housing in the UK isn't dictated by some simple 'cost of land + cost of build + profit = price of house'.  Housing is priced on the availability of credit.  Only.

If you reduce the price/cost of land then the costs of all other elements will expand to fill the newly created space - the end price of the home will remain the same.

Increase the cost of credit (interest rates go up, tax perks go down, house purchase incentives are removed, anything) then house prices will change to compensate.

The problem we have in this country is that we've not introduced any counter cyclical elements to stabilise house prices.  We could have had sensible interest rate policies which raised the interest rate of mortgages as housing got hotter (perhaps as an additional 'risk to the economy' premium charged to banks.  Or a land value tax (effectively acting as a constant 'interest rate' factor, which wouldn't turn with as the economy turned).  Or housing benefit which rose by <100% as rents increased.  

But no, we have had crazy policies, where we encourage speculation during the good years but encourage speculation during the bad years.  Probably the worst possible mix.

Irrespective of the massive housing bubble currently afflicting the country, the UK really could use more/better houses, and this idea would be a better way of delivering them then the current system.

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Please, please do not build anymore round me.  Not nimbyism but the infrastructure cannot take it.  East London, shed loads of new high rise shoe boxes, sorry apartments.  My local station, only one stop from the start of the line, gone from being able to get a seat to having to fight for one.  Two stops down we are like sardines.  Car parking is a nightmare as all newbuikd comes with too few spaces so as to discourage car ownership. It doesn't, it just clogs the streets.  Local schools completely oversubscribed. Doctors, have stopped trying to get an appointment. 

It's all very well shoving loads more homes into an area, but there needs to be commensurate spending on infrastructure. 

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