Monday, September 21, 2009

Only a billion

Government asked to pay off £800m Olympic land debt

The olympic development has debts of 800 million on the regeneration site. The government wants London to pick up the tab, and Boris on behalf of London wants the government to pick up the tab. If London gets the debt then council taxes will have to rise. There is one advantage to the absence of social housing provision under Labour, they did not make a huge loss building properties in the bubble.

Posted by stillthinking @ 09:21 AM (815 views)
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4 thoughts on “Only a billion

  • Oh now this one has a funny history if I remember it correctly.

    When the government purchased the site, commercial and residential land prices were soaring, so the government amortized the debt based on resale value after the games. In other words, they allowed themselves to assume that property would keep going up and up and up for the next ten or so years after the bid was won.

    Who should pick up the tab for this? Whichever accountancy firm came up with that gobsmacking repayment idea.

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  • tyrellcorporation says:

    Stratford? Surely they mean £8m!

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  • @ Stillthinking: “There is one advantage to the absence of social housing provision under Labour, they did not make a huge loss building properties in the bubble.”

    Does not compute. Nobody makes a loss by building properties, you make a loss by buying overpriced land or overpriced existing houses. And seeing as 99% of the cost of land is the value of planning permission, and councils can give themselves planning permission for free, there is no reason for them to make losses (of course they can, because a lot of them are idiots or corrupt, that’s a different topic).

    That’s my new campaign anyway – let’s build more state-owned housing for rent (but let on a commercial basis) and keep building it until rents drop to a level that just covers the index linked cost of capital and maitenance/repairs (i.e. about £2,500 a year for a small house/big flat).

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  • Lots of people make a loss by building properties. In the boom years, a lot of people who thought they were making money building properties were actually making a loss because they would have made more profit on the increased land value if they had done nothing.

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