Saturday, October 15, 2011

The problem with housing

Cathy Come Home's lesson will soon be learned again

"There is no cheap answer to housing but as rent gets more out of reach the state has to find ways for all to afford a home". Polly Toynbee sets outs a summary of the thorny housing issue but doenst provide much in the way of answers.

Posted by greenmind @ 12:35 PM (3568 views)
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36 thoughts on “The problem with housing

  • Maybe I did the article a disservice as there is a chunky paragraph on things to be done.

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  • mark wadsworth says:

    Ho hum, she mentions LVT, more new constructiom and more social housing, so amen to that, but she might as well have stopped here:

    “Lessons of the 1960s will have to be learned all over again.”

    Yup, lots of new construction (private and social), ever rising numbers of owner-occupiers, low and stable prices, no major financial crises, strict rent controls in private sector, high taxation of rental income, strict mortgage lending limits and Domestic Rates (and, until mid-1960s, Schedule A tax on imputed rents of owner-occupiers). By today’s standards, it was positively Georgist.

    That is all quite simple in practice and we could re-introduce it tomorrow, given the political will.

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  • Just thinking out loud.. If the government suddenly built lets say 2 million homes of all types, it would devalue all other housing stock BUT those new 2 million homes would be worth some money so wouldn’t it all net out to zero. Ok, there will be winners and losers but the net effect is more housing.

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  • Property is still overpriced, due to shortage.

    Numpty Polly.

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  • stillthinking says:

    Although it seems as though we could make the decision to build, relax the choke of planning permission etc, and address the underlying shortage I don’t see that we can, and the reason is simply because we have already borrowed and spent the money required to do so.

    There is no way that we can kick off on 250,000 properties a year, because this would require REAL capital from the pool of REAL uk savings, and it isn’t there, and to build it up requires ploughing through our existing debt overhang first… we don’t even have enough real capital to avoid inflation by not building them!

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  • Easy just phone Merv and ask him to credit your account with the cash.

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  • voiceofreason says:

    Adjust the tax breaks landlords get to level the playing field back in favour of owner occupiers.
    E.g. we used to have MIRAS which BTLrs wouldn’t.

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  • Polly Toynbee: There, there, no need to riot. The Guardian will make them see sense.

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  • Really building a million homes would just transfer the wealth from (older) existing homeowners to new (younger?) homeowners.

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  • mark wadsworth says:

    Stillthinking: “There is no way that we can kick off on 250,000 properties a year, because this would require REAL capital from the pool of REAL uk savings, and it isn’t there, and to build it up requires ploughing through our existing debt overhang first… we don’t even have enough real capital to avoid inflation by not building them!”

    Well, for young people on an OK income, they can pay for their own houses, they only cost about £80,000 to build, no state intervention involved.

    We (the taxpayer) can pay for the social housing by scrapping Housing Benefit for private landlords, that’s enough to pay for 150,000 new units each and every year.

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  • Question :
    If house prices are high due to shortage then how come they’ve gone up so much – globally.
    There’s no shortage of land in Australia And we’re led to believe China has entire towns vacant yet house price bubbles are common to both countries.

    I suggest it’s the low deposit/big credit situation that accounts for the bubbles, combined with an anticipation prices will increase and low interest environment allowing the ‘bets’ to remain on the table.

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  • Without a policy in place new homes would simply be bought up by BTLers for speculative flipping and renting back to the generation they were meant for.

    I’m surprised the protests around the worlds banking communities have stayed peaceful – so far.

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  • Str, The US and Ireland still have low interest rates you can currently get a mortgage in Ireland at around 3% @ 92% LTV.

    These countries both have had a housing crash, why? Apparently due to oversupply.

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  • New homes arent being built because developers who paid for land at the top of the market cant get the returns they need to make a profit (due to house price falls). The policy required to tackle land banks is some kind of “use it or loose it” approach. Land speculators must be forced to take the hit rather than allowed to wait and wait and wait. LVT would do the trick. This could be built into the planning system. If a local authority deems that a particular site (whether greenfield or brownfield) is the location for new build, then it should be able to levy a charge on the owners of said site, e.g. council tax rating as residential land. This could be done with an 18 month advance warning to give land owner a chance to get building.

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  • sibley's b'stard child says:

    Toynbee; high on emotive anti-tory rhetoric, low on answers.

    Conspicuous from her hackneyed ramblings is the refusal to acknowledge how Labour’s manifold failings have led us here. Still don’t let inconvenient facts get in the way of partisan tubthumping.

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  • The housing shortage is relatively small, but it becomes critical because everyone has to live somewhere.

    As Mark says, build cost alone is around £80k, although for self-build, it is a lot less, especially if there was general clear-out of the obstructive regulations the construction industry is now burdoned with.

    The issue of land availability does not have to be contentious – the MoD is sitting on vastly more than it has any valid use for – and more than enough spare land to make up the housing supply shortfall.

    The maths is overwhelming – sell a new issue of govt. bonds to build new houses, and pay off the debt using savings from the housing benefit budget.

    Project: Build 1m new homes on ex. MoD land over five years.

    – Cost £80bn (funded by the bond issue)

    – Savings from HB budget – c.£10bn p.a.

    – Jobs created (including indirect jobs) c.1m

    – Saving on welfare budget from job creation – c £10bn p.a.

    – Cost of servicing £80bn bond issue – c. £2bn p.a.

    – Saving to the taxpayer – c.£18bn p.a. – before any rental income from the new homes is taken into account.

    (and when the shortfall of homes is sorted, start a new project to re-develop run down areas, and improve the overall quality of the UK’s housing stock)

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  • mark wadsworth says:

    Uncle Tom, good maths, can’t fault you there. Is there a map where I can look up my nearest MoD-owned land?

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  • UT I largely agree, but MOD land often isnt the best place to build. un like some on here i do think site selection should be done carefully rather than ad hoc build whereever there is a chance to. I favour planning in the true sense which is proactive, rather than the pitiful “development control” version of planning we have in this country at present. Climate change, flood risk, transportation, eco-systems, food production etc, all these issues need to be put on the scales when deciding where to build. It shouldnt be left up to developers to decide. At present local authorities can only outline where development is possible, and if they want to boost productionn they need to identify lots of sites in the hope that one of them might come forward. Thats a hopelessly reactive way to go about things, no wonder the planning proffession is such a pathetic one.

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  • “Uncle Tom, good maths, can’t fault you there. Is there a map where I can look up my nearest MoD-owned land?”

    Try Google maps – old air bases and barracks are quite easy to spot on satellite photos – for example, look up Kneesworth in Hertfordshire – immediately to the north-west you can clearly see the outline of Bassingbourn barracks.

    This site is used mostly for basic training, and most of the recruits have northern or Welsh accents, so its location is ludicrous. The facility could be re-located to south Wales, where they would appreciate the spin-off employment, and the Bassingbourn site liberated for the building of about 3,000 homes.

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  • “Conspicuous from her hackneyed ramblings is the refusal to acknowledge how Labour’s manifold failings have led us here. Still don’t let inconvenient facts get in the way of partisan tubthumping.”

    Certainly not getting in your way, sibs.

    As str2007 reminds us, the so-called housing shortage has more than one meaning. In the case of the UK, and much of the world, shortage means more money aimed at houses than numbers for sale can satisfy. Of course there is the matter of insufficient houses where they’re needed (which really means ridiculous concentration of economic activity in one part of the country), poor quality houses, MOD land, empty second homes, land banking, and all the other imbalances and inequalities that we get in the name of freedom and choice.

    It’s perfectly true, as MW says, that there are good ways to deal with these problems. But this means redressing some of the inequalities that benefit a wealthly minority, and as our current govt’s – even more so than the last govt’s – unspoken policy is to conserve these inequalities, I see no change, even in the distance.

    (You might like to listen to this morning’s Point of View – a pointed jab at Nimbyism.)

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  • Mark W,

    Council housing isn’t always the answer. In parts of the country where the cost of land close to zero (generally areas where you can buy a house for under £70,000), it’s cheaper to pay housing benefit to private landlords than to provide council housing. Basically it’s the same as outsourcing, no different to the council paying Biffa or Sita to do bin collections.

    The maintenance costs for council housing add up quite a bit over the years. The Tenant Services Authority provides some useful figures: Understanding Social Housing Costs [PDF]. Average net operating costs per social housing unit were £3,590 in 2010.

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  • sibley's b'stard child says:

    Ha touche LTF, you may have a point had I ever, or ever intended to, vote Tory.

    Poynbee is emblematic of the blinkered Guardian readership whose raison d’etre is solely to bash the Tories while conveniently ignoring any Labour short-comings that would challenge their world-view. Party politics are so outmoded, but hey, let people cling to them if it helps them sleep at night.

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  • mark wadsworth says:

    D, council tax is a sticking plaster to alleviate the worst excesses of Home-Owner-Ism, in a perfect LVT-CI world, we wouldn’t really need it, but that world is a long way off.

    In my current job, I’d never qualify for social housing, but so what? If they build more of it at the lower end, then rents and prices in the middle and upper tiers would fall correspondingly. In fact, if the government had any long term vision, it would rush out and build millions of units of social housing of all types, from student bed sits to family homes to executive villas and rent them out to people for a few quid less than what the private sector charges.

    That figure of £3,590 is for housing associations, who are upmarket of ordinary council housing, and it’s not just maintenance, it’s insurance, ‘management’ (about a third of all costs, depreciation on improvements etc etc. I’m sure they could pare back the ‘management costs’ back a bit, but hey, that works out at under £100 a week, I’m sure that nearly everybody can afford to pay that much.

    Sib’s, simple fact is that the last Labour government were far more Home-Owner-Ist than any previous Tory government ever dared, the problem is that the current lot and continuing with exactly the same policies.

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  • It is such a shame the government changed the planning laws in October 2009 to allow these land bankers to extend their planning permission, otherwise the permissions would be expiring in 2012.

    http://www.hip-consultant.co.uk/blog/extend-planning-permission-123/

    Of the land hasn’t been built on in 3 years then the local council / planning office should be able to deny planning permission based upon the building company has no intent on providing new homes in the near future.

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  • Come on sibs, you send exactly like a Telegraph Tory saying that. Absurd to claim those who read the G are any more blinkered than the readership of any other paper. PT is the social correspondent and therefore can be expected to attack govt policy that harms the least well off.

    MW:”last Labour government were far more Home-Owner-Ist than any previous Tory government ”

    Not sure how you come to that conclusion – council house sales, MIRAS and all that …

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  • sibley's b'stard child says:

    Oh dear, you walked into that one LTF. Did you realise that more council stock was sold-off under Labour? Which kind of substantiates MW’s point.

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  • mark wadsworth says:

    LTF, “Home-Owner-Ist” is not the most precise term I’ve ever coined, but you have to look at everything in the round, the amount of bank bail outs, the number of council house sales, how much new construction fell, how far interest rates were depressed, by how much land taxes fell as a proportion of all taxes etc. On that measure, New Labour were worse than any previous Tory or Labour govt, including Thatcher.

    But most importantly, look at the house price bubble, under New Labour it was two or three times as big and lasted two or three times as long as any previous one. And hence will cause between four and nine times as much damage while it unwinds. For sure, the Lib-Cons will try and keep the whole charade going, but that’s just the Home-Owner-Ist ratchet at work, if there are votes to be had in cutting interest rates, then each govt will try and keep them lower than the previous one.

    SBC, ta, exactly.

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  • You’re not really in a position to patronise anyone sbc. Considering you claim to be non-party-political, you make a lot of hollow jibes at Labour, digging out the odd tatty figure carefully folded in your inside pocket.

    Come one, MW, you of all people know that housing bubbles, low interest rates, etc were a global phenomenon. I think you will also agree that economic activity is also as much or more dependent on external forces than govt action (as we are currently seeing). The Con’s ideology was to encourage home ownership (MT’s idea of the fruitful Englander); they kicked it all off. Sure, blame Labour for following their policies assiduously (the exact figures on council house sales are by the way), but the current govt are not merely keeping the charade going, they invented it (LD’s joining in it seems) and are keenly continuing with it.

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  • ltf,

    Hollow jibes? By all means take a left-leaning view, but parroting the notion that last govt. was somehow an innocent victim of global events denies the warning bells that rang out loud both here and elsewhere throughout the last nine years of their reign..

    ..New Labour was never a champion of left-wing ideology, and they screwed up – big time. Left wing politics has no chance of recovering in this country until those who are genuinely of the left openly condemn those that betrayed the cause.

    It’s not hard to find fault with the concept of home-ownership, but the alternate theories do not have much of a track record in this country. Any alternate policy needs to be worked through in some detail, because it won’t pass muster with the electorate as an ideology alone..

    “Never to let a hold of nurse, for fear of finding something worse” [Hillaire Belloc]

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  • sibley's b'stard child says:

    Nah, you’re barking up the wrong tree there LTF. My old dear was a Labour councillor for a number of years and my old man was a card-carrying Connie. Years of CND and TU demos, boycotts and the like. The family are all staunch Labour or, if they’re feeling a little rebellious, Libs.

    The derision I reserve for Labour is borne from how they’ve successfully shafted their core support. In fact, i’d go ad far to say at least the Tories far better serve their grassroots than Labour. Given how far the common man had been f*cked over by the last govt, it appalls me how the Guardian still clings to the pantomime jeering of the Tories.

    In fairness to the Tories, were I to vote for them i’d at least know what to expect.

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  • UT:”..New Labour was never a champion of left-wing ideology”

    I quite agree. But I’m not parroting anyone’s notion: it is true that world events had a big impact on all countries. One cannot expect govts to stand alone, even if one would like them to. We’ve argued this at length in the past. However, I do agree that Lab were in many respects like the Cons, especially with regard to their laissez faire with the banks.

    sibs
    I’ll accept your left-wing pedigree. And I don’t disagree either with you about at least some of the aspects of the last govt. But bear in mind that policies like the min wage and tax credits did help the least well off considerably (see the IFS for figures if you wish), so in that respect they did behave as a Lab govt should. As for Tory grass roots, it seems to me that their lawn is extremely small, but they manage to convince many that they too sit in the garden, when in truth they are in the corner with the compost heap.

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  • mark wadsworth says:

    SBC: “Come on, MW, you of all people know that housing bubbles, low interest rates, etc were a global phenomenon.”

    By and large, they were an Anglophone phenomenon plus Spain (a lot of British ex-pats and gold diggers). You can compare the UK housing bubble with other countries if you like, I don’t think it was as big as the Irish one, but it was bigger than most.

    And Mr G Brown himself boasted a few years ago that “Middle England had seen their house prices rise faster than their incomes” and made it clear that he thought that this was a good thing.

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  • mark wadsworth says:

    Oops, that was addressed at LTF and not SBC, obviously.

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  • ontheotherhand says:

    SBC “Come on, MW, you of all people know that housing bubbles, low interest rates, etc were a global phenomenon.”

    Brown spotted the housing bubble alright (see him speak about it below), but he boasted that he had beaten it. No modesty in his speech to the Labour Conference in 2005;

    “We will have the strength and resolution to take the right long-term economic decisions too.

    Why has it been that at every point since 1997 faced with the Asian crisis, the IT collapse, a stock exchange crash, an American recession, last year a house price bubble, this year rising world oil prices, why has it been that at every point since 1997 Britain uniquely has continued to grow?

    In any other decade, a house price bubble would have pushed Britain from boom to bust.

    In any other decade, a doubling of oil prices would have put Britain first in last out and worst hit by a world downturn.

    I tell you, it is because with Bank of England independence, cutting debt, fiscal discipline and the New Deal this Labour government has shown the strength to take the tough long-term decisions, that inflation is low, interest rates are low, growth has been sustained in every year, and we are closer than ever to the goal which drives us forward: the goal of full employment for our generation.

    Labour, the natural party for economic strength in our country today.”

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  • mark wadsworth says:

    OTOH, I’ll see your 2005 conference speech and raise you a pre-pre-election speech from 2008:

    “Responding to the concerns, Mr Brown appealed to the self-interest of homeowners, small businesses and the aspirant working classes. He said: “I think the important thing is that over the last 10 years people in the South have seen their living standard rise substantially. They’ve seen their net wealth rise even faster than their incomes.”

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  • Since when did you ever expect modesty from a politician, especially a frontbencher? Quoting speeches doesn’t mean much. Little that is said in speeches has much bearing on political decisions.

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