Monday, August 20, 2012

They own land so let them make MORE money

Government U-turn 'will deny council housing to millions'

"Last week, Mr Pickles announced that he was dispatching a team of experts to give councils free advice on how to limit the impact of Section 106. He also announced that developers who had entered into these agreements during the housing boom are now free to ask local authorities to reopen negotiations" "Dispatching "huh..sounds dynamic

Posted by richy richless @ 08:01 AM (1104 views)
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7 thoughts on “They own land so let them make MORE money

  • Great! The old system has blighted the UK landscape with social housing tenements. And added barriers to smaller developers. This is good for the housing market.

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  • mark wadsworth says:

    Yup, the three main reasons why development has stalled is
    – banks aren’t lending as much
    – developers are land banking, assuming that the Tories will reduce number of planning permissions in future
    – developers are gambling on large land price rises in future (and/or, restrictions on bank lending have pushed down prices)

    Simply giving developers money now (or giving them the promise of more money later) does not affect any of these three reasons in the slightest – there is still every incentive to drip feed housing onto the market. They need a good old LVT kick up the backside, or at the very least, strictly time limited planning or something, that’ll get things moving.

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  • This u-turn is actually a good thing. Section 106 (the requirement to include “affordable” housing in any new developments above a certain size) is a swizz because of their ridiculous definition of “affordable”. We’ve created an army of bureaucrats to administer these part-rent part-buy schemes, yet they aren’t particularly good value for buyers and the interwebs are full of horror stories of people struggling to sell their 50% share. Not to mention the fact that you only own 50% (or 25%), but you’re liable for 100% of maintenance costs.

    Scrapping these regulations means more homes will be built. It doesn’t matter if they are affordable: any new housing adds to the supply. In most instances, when a family moves up the ladder to a brand new expensive (“unaffordable”) home, at the same time they are selling their older cheaper home.

    Fundamentally, builders should aim to build what buyers want, not what the government tells them to build. Or should farmers be told to grow affordable vegetables, or car-makers told to build affordable cars?

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  • mark wadsworth says:

    D, I agree with you on those particular facts*, but there’s still no reason to assume that just giving landowners more money will increase the number of new homes built.

    * If I were in charge “affordable” would mean social housing to rent not this part buy nonsense.

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  • richy richless says:

    @2 – where market forces can effect the supply in time to effect the scope of supply then yes I would agree. With the relatively long gestation period that housing has my cynical brain thinks the builders will build more of the property that makes them the most money.

    This is a short-term view but then Bovis et al are in business for their share holders, not the long-term social and economic good.

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  • 106’s have never provided “affordable” housing just a few token “small” houses. 106’s are just a layer of time wasting bureaucracy. Developers are not crazy they like to build big houses in posh areas, apartments in city centres and more suburbs in the suburbs. 106’s just keep planners in jobs and planners are a waste of taxpayers money. I have a client who took >2yrs to get planning for a barn conversion on a farm where they had already let a house builder build 8 new houses. The barn was derelict, they had already let the farm be redeveloped so it could not be used for agriculture and it still took 2 yrs and about £50k to get planning.

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  • richy richless says:

    *at 3.

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