There is one persistent mistruth in the debate about the wisdom and complexity of requiring Housing Associations to sell homes to their tenants at a discount. The critics say that this will reduce the number of social homes available. Let me reassure them. No-one demolishes or destroys the home when it is sold. The same family that rented it carry on living in it as homeowners. The housing stock and the living arrangements remain identical pre and post sale.
It is true that when the family who lives there dies, or decides to move, the home is now in the private rather than the public sector. As turnover of social housing is very low, it takes a long time on average before a social home becomes available for someone else to rent. The government’s policy of home sales will increase the available supply of social houses, by insisting on the construction of a new home for every home sold to tenants. This means that following the new build a social home is instantly available. Had the tenant of the social home who purchased still been a tenant, there would have been no empty home to rent.
Ministers do have to work out how to implement this pledge. They will not wish to leave a housing charity worse off as a result. They will need to be compensated for the discount on true value that the tenant enjoys when buying his property. They will need to work closely with the subsidised social housing providers to ensure maximum new construction for the available subsidy, and to ensure fair compensation for charitable assets.
June 4, 2015
John, three questions…
1/. How can a social housing association build a new house if the sold-off property has been sold at a discount – will the government assure that no property will be sold at less than it’s current replacement cost no matter how long the tenant has lived in it?
2/. Will the government take steps to ensure that for each sale there is at least a like-for-like replacement built within (I would suggest) 2 years, if the social housing associations fail to do so will government -via legislation instructing local authorities- step to either take over the association (like is done with failing schools) or at least make sure that the replacement property is built?
3/. Why is it fair to those in the capitalist housing market to see other people, via this Tory socialist policy, being able to buy a (perhaps, huge) discount when they themselves were once tenants in either the social housing sector but scrimped and saved to first raise a deposit and then afford mortgage repayments on the full open market value of the property?
Reply Yes, the Housing Association will be compensated for the discount. Why a discount? It may well save future housing benefit and subsidised housing costs for the taxpayer.
June 4, 2015
@JR reply; “Why a discount? It may well save future housing benefit and subsidised housing costs for the taxpayer.”
Unless the government fixes the excessive rents in the private social housing, often BTL) sector not a lot of chance of that. This policy, how ever well meaning, will likely do the exact opposite!
June 4, 2015
They are not excessive rents they are market rents. How else do you match supply and demand? What about the excessive price of Ferraris, Picassos or Gold bullion?
Fewer people or more properties are the way to get rents down. Not some moronic government contol/interference and lanlord theft, as Ed Miliband suggested (to try to buy votes with other people’s money). Made immortal on his Ed Stone/Tomb Stone.
Let us hope we hear no more of this dreadful would be landlord thief and economy destroyer.
June 5, 2015
@LL; “They are not excessive rents they are market rents.”
Says who, the Landlords…
“How else do you match supply and demand? What about the excessive price of Ferraris, Picassos or Gold bullion?”
Housing, especially the rented sector (even more so the social housing sector) is not like selling Ferraris, Picassos etc, if demand outstrips supp0ly then there need to be more houses built…
“Fewer people or more properties are the way to get rents down.”
So why don’t Landlords get a loan and build some more houses?
As for fewer people, well perhaps, although perhaps less single parent families, perhaps more young adults still living at home, perhaps putting the age at which people can marry up to 21 or even 25 could all help to reduce the demand – not forgetting perhaps making people under 30 take what ever work there is, thus reducing the amount of inward migration. /rant…
“Let us hope we hear no more of this dreadful would be landlord thief and economy destroyer.”
…well a Landlord would wish that, wouldn’t they Mr Lifelogic, how is the weather today on your island, enjoying your early semi retirement?
June 5, 2015
I know several people who own rental properties and who are not evil monsters grinding the faces of the poor, on the contrary they are perfectly decent people.
One decided not to sell an inherited house but instead keep it and let it out. Another decided that investment in rented property was the best form of pension provision available, partly because the government had made it so. In a third case the people decided to buy another house and rent out the one they had while noisy and disruptive building work was being done on the other side of the bottom fence.
They all let their properties at rents which the market will support, and why shouldn’t they? If you want lower rents then you should support measures to do something about the constantly rising demand, like an immigration policy which reflects what the great majority of UK citizens want rather than what a small minority wants.
June 5, 2015
Says who, the Landlordsā¦
No – says the market that matches supply, price and demand.
You need more supply pushing rents down by law will clearly give you less supply not more. Relax planning and/or have selective immigration.
June 5, 2015
@Denis Cooper; “I know several people who own rental properties and who are not evil monsters grinding the faces of the poor”
Non one is say6ing they are, just that rents are not at the market rate, most people who rent would gladly pay a lot less and would be able to if there was spare capacity in the sector.
@LL: “No ā says the market that matches supply, price and demand.”
No, landlords say so, otherwise they would not oppose rent controls, nor a plentiful supply of social housing.
“You need more supply pushing rents down by law will clearly give you less supply not more.”
You assume that there would not be social housing provided by the state sector, as it use to be. It is in the interests of the private landlords to restrict the supply as that drives up price they can charge as uptake outstrips supply.
June 5, 2015
Rents in London are among the lowest for return to value. If a new BTL landlord wishes to rent, they have to cover mortgage and other costs, which are tax deductable, but still only just cover current borrowings. They could give up and invest the money in pensioner bonds or stocks, but most stay in hoping the prices will go on rising. They won’t forever and then many will sell. Many may decide that dealing with tenants is too difficult and sell. The only way to reduce rents is to reduce house prices, and then there would be less available to rent and a big increase in bad debt with another financial crisis. CGT would also decrease. However, first time buyers would be better off eventually.
June 5, 2015
Jerry: “So why donāt Landlords get a loan and build some more houses?”
Because they can get someone else to specialise in the building, planning permission, decoration, aka the developer.
It’s a facet of division of labour, and makes for a more efficient market – unless of course the government gets involved.
June 6, 2015
@Stred; @APL; Funny how socail housing associations and indeed LA housing departments manage…
If private landlords can not cover their costs at a realistic rental fee then perhaps there is no place for such a large private sector in socail housing – remember that the premiss for government selling off socail housing is to cut the cost of them paying HB, much of which goers to the private sector at the moment due to the wholesale lack of socail housing, perhaps if this policy works out and say two replacement socail housing properties are built for everyone sold off then there might be shrinkage in the private socail housing sector that seem so ‘uneconomic’ for private landlords currently?…
June 6, 2015
Well as the properties are rented through the market the rents are at the market rate and it’s nonsensical to argue otherwise.
June 6, 2015
Jerry: “just that rents are not at the market rate, 2
And Jerry is right on this one thing.
Rents are not at the market rate because the government has interfered in the market with subsidies and incentives. Mostly to ‘goose’ an election, but also to attempt to stop the natural adjustment in price downward that the market would demand.
The house that was exchanged for Ā£500 in 1950 is no more or less of a house than the same building that sold for Ā£3/4 million in 2014.
June 6, 2015
Jerry: “Funny how socail housing associations and indeed LA housing departments manageā¦”
They manage because they don’t need to make a profit – or even cover their costs – and have an unending supply of other peoples money.
Not only are LAs operating a cartel, they are less efficient than the private sector, they have higher costs, and thus produce less socail [sic] housing than the private sector could for each pound sterling spent.
In fact, a pretty lousy deal.
June 7, 2015
@Denis Cooper; There is no “market” in social housing, just a socail need that few LA housing department can or choose to fill whilst socail housing charities are struggling to fill, thus landlords are exploiting this need at the tax payer expense – the BoE might as well hand over their printing presses to landlords at the moment! How many private BTL mortgages have in effect been paid off by the taxpayer via the state and inflated HB payments.
June 7, 2015
APL; “[Social housing associations] manage because they donāt need to make a profit”
Bingo, exactly! If this was any other industry most on this site would be complaining about state subsidies being paid out of tax payers money to private industry.
June 5, 2015
Most of the rented housing market is affected by quotas and subsidies. The part that is truly a market is very narrow. You have to “qualify” for a council home or HA property – both are offered at “below market” rents. Many private rentals are only possible because of housing benefit top-ups.
June 4, 2015
So the taxpayer will fork out the difference. New houses will probably go to foreigners who have paid nothing into the system while British born and bred will be ignored
Stupid policy by what is being seen as an increasingly stupid government.
Still no idea what Dave is negotiating and the debacle over the HRA gets more bizarre daily.
June 4, 2015
I think this might be one of your most deeply flawed blogs JR. My local authority thought it would take years of building to house the existing homeless, this was before we had the continued mass immigration policy of your government. There is no local priority clause that comes in tandem with Cameron’s mass immigration policy, nor public spending to provide the infrastructure required for such a huge increase in population, currently the population size of Nottingham each year.
Therefore to build one for one will not meet demand as there is already such a huge back log, perhaps Cameron will follow Boles’ advice and build on national parks- and every piece of green belt. But for what? To home the poor EU and give them a standard of living they would not achieve in their host country because the Euro and EU project makes them jobless, homeless and destitute. How about the idea of not supporting the EU project that causes such deprivation which this policy is actually indirectly doing! Is Cameron going to guarantee match funding for the infrastructure and public services required for this dopey policy?
This will cause unrest when local people realise that they cannot live in the area they grew up in, cannot send their child to the local school, wait for ages to get a doctor or hospital appointment. None of these issues are even remotely being addressed despite Ā£92 billion deficit and the debt doubling! Like. Like a lot of his short-term ideas he does think of the wider consequences or picture. Perhaps he thinks this will not be his problem as he can blame the region for his failing when he carves up the country!
June 4, 2015
It is nothing more than a complete kick in the teeth to all those who have saved money for a deposit, or who have lived in shared ownership homes and then have bought the remainder at the market price. Why the discount for new buyers if social housing? As you state, it is clear who a lot of the beneficiaries of this taxpayer largesse will be!!
zorro
June 4, 2015
A bit like the overseas aid versus food banks at home,overwhelmed public services, old age care, military spending. Christopher Meyer writes a good article in DT about the UK’s position in the world and how our taxes would be best spent.
Meanwhile the EU has overruled Cameron’s VAT pledge as the Queen announces them! You could not make it up.
As they say: Don’t blame me I voted UKIP
June 4, 2015
Why the rent discount for social housing tenants?
June 5, 2015
Many of who do not need it and it can last for a lifetime. Paid for by other often poorer tax payers.
June 5, 2015
@LL; “Why the rent discount for social housing tenants?”
Perhaps it’s just the “market rate” for that sector… š
June 6, 2015
Jerry: “Perhaps itās just the āmarket rateā for that sectorā¦”
‘that sector’ is not a market, at best it’s a cartel. Something you’d expect a good socialist to object to?
June 7, 2015
APL; Sorry you missed my sarcasm towards Mr Lifelogic in your rush to try and rubbish me…
June 7, 2015
Jerry: ” to try and rubbish meā¦”
You should try to understand the difference between who someone is, and what they say.
June 4, 2015
Totally agree Ian. I think people will be wondering why they bothered voting Tory soon. Just what is Cameron doing about the subsidies for wind??? While he is wringing his hands and thinking of rolling over once more for Empress Sturgeon, we have seen one large wind farm get permission here in a VERY sensitive area surrounded by SSSI’s and another one come back after being refused at appeal!! It is none stop up here and we are wondering when Cameron is going to keep just one of his promises. The policy on social housing is a joke and a way of people getting something for nothing yet again.
June 4, 2015
To All–Why can’t we have Allister Heath as Prime Minister?
June 4, 2015
Indeed or anyone even a bit like him. All we get is tax borrow & piss down the drain, happiness index toting, greencrap pushing, pointless warmongering, EUphile, HS2 loving, bleeding heart loons in charge.
June 5, 2015
Because the answer to all our problems is to have yet another lawyer or journalist telling us what to do?
June 4, 2015
oh come on !!! – -did you really expect CND to keep a pledge or promise? – -after 5 years of lies, lies and more lies? If the in-out referendum ever actually appears and it gets 100% out – -he will say it was a resounding YES and we are staying in. HE wants his reward of a seat in Brussels – selling and destroying the country and the nation is of absolutely NO consequence to him at all.
Reply Several people here forecast before the election that Mr Cameron would not honour the pledge to hold a referendum – often the same people who also were sure he could not win anyway – and were wrong on both counts. Out means Out – if 50% plus vote for it we leave.
June 4, 2015
Just started watching Question time. I had to turn it off when we had the usual rubbish spouted by the in EU crowd! Total lying traitors and they must know it. Cameron, the BBC and the legacy party leaders are the biggest threat in our history to the return of our sovereign democracy. The Tory wet was totally lame as was the Labour, liberal and Mirror reps. No bias as usual from the BBC. EU overruled UK Government on VAT today. Where has our democracy gone?
June 5, 2015
Dear John–I don’t think too many people were saying exactly that. Rather, many more than several did not trust him to do it (there’s a difference) and that even if he did it he would without question strive to mickey mouse the run up (already happening with the wording of the Question–without debate) and, if he could, the resultant action consequent on an Out vote. With his form even now he might find a way not to hold a referendum.
Reply Lots of backsliding in the allegations there then! Try sticking to the truth. The PM has rejected calls to change the franchise in ways thought to help the stay in campaign. The question will be debated as part of the Bill process. I and others led by Steve Baker MP have written today to the Electoral Commission backing the question version they said was most neutral.
June 5, 2015
Would that be the question which offers two alternative options, stay or leave, and asks the voter to choose one?
(Incidentally, it should be just that, “stay in” the EU or “leave” the EU, those are the opposites in common speech without inflating “stay in” to “remain a member of”, which has its own psychological bias.)
June 5, 2015
He will probably have a referendum but he will not hold a fair referendum I suspect. Already seen in the bias of the question.
June 4, 2015
‘ I think people will be wondering why they bothered voting Tory soon.’
How soon is ‘soon’? They may wonder, ‘soon’, why they voted for the Conservative and Unionist Party but they’ll vote for it again in 2020, and 2025, if ‘national’ governments still exist then.
Re . Neckerla Studgeon (Scotch pronunciation) and windmills: She is the (overwhelmingly) democratically elected dictator in Scotland and Grooovey Dave is really only (boss ed) in England. Why should anyone in England care about windmills in Scotland, a land more and more of us wish to be rid of?
I’d move back to England were I you.
June 4, 2015
The compensation to housing societies with sometimes very valuable properties will have to be very high. It should also compensate for the extra expense of fragmented maintenance. The idea seems to be that councils should sell any particularly valuable properties and use the money to compensate for the discount of up to Ā£100k and the cost of building a new social house for discounted rent.
This is what councils may already do and is a good idea, as it may actually allow more new units to be built with higher standards of insulation. At this point your party’s one time reputation for financial competence falls apart.
Your conservative representative on Any Questions two weeks ago came out with the amazing statement on the climate change discussion, that the problem could be solved by raising standards of building regulation. Anyone in the building industry would know that regulation is already very high and it is going to be even higher next year. Even when repairing existing roofs and walls, any more than 25% will require high fees to the LA, who will then insist on thick insulation, which may make internal spaces too small or lose lofts altogether. To build new housing now requires big companies to employ a team of 9 to do what 1 or 2 used to do in order to go through planning and building regulation approvals. This, incidentally tends to favour the big boys, who can perform expensive ventilation tests and use repeat designs. Insulation, ventilation and disabled access are among the regulations which may new build MORE EXPENSIVE than old per unit area. This is why the sums do not add up and in practice LAs have not been able to replace like with like.
Even as an election bribe it does not appear to have worked. In London, where the discounts will be huge, Labour increased their vote. Here, tenants will be able to obtain loans in order to make a killing and then the house will be most likely finish up in the private rental sector, where tenants not luck enough to qualify for subsidised rents will have pay by sharing or obtain HB, costing the taxpayer more. Much of the money for loans will come from those that operate in this area, where a lot of social housing is already sub let for high rents. Unbelievably, the Treasury was proposing to make sub letting legal an encouraging this landlord’s nightmare. In fact this whole policy seems to have Osborne’s prints on it, bearing in mind that raiding private property and bank accounts seems to have become one of his specialities. He is not going to force it on anyone, because he has already done it, as we find too often.
June 4, 2015
To clarify, LAs can only build new by selling expensive old housing when vacant and not by selling at a discount.
June 4, 2015
@ Stread
And that is why the legislation should be amended so that the purchase price reflects the requirement to build two new social hoes for each one sold.
Monies from sales of older more expensive stock (at full value) should go toward building ever more homes to cope with our ever increasing population.
June 4, 2015
The irony of course being that to build these houses we will need more Eastern Europeans (subsidised by working tax credits and housing benefit) which will in turn lead to the requirement for ever more homes.
Self sufficiency has its merits.
June 4, 2015
Not necessarily, apparently they can all live in tents or sleep on park benches or under the arches and so in fact they will add nothing whatsoever to demand for housing. That’s according to the advocates of mass immigration, like JR’s colleague Anna Soubry, who has yet to apologise to Nigel Farage in the light of the most recent statistics on immigration from Romania and Bulgaria.
June 5, 2015
My comment above was to follow a longer entry about increased new build costs because of regulation and the fact that it is already very strict and rising. Also that the figures do not allow houses to be replaced like for like because of real land cost + new build. Perhaps because I was too horrible about Mr Osborne on his day announcing more brilliant ideas, it was not allowed.
June 4, 2015
“How can a social housing association build a new house if the sold-off property has been sold at a discount”
Easy build cost is usually less than value, they just need some land or to build higher.
Also the discount is to vacant value not tenanted value which is lower.
June 4, 2015
Lousy reply.
You realise land costs money?
Why can’t these people buy new private sector housing if they can afford it? If they can’t they shouldn’t be in the market in the first place.
Why should taxpayers who are real buyers in the real market be propping them up if they can afford to buy a house?
June 5, 2015
Maybe they should be offered the choice of taking the Ā£100k subsidy to buy in the private market. They may prefer somewhere else and then the Housing Society could keep its stock of housing in one place and reduce maintenance complications.
June 4, 2015
The whole system is broken.
Needy people should have a housing subsidy to take anywhere they want. Subsidy should not be tied to historical allocation of social housing. There needs to be a free market in housing to allow people to move away from some of the sink estates, and estates with no modern jobs market, and not be kept there by state manipulation.
Rent in the existing social housing stock should be free mrket, and all subsidies including the hidden ones in the planning rules to social housing should be stopped BUT needy people should get a lot more money to compensate. And there should be transition arrangements. Some areas with no modern jobs market will have to abandon housing stock (as happens in the private sector), this is preferable to the current situaton of the dire conditions in those areas.
Social tenants with the means to buy their home are already getting a great deal, they are after all getting heavily subsidised rents while pretty much by defintion not being the most needy. To give them another big state subsidy is hardly good use of resources.
And the biggest problem for the Conservative party is it has nothing to say to private tenants about their issues. There is still widespread abuse from landlords, and so very much more.
I supported Mrs T and her right to buy programme, this one is very misguided.
June 7, 2015
I have a question, if anyone knows the answer.
What happens if a tenant renting from a Housing Association, either does not want or cannot afford to buy their flat, even with the discount? Are they made to leave? I have a reason for asking this as I have a hard working relative in London in this position, and it concerns me that they could end up homeless if this goes through. Some reassurance would be very welcome.
Thank you.
Reply It’s a right to buy, not a requirement to buy. If they don’t want to buy they don’t have to buy.
June 4, 2015
So they made a stupid pledge that was never thought through in a bid to buy some votes and now have to work out what to do?
The Lib Dems had an excuse for their manifesto in 2010 in that no one expected to have to deliver on it – not sure what the Conservative excuse is for 2015.
June 4, 2015
Not a stupid pledge at all it makes perfect sense to sell them of and build some new ones. Also it brings more mixed occupants.
June 4, 2015
A) The affordable house is never affordable again
B) Why should it be sold to someone below market value ?
How frustrating for those who have suffered inflated private sector rents whilst scrimping for their deposits. Some of these houses will be in prime areas.
The government is already watering down far more important election pledges than this one.
June 4, 2015
It is usually not at below the “tenanted” value which is the true value to the housing association.
June 4, 2015
Either people can afford to buy a house properly or they can’t because they are feckless or just poor. The former should leave their privileged social housing leaving the houses untenanted and buy proper houses, the latter shouldn’t buy at all.
If the person in the house can afford to buy they should be kicked out of the social housing into proper rented or to buy, like everybody else. The house shouldn’t be sold as tenanted at all.
Period.
June 4, 2015
The policy is clearly a bung to a lucky group at the expense of the rest of us, but on balance I think it’s good. A high level of home ownership makes for a better and more contended society. The left would of course prefer all the poor sitting gratefully in state provided housing
June 4, 2015
@Richard1; “A high level of home ownership makes for a better and more contended society.”
Hmm, tell that to those who suffered negative equity in the 1980s and ’90s…
As for a contended society, there is a lot more to having that then home ownership, indeed the 1950s and ’60s society were -on measure- contented decades even though there was a very high level of people living in the rented social housing sector.
“The left would of course prefer all the poor sitting gratefully in state provided housing”
The far, hard, left might but I suspect that majority more moderate left just want people to live in affordable housing of good condition, who ever actually has their name on the deeds.
June 4, 2015
Yes prices of assets can fall as well as rise, and people need to think about that. But the more people who perceive they have an equity stake in the performance of the economy, the competitiveness of the UK etc, the better. This is why the left dont like like home ownership, private pensions, share ownership etc (but of course dont dare admit it)
June 4, 2015
Richard1 ,
Nothing damages the UK’s competitiveness as much as high land prices .
With sufficient political will accommodation costs could be reduced below half of what they are now and the minimum wage could become a livable wage .
The surplus could be invested in productive assets and provide for peoples old ages .
For those of us working in the global economy , e.g. in manufacturing , software development etc , exporters it is the difference between a job existing in the UK or being offshored .
I don’t expect politicians , civil servants or others who work in the domestic economy to understand this .
Locally produced goods could be cheaper and offset imports .
Domestic services such as getting your car serviced could be far cheaper and more people could start their own businesses .
The mortgage lenders have been puffing up prices and found themselves a succession of compliant govts to help them relieve the average person of the lions share of the fruits of their labour .
I’ve got a friend who screwed up almost every opportunity he’s had in his life but bought a house at the right time in the right place .
There is no hope for the country if peoples financial outcome is almost entirely decided when and where they buy a house as it is now .
June 6, 2015
ADS: “Nothing damages the UKās competitiveness as much as high land prices .”
What about the exorbitant tax on fuel, the staple that makes any ( but especially a modern) economy work.
June 6, 2015
@a different Simon.
Right! The problem the politicians don’t get, and are from my experience of lobbying some of them for LVT, are too thick to grasp, is that high land and property prices blight the productive economy.They see the inflated housing market as a self contained problem. At the moment UK people cannot afford things produced by their fellow citizens because they don’t have any money left over after paying for inflated rents and mortgages.They have to buy cheap imports from the Far East. These economic facts of life were well understood at the outset of Economics in the Eighteenth century but the expensive educations sold to our very thick elite somehow contrive to suggest that land price inflation is not inflationary and all wage increases are inflationary. With this degree of organised madness things are not going to end well and it may prove that the last election was a good one for the Labour Party to lose. The Tories are not intellectually or ideologically equipped to cope with the almost certain property price crash (Keiser says this year) and its ruinous effect on the banks which put too much “lending”into the property market.
June 6, 2015
APL ,
Fuel duty doesn’t damage the economy as much as astronomical land prices .
The tax on fuel goes back into the public purse to be recirculated .
The benefits from high land are captured by the few ; mortgage lenders and landowners .
Taxing land more heavily is better than taxing land lightly . Hong Kong and Singapore have shown this .
This also allows a reduction in employment taxes which disincentivise employment .
June 7, 2015
@APL; But even those using a horse and cart need some place to live!
June 7, 2015
DBC Reed ,
Responsibility for the next house price crash will be laid firmly and correctly at Osborne’s door .
I can already see him using public money to bail out the banks as they foreclose on businessmen who have had no option except to put up their house as now insufficient security .
If interest rates go up he’s bring back Miras .
I think I’m becoming clairvoyant .
He’s still be able to afford a seat at Chelsea FC mind .
June 4, 2015
Indeed.
June 4, 2015
@Richard1; Your comment is based on nothing but pure political dogma, home-ownership = good, renting (social housing especially) = bad! š
Many a person living in rented social housing “perceive they have an equity stake in the performance of the economy, the competitiveness of the UK etc.” They also often have far greater disposable incomes than those funding mortgage repayments, thus they are very likely the ones who empower consumerism that fuels jobs further growth.
June 5, 2015
social housing is bad in that one lot of people as subsidising the other often people worse off in fact.
June 5, 2015
@LL; “social housing is bad”
Says the private sector landlord…
June 5, 2015
Jerry: “Unless the government fixes the excessive rents in the private social housing, ”
Spoken by someone who has no idea about economics.
Jerry: “Hmm, tell that to those who suffered negative equity in the 1980s and ā90sā¦”
As one of those, I can tell you it was a learning experience. It made me very conservative in my financial habits.
June 5, 2015
@APL; “Jerry: āHmm, tell that to those who suffered negative equity in the 1980s and ā90sā¦ā As one of those, I can tell you it was a learning experience.”
…yet you say I no idea about economics!
June 4, 2015
There is of course the problem of massive (building) land price inflation leading to house price inflation and extortionate private rents.When Gordon Brown made the last sane comment in British politics at the time of his 1997 Budget,he said “I will not allow house prices to get out of control and put at risk the sustainability of the recovery”. The average house price was then Ā£62,000. While the political parties try to ride the tiger of house price inflation ,ignoring such inconveniences as the worldwide Credit Crunch starting in American mortgage backed derivatives, the British public is so strapped by rents and big mortgage repayments that they provide no effective demand in the shops for British manufacturers and entrepreneurs and real wages go down. But house prices are going up! Not to worry.When the average house price is Ā£1 million we’ll all be millionaires! Politicians are prolonging a Dutch tulip type popular investment mania for the corrupt purpose of staying in power and providing market share for the banks.
June 4, 2015
This is rather a parody of the UK economy in reality. The credit crunch has been debated many times before here – over-leverage in the UK banking system was a major contributor for which Brown’s apologists cannot blame America.
Planning restrictions are the main reason for building land price inflation.
June 4, 2015
Indeed relax planning.
June 4, 2015
Richard1,
Planning restrictions are the main reason for building land price inflation.
That would seem a plausible theory for the UK. But house prices in both Australia and NZ are equally high in terms of the ratio to average incomes. So much so that the word “bubble” is regularly used to describe them. You don’t get much for $5ook any more!
The population density is much lower yet still the same problem. So why is that?
June 5, 2015
@petermartin2001; “So why is that?”
Perhaps it is due to the human herding instinct, we most people want to live in the same place as others!
June 4, 2015
@Richard1; “over-leverage in the UK banking system was a major contributor for which Brownās apologists cannot blame America. “
No Richard, we don’t blame the USA (nor are we Brownās apologists, there is nothing to apologise for), the problem you cite has been a recurring bubble ever since Thatcher’s housing policies, when housing became an “investment” rather than first and foremost a place to live, before the 1980s the majority of people often only ever thinking about monitory values much later in life, either when down-sizing or whilst putting their estate in order (such as IHT implications).
“Planning restrictions are the main reason for building land price inflation.”
Indeed, and NIMBYs (at least Mr Mrs Average, with their 3 bed semi or detached) looking to protect the value of their “investments” are often the most vocal in getting those restrictions put in place, as a glut of housing will naturally devalue their property, just as a glut of crude oil sent prices plummeting last year. It’s called supply and demand…
June 5, 2015
Jerry, that isn’t true, I recall family and other discussions in the 1960’s about how much house prices had risen and how difficult it had become for young people, but nevertheless it was still the general view that if you could manage it you should put your money into “bricks and mortar”.
June 5, 2015
Jerry wrote:
(nor are we Brownās apologists, there is nothing to apologise for)
In which case, you might like to read the Telegraph article entitled:
Revealed: why Gordon Brown sold Britain’s gold at a knock-down price by Thomas Pascoe.
You go around rubbishing people, and rubbing people up the wrong way, rather putting your argument respectfully. I sometimes wish our host would let me reply to you in the manner I consider most fitting. Think yourself fortunate he likes to keep some decorum.
June 5, 2015
@Tad Davison; “In which case, you might like to read the Telegraph article entitled”
Why would I want to read that title (in this respect), which is as politically biased towards the right and Tory party as many non here claim the BBC is biased towards the left and Labour party. You do know what the media industries pet name for the Telegraph is don’t you? š
“You go around rubbishing people, and rubbing people up the wrong way, rather putting your argument respectfully.”
Well look at all those filthy pots and pans… If you want me to take note then cite some non-partisan proof to back up your assertions!
June 5, 2015
@Denis Cooper; But in the 1960s and ’70s there was still both a strong socail housing and new build (for purchase) sectors, those who could afford to buy could do so, people who could not still were able to obtain secure half decent housing in the rented sector. Back then housing was for living in, not to provide your pension, hence why so many elderly widows lived in large family houses and no one thought anything of it.
June 6, 2015
“Back then housing was for living in”, AND it was viewed as a good investment. That didn’t start with Thatcher.
June 6, 2015
OK then Jerry, if the Telegraph article was incorrect, why didn’t Gordon Brown sue them?
Like so many lefties, you’re just wrong and ain’t big enough to accept it. No matter how much evidence is put before you.
I really do wonder about people like you. You have this strange mind set, and nothing will persuade you to change it, regardless of the strength of the evidence, or how many times your arguments get pulled to pieces.
June 7, 2015
Denis Cooper; For the majority, housing was looked at as a future legacy (to be converted into a cash sum for the (grand-)children etc upon the owners/parents death), not an investment and thus transient accommodation, to be cashed in when one judged that the market had reached tops – ever wondered about the reason why there was very little if any “property porn” type TV programmes before the mid 1980s (perhaps even 1990s), whilst the DIY type programmes dealt with the more mundane items like putting up a shelf, laying a new bathroom floor covering (or most daring of all constructing ones own mini-bar in your living room!), not a blow by blow account of converting a two-up, two-down into a HMO…
June 7, 2015
Tad Davison; “I really do wonder about people like you. You have this strange mind set, and nothing will persuade you to change it, regardless of the strength of the evidence, or how many times your arguments get pulled to pieces.”
Oh look it’s the filthy pots and pans time again. People like you Tad, regardless of the strength of the evidence, will always have problems rationalising what is political comment from raw facts, because you are not actually interested in the truth, just the political spin.
June 8, 2015
Define raw facts Jerry.
You regularly refer to articles when arguing you are right yet you regularly rubbish others when they do this claiming their source is unworthy.
More often your posts are just your opinions based on your take on political history.
Nothing wrong with that Jerry.
You just need to accept others may hold different views to yours.
Which you seem unable to do.
June 8, 2015
Ted Monbiot; “You regularly refer to articles when arguing you are right [..//..] More often your posts are just your opinions based on your take on political history.”
Do I, more often, when I dispute a citation or an argument built upon one, it is that the other person has not proven their own argument. Now if Tad Davison, Denis et al care to cite the official BoE report, or some peer-reviewed academic paper that proves the catastrophic events within the (UK) banking industry between 2007-2010 were all the fault of Gordon Brown I will happily stand correct but if all you lot can do is cite what is basically (party) political spin…
“You just need to accept others may hold different views to yours. Which you seem unable to do.”
Quite wrong, I accept everyone’s right to an opinion (and would be prepared to die to defend that right), but just because three, four or more peo0ple have the same opinion doesn’t necessarily make their shared opinion the correct one.
I believe there is a word to describe this activity that our hosts invites us to do each day, oh yes, it’s called “Debating”. š
June 6, 2015
DBC Reed: “There is of course the problem of massive (building) land price inflation leading to house price inflation and extortionate private rents.”
You pretty much refute your own premise in the first statement. How can the cost of a thing be ‘extortionate’ if its price reflects the costs of obtaining that thing?
You are looking at a problem, at the last link in the causal chain and saying the landlords rent is the cause of the massive land price inflation, when of course the price of an asset ( a property to let ) is the reflection of the sum of its costs. Then, blaming the last person in the chain because of the inflationary behaviour of the Government.
Government causes inflation – it is a stated tenet of its economic policy.
Government causes increased demand for a limited asset – throwing open the borders so the population and hence demand for properties have exploded.
Government causes restricted supply of properties because of planning restrictions and other bureaucratic regulations, but including the monopolization of ‘Social housing’.
Government inflates the economy further by borrowing to support the three largest mortgage banks through the financial crisis when if they’d gone bankrupt, rationalised or merged, there would have been a rationalisation in the property market which by now we’d probably be emerging from, with the holy grail, affordable housing. Viz a viz Iceland.
June 4, 2015
I do not understand why these tenants are entitled to this subsidy. It is wrong.
I do accept the premise as explained by David Davies that this stock is among the most unlikely to be freed up for others so if your government must persist with it two caveats should be introduced.
1 The purchase price should be set at the cost including land of building two replacement homes in the same area (this will still represent a substantial discount and will genuinely replenish the housing stock).
2. The title deeds must be amended so that the house in future can only be sold to a someone eligible for social housing and must always be sold at the same percentage discount on the ongoing sales price (as determined by at least two independent sources).
This keeps the stock available for social purposes, allows the owners to make gains on their investment and ensures that the taxpayer subsidy remains in the system for the benefit of others and is never taken as profit.
June 4, 2015
Understand perfectly the house numbers John.
The problem I have is is with taxpayers funding a huge discount (up to 70% we are told) to the present renters.
If some people are purchasing at a massive discount, they are at a huge advantage over those who have not been so fortunate to get a housing association property in the first place.
Many of those who purchased Council properties many years did so with deposits paid for by their Children or grandchildren, purely and simply because it was a potential large future inheritance windfall, and a financial no brainer.
If you are going to get taxpayers to fund house purchases, then reintroduce MIRAS (suggest a Ā£250,000 mortgage limit to avoid huge abuse) and make the same rules and subsidy for everyone.
I would suggest this policy has absolutely nothing to do with building more houses, but the belief and thought, that those who own their own homes are likely to vote Tory rather than Labour in the future.
The simple solution to the present and future demand is to reduce immigration, then you would not have to fund a huge amount of house building, and tackle the cause, not the effect.
June 4, 2015
“If you are going to get taxpayers to fund house purchases, then reintroduce MIRAS (suggest a Ā£250,000 mortgage limit to avoid huge abuse) and make the same rules and subsidy for everyone. ”
It still amazes me that the Conservatives (allegedly more economically sound that the other lot) are distorting an end-stage bull market even further by pumping public money into subsidising private house purchases .
Osborne’s criminally negligent stewardship of the economy ranks alongside the Conservatives stewardship of the Armed Services .
The first function of Government is no longer defence of the realm but underwriting astronomical land prices so banks can lend recklessly at zero commercial risk .
Whatever Govt calls these gimmicks , they are not an acceptable substitute for policy .
Disgusted from Wokingham .
June 4, 2015
“I would suggest this policy has absolutely nothing to do with building more houses, but the belief and thought, that those who own their own homes are likely to vote Tory rather than Labour in the future.”
So the occupier of the property continues to vote Labour and when their Tory voting child inherits, the property is then rented out to another Labour voting tenant. Brilliant scheme.
If the government would try to run the country properly perhaps they would not need such half-baked strategies for buying votes. Are politicans the least able professional group in the country; one has to wonder.
June 4, 2015
A very important point has been missed in the debate over this policy.
When Margaret Thatcher introduced the sale of council houses most were on large estates which were like a gettos with poorly maintained gardens, unmowed verges and identical cheap timber front doors on every house. Many were not very pleasant places to live.
As soon as some began to be sold, council estates began to be transformed. The first thing that you noticed were the new front doors and double glazing. Then the gardens would be improved.
Now many or perhaps most ex-council estates are largely pleasant places to live and the proof is that when they are sold on, ex-council houses no longer have to be sold at a large discount. This benefits everyone, tenant and owners alike.
Housing Association developments are generally of a much higher standard of design and construction than council estates but, as well as the desirability of enabling tenants to own their own home, the developments would still benefit from the introduction of a proportion of owner occupation.
As long as the 1 for 1 policy is rigidly enforced without being used by the Associations to unfairly restrict sales, I believe it will be a worthwhile policy.
June 4, 2015
So, in summary, the idea is to sell off the existing social housing to finance the building of new social housing. This means the govt pays nowt because it’s cheaper to build a house (on a commercial scale) than it is to buy one, plus the govt will probably avoid land costs and other fees because it will be on’council-owned’ property. The HAs then make a profit on the new rents.
So, more greenfields destroyed, more energy required, more roads required, more people looking for jobs, etc.
Of course if we didn’t have a huge immigration issue there would be far less need for all this.
June 4, 2015
You can’t get away from the subsidy or loss to the total government coffers by using council owned land for an artificially low price. This land could be sold at full price and used for other government subsidies or tax cuts. Either way it amounts to a decision to give a very large amount to some lucky citizens, while taxing others who pay full price for housing. Using the money to build new housing has to include very inflated land costs, services and clean up of sites plus the expensive regulations to reduce energy consumption and for disabled access. The scheme only works by fiddling the figures and missing costs out. A total account should be carried out of all costs including the effect on housing benefit.
June 4, 2015
Indeed, agreed.
June 4, 2015
Council houses / Social housing is not really charity.It is subsidised housing. The occupiers still have to pay . I cannot think of anyone who would perceive the housing stock as being depleted if a council house is sold on, yet the semantics you bring to this point suggest that The reality is if the council houses are all sold then the stock of council houses will be less.
Many do not want to own a home and when a person can get the council to pay for new roofing,heating who would blame them.I personally do not like the ghetto type of social type of housing where disrespect for property is rife ,but this is liberty. Can we be free without social rules? Can we avoid social typecasting without the majority commenting on how things should be in their eyes?
Again I wonder what the EU stance is on social housing.
June 4, 2015
There seems to be a strong demand for more homes. There seems to be a good availability of mortgages at low rates of interest.
A new estate of homes near me had people camping outside to be first in the queue to buy.
If charities, trade unions, councils and the Church of England (amongst others) were a bit more dynamic they could get together, borrow some money, build some houses and make a profit.
They have billions in assets and cash reserves, but they seem unwilling to do any more than complain at the current situation.
Leaving “wicked” propery developers and buy to let landlords (the lefts latest group for attack) to build and renovate and provide housing.
Right to buy is a great revived idea and it just might stimulate some more new builds.
June 4, 2015
Is there really a strong demand for new homes? If there were, many more would be built. Furthermore, most new homes are not particularly attractive propositions: very small internally, with limited gardens and (no) parking, often poorly located in relation to jobs, schools and shops, much money wasted on “green” features that will never pay for themselves and make them unattractive (e.g. few windows). When re-sold, they tend to fare less well in the market, because the new price is also covering for Section 106 costs. That makes new homes a poor investment proposition, except if you are a landlord, expecting subsidised rents or benefiting from the Section 106 social property subsidy.
The reality is that we still don’t have a shortage of property, despite the contribution of immigration to rising population. That is because the majority of immigrants are young and single (many of them students), living in shared accommodation.
June 4, 2015
I think there is a strong demand from potential home buyers of various sorts, but for some odd reason the construction industry does not seem to be rushing itself to satisfy that demand.
I agree with you that section 106 (another John Prescott disaster) and huge amounts of red tape in the planning process is a problem and adds to costs of property.
But still no new towns in the planning which were common in previous decades
June 4, 2015
“There seems to be a strong demand for more homes. There seems to be a good availability of mortgages at low rates of interest.”
Would anyone be happy for a 30 year old son or daughter to take out an 85% mortgage to buy a dilapidated three bed semi in Joel Park Wokingham for say Ā£300,000 ?
Or Ā£220,000 for a fairly cramped two bed in Woosehill .
Does anybody think current house prices represent good value for money ?
June 5, 2015
Only on the assumption that house prices will continue to rise enough to provide an outstanding return, and that in turn depends on a number of factors including the rate at which the population increases.
June 5, 2015
The boomers paid high interest rates but for many their houses were bought for them by inflation – an outstanding return indeed .
Wage inflation in The West is now a thing of the past and with the emergence of the developing world the trend towards wage deflation is inevitable .
All we see are vain attempts to keep the party going with expansion of private credit and national deficit .
After four decades of rampant house price inflation , the rate of growth of house prices is bound to tail off or even become negative .
To get a 5% net yield one might expect to require a 7% gross yield which implies house prices 14.3X rental value .
Would a Ā£220,000 house really generate 7% gross , i.e. Ā£1,283/month rental or a Ā£300,000 house Ā£1,750/month ?
If you could not get regular occupancy by charging a gross yield of 7% then house prices are fundamentally overvalued .
Add to accommodation costs , food and utility bills , transport to work , trips to the dentist , what is left to be saved for old age ?
For a couple earning a combined 3X national average wage , there doesn’t look to be enough left over to use the full ISA allowance or put all earnings at 40% tax into a SIPP so they are not saving enough for old age .
I expect we’ll have to go through a Govt operated equity release scheme before Govt finally faces facts and takes action to make houses affordable .
June 5, 2015
Compared to renting I would still advise young people to purchase their home.
As many still want to do.
June 5, 2015
If I was starting out again , the prospect of buying a “starter” hutch in a worse location to the 3 bed semi I bought 15 years ago would not appeal .
On the train back after a long day I would question what I was working so hard to pay for .
My colleagues overseas who think I’m well paid would be embarrassed if they saw it .
The value is definitely worse than it was 15 years ago .
For the young who are healthy there is a third option – move somewhere you can have a better life .
June 6, 2015
I would also advise looking to emmigrate to a nation that is still independent, prosperous and has cheaper housing.
Several hundred thousands of our citizens are doing just that each year.
The point is you have to live somewhere
You can rent or you can buy.
If you are able to buy, once you get to my age the 30 year mortgage is paid off, you own a home.
Some friends who have always rented will pay rent until the day they die.
And have nothing to show for it when they do.
Rents are not much different to the cost of buying.
In many cities rents are more than the cost of buying.
The deposit was in my day hard to raise and I would concede it is harder to raise today.
I lived at home rent free, thanks mum, and saved up via a second job for two years to get my deposit together.
June 4, 2015
Hi John
“As turnover of social housing is very low, it takes a long time on average before a social home becomes available for someone else to rent.”
Do you know how long on average nationally?
regards
Corin
June 4, 2015
I don’t know about nationally, but I am aware of a single individual in his seventies who is living is a three bedroom council property where he was born, his parents having been in it for probably ten years before his birth. His parents have died, his sister has married, and he is determined to remain in a family home until he dies and is fighting attempts to charge him the so-called bedroom tax. I hope this isn’t typical, but I fear it is, as such properties are often “inherited” by children.
June 4, 2015
EP
If his children, grandchildren or failing that, his nephews and nieces, lend him the deposit, he can opt to purchase it at a massive discount, and given he has a right to buy, I think he also has a right to a guaranteed council mortgage, at least that used to be the case.
Thus he stays where he is, and if he wills it to to those who loaned him the deposit, they have a house at full market value when he passes, and all tax free if less than Ā£325,000, and all subsidised by the taxpayer.
Not bad a bad return is it.
But is this really what the taxpayers should be funding for a few chosen people John.
This scheme is absolute madness, and has zero financial benefit to the taxpayers who are due to fund it all.
Indeed this is probably worse than the Bank bailout.!!!
June 4, 2015
Indeed the housing stock remains the same as you say. It is also the same whether houses are let by buy to let landlords or bought by owner occupiers (the other absurd BBC scape goat always “unscrupulous” to the BBC ). The absurd levels of stamp duty often mean that renting is the best option for many, especially those who move jobs often.
The discount is often only a discount to the properties “vacant” value. The value (with the low rent tenant in place) is usually far lower. Often the seller is actually making a profit over and above the value of the unit with sitting tenant or the value of the rental stream. So it is win, win especially if a new unit is build with the money received.
The real problem is over restrictive planning which allows fields of pig houses, fields of PV panels, fields of rape seed or cows plus cow sheds etc. at the drop of a hat, but will not let you build a few nice houses there for people.
I personally thing all tenants should pay market rate. Otherwise we can have two people on similar wages one with lots of disposable income and the other with none as he is paying the market rate. Furthermore few ever leave social housing as it is, in effect, free money so why give it up? It is also unfair competition for other open market providers. Those that need help with rent get it anyway.
June 4, 2015
I agree – more Cameron style froth which is not thought through properly…… Let’s see how long his honeymoon lasts……with his own backbenchers
zorro
June 4, 2015
“I personally think all tenants should pay market rate” I agree.
June 4, 2015
Furthermore few ever leave social housing as it is, in effect, free money so why give it up?
Can I fix that for you:
Furthermore few ever get caught leaving social housing as it is, in effect, free money so why give it up?
There, that’s better., rant away…
June 4, 2015
Much truth in that.
June 4, 2015
So you basically want to double the Council House rent from Ā£80 per week to Ā£160 market rate for GB households with income averaging Ā£300 per week. The private rented sector are paying GB market rate Ā£160 per week with household incomes of Ā£550 per week.
You didn’t say what you intended to do about increasing Housing Benefit to pay this market rent, because that is the only way it will get paid? Boris has a target of rent taking 30% of income in London. 40%, if household income is above circa Ā£1,400 per week.
I love it when you Rednecks really think these things through properly.
June 4, 2015
Why should a few get a large rent subsidy, paid for by taxes on often poorer workers who do not get one? They may we’ll be earning plenty to pay it. If not they get help like the rest do.
June 4, 2015
Perhaps market rents are high because government is propping up the sector with housing benefit? Take away government props and planning restrictions for the housing market and things would be different.
June 5, 2015
Indeed relax planning.
June 4, 2015
Where I live (Hammersmith) the Labour Council has a policy to transfer (sell-off or privatise if you will) the ENTIRE council housing stock to a housing association. I assume the main reason for this is (was) to prevent sales of any council housing at all under right-to-buy. Now their little plan has been scuppered but it seems they are going ahead anyway. If we agree with right-to-buy in the council-owned sector it seems logical to extend it to the housing association sector. It is also a good idea to force the sale of high-value council and housing association properties to fund the building of a larger number of cheaper properties – I myself have bought ex-council and ex-housing association properties now worth well north of Ā£750k each. I am not that bothered by a discount being offered, the market price with a discount will still likely be less than the new-build cost of the replacement. These housing associations control a lot of money, have high-paid executives, and operate under opaque public accountability and democratic control, subjecting them to some of that won’t do any harm.
June 4, 2015
How about getting rid of the social housing category entirely? Sell the houses to sitting tenants or to entrepreneurs. The State would aid individual people and families as long as they needed help, and no longer. This aid would not be tied to particular properties.
State involvement in housing has been disastrous for a hundred years and it’s time to call a halt.
June 4, 2015
State involvement in housing has been disastrous for a hundred years and itās time to call a halt.
Indeed State involvement in almost everything is almost always disastrous – education, health, housing, railways, augmenting the feckless……..
June 4, 2015
@Lifelogic; “State involvement in housing has been disastrous for a hundred years and itās time to call a halt.”
Well you would say that, as a private sector landlord yourself, you are hardly going to see any benefit or advantage in the social or state housing sectors!…
June 6, 2015
Are you deliberately trying to misunderstand what I wrote? The State can subsidise the housing of the poor without owning property and without effectively creating tenure for life. Put it this way: should sink estates like Easterhouse exist? If you gather together thousands of the poor and the feckless in one place, why do you expect a good outcome?
June 7, 2015
@Lindsay McDougall; Plenty of “feckless” property owners around here, as the old saying goes “Money but no class”, [1] so your suggestion that social housing per se is the cause and not wider socail attitude is the cause of ‘problem estates’ is some way off the mark…
Oh and Lindsay my original comment was directed at Mr Lifelogic (due to him not properly quoting your comment), I have no idea if your remarks come vestige interest in the private rented sector or not.
[1] whilst elsewhere locally many of those areas full of Thatcher era sold-off council houses still find old sofas, old cars etc. dumped in front gardens just like they would have been in the worst of the 1970s
June 4, 2015
I just hope you’ll never need the NHS. … and also you’ll never come close to power.
June 5, 2015
No, it hasn’t been “disastrous”. The state only got involved because for decades the market had failed to provide adequate housing for those with low earning capacity, basically because there was not enough profit to be made by doing that, as the occupants could not afford to pay enough. The state’s interventions have sometimes been clumsy and even counter-productive, and often too expensive, but it’s quite wrong to say that it’s been “disastrous”. The British Army is no longer rejecting almost 40% of volunteers for medical reasons, as it had to do during the First World War, and if a volunteer is rejected now it’s more likely to be on the grounds of obesity than malnutrition.
June 4, 2015
Total economic nonsense.
June 4, 2015
This policy was popular in Margaret Thather’s time when there was not so much pressure on housing as there is now mainly due to past & continuing levels of high immigration. House prices and rents are much higher now than then as a direct result so the gap between social housing rents/discounted sales prices and those in the private sector is much greater. As has been pointed out there is resentment now that did not exist in the past, that the numbers of people coming into Britain is resulting in some of them, never having paid into the system, getting peference for social housing. The main problem is that not enough houses are being built for the numbers of people allowed to settle here. Something drastic needs to be done about that before we sell off social housing as many young people on decent salaries cannot either to buy a house or even afford to rent without sharing with others well into their thirties. Otherwise we will eventually have social unrest. Perhaos we should look back to Harold MacMillan who managed to increase housing supply rather than Margaret Thatcher.
June 4, 2015
If the Tory government has a gnats earlobe’s commitment to tackling immigration then any new-build of a social home would not be as massively urgent.
One has to wonder the location of our future workplaces. Brownfield sites where factories would be better situated are being eyed for housing construction. Will we all work from home ? Even commercial closed tank salmon fishery employees?
France density population =289 per square mile
UK density population = 650 per square mile
Of course the land mass of Scotland is part of the UK figures. We English are becoming squashed. Even with massive UK immigration, Scotland’s population is actually diminishing. With a loony SNP in power and a worsening economy in the goodness of time we will see an even greater exit from Scotland to the Squashland we have made for ourselves.
I wonder how many SNP MPs will return to Scotland after they are voted out of power by and by. Can’t be many after English taxpayers have paid for their London homes.
June 4, 2015
The question which is never answered in any discussion about house building is “When is the infrastructure going to be upgraded, and who is going to pay for it?”.
Where I live, there has been a considerable amount of new building, mainly by infilling and demolishing large properties with a lot of land. But the infrastructure remains unchanged. The schools are being enlarged causing ever increasing traffic congestion. Parking is often on the roads near new builds because they have insufficient parking space. Problems occur with the drainage system which wasn’t built to take the extra volume of rain and waste water. The two doctor’s surgeries are overloaded with long waits for appointments, and their parking space is now inadequate leading to overspill onto the adjacent roads.
The list is endless, I’m opposed to this type of building as the infrastructure can’t cope – far better to build a new town where the infrastructure is part of the overall design.
If there is a need to free-up homes, perhaps the government should consider some incentive to encourage elderly people like myself to move it a smaller home. At present the costs involved in downsizing within the same area would exceed the difference in the price of the properties, so we are staying put in a large family house, as indeed are both our neighbours.
June 4, 2015
Why is the Government letting some people have houses cheap whilst others pay a fortune for the same housing?
I know people who lived in council housing for free because they were professional single mums, now if they deign to work they can buy it cheaply. I thought the Tories were in favour of work not in favour of people not working to get a council house and then working to get it cheaply.
June 4, 2015
Entirely off-topic, and therefore very briefly, the German and French economy ministers have a joint article in newspapers across the EU, including the Guardian, in which they propose major EU treaty changes for far-reaching integration of the eurozone:
https://euobserver.com/economic/128964
“Berlin and Paris propose radical eurozone integration”
Of course the questions are – who would be in it, would any of the countries already in the eurozone be allowed to get out of it before it underwent these federalising measures, and would all the others be relieved of any legal obligation to ever join it?
I note also in the article:
āThe fundamental instrument of EU integration is the single market”,
which should give some people in this country pause for thought.
June 4, 2015
Denis, did you spot the line “For the EU to survive, eurozone countries need to integrate further and create a joint treasury.” Which makes sense for something coming out of Euroland. The Eurozone has to run with a single federal Treasury to run fiscal policy; it has to have its own federal tax base. It could then convert the ECB to a proper global standard Central Bank like the BoE or the FED. A Tobin tax and a property tax would be a good start. If this gains traction, Greece can be revitalised via federal transfer payments just like the US does with it States.
The nine Member states with their own currencies can go back to calling themselves EFTA; negotiate a free trade agreement with the Euro-zone; we all forget the EU and its Treaties ever existed and live happily ever after.
June 5, 2015
Under the present EU treaties only two of the EU member states which have not yet adopted the euro are free from the legal obligation to do so, and if they were to be liberated from their present obligation then it would have to be asked whether the countries which have already joined under the present treaties should also be allowed to withdraw.
June 4, 2015
I really despair .
Gideon was making idiotic promises every day leading up to the election .
The boy is all politics and bereft of policy and vision .
June 4, 2015
Sub-prime home lending in the U.S. triggered the bank crisis which lead to the GFC .
Astronomical land prices put up the cost of everything we buy and make our exports even more expensive . They price British people out of jobs in the global economy .
Astronomical land prices push everything back in peoples lives ; vacating your parent’s home , marriage , having kids , retirement and destroy ones ability to make financial provision for old age .
The situation is not only national economic suicide but completely immoral .
Reduce the employment taxes of the average family by Ā£10,000 p.a. and tax land at 4% value annually and people who work would be no worse off and additional work would pay .
This would encourage vacant lots to be developed , land to be utilised more efficiently and provide an evidently needed negative feedback into the land price loop .
Exemptions could be made for seniors .
June 5, 2015
This extreme language “The situation is not only economic suicide but completely immoral,” is entirely justified.The situation also includes the end of democracy : as Mr Wolf says below the “Tories are wrong to buy votes with housing.” However all political parties, except perhaps the Greens, are up to it.It is no longer possible to win an election by promising to curb house price inflation, although curbing wage inflation has become acceptable. You cannot rig the economy without rigging the democratic process.
June 4, 2015
They will need to be compensated for the discount on true value that the tenant enjoys when buying his property.
I take it this will be on a voluntary basis and you are volunteering to stump up the readies then JR?
June 4, 2015
Oh come off it Mr Redwood. A rather tenuous justification for an ill thought through policy. The initial Right to Buy was a very clever piece of social engineering – offer public housing for sale at huge discount to council tenants, combined with the ability to buy shares in newly privatised utilities, and thus persuade those people never to vote Labour again. But you were thwarted by the House of Lords in 1980 and its concern about selling charitable assets, which may happen again this time.
Housing Associations are social businesses with business models reliant on long term rental income to partly finance their development schemes, and they tend to be free of scandal. Also it’s notable that you are offering no ‘incentive’ for for private renters to buy the properties they live in. There’s no strong case for interfering with a successful and well established method of providing and letting homes.
June 4, 2015
If the government wishes to build many new homes to mitigate the effects of it’s failed immigration strategy it should just do so and spare us this naĆÆve and politically calculated claptrap.
There is an issue of gerrymandering as well as the moral hazard to consider.
Many tenants will sell or rent their bargain homes, pocket the difference between full market and the discounted value. Or tick the boxes for another social house and repeat the process.
Why should taxpayers that are already supporting tenants in social housing then again be asked to subsidise those tenants to buy the homes at a large discount?.
The Conservatives are SUPPOSED to be on the side of those that ‘work hard and do the right thing’. Yet again the party seems to have forgotten what it stands for.
June 4, 2015
It helps to analyse the problems we’re trying to solve. We don’t actually have a shortage of housing – instead, we have a property bubble that makes house purchase unaffordable for many who in previous generations would have easily afforded to buy a home of their own. We also have a shift in tenure towards buy to let, caused by financial and tax factors, including poor returns on other assets; preventing unwinding of the property bubble by allowing mortgages to continue increasing in size; gearing; foreign speculative money flows; CGT that has a ratchet effect on portfolios, dissuading sales by landlords.
The rental market is a hodge-podge of subsidies: council property let at well below market rent, HA property at a smaller discount to market rent, private sector rents propped up by housing benefit – and finally, the rest of the private sector supported by subsidised interest rates and expectations of capital gain.
Providing subsidies to allow selected tenants to buy at below bubble prices doesn’t solve the underlying problems, since nothing is being done to prevent the continued growth of the buy-to-let sector and of property prices generally. It merely adds yet another subsidy burden to those already being endured by taxpayers. Many of the homes will in due course be bought by landlords (as has happened to a significant proportion of council homes sold off), returning them to the rental sector.
If we wish to see affordable homes we need lower real property prices generally. If we wish to see more owner-occupation we need to curb and reverse the growth of the buy-to-let sector. The policy achieves neither aim.
June 5, 2015
Not sure why this is still in moderation.
June 5, 2015
Has anyone in government seen the BBC series āThe Housing Enforcersā.
We the general public see this world for ourselves but the politicians in their leafy suburbs donāt seem to be troubled by it.
Week after week viewers are treated to views of (problems ed) that we have willingly imported.
Matt Allbright said…
āThere is absolutely no shortage of desperate people looking for somewhere to live across the UK.
Itās often called a housing crisis, a term thrown about like magnolia paint, but until you see it yourself, you donāt really know what that means for the people struggling to achieve that most basic human need ā a roof over their headā.
Anyone with a bit of street knowledge and a basic grasp of maths can see we arenāt going to build ourselves out of this mess. The door to a solution through Eu withdrawal seems to have been closed with the knowledge of Mr Cameronās warm words to Mr Junker concerning his wish to ādockā the Uk in the Eu.
June 4, 2015
Has anyone in government seen the BBC series ‘The Housing Enforcers’.
We the general public see this world for ourselves but the politicians in their leafy suburbs don’t.
Week after week viewers are treated to views of third world squalor and deprivation that we have willingly imported.
‘There is absolutely no shortage of desperate people looking for somewhere to live across the UK.
Itās often called a housing crisis, a term thrown about like magnolia paint, but until you see it yourself, you donāt really know what that means for the people struggling to achieve that most basic human need ā a roof over their head’.
http://www.mirror.co.uk/tv/tv-news/matt-allwright-truth-homes-crisis-4150256
Anyone with a bit of street knowledge and a basic grasp of maths can see we aren’t going to build ourselves out of this mess. The door to a solution through Eu withdrawal seems to have been closed with the knowledge of Mr Cameron’s warm words to Mr Junker concerning his wish to ‘dock’ the Uk in the Eu.
June 4, 2015
Probably be the demise of housing associations
Why would they want to build houses so that people can buy them at subsidised prices?
June 4, 2015
I think that HAs are a reasonable idea. In essence, they are professional landlords with larger scale portfolios. That’s probably preferable to having the local council as a landlord from the point of view of ensuring property maintenance, etc. The quality of buy-to-let landlords varies greatly, with many of them being small scale, while the larger ones tend not to have the best reputations with their tenants, as their motivation (and how they became large) is more likely to depend on capital gain than providing a service to tenants for an income.
June 4, 2015
I dislike the idea of individuals being given preferential treatment in the housing market. This strikes me as essentially unjust. My antipathy is mitigated by the hypothecation of the money for building new social housing as creating more stock is the only way to reduce the pressure on the housing market.
June 4, 2015
I have never seen it written in tablets of stone that everyone has the right to own their own home.
I got my first property by working all hours to raise the deposit and had hardly any social life for more than a few years with no state aid, handouts whatever.
If you must sell of public housing stock at least adopt the Spanish idea. If you sell your property within ten years there is a sliding scale of tax from 90% to 0% to cover that period on the profit you make. To reduce the tax liability one can produce all IVA (VAT) receipts for the period of ownership for all alterations and improvements that have been made to the property.
Buying a council, housing association property will be seen by many as a quick get rich opportunity. If people wish to sell up then the first refusal should be given to the original owners who can pay selling price plus index linked percentage profit.
Too many ex council homes end up with private landlords.
June 4, 2015
You’ve probably noticed that once these properties have been sold into the private sector they will no longer be eligible for the reduction in VAT to the EU-permitted minimum of 5% for purchases of energy saving materials, courtesy of the ECJ today.
As Guido puts it:
http://order-order.com/2015/06/04/eu-forces-elected-government-to-renege-on-queens-speech-promise/
“The government will be forced to back track on their Queenās Speech promise not to raise VAT following a European decree. The decision by the Court of Justice of the European Union to ban the UKās 5% rate of VAT on the supply and installation of energy-saving materials will force the government to raise VAT to the standard 20% rate. Unelected pen-pushers over-ruling a democratically elected government just weeks after an election.
The CJEU has form with these types of judgements, last year forcing Poland to apply the full rate of VAT to fire protection equipment. One for Dave to bring up with his new German friends.”
June 4, 2015
@Denis Cooper; It will be interesting to see what comment politically neutral journalists make regarding this ECJ ruling…
June 5, 2015
Well, Jerry, why don’t you provide us with a well-informed and rational and politically neutral analysis to counter any “rants” about it?
June 5, 2015
@Denis Cooper; What ever, Sorry to burst your bubble! But I do find it strange that you would not seek out a politically neutral comment yourself [1], just proves that you are not actually interested in the facts, just what ever fits your own preconceived opinions and that is all you go trawling the web for.
[1] and no I have not gone searching the web regarding this ECJ ruling, been quite busy, unlike yourself obviously…
June 6, 2015
Its been reported in every UK newspaper Jerry so pick one you like and have a read.
It was even on the BBC, so Im surprised you refuse to accept it.
June 6, 2015
The facts are simple enough, Jerry. The UK government wishes to encourage energy conservation, and therefore it wants to reduce the tax on the necessary supplies. It cannot remove the VAT because the EU will not allow VAT to be removed from anything to which it has once been applied. Nor can it reduce the VAT to zero because the EU says that the minimum is 5%. Now it has been told by the ECJ that it cannot even reduce the VAT to 5%. No amount of personal comments from you will change any of that.
June 7, 2015
@Edward2; “Its been reported in every UK newspaper “
You point being what, or did you miss my comment about seeking a report by a “politically neutral journalists”? I have yet to read any newspaper that is politically neutral (even the so called Independent is anything thus), and as I have said I have not had much time to trawl the internet for a neutral opinion – nor anything much besides work related stuff, other than a dew fleeting forays to this site.
@Denis Cooper; My comment was related to you posting comment from a Tory supporting website as fact, thus if these facts are “simple enough” there should have been no problems in you finding as more neutral reference?
I’m not actually making any judgement on the issue what so ever, just the way Denis presented them, if you think I’m picky about such citations just wait until. you have the europhiles contesting your every word!
June 8, 2015
What do you do Jerry if all media sources are infected with political bias as you have just said ?
Now the internet is making available thousands of new biased sources it must be a terrifying world for you.
Trying to avoid all these influences.
There is little room on this particular item for bias.
The EU has made a ruling on a product the UK wanted to reduce the VAT rate.
Its been reported in nearly all news media sources.
Some were much more politically biased against this decision than others but the “raw fact” remains and was reported as such in all the articles I read.
The EU has ruled we cannot reduce VAT on this product.
It is even on the EUs own website.
June 9, 2015
@Edward2; “What do you do Jerry if all media sources are infected with political bias as you have just said ?”
If it is that important I’ll try and get to the same source report, or I read multiple reports and then make my own judgement as to the likely truth.
“Now the internet is making available thousands of new biased sources it must be a terrifying world for you.
Trying to avoid all these influences.”
Far from it, never has it been so easy to to split opinion/spin from the actual facts, the Internet has been liberating!
“There is little room on this particular item for bias.”
It is not just the facts but how those facts are presented and packaged.
“Some were much more politically biased against this decision than others but the āraw factā remains and was reported as such in all the articles I read.”
Then there would be no problems in citing the source if the facts are so clear and uncontentious…
“It is even on the EUs own website.”
Exactly, so why not cite it, along with the supporting official documents that will have also been provided?
June 6, 2015
Jerry: “It will be interesting to see what comment politically neutral journalists .. ”
Go on then Jerry, give us a good belly laugh. Nominate a journalist that you consider ‘politically neutral’.
June 7, 2015
@APL; Thanks for making my point! Perhaps Denis could have cited the actual ECJ document/ruling and an extract from within?…
June 8, 2015
Failing to answer the straightforward question again Jerry
Are you a politician?
June 9, 2015
@Edward2; Did you ever stop to wonder why I didn’t, sorry, couldn’t answer APL’s question before posting nothing more than yet another inflammatory comment designed to add nothing but inject another fake disagreement in to the debate?
But as you seem to think APL’s question so easy Ed, how about you naming a politically neutral (mass circulation [1]) journalist?…
[1] in other words not a journalist who works for as specialist publication of the sort that I suggest would be a better citation, for example if debating a medical issues it might be The Lancet.
June 9, 2015
An even more nonsensical post from you Jerry.
You first refuse to accept a widely reported news story because it came from what you describe as a politically biased source.
Then you demand a reliable source for the story from an unbiased journalist before you will accept it as correct.
When asked who you consider to be neutral you first fail to give an example and then demand someone else does!
Bias is irrelevant to the original post, which was about the EU stopping the UK reducing VAT on certain insulation products.
This story was correctly reported by a wide range of newspapers and tv news companies including the BBC.
If I remember previous posts from you Jerry, you stated that the BBC is neutral in its political bias neither left nor right wing.
Do you still refuse to accept the story was factually correctly reported?
June 10, 2015
@Edward2; “An even more nonsensical post “
Sorry that you have no clue about standard academic (and media industry, as it happens) research practice. š
“When asked who you consider to be neutral you first fail to give an example and then demand someone else does!”
But perhaps that is because there are no reliable unbiased journalists in the press (which was the media sector asked about), hence why people should not cite the press, especially if the raw source can have been cited and quoted (which in this case I am told it could). Of course if I’m wrong you or “APL” will have no problem in naming such a journalist yourselves!
“Do you still refuse to accept the story was factually correctly reported?”
How can I do either, as no one has cited the original source, nor one that can be assured or at least assumed to be unbiased! The issue is not one of right or wrong in any case but one of reliable references, in this case a right wing political blog was in inappropriate source. as much as had (the erstwhile) Bazman cited something like Left Foot Forward to prove something about good about the Labour party or bad about the Tory party, and people like yourself Edward would have taken him to the cleaners over it without a doubt. One rule for what you want to hear and another for what you do not it would seem… What ever.
June 11, 2015
So to you the story doesn’t even exist unless from a source you accept.
What an unusual parallel zone you live in Jerry.
June 5, 2015
This is not going to help owners of older badly insulated houses, who will have to pay extra tax for increasingly high standards, provided by regulated specialists, who charge amounts for wall and floor insulation which do not pay in savings on energy costs.
June 4, 2015
As Martin Wolf of the FT puts it under headline ” Tories wrong to buy votes with housing” FT 28.v.15
“In contemporary politics buying votes retail is, quite properly, illegal . But buying votes wholesale is not. Offering public money to specified groups is not wrong, provided the criteria used are persuasive. One can readily justify support for the poor, the sick, the elderly or the very young.But how can one justify handing over huge amounts of public money to people who happen to win the housing equivalent of musical chairs? One cannot. But this is one of the British government’s flagship policies. Its offer to tenants of housing associations of a” right to buy”is worse than a crime ; it is a blunder………………………………..This then is a corruption of policy”
June 4, 2015
“Ministers do have to work out how to implement this pledge.”
Maybe I can help?
The government is in a very advantageous position when it comes to doing anything in the economy. Unlike you or I, it doesnāt have to borrow money at high interest rates. It can either just create the money or borrow it via the sale of gilts at very low interest payments. Also unlike a private developer which has to pay taxes to government during the course of the development, government actually receives taxes. Therefore if a private developer can build at a profit, then government can do the same thing and make an even bigger āprofitā.
So say it decides to build a Ā£100 million residential development. It classes that as investment spending or capital spending so it doesnāt appear on the books as a ācurrent deficitā. It hands out contracts to builders in the private sector and most of that money gets spent on wages. Either directly, on the wages and salaries of building workers, architects etc, or in the process of the labour that goes into making bricks, concrete, timber, tiles etc. So straightway some Ā£30 million or so comes back as taxes and NI payments. The bricks, concrete etc attract VAT when they are purchased. So thatās probably another Ā£10 million or so going back into government coffers. That revenue is classed as current revenue so it reduces the ācurrent deficitā.
Then that remaining Ā£60 million gets spent and respent in the economy. At every stage taxes are levied. 20% VAT, corporation tax, capital gains tax, fuel taxes, alcohol and tobacco taxes, yet more income tax and NI, plus lots more taxes too that we can all think of. The end result is that nearly all that Ā£100 million goes back to government. At the same time building workers who were unemployed have now found jobs so donāt need to be paid dole money any longer.
Then government can take delivery of those Ā£100 million worth of flats or houses , say about 400 of them at Ā£250k each. It then sells them to a housing association or co-operative and gets all its money back. But itās already got it back anyway! Alternatively it can rent out the residences directly, or via a lease arrangement with the co-operative, and collect the lease or rents, which at present day prices, especially in London, will pay off any interest multiple times. That way it still owns the properties and their value appears as an asset on the governmentās balance sheet.
In other words it makes a tidy profit on the deal. And no, itās not necessarily inflationary, when there are unused resources available. Government will have created something extra for sale in the economy. Inflation has to be about more money chasing the same amount of goods not more money chasing extra goods.
Reply That’s what government has been trying since 2004 but it just led to a bigger deficit.
June 5, 2015
It Gordon Brown that neatly defined all spending as ‘investment’. That didn’t end well.
What part of the failure of Gordon Brown’s experiment do the MMT followers not get ?.
By the way bricks and concrete are zero VAT rated on new residential builds.
Diverting resources to build homes to accommodate an exponential increase in population brought about by low skilled foreigners is just potty.
We need a clear industrial policy, factories and real jobs not more and more houses – where are all these people going to work when the brownfield sites have been cleared for housing… Or is selling each other coffee and cold calling each offering double glazing and extended warranties going to pay our way….
Reply If you establish double glazing factories or coffee machine factories you will need coffee shops and double glazing installers to help sell your factory product!
June 4, 2015
The sale of social housing to tenants who are earning enough to afford a mortgage on the property makes sense, particularly if all the all money generated is used to provide further social housing.
But to give huge discounts on these sales is so deeply unfair to everyone else that it looks like it is either an idea dreamt up by a rotten borough politician or it is an EU directive.
June 13, 2015
Please be more careful when using the terms “Europhile”, “Eurosceptic” and similar.
These terms mean nothing, but they quietly lead people to falsely believe that those of us who want to leave the EU hate Europe, Obviously, nothing could be further from the truth.
And they also suggest that “Europhiles” love Europe, rather than love the EU, which is very different.
In short, we are establishing a code that makes people think that an Out vote means a vote to hate Europe.
Maybe use terms such as pro-EU or anti-EU, or something similar instead.
Thanks!