From The Metro:
Up to £6.3 billion must be ploughed into a scheme to build more than 100,000 affordable homes over the next two years, according to an influential group.
The newly-formed 2020 Group said the credit crunch has meant a collapse in house prices and lending, a severe drop in housing building and an estimated 450,000 job losses in the construction industry between 2008 and 2010.
And who might the members of the 2020 Group be, I wonder ... ah, here we go:
Ms Barker, who sits on the Bank of England Monetary Policy Committee*, is a member of the 2020 Group alongside the National Housing Federation (NHF)**, housing charity Shelter***, the Local Government Association (LGA)**** and the Trades Union Congress (TUC)*****.
* The MPC, which ought to be disbanded. Ms Barker is also on the Board at super-quango the Homes & Communities Agency.
** The umbrella body for Housing Associations, which are either fakecharities or quangoes, depending on your point of view. Not to be confused with the Home Builders' Federation, who have been surprisingly silent in all this.
*** Make that "housing fakecharity Shelter", item 5 here.
**** Dude, WTF? Local councils could create masses of 'affordable housing' at the stroke of a pen by granting more planning permission - if enough were granted, land values, which make up nearly half of the cost of a new home would fall significantly, so there'd be no reason for a new, privately built home to be sold for much more than its construction cost, or £75,000 for a three-bed semi.
***** The TUC, who have a symbiotic, if not parasitic relationship with the public sector and the ruling Labour Party, Exhibit 2 here.
Monday, 23 February 2009
Quangista form new quango, ask for more taxpayers' money
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8 comments:
I disagree - you might say "well, you would", but there we are.
More planning permission would of course help, but hardly anyone's applying. If land prices did fall further, nothing would happen until that led to the big housebuilders going bankrupt and their creditors auctioning off the land.
But apart from the public sector, almost everyone who builds houses builds them to sell. We don't particularly need more housing for sale right now, we need housing for a mixture of market and affordable rent.
Only the public sector right now has the cash to deliver that on any sort of scale (yes, with printed money, but for as long as demand in the economy is below supply, so what) and the experience of managing long-term rental housing.
Of all the 'stimulus' options open to the Government, this is the one with the best timing in terms of getting value for money, and the most chance of delivering a long-term revenue stream from rent back onto the books when the economy recovers.
LGO, firstly, we do not have a particular shortage of housing, it's that prices are too high because people like you have been giving in to NIMBYs for far too long.
If builders could get the land effectively for free, they'd be able to sell houses for £80,000 all in and still make a profit.
The government is totally schizophrenic on this. OT1H, it wants to keep prices high (using taxpayers' money) and OTOH it says it wants to provide more affordable housing (also using taxpayers' money). And what do those two extremes have in common ...?
If the government butted out and allowed prices to fall by 40% or something, then many more people would be able to afford to buy, or indeed to buy-to-let at 'affordable' rents. There, that's that fixed.
Giving in to NIMBYs is more a sad fact of life for the elected branch of local government, than something the staff are keen to do. Call it an unfortunate side-effect of being held accountable at the ballot box, I'm sure it has its compensations.
I could equally give you examples of developments that were championed by local Councillors, supported by the community, and then vetoed by the planning inspectors and Minister because they didn't fit in with some notional "regional plan".
We probably don't have a shortage of small flats across most of the country, that much I will happily accept. In many places we have a glut. We don't have enough of a shortage to justify prices being as high as they were or, in all probability, as they are even now. That was because of financial trickery.
Nonetheless, we have a shortage of family homes in most places at prices most families can pay. Even with another 25% off, call it 50% from the peak, houses will be less affordable compared to wages than across much of the world. And you are right, the Government will probably come up with more ruses to keep them up.
We could 'solve' this if there were some way of moving all the pensioners living in family homes into the flats, and freeing them up for families, but short of tripling Council tax (don't tempt me), I'm not sure how we would manage this.
One Council I have worked with have a project where younger people who can't afford a house get paired with older people who need help cleaning, cooking and gardening. Nice as far as it goes, but I'm not sure it's a solution for the wider problem.
Anyway setting all that aside, I think this is a good deal. The public sector would be borrowing at a 4% yield, or even printing at a 0% yield, building on land that it can get at knock-down rates, delivering long-term income from rent, and getting the labour from builders who would otherwise be getting paid public money anyway - in the shape of dole. Net of the tax paid this could be a real moneyspinner, and if the alternative is chucking it at Northern Rock to write more mortgages, then, well, you choose!
LGO, in my darker moments, I tend to sympathise with your last paragraph, but there is another way that would also fix the over-occupying pensioners issue*.
It's called Land Value Tax, whereby (economically) you pay rent on the land bit but own the house. So councils wouldn't need to bother managing property, they just have to make sure that it's a nice area to live in and the money comes rolling in. And house prices would be low and stable.
* Although politically, I'd allow them to roll up LVT to be redeemed out of the sale proceeds of the house, that's got to be better than these awful equity release schemes that are a complete rip off. At least it focuses their attention.
I'm not opposed in principle to LVT, indeed I think it should be one of the options open to Councils as part of a shift in local tax so that the decision is made locally and fought out at elections, rather than national parties arguing about what the local tax system should be.
I do see substantial political and practical problems in getting from here to there, though, given we're not starting from a blank canvas.
If they are affordable (at 63 grand a pop they should be) and there is a demand, these houses should sell like hot cakes.
So why the 6.3 billion subsidy?
Why should pensioners, most of whom have worked hard and paid taxes all their lives be forced to move into a shoebox to end their days, leaving all their memories behind? The people who should be given flats (or preferably a room in a shared building with creche facilities) are the dole-scroungers who have never had any intention to work and reckon parenthood is the quickest path to getting a house. And what about the mega buy-to-let landlords? I'm not talking here about the few people lucky enough to have a second property to eke out their pathetic pensions (one of the lowest in Europe) but people who own hundreds of properties. These are the people who should be targeted. It's a simple equation: the more properties these BTL landlords own, the fewer there are on the market, hence the price goes up so even fewer people can afford them. At the same time, all these people who can't afford to buy are forced to rent, thus rental prices go up, encouraging the BTL landlords to buy even more properties. Put a limit on the number of residential properties any individual is allowed to own, and suddenly thousands of properties will become available.
Anon, I never suggested 'forcing' pensioners to do anything - they can roll up the tax to repay on death. And this 'leaving memories behind' is codswallop, you can still take your possessions with you when you move; you can tell you friends and relatives your new address and 'phone number; and so on.
Plus pensioners are usually among the hard-core NIMBYs. With LVT, at least it's not a one-way bet, as they'll have to choose between no new housing, high prices and high tax bills; or more new housing, lower prices and lower tax bills.
Our daft welfare system is a completely different topic.
By the way, if lots of BTL landlords buy properties to rent, then rents will tend to go down, not up.
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