From The Daily Mail:
... he warned the housing shortage was damaging the lives of the young.
Mr Clark said: "It’s destroying family life in so many ways. How can a family put down roots if they’re on six months’ notice to quit on a buy-to-let? Young parents are having to spend more of their earnings on rent, and less on their children. Living in tiny flats and houses without the gardens they played in as children. Leading isolated lives, miles from where their children’s grandparents and other relatives are."
His suggestion, to allow more new construction, is of course only part of the solution at best: as we know from the 1950s and 1960s, it requires a combination of land taxation (Schedule A, Domestic Rates, ideally in combination with lower taxation of incomes); lots of new construction; and sensible mortgage lending restrictions.
Just doing the last two is only deferring the problem until later, it would in fact be quite sufficient just to do the first bit, but hey.
Wednesday, 5 October 2011
Tory Minister talks sense on house prices: shock
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9 comments:
"...and sensible mortgage lending restrictions." Well, until reg-yew-lay-shun really got going in 2001 with the adven of the wholly discredited FSA there were excellent lender governed lending restrictions that worked really well. I know this. And I have seen these restrictions be relaxed in almost perfect correllation with increase in reg-yew-lay-shun and Darling Brown Balls loadsa funny money experiment.
L, sure, the last ten years were insanity gone mad, but we've always had house price bubbles (just not as big as the last one) and we've been having them for centuries.
It wouldn't be sufficient to do the first bit. House prices are determined by supply and demand. If you introduce LVT, then sure it would increase the cost of owning land, which would suppress demand in an economic sense. And that would cut land purchase prices. But it wouldn't solve the problem that there are fewer houses than families who want to live in them.
AC: "which would suppress demand in an economic sense"
It would have absolutely no impact on the demand curve, that's the whole point, the tax affects the supply curve only (which is nigh vertical). LVT leads to a wider spread of ownership, because nobody wants to own more than he needs or can afford.
"But it wouldn't solve the problem that there are fewer houses than families who want to live in them."
There are plenty of houses, they are just woefully badly allocated. Once people have upsized and downsized, second home owners have sold to owner-occupiers, derelict and vacant have been done up, we're unlikely to find any major shortage.
And if there is still a slight shortage, then that is reflected in LVT being higher than otherwise in ceratin areas (South East?), so the NIMBYs are less likely to oppose new development.
"But it wouldn't solve the problem that there are fewer houses than families who want to live in them."
Yes, but what causes this problem? Housebuilding has slowed down in the past few years, but population growth has slowed even more. It has more to do with people aspirationally trading up, than needing somewhere to live, something that LVT would discourage.
Classic example just down the road from me. Lovely stone detached house in absolutely prime site. Uninhabited for 15 years, it is now completely derelict. It turns out that all this time the owner is a property developer (clearly not a very fast working one!). He has now put in to get it demolished and replaced with 3x 4bed town houses and obviously in its derelict state demolition is easier to justify. It is not the nature of the development that bothers me it is the length of time the site has been wasted and there must be thousands of similar cases all over the country.
QP wrote:
Classic example just down the road from me. Lovely stone detached house in absolutely prime site. Uninhabited for 15 years, it is now completely derelict
This is exactly what first attracted me to LVT back in the early 1980s when we were still taxed on the ratable value system: people letting perfectly good buildings go to rack and ruin -- or even deliberately destroying them -- just to avoid taxes.
That is such a waste. And LVT would stop it dead. Yes, QP you are right: it's replicated again and again throughout the UK. In urban and in rural areas, in domestic and in commercial buildings, in agricultural and in industral settings. It is criminal that it's still going on after so many years.
B, elegantly played, sir.
QP, even on my street (which is a weird mix of commercial and resi) there are several sites which are vacant or empty or derelict. As I've drilled my kids to say "Land value tax - that will sort them out!".
As to your developer, if the 'local people' insist that the house stays as is, then he would be taxed as such and have no reason to leave it empty. If he managed to get planning, well, he'd be taxed on the uplifted rental value from grant of planning and would get on with it ASAP.
As to your developer, if the 'local people' insist that the house stays as is, then he would be taxed as such and have no reason to leave it empty. If he managed to get planning, well, he'd be taxed on the uplifted rental value from grant of planning and would get on with it ASAP.
Yes, as it stands there is now going to be a stand-off (its a "conservation area" to add extra complication). I don't see anything happening quickly and I don't see the proposed planning changes making any difference in such a case. With minimal liabilities there is every incentive for the developer to drag things out rather than accept a decision and crack on. So on the face of it LVT would appear much more effective in solving the problem than any tweaks to the planning framework.
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