There's a splendid summary on David Ireland's blog* of some of the hundreds of millions of taxpayers' finest which the UK government has thrown at the "house builders", ostensibly to help "first time buyers", but as he points out, all that has happened is that construction levels have fallen and "house builders" have booked much larger profits. Which is what you would expect - all subsidies to land ownership go to landowners. He missed off the £80 billion "Funding for Lending Scheme", but hey.
Now, who is this David Ireland chap? He's Chief Executive of the fakecharity "Empty Homes".
And what's their Big Idea..?
The loans fund was one of the demands of Channel 4's “Great British Property Scandal” campaign led by architect and independent Empty Homes Adviser George Clarke. Government operated empty homes loans funds have already been announced in Scotland and Wales, this fund will operate across England.
Loans will be available to pay for works needed to bring empty properties into use. The resultant homes must be affordable. This means that they will need to be let an affordable rent (no more than 80% of the market rent) for at least five years. Homes will also need to be renovated to at least the Decent Homes Standard.
The fund will be run jointly by Empty Homes and a building society. It has been made possible by a grant from the Department for Communities and Local Government’s Empty Homes Community Grants Programme.
In other words, more of the same. He primarily wants to give more taxpayers' money to landowners, ostensibly to help tenants, but applying his own logic, at best this will just push up landlords' profits and at worst achieve nothing. And secondarily he'd like to funnel off a little bit for himself as a commission, of course.
* Via SBC at HPC.
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8 comments:
how the worl has changed. A wweek ago, I watched a film about firemen during the Blitz. one of them rented a flat and it was a bit ramshackle so he and his mates went and painted it, cleaned it, wallpapered and furnished it. Now, you need a government grant to do that?
Mark,
That's a bit harsh. Perhaps Mr Ireland has never heard of LVT? Empty Homes should be one of it's most vociferous advocates.
Perhaps someone should email him a link to your educational blog? Er.........
G, exactly.
BJ, Robin has desperately been emailing them, to no avail. Anybody who can slag off subsidies to landowners as pointless and then hope to make a living by doling out subsidies to landowners is beyond redemption.
That said, in terms of benefit per £, doing up existing buildings in town centres is far better than building new ones on the green belt.
Fair do's then. They obviously have a self interest in keeping the bogeyman alive.
You have to admit, it is so odd, it's barely believable.
"Anybody who can slag off subsidies to landowners as pointless and then hope to make a living by doling out subsidies to landowners is beyond redemption"
Hang on a mo'. These are loans we are talking about, the Gov't is expecting to get the money back again, with interest. Ok, not much interest, but with the BoE rate as low as it is, all they are doing is cutting out the greedy middlemen bankers. Where are the subsidies you are moaning about? All this sounds horribly like the Daily Fail going on about "subsidised council housing".
B, we discussed this before, I am reliably informed that banks don't like lending money for renovating currently uninhabitable homes.
(Quite why is unclear to me as the payback period is very short i.e. the implied return on cash spent is enormous. I'd happily set up as a specialist lender to do this.)
So the interest rates you would have to pay are quite high and so the subsidy is also very high.
Now, as I have also said before, the "stick" of higher council tax on empty or derelict homes (if it could be administered properly) would definitely work.
So if there is to be a "carrot" as well then why not fund it out of a council tax surcharge on empty and derelict homes? Belt and braces, pretty much guaranteed to work at zero net cost to the taxpayer generally.
"So the interest rates you would have to pay are quite high and so the subsidy is also very high."
I really don't follow that. What subsidy? Let's say I own a derelict property. I want to do it up, but can't get a loan. I have an idea: I go to three or four of my mates and say, if you lend me three grand, I will pay you 1% more than the building society and in a year, you can have it back. (This isn't theoretical, I know someone who did just that, except he got all the dosh from one person). So I borrow for about 4%. This is a lot more than I would have been charged by a commercial bank. I am saving money, my mates are making more money, where's the subsidy?
B: "I want to do it up, but can't get a loan."
Then the effective interest rate is infinity, isn't it, not 3%.
Why the banks are so prissy about this, I do not know (as your example shows, it's not a particularly risky type of lending).
If banks really were lending on renovations at 3%, then there'd be no need for a taxpayer funded cheap loan scheme.
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