Monday, 30 November 2015

Ouch that hurt, but let's try again...

Torygraph hack Matthew Lynn has found some interesting stats on housing in Europe:

* The UK is now fourth from bottom of all 28 member states for homeownership
* 96% of Romanians live in owner occupied housing
* The average British home is now 96 square metres, the smallest in Europe

He suggests we might like to worry that the disenfranchised might turn to "populist, brain-dead redistributionist politics of the sort pushed by Jeremy Corbyn". But fear not, for Mr Lynn has a populist, brain-dead redistributionist solution of his own:

  ... why not re-introduce mortgage interest tax relief, abolished in the 1980s? That was the one policy that kick-started home ownership and it makes getting on the property ladder dramatically more affordable.

One last roll of the dice?  They wouldn't, would they?

13 comments:

Bayard said...

I doubt the country could afford it, but hey, when has that ever stopped them?

Graeme said...

They want MIRAS when interest is around 5%? Amazing.....It helped when the rates were 15% but this is just ridiculous

Mark Wadsworth said...

The man is so gloriously wrong about MIRAS, its history and impact and justification, that he does not deserve to live. He has richly deserved his "twats" label.

L fairfax said...

I don't think George would be that silly. The changes to tax have made the playing field fair for home owners compared to BTL

L fairfax said...

This is a clever idea
"Empty high streets could be converted to homes, as could the out-of-town shopping centres where the likes of B&Q and Argos are closing stores"
There are loads of empty shops near me and prices are sky rocketing.

Steven_L said...

B, he reckons we can't afford not to, lest someone like Corbyn gets in!

G, they'll probably just plump for negative interest rates after the next bust, same thing in a way.

MW, I didn't take me long to decide whether to apply the label.

LF: What tax changes? The ones that GO says will happen in 2020? There is no level playing field. BTL loans are not subject to the same regulation and are given on up to 15 times the income of the 'business'. A consumer cannot get a 15x income mortgage.

On empty high streets, if they are so run down why not compulsory purchase at the run down price, grant planning and then sell them or build housing for rent?

Dinero said...

Has anyone got any stats on housing costs as a portion of income, with rising incomes.
A commentator on here last month said that housing costs in proportion to income were currently out of trend and that over the long term since 1950 housing spend of income has been in fact pretty stable. Does anyone have some stats or evidence on this to show one way or the other.

L fairfax said...

"Does anyone have some stats or evidence on this to show one way or the other."
In my road in 1992 you need £6.2K deposit (for 90% LTV) to boy a house you now need £36K plus £8K to buy the same house at £360K.
Anyone who things that is comparable has had some really good pay rises in the last 23 years.

mombers said...

MIRAS would indeed make " getting on the property ladder dramatically more affordable" for approximately 3 seconds, before prices rocketed up to compensate...
Also no mention of the egregious violation of private property that has happened over the decades as tax has fallen more and more heavily on labour and capital and lighter and lighter on land...

mombers said...

Also, with MIRAS, is it in any way fair that a renter and homeowner have such dramatically different tax rates? Sure, the homeowner just pays a portion of their tax to the bank as a privately collected tax...

Mark Wadsworth said...

Din, yes of course there is an overall trend for rents to grow as a share of the economy. Common sense tells us this.

As to UK statistics, you don't need to look very far. But bear in mind that until the 1980s or so, UK governments deliberately depressed the amount which people needed to spend on housing (rent caps, mortgage caps etc).

What has happened over the last twenty or thirty years is that Thatcher, Blair, Brown and Camerosborne have abandoned the old logic and gone for full on Home-Owner-Ism, the whole aim of which is to make rents and house prices as high as possible.

So comparing pre and post 1990 or so is not comparing like with like. It is comparing one set of policies (keep rents and prices down) with the opposite set (keep rents and prices up).

Ben Jamin' said...

Lynn has been the object of derision on this blog several times hasn't he? Not quite up there with fellow Torygraph thicko Heath yet.

Shame he didn't mention Singapore as a paragon of homeownership too. Again over 90% I believe, only there people lease from the State which owns most (85%) of the land and the buildings.

Mark Wadsworth said...

BJ, that's the beauty of the system.

What the Faux Libs call 'state owned housing' belongs to everybody equally. So if we had 100% social housing, every citizen would be a home-owner, albeit indirectly, and then it can be allocated by price i.e. rents and everybody gets what he pays for and fair compensation for what he is excluded from. It's Georgism by the back door.