Friday, 11 December 2015

He says that with a straight face and as if it were A Good Thing.

From City AM:

Why the war on buy-to-let will make the UK housing crisis worse

While the RLA is clear on the need for landlords not to take on mortgages that they are unable to afford, it cannot be forgotten that the housing market would be in the doldrums if it were not for the private rental market.

Government figures show that, of the 3m new dwellings created in England between 1996 and 2013, 83 per cent were private homes to rent...

As Ben Jamin' patiently explained last week, there is no 'housing crisis' it is a 'transfer of wealth crisis'. And where is that wealth going?

A lot of it is going to landlords and bankers of course, who are basically just leveraging up land price increases, but…

… Developers have come to rely on investors buying “off-plan” to fund new homes. As ministers have acknowledged, the private rented sector provides the housing needed to support and encourage a flexible labour market.

Strange. In the good old days, since the dawn of time up until about twenty years ago, BTL landlords didn't buy any new homes - landlords were net sellers for the whole of the 20th century -  and nobody bought them "off-plan". Land cost the developers next to nothing and homes were sold for their build cost plus reasonable profit margin, homes only take 6 to 12 months to build so there were not huge amounts of cash tied up in work in progress. They were called 'speculative builders' not in a pejorative sense, but because they were taking a punt with their own money.

So why do developers need so much cash up front nowadays? To pay for the land, of course. That's where the wealth is disappearing, in inflated land prices.


James Higham said...

Even rooftop prices are skyrocketing.

DBC Reed said...

Brilliant leftish article about our subject by the American, Jesse A Myerson , provocative enough in his country to draw denunciations of being Marxist .Googleable as: Jesse A Myerson Lets get rid of private housing.

Bayard said...

"to draw denunciations of being Marxist"

Doesn't that happen to anyone over there who's left of Oswald Mosley?

DBC Reed said...

More to the point: did anybody see Thomas Piketty on Newsnight last night? Asked about what he thought relevant tax wise to the new Labour Economic Committee he's part of ,Piketty said "a steeply progressive tax on UK housing wealth".Since Corbyn and McDonnell have Land Tax leanings there could be a productive interaction.