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?
Monday, 30 November 2015
Torygraph hack Matthew Lynn has found some interesting stats on housing in Europe:
Good little vignette here that pleases me on so many levels.
1. It is clear that house, aka land, prices suffer a reduction compared to similar locations if they are on a busy road. That is the market is pricing in the externality. Well. Well. Who'd a thunk it?
2. DA is just another rent seeking homeownerist looking after No. 1.
3. What's more DA appears to be using her position to further the scheme that will enhance her personal land value. Allegedly. It cheers me up no end to see that cronyism is alive and well in JC's acolytes.
I was so gleeful at fatties cronyism and hypocrisy that I did not set out this post as well as I should have done - as MW pointed out.
Obviously the cost of the externality is not falling on the traffic using fatty's street. But there is a lower price for living in that street. And since that price will rise when the traffic is magiked away by said fatty's mates there is clearly some price discounting going on by the market because of the traffic blight. I call that the market succeeding, albeit not in the way that actually penalises the polluters for their externality.
(As JFK never said.)
From the BBC:
Residents of the German city of Hamburg have voted against hosting the 2024 Olympic and Paralympic Games.
Hamburg was one of five cities left in the running, alongside Rome, Paris, Budapest and Los Angeles.
But 51.6% of residents of the city voted no in a referendum on Sunday. The No camp argued that money earmarked for the Olympics could be better spent...
Hamburg's mayor Olaf Scholz was disappointed with the result: "That's a decision that we didn't want, but it's clear."
Well done lads!
The responses to last week's Fun Online Poll were as follows:
What is the most likely cause of Islamic State?
The usual violent Islamic tendencies and outside meddling in Syria - 74%
Climate change - 0%
The Killer Cornflake Conspiracy - 10%
Other, please specify - 15%
So no takers for 'climate change' then. It appears that more people would give credence to the 'Killer Cornflake Conspiracy', which is something equally fictitious.
As to 'outside meddling', from the comments it appears that people interpret this to mean Western meddling. That's only a part of it - the Iranians, the Saudi Arabians and possibly the Turks are just as guilty if not more so.
Being a democratic blog, it's a free vote this week with no party whip this week:
If the UK bombs ISIS targets in Syria, this will…
Make us safer from terrorist attacks
Make us more a more likely target
Not make any measurable difference
Be a waste of money better spent controlling our borders and combatting domestic terrorism
Other, please specify.
Vote here or use the widget in the sidebar.
Sunday, 29 November 2015
OK, as someone who has recently lost close to 2 stone in weight after the doctor told me I had to, I thought I'd share my plan for how I made this happen:
- Stop Eating so much shit
- Fill up at breakfast. I'm having porridge every day, or some cereals and fruit and maybe some toast.
- Cut right down on the sugar and fat.
- Get a bit of exercise (but really, that's like 30 minutes walk most days)
- Don't go hungry, but snack on healthy things or have something to drink.
I'd really love to be able to expand this into a diet programme with books and packets of expensive things for sale, especially as it works, but honestly, that's about it. And the last one is my best advice: there is nothing else to do with feelings of hunger but to eat or drink. Just don't eat shit.
And you don't need "diet" foods. They're just small portions of garbage (diet drinks seem to be pretty much OK, although I have no ideas what the chemicals inside them are doing).
There are a few neat tricks that I found, too. Like:-
- Use healthy flavourings. So, mustard instead of pickle in a ham sandwich. Replace the creamy salad sauce with a light vinaigrette. Use spices or garlic to flavour foods (which are like no calories).
- If someone offers you cake, have a tiny piece. It's not like you taste it after the first mouthful anyway. Same with chocolate and sweets - I'll grab 3 or 4 of the kids ones occassionally and leave it at that. After the initial pang of desire is gone, I'm OK.
- Buy tastier natural products. So, I'm buying gourmet coffee that tastes great, which means I don't feel like adding sugar.
- Have healthy stuff around to snack on and eat if you feel like it. If I'm working late and get that "must eat" feeling, I just grab a carrot, some fruit or some raisins. We've got a little popcorn maker and popcorn with nothing on it is healthy. You can throw some cinammon on it and it's still healthy. Or salt as long as you don't have too much.
Two of these sentences are grammatically correct and are verifiable statements of fact (true/false). One is meaningless to the point of being gibberish:
1. "I am sitting in the garden."
2. "I like sitting in the garden."
3. "I am like sitting in the garden."
Saturday, 28 November 2015
Do you have some spare time and money to campaign against taxes on landlords? They're not taking these attacks on their way of life laying down.
In the more recent comments, NW Landlord reveals:
One of my business partners has there own manager within the council personally handling all of the claims and issues with payments because they are that worried that if he decides not to benefits they will have literally hundreds of families looking to be housed and with this universal credit it’s going that way let alone clause 21. where are all these families going to live if we can’t meet our tax bills and government pulls the plug?
Gareth Wilson spots an opportunity:
Perhaps your friend or even his manager could be convinced to write to the Mail as well or any number of the other members of public office we have been trying to awaken. Should our arguments be voiced by an individual within a council, they could carry more weight.
Manchester Landlord has a cunning plan:
In a few years Conservative party members will have the opportunity to vote for the next conservative leader in the run up to the election. As a collective of tens of thousands of landlords we could threaten to become members and vote for his opposition. Call it bribery or blackmail or whatever you like, but this will make him listen very carefully.
But Darren Bell would favour a more direct approach
A landlord strike would have a powerful effect. Put a load of tenants on notice and whilst the local authorities are trying to deal with the problem throw the ball back into Gorden Osbourne’s court. Result, new tenants on higher rents, GO with his tail between his legs.
Ros likes Manchester landlord's idea best:
I’m loving it! Depends who is standing against him of course – we don’t want to get rid of the Shah only to end up with the Ayatolla – but I agree it is a potentially brilliant idea, ML. And if we all agree on it, we should start publicising the idea asap so that he gets wind of it.
Continuing our occasional series of flimsy arguments for remaining a Member State of the EU which on closer inspection are arguments for leaving, from the Evening Standard:
A vote to quit the European Union would trigger a flood of up to 100,000 banking jobs out of London, senior City figures have warned.
One board-level banker told the Standard that “Brexit” would force dozens of banks that have their European headquarters in London to relocate highly-paid professionals to rival EU financial centres such as Frankfurt, Luxembourg and Dublin.
He estimated that staffing levels at some investment banks in London could fall by as much as half, with a huge knock-on effect for the broader economy and property prices.
What conclusions can we draw from this?
1. The banks, being the most corporatist of corporatists love the EU. So the EU is guilty by association and we should vote to leave.
2. If you want shot of a few bankers, vote to leave.
3. If you would like London housing to be a bit less unaffordable for ordinary people, vote to leave.
While I'm on the topic, other world financial centres like New York, Switzerland, Hong Kong, Singapore and Tokyo - remind me, are they in the EU or not?
Spotted by MBK in The Daily Mail:
Miss Nnyanzi, a former pupil at the prestigious Cheltenham Ladies' College who studied medicine before pursuing a career in law, died in August this year.
The court heard how, at the time, Kibisu had been welcomed into the £600,000 semi-detached home and was a close family friend. Appearing in the dock at the Old Bailey today, the defendant showed no emotion as he pleaded guilty to murder.
Prosecutor Mark Heywood QC said a further charge of rape has been added to the indictment following fresh scientific evidence. Kibisu was remanded in custody until 8 January when the rape charge will be dealt with.
Friday, 27 November 2015
I don't hear this one often, and it's raised by LVT supporters as well as Home-Owner-Ists, but goes along the lines of "What about government owned buildings? To whom will the local council pay LVT on its own Town Hall?"
The simple answer is, it doesn't really matter. A government can't pay tax to itself.
The more subtle answer is that under existing rules, most branches of the UK government are already paying LVT to some other branch of government. It's not called LVT, of course, it's called "rent" but that's just "LVT plus amortisation of bricks and mortar".
The FT explains:
The chancellor is setting up a body to take over ownership of government properties and act as the landlord to Whitehall departments, charging the market rate. The Treasury said the move was aimed at encouraging ministers to become more efficient.
Expensive London districts around the Palace of Westminster, which have been home to generations of policymakers, could be abandoned by the government if departments shift staff to cheaper outlying areas of the capital such as Croydon or Stratford.
Iain Duncan Smith, work and pensions secretary, could pay a total £800m by 2021 to rent his department’s holdings, including its network of jobcentres.
The UK government in all its guises has always done this to a greater or lesser degree, this just extends the principle a bit further. It doesn't really matter which other branch of government collects the rent - it is not designed to raise revenue directly (how could it?), but to encourage each branch of government to use as little expensive space as possible, either by using less space, full stop, or by relocating to cheaper areas.
If a particular branch realises a 'saving', then for a given total budget it has more money to spend on actually doing what it is supposed to be doing (hooray). And the Government Property Unit now has some vacant space which it can let to proper paying tenants, which boosts government receipts which means that all things being equal, taxes on earnings and output will be lower (hooray).
Somebody set up a blogger account this month in the name of Paul with the sole purpose of leaving a KLN over at the KLN blog (ironically enough):
So Mark... Tell me how LVT and a flat rate of income tax are going to help reduce income or wealth inequality. What exactly is it that drives your moral crusade for LVT? By the way, leverage is used routinely by businesses to expand and drive economic growth so I don't see why private individuals shouldn't be encouraged to use the leverage that mortgages provide to grow wealth too. It works.
and then following some goading by me
Have you considered whether or not LVT might just increase income inequality and not reduce wealth inequality either? High earners would use their increased income to buy non-housing assets instead and thereby increase wealth inequality in a different way. You should also consider that home owners on modest incomes use the increased equity value of their homes as a way to share in the general prosperity generated by the high earners of society.
In a flat income tax and LTV world the poor could never escape being poor because they would always be low earners and could never benefit from any unearned wealth (capital gains). The tax breaks of home ownership give modest earners the chance to build the equity they need to become wealthy asset owners over time. Home ownership thereby encourages social mobility. Margaret Thatcher turned some of the working class into property owning middle class when she encouraged people to own rather than rent.
That is all Homey one-sided bullshit, of course*, but I wonder about the mental state of these people.
Clearly he doesn't even believe a word he is saying himself, and he must know that I know that and won't be swayed by his arguments because I have already dealt with them somewhere on the KLN blog.
His arguments are like a stone skipping across water. Everybody knows that it will bounce a few times, but sooner or later friction and gravity will take over and the stone will sink. The thrower knows that, the observer knows that.
The simple answer is, the stone will sink. There's no point somebody pointing out if you throw the stone the right way, it will bounce. We know it can and will. It might even bounce several times, but each bounce gets smaller and in the end it sinks.
He knows that, we know that. Why do they bother? Who are they trying to convince?
* Turning to his substantive argument, that is easily demolished.
Back in the days of 'Georgism-without-LVT' which the UK had until the 1980s, i.e. rent controls, high taxes on rental income, caps on mortgage-to-income ratios etc, there was a rapid increase in owner-occupation rates and hence much greater 'wealth equality'.
This also showed up as greater equality in disposable incomes after housing costs. Very few people had to pay rent and didn't pay much when they did, and rental income collected privately net of income tax was 0.1% of GDP rather than 3%.
Who cares about 'wealth inequality' anyway, it's disposable income after housing costs that matters. If some bloke has countless Ferraris and original Picassos in his basement, so what? That doesn't suck wealth out of the working man's pocket every month, does it?
And what is this disdain for 'the working class'? Why is it only the magic of land ownership that can elevate them into 'the middle class'? If you ask me, there are too many middle class people in this country and not enough working class people. Surely, it would be far better to have fewer people doing non-jobs and better pay for people doing proper jobs.
For example, what about these junior doctors working all hours God sends (albeit for a tasty salary) but who are probably all still renting? Are they 'working class' or 'middle class'?
From The Telegraph, 13 September 2015:
RAF jets were last week scrambled for the seventh time this year to intercept Russian bombers near the UK. Flights by Russian long-range nuclear bombers skirting British airspace routinely spy on UK air defences, but should not be considered provocative, a senior former Russian officer has told the Telegraph…
We Brits are far too civilised to just shoot them down. We'd measure to an inch whether they really were within 'British airspace and would stand politely to one side if they were outside it. And there'd be all sorts of unpleasantness afterwards for those involved.
We can safely assume that the Russians take the piss over or near dozens of other countries as well, most of whom also tolerate them being such arse holes.
Turkey warned Russia in early October that it would no longer endure violations of Turkish airspace, and last week they snapped and shot one down.
So that while that one overflight last week might have been an innocent mistake, in terms of the bigger picture, the Russians got what they deserved.
Instead of whining and asking for an apology, what the Russians might try is a tactic called "not violating other people's airspace" or "politely asking for permission first". That often works, how do you think civil aviation functions?
Thursday, 26 November 2015
George Osborne at his pathetic vote-buying best:
1. Help to Buy Shared Ownership: current restrictions on who can buy a home through shared ownership will be removed from April 2016
Currently, these are allocated in several different ways including criteria set by local councils, for example whether potential buyers work in the local area or if they are already in council housing.
Help to Buy Shared Ownership will lift the limits so that anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, can buy a home through shared ownership.
Yes, housing is so very affordable nowadays that households earning £80,000 or £90,000 need subsidies to afford one.
2. London Help to Buy: If you live in London the government will lend you 40% the price of your home from 2016
Help to Buy Equity Loans are already open to both first-time buyers and home movers on new build homes in England with a purchase price up to £600,000... to reflect the current property market in London, from early 2016 the government will increase the upper limit for the equity loan it gives new buyers within Greater London from 20% to 40%.
With London Help to Buy equity loan:
•you’ll need to contribute at least 5% of the property price as a deposit
•the government will give you a loan for up to 40% of the price
•you’ll need a mortgage of up to 55% to cover the rest
The taxpayer backing low interest loans of up to £240,000 to speculate on London land prices? What could possibly go wrong?
3. First-time buyers will be able to get a 20% discount on 200,000 new Starter Homes
Starter Homes are new build homes available at 20% off the market price. They are only open to first-time buyers under 40. You can register to find out about Starter Homes in your area.
£2.3 billion will be spent on building 200,000 Starter Homes over the next five years.
The 20% discount is probably illusory. There will always be far more people wanting to buy them than are available, so the remaining non-discounted homes will be sold for higher prices to those above the income limits and it all averages out.
So basically they are going to bung the land bankers £11,500 per home for a random number of homes.
4. Money raised from tax on people buying their second home will be used to help those struggling to buy their first home
From 1 April 2016 people purchasing additional properties such as buy to let properties and second homes will pay an extra 3% in stamp duty.
That's the only mildly good idea present, although probably unenforceable.
Wednesday, 25 November 2015
I have been a bit out of action the last few days, so slightly belatedly: the results to last week's Fun Online Poll:
Does a pie need pastry on the top and bottom to qualify as a pie?
Yes, both 76%
No, a pastry lid is sufficient 24%
Good, we are three-quarters of the way to common sense. The correct answer is bottom and sides are most important. The upper crust, as per usual, is pretty superfluous.
Full write up over at Pub Curmudgeon's.
Yes, we know that The Guardian have been saying that global warming caused the civil war in Syria for ages, but what's a bit worrying is that somebody who would like to be an unelected head of state is parroting this bullshit (while whizzing round in a private helicopter and living in several fully-staffed castles).
From the first article which is still rational, yes, if does appear likely that the drought in Syria was one of the indirect causes of civil unrest, as starving farmers moved to towns where people are more likely to start revolutions, that's happened quite often in history. But you can just extend this simple connection several steps in both directions.
So this is probably true:
Drought -> civil unrest
But you can't just keep extrapolating and end up with this:
Driving a car -> CO2 emissions -> global warming -> either floods or droughts, depending on what suits your argument -> civil unrest -> violent Islamists (which we've had for four decades) -> terrorism.
So is he right? Or is it more likely The Killer Cornflake Conspiracy?
Vote here or use the widget in the sidebar.
Sunday, 22 November 2015
From the Guardian
The UK’s three leading cinema chains have refused to show an advert by the Jedi Council that features the words of Yoda, citing fears that it could offend people.
The 60-second advert was due to be shown before The Ten Commandments, released on 18 December and which has smashed records for advance ticket sales at UK cinemas.
It was cleared by the Cinema Advertising Authority and the British Board of Film Classification, but the Odeon, Cineworld and Vue chains – which control 80% of screens around the country – have refused to show the advert because they believe it “carries the risk of upsetting, or offending, audiences”.
The council warned that the move could have a “chilling effect on free speech” and said it was at a loss to understand the logic behind the decision.
Obi Wan Kenobi, director of communications for the Jedi Council, said: “The prospect of a multigenerational cultural event offered by the release of The Ten Commandments on 18 December – a week before Galactic Liberation Day – was too good an opportunity to miss and we are bewildered by the decision of the cinemas.
“The Star Wars movies are watched by billions of people across the globe every day and in this country has been part of everyday life for decades. The force permeates every aspect of our culture from YouTube videos to toy shops and Comic-Cons. For millions of people in the United Kingdom, Star Wars is a constant part of their lives whether watched on TV, or playing Battlefront".
Friday, 20 November 2015
From a surprisingly even-handed article in The Guardian:
... recent studies have suggested part of the West Antarctic ice sheet is indeed unstable, triggered by warm water flowing onto the continental shelf for at least a few decades. We don’t yet know if humans have made this more likely, and until now we also haven’t had confidence in predictions of how much sea level rise could result from this region and others that could become unstable from climate change.
The Intergovernmental Panel on Climate Change decided in 2013 there was insufficient evidence to make an assessment any more precise than “it would not exceed several tenths of a metre” this century. We predict Antarctic ice sheet instability will most likely contribute 10cm sea level rise by the end of the century but is extremely unlikely to contribute more than 30 cm. So ‘several’, for us, is ‘about three’.
The author goes on to say "Does this mean climate sceptics should be dancing in the aisles, because our study rules out these very high contributions? Not at all."
If we are dancing, some will be dancing barefoot, obviously, because that extra 10cm of water will have made their shoes and socks wet.
Simple question: if you remortgage at a lower interest rate, does your annual cost go down?
A: of course if does. So by definition, your annual surplus goes up (or your annual net loss goes down).
It is the same with QE. The government refinanced £350 bn of interest-bearing debt by replacing it with £350 bn* of QE money which costs it 0.5% interest.
If the government's interest costs go down**, then that reduces the deficit.
* Let us assume, for simplicity, that the £350 bn old debt was not bought redeemed at a premium i.e. £350 bn nominal of high interest debt was bought back for £375 bn or something.
** There is a good argument and plenty of evidence to show that governments don't need to pay interest at all, separate topic. But 0.5% is pretty close to zero.
It is a mystery to me why 'financial journalists' find this so difficult to understand and pretend it is more complicated than it is.
From yesterday's Evening Standard:
The Chancellor is also going to get a handy leg-up from Robert Chote’s watchdog on the public finances over the next few years — cutting his borrowing bill with the wave of a magic wand.
How so? It all comes about through the change in the OBR’s assumption about the Bank of England’s Asset Purchase Facility (APF), the vehicle in which Threadneedle Street holds the £375 billion of government bonds it bought under its money-printing programme.
"Osborne will paint this as fiscal rectitude, when he’s being rewarded for economic failure." [says] Russell Lynch.
Explaining the mechanics of this without needing to put a wet towel over your head is difficult, but here’s the gist of it.
All those bonds bought by the Bank under quantitative easing (QE) rack up “coupon” or interest payments from the Government — say of between 2% and 2.5% — most of which is now transferred back to the Treasury, after the Chancellor changed the rules a couple of years back***. But the Bank bought the bonds with the newly created QE money on which it pays interest set at Bank rate, which is just 0.5%.
Broadly, the difference between the two rates is now returned to the Treasury. The details of these arcane transactions have been relegated to supplemental fiscal tables in recent publications and this transfer —which looks like very (ahem) “creative” accounting — gets much less attention. But it has a big impact. For example, this financial year, the APF is forecast to generate £14.1 billion in coupon payments less £2 billion in interest paid out on the QE cash — £12.1 billion.
The "creative accounting" is pretending that the original bonds still exist and making two sub-departments of HM Treasury pay interest to each other, but such is life.
*** Not clear how the rules would ever have been any different. Governments pay interest on their bonds. The holder of the bonds receive the interest. If the UK government holds German bonds, the German government pays the UK government interest. If the UK government holds UK government bonds, it pays itself interest i.e. nothing happens.
Polar bear populations are likely to fall by more than 30 percent by around mid-century as global warming thaws Arctic sea ice, experts said on Thursday in the most detailed review of the predators to date.
The report, by the IUCN (International Union for Conservation of Nature), estimated there are between 22,000 and 31,000 polar bears in the Arctic and said they will be increasingly vulnerable as their habitat shrinks.
Thursday, 19 November 2015
Parker Tron linked to this article in The Guardian, none of this is news but worth repeating:
Almost half of social homes are occupied by only one person, and only a quarter have two residents:
43% are one-person households
32% have more than two residents.
This is partly down to the high number of retired people living in social housing, especially in supported accommodation.
... in terms of economic activity, the difference in employment status between owner-occupiers with mortgages and social renters is stark.
92% of owner-occupiers with mortgages are in employment
41% of social renters are employed
But the reasons for the disparity aren’t immediately obvious:
Half of economically inactive social renters are retired
The remaining renters are full-time carers, or long-term sick or disabled
How old are they?
People in social housing are considerably older than the people in the private rented sector:
28% of social tenants are over 65, compared with 8% of private renters
Only 25% of social renters are under 45, in contrast to 70% of private tenants
Five times as many people over the age of 75 rent in the social, rather than private, sector
This is partly down to the high number of retired people living in social housing, especially in supported accommodation.
So to generalise, social tenants are disproportionately pensioners and one-parent families.
Coincidentally, Kj emailed me a link to an article about public housing in Hong Kong (link extremely dodgy, open at your peril):
Impoverished inhabitants have reappeared in the city. The public renter-housing sector today is a concentration of poor elderly retired households and low-income single parent households.
Between 1976 and 2011, the proportion of public housing renter households from the lowest income quartile increased from an estimated 24.5% in 1976 to 48.4% in 2011, and the proportion below the median household income rose from 53.3% to 80.0% (see Figure 1).
At the same time, among households with heads aged 20-65 the percentage living in public renter housing declined from 36.3% in 1976 to 27.4% in 2011, while among heads aged above 65 the percentage rose from 30.6% in 1976 to 48.6% in 2011.
Same old, same old.
The article was written by somebody working on behalf of banks, insurance companies and possibly the old-age care sector, who are salivating at the proposal of selling off public housing.
How about this for a Home-Owner-Ist tour de force, all done presumably without any intention at irony:
Given that demographic, it seems obvious that old age support should focus on selling our public housing estates to sitting tenants at an affordable price. In particular, this would allow the elderly to immediately and cheaply acquire an asset to provide old age support. It would go a long way to addressing the problems of elderly poverty in Hong Kong.
At present, elderly homeowners can mortgage their homes in exchange for an annuity to provide a constant stream of monthly income support for the rest of their lives. Upon passing away the property is inherited by their designated heirs, who can either take ownership and assume repayments on the outstanding mortgage loan, or receive the net value of the property after the loan is repaid in full.
Using land to finance old age retirement and to benefit the next generation has been a tradition in many civilizations long before the modern world made governments the preferred provider of those in need.
Privatizing the public renter housing estates would create a very large client pool of elderly homeowners willing to take advantage of mortgage backed annuity schemes. This would create better opportunities for diversifying risks associated with the uncertainty of life expectancy. A bigger market could also lead to better terms for all participants.
Wednesday, 18 November 2015
From the paper version of City AM:
Between August and September, prices rose 0.8 per cent on a seasonally-adjusted basis, with first-time buyers found themselves paying an average of 4.3 per cent higher than in September last year.
It's an encouraging sign for the market, after figures over the summer suggested the chancellor's cooling measures - which included a hike to stamp duty and rules limiting how much mortgage customers can borrow - were beginning to take their toll.
They added a few extra words to the online version:
It's an encouraging sign for the market (or discouraging for buyers), after figures over the summer suggested the chancellor's cooling measures - which included a hike to stamp duty and rules limiting how much mortgage customers can borrow - were beginning to take their toll.
And how any sensible person can be opposed to limiting the amount of money banks can create when houses are bought and sold is a mystery to me.
Tuesday, 17 November 2015
From City AM:
In ten years time only 26 per cent of so-called “generation rent”, those aged between 20 and 39, will own their own homes according to a study by accountants PwC.
In 2013, 38 per cent of those in that age group had bought a house. The amount of 20-39 year olds renting privately by 2025 is expected to have ballooned to 59 per cent, up from 45 per cent in 2013.
Richard Snook, an economist at PwC said:
“The continual advance of house prices, which have for outstripped growth in earnings, is fundamentally changing the way that people live. Changing the outlook for generation rent will require us to build more houses than need just to match population growth in order to make up the past shortfall between housing supply and growth in demand.”
Not much of an economist, is he?
Firstly, there's not much hard evidence to show that building more homes gets prices down (unless you build them in entirely the wrong place, in which case they are not homes, they are just piles of bricks), only blind faith.
Secondly, who does he think will be snapping up those new builds?
Answer: exactly the same 'equity rich' Baby Boomers who are snapping up a disproportionate number of any other homes which are up for sale. At present, the ratio is one BTL purchase to two first time buyers, but that ratio is worsening (or improving, from the Homeys' point of view).
And whatever happens, all those new builds are a net transfer of wealth to large landowners.
I quote from this:
"The risings began when Mohamed Bouazizi, a market trader, was driven to the horrific extreme of self-immolation because he had been denied ownership of his own goods and the right to engage in commerce. His was a protest against the violation of property rights, and he was not alone. In an authoritative study of the Arab Spring, the Peruvian economist, Hernando de Soto, chronicled hundreds of cases of entrepreneurs in Arab countries being driven to suicide by police corruption and harassment.
Why is this different from the effects of all the regulatory quangos in the UK?
This example from the delectable FSA/FCA which has resulted in a huge loss of jobs and businesses as set out here.
I have maintained all along that the RDR was a fundamental assault on property rights (by the destruction in the value in the businesses of honest citizens built up over many years and the arbitrary interference in the sanctity of private contract leading both to the whole sale loss of jobs and the undermining of all existing client agreements.
Monday, 16 November 2015
...we have seemingly endless news flow on the appalling events in Paris where 129 people were murdered. But it was only a few days previously when another 220 people were murdered by a bomb on an aeroplane, the news coverage of which seems to have just evaporated. It'd be a lot truer to conflate the two horrors and make the point that (apparently) ISIL terrorists have murdered 349 in November - so far.
From City AM:
“They’re on the back foot, momentum is with us, and I think we’re going to win,” Carswell says.
“[The CBI] are not neutral players in this. They tend to favour big corporate lobbying because they are a big corporate lobbying organisation. They produced a poll that even the British Polling Council admitted was questionable,” he adds, using a recent corporate scandal to land another punch on the business group.
“The CBI is to measuring what British business thinks about EU membership what Volkswagen is to carbon emissions tests. They’re methodologically rather suspect.”
Some businesses want to stay in the European Union, Carswell concedes. But that’s because “those businesses – big corporations and banks in particular, but also lobby groups – that have a clear vested interest in a commercial system based on lobbying and the granting of permission, who are going to love the EU.”
“But they are not representative of the broad bulk of business in this country, who can’t afford to rig the rules. I also happen to think there is something unethical about gaining market share by fixing the rules by hiring lobbyists.”
“I believe in the free market, and the corporatist vested interest in Brussels who are rigging the system to their advantage are not helping us be competitive. Competitiveness, like red tape and all problems in the EU, has been a problem all Prime Ministers have said they’ll address, but nothing ever changes.”
Which is what I have been saying for years. The Outers should not be just attacking the EU from 'the right' by focusing on immigration (even though in the light of recent events, that's becoming ever easier), they should be attacking the EU from 'the left' as well.
I was at a UKIP event in London a few years ago, and when it was finished, I told the others that I was off to the Occupy London thing at St Paul's. That took some of them by surprise, but I explained that as far as I was concerned, in some ways, UKIP and the Occupy people are fighting for the same thing, they just don't realise it.
The results to last week's Fun Online Poll were as follows:
Did you wear a poppy this year, and if not why not? (Choose all that apply).
Yes - 58 votes
No - I don't wear symbols at work - 3 votes
No - the poppy has been misappropriated - 9 votes
No - I reject 'poppy fascism' - 11 votes
No - I am a pacifist - 2 votes
No - I object to actions of the British armed forces - 3 votes
No - other, please specify - 14 votes
So now we know.
This week's Fun Online Poll is run jointly with Pub Curmudgeon.
"Does a pie need pastry on the top and bottom to qualify as a pie?"
Vote here or use the widget in the sidebar.
Friday, 13 November 2015
From The Evening Standard:
A magician impaled his hand on a six-inch nail in front of his audience after a Russian roulette-style trick backfired.
... when Mr Wallace tried the trick last week, he hit the wrong bag, leaving the nail embedded in his palm.
“There was no drop of blood at all because the nail had sealed the wound,” he said. “As I raised my hand I brought the bag up with it. It was a nightmare. I wanted to take away as much of the negative experience for the audience that I could, so I told them it had gone wrong.
“Everyone looked in horror at that one point and one guy at the front even burst into tears. I told everyone to get their phones out so they could take a picture.”
Thursday, 12 November 2015
From the BBC:
In a new report, the Trust says the UK is "ignoring known risks of flood and erosion at the coast".
In England, just one in three coastal local authorities has long-term, informed plans in place, it claims. The Trust cites examples of adaptive "soft engineering" and innovation, such as creating flood banks and reed beds.
It even encourages the design and use of moveable buildings close to particularly vulnerable, quickly-eroding areas of the coast.
Wednesday, 11 November 2015
The film is set at various stages in the career of Apple co-founder Steve Jobs (Fassbender).
Flashbacks show Apple co-founder Steve Wozniak (Rogen) and Jobs creating the Apple II, revealing that Wozniak's ideas made the product successful. Jobs then discusses company politics with CEO John Sculley (Daniels); they talk about Jobs' life as an adopted child, and Jobs admits that his need for control stems from his feelings of powerlessness in being given up.
Bored with the computer industry, Jobs starts working as a surf instructor, topping up his income by playing saxophone in a nightclub. A stint as a car mechanic doesn't end well after he is sacked for consistent lateness and slapdash attitude, although he progresses to become the garage's most successful used car salesman of 1989.
In the 1990s, sickened with the false patter of the used car trade, Jobs retrains as a school bus driver.. He becomes a popular figure with teenage students at George Washington High in Outer Richmond, where he also works as a janitor, before sadly dying of cancer at the age of 56.
Tuesday, 10 November 2015
Andrew S. Mooney left the following comment at Tim Worstall on top form:
"That’s us, of course – we are all consumers of steel in tin cans, cars, fridges and the skeletons of lovely high rise buildings. This can indeed be seen as unfair on other producers of steel. But we don’t run the economy for the interests of producers; we run it for us, the consumers."
I have not seen a reduction in the price of tinned food off of the back of these surpluses.
I have not seen a reduction in car forecourt prices...
Well why would you notice?
An average car contains one ton of 'steel'. I don't know what particular kind of steel, but...
Until either Chinese capacity is reduced or a resurgence in Chinese economic growth is realised, prices will continue to slide. The price of slab steel has dropped by 40% from around £318 a ton to under £191 in the past year.
Maybe car manufacturers use a higher grade more expensive steel. But the cost saving to car manufacturers is only a couple of hundred quid per car and of course you wouldn't notice that, quite possibly it's the car manufacturer who benefits from most of the cost saving. It's still our gain and China's loss.
If we do the same calculation for tinned food, we are talking fraction of a penny, which you wouldn't notice either.
From The Telegraph:
... the pair decided to scale the Eiffel Tower from the outside. Kingston describes the first moments of the escapade:
"We started the climb at 1am, narrowly avoiding the patrolling security – who seemed more like the French army as they were in full camo and had massive guns. We then wormed our way through what seemed like endless CCTV cameras. But once we reached about 20 metres up the side of the tower it appeared we'd made it through what would normally be the riskiest part of any climb..."
After a brief period of jumping from strut to strut as the sun came up, Kingston and his partner returned to the ground, where they were promptly arrested.
"We were handcuffed and taken to the local police station," says Kingston, "where we were held and questioned for around 6 hours before being released without any charges. so had to promise them I wouldn't climb it again for 3 yearst I can now officially tick the Eiffel Tower off my list."
He has written this so many times he can probably write it in his sleep, but hey.
From City AM:
With calls to tackle “unfair dumping” should more be done to block cheap Chinese steel imports?
Far from rejecting cheap Chinese steel, we should thank the oppressed Chinese taxpayer for making us all richer. Subsidies are a distortion to a market and we normally don't like such distortions. But think through what the allegation here is.
The Chinese government is subsidising the price of the steel which is flooding out of China. Some call this a subsidy to those steel producers: it isn’t, it is a subsidy to steel consumers. That’s us, of course – we are all consumers of steel in tin cans, cars, fridges and the skeletons of lovely high rise buildings. This can indeed be seen as unfair on other producers of steel. But we don’t run the economy for the interests of producers; we run it for us, the consumers.
The Chinese government is, quite literally, sending us free money that it has taken from its citizens. This might not be a bright idea for the Chinese, but what else should we do but say “thank you. May we have some more?
Monday, 9 November 2015
The results to last week's Fun Online Poll were as follows:
Has anyone, anywhere, ever connected to free wifi successfully?
Yes, it usually works - 72%
Possibly somebody has else managed it, but it never seems to work for me - 28%
Good to know.
In that case I must be doing something very wrong, because it only works for me in hotels, never in shops or restaurants etc.
This week's Fun Online Poll:
"Did you wear a poppy this year, and if not why not?"
I didn't write the possible answers, I took them from a BBC article on the topic.
Vote here or use the widget in the sidebar.
1. I am not dead.
2. Point of disclosure I live in Switzerland (if the UK wants to bum rape slum kids made good to pay for Essex millionaire grannies it can do so without my triple mortgaged brain footing it. Interesting legal point for another day, if born into society have you "accepted" to abide by the law or is it foisted on you?).
3. I am not really anti Europe. And if you stopped reading here then I will take comfort in fact that you have probably gone off to rot your brain with corporate welfare pleadings dressed up as news in the Telegraph.
But enough of that. As you may know Switzerland is not in the EU. It is in another odd little club with Norway, Iceland and the only German speaking country to not border Germany, Liechtenstein, called the EFTA (European Free Trade Association). If you were going to say EEA, then make a dunce hat and wear it. WEAR IT I SAID!. Fun fact: the UK used to be a member of this too, from about 1960 to 1973 but decided more cash could be made from the EEC).
For the people who cry "but Britain would be something circa Mad Max Fury Road" (really awesome film but terrible place to live) Switzerland, and to be fair the other members of the EFTA, present something of a problem.
First off, some quick background. Switzerland is only about twice the size of Wales, fairly mountainous and with a population of about 8 million. It has 4 (well 4 and a half) languages of which German is the most prevalent, followed by French, then the Italian speaking canton of Ticino and lastly a few bits of Graubünden where Romansh is still in use. (the half is English because it is basically the default for forrins too dumb to learn German).
Swiss unemployment hovers around the 3-4% mark with half of that broadly acknowledged to be people with serious conditions like non functioning alcoholism or drug dependency who are never really going to hold down a job anyway.
The median household income is in the region of £50,000. The average in Germany, the richest country in Europe is about £30,000.
The biggest export partners for Switzerland are Germany (about 20%) and the US (about 10%) and like most small European countries (looking at you Sweden, Netherlands and Lux) it has a very active and approachable diplomatic service that is quick to assist and support domestic businesses in their foreign adventures.
Much to the almost constant ire of the US, Switzerland point blank refuses to criminalise people who download copyrighted material and has successfully resisted various barbed demands over the years to change this policy. Make of that what you will in the "But how can we stand up to the US" arguments, apparently all it takes is a spine. (though if you post copyrighted material expect a serious bill in the post with a fairly blunt but polite note).
While the apparently still shooty UK can press its military reserves if really needed for a combined weight of about 250,000 personnel, thanks to a history of giving every teenager an assault rifle and pointing them at the nearest border the Swiss can mobilise almost 3 million troops surprisingly quickly. Almost every Monday morning my commute is met by a dozen or so late teens/early twenties boys with huge kit bags and aforementioned assault rifles slung around their persons. My neighbour explained that if you are issued with a gun you need to keep 50 rounds of ammunition with it just in case for example France decides it wants to have a go. the 50 rounds are to get you to your barracks where you "tool up". He then pulled out something that looked like it was the prototype for the blunderbus, but in fairness he is bluddy ancient, and waved it around until his tiny wife called him an idiot.
It should also be borne in mind that Switzerland (along with Iceland and Liechtenstein) is not oil or particularly mineral rich so has no easy money (like the slovenly Norwegians who really have caught the resource curse) to smooth the road and so must rely almost entirely on international trade for its wealth.
All in all therefore life outside the EU is pretty decent, even when you are literally surrounded by the EU.
Except, it's not the whole story. The really odd thing is that the rabid, EU can do no wrong loons, would love the UK to look like Switzerland while those in UKIP's core vote who have that whole "let's go back to the 50s, I like my food boiled and boiled some more and was rampant racism all that bad" would absolutely hate it.
The Swiss rejected the EU in the early 90s and the economy did suffer growth was certainly slow but the country did not become an economic waste land by any means. One of the biggest grudges attributed to that decision was the fact that Swiss Air got gobbled up by the rampant monster Lufthansa (which now has its own legacy problems, so go figure).
The Swiss therefore did what any sensible European country outside the EU would do (hint) and that was to spend 4 years arguing about association agreements. the upshot of this is that Switzerland today has borders which are more open with the EU, than the EU member UK has. i.e. I don't have to go through stupid passport control when I fly to the Netherlands for business or Austria for a cheap McD's (since I can throw a stone from Sumo HQ) but to go back to the UK I need to add an hour onto my journey time to stand in a boxy room and be stared at by a bored guy who we all know failed police school who doesn't even record the entry and exit.
I do need a work permit, but because I am an EU citizen I can hang around for 3 months looking for work and if I apply for a permit I am guaranteed to get it. No quotas (well there has been a referendum so circle back in 18 months, generally west of Vienna = okay). I also have access to the Swiss benefit system which, unlike the complex "throw various packets of cash at everyone unless they have a beard and then bitch like a child who had to share the toys they weren't using" UK system, is simple and sensible. If you work for (I think) 18 months then you are eligible for benefits if you become suddenly unemployed. This stops people turning up and demanding benefits. This stops teens living on the dole post school and this stops any argument about discrimination since everyone has to meet the same standard. As it is very easy to hire and fire that unemployment has to kick in quick and because nobody wants to piss around with lots of benefits, the unemployment benefit is just 80% of your salary from the year before you were canned.
It's a nifty trick because by not handing out things like housing benefit nobody is getting a private landlord to give them a house and no bank is giving a mortgage, meanwhile if you were employed you can still pay your rent but that 20% will be biting.
While the Swiss legal system is quite open, business friendly and pretty much WYSIWYG, many things, such as Art.253b of the Swiss code of obligations gleefully slap rent controls into an otherwise quite free market economy.
So there we have a quick over view from outside the EU, nowhere near a disaster zone, in fact, in comparison to much of the EU, things "actually work" however the UK would be starting from a very different position and would certainly need to endure some initial pain as it found its feet and got its house in order. It very unlikely that the UK would cut all ties to the EU and that pretty much means that free movement of people is never going to go away.
Sunday, 8 November 2015
Lots of whinging by uber-rich footballer's losing out as a result of "investment advice" to put their hard earned into film partnerships and similar.
Sorry lads, they weren't 'investments'. They were 'tax planning'.
You can rely on the DT to not know/deliberately ignore this.
Posted by Lola at 18:08
Women named in songs about knives who appeared in a film with a knife
Answer: Lotte Lenya who is named in the English version of Mack the Knife, who starred as Rosa Klebb in From Russia with Love. Lenya owned the rights to Mack the Knife having been married to Kurt Weill.
I went to a Labour Land Campaign meeting last weekend to discuss "implementation".
If you want to skip the boring background to all this, click here.
Another member and I had, independently, drawn up a list of existing property/wealth taxes which could and should be replaced; added up total revenues R (about £80 bn); calculated the total amount of rental value of UK developed land and buildings which relates purely to the location premium L (about £240 bn); divided R by L and arrived at a figure of around 25% for residential and 50% for commercial.
The annual tax on the bottom two-thirds of homes would be the same as or less than their current Council Tax plus TV licence, assuming they don't claim Council Tax Benefit or its replacement. The LVT on commercial land in London would be higher and in most other places would be lower than their current Business Rates bill. That's them dealt with.
So far so good, then 'politics' got dragged into it, i.e. identifying the 'losers' i.e. those who would pay more on an annual basis, even though over a lifetime, getting rid of SDLT and IHT would largely even it out. Remember that SDLT is a very crude LVT paid in advance and IHT is a very crude LVT paid in arrears. Surely it is far better to get rid of those two taxes and ask people to pay-as-they-go?
One member present actually is a low-income pensioner whose home in London would now sell for around £1 million; we both had calculated that the LVT on such a house would be about £9,000 a year against a current Council Tax £1,500. We pointed out to him that all sensible LVT proposals include a deferment/roll-up option for such pensioners, the chances are that the deferred LVT payable when they die and the house is sold would be much the same as the comparable IHT and SDLT bills. Much less for those who die sooner, much more for those who live longer, it all averages out.
The next political objection was the diagonal opposite of the low-income pensioner in a high value home, namely, the aspiring young couple who had taken out a large mortgage to buy an expensive home and who were absolutely maxed out. My view is, they should have budgeted for an increase in interest rates of at least 1% or 2% and having to pay 0.9% LVT on the current selling price would only eat into that reserve, but was shouted down.
OK, Plan B, I said, for those borrowers whose LVT is significantly higher than their budgeted-for Council Tax, how about we just tell the banks to write off a corresponding part of the mortgage debt? Not good enough, came the reply. That would benefit people with large mortgages but not those with a small mortgage. At which stage I gave up on that line of reasoning.
So in the meantime, I have cooked up Plan C. That is simply to cap the interest rate on mortgages which were taken out prior to the introduction of LVT being announced.
Let's imagine our aspiring young couple has taken out a £900,000 mortgage to buy a £1 million home. (To justify that sort of mortgage, they must be earning around £180,000 a year between them, so they are not exactly starving, but hey…). A quick Google tells us that at the moment, they are probably paying 2.5% interest on their mortgage.
So for a 25 year mortgage, their annual repayments are currently £48,848 (=PMT(0.025,25,900000) and their Council Tax is £1,500, total £50,348.
If their LVT bill is £9,000, that leaves £41,348 to be spent on mortgage repayments, which would mean reducing the interest rate on their mortgage to 1.1%.
As far as I am concerned, we could cap the interest rate on all pre-existing mortgages at 1.1%. So nobody at the top end loses out, and people further down get a double win - their LVT is lower than what their Council Tax/TV licence was and they save a few quid in mortgage repayments.
The total annual 'loss' to the banks, i.e. land rent which they can no longer collect because the government is now collecting it would thus be be a surprisingly small £8 billion a year*. This is about the same as the pay and bonuses paid out to senior staff, or 0.1% of what they claim are their total assets; or 2% of their net assets, so nothing they can't afford.
No doubt somebody will think up an objection to Plan C, in which case, I will do a Plan D, and so on.
The only counter-objection I can think of is that banks will somehow game the system and charge more than 1.1% interest. In that case, the government just sets up a 'government mortgage bank' and offers people with pre-existing mortgages a remortgage at 1.1% interest. So the 'government mortgage bank' pays the banks the face value/amount outstanding of existing mortgages by creating more bank deposits with the Bank of England in exchange.
Let's imagine everybody did this. It would be like more QE. Instead of the BoE paying banks 0.5% interest on £300 bn, the BoE would be paying banks 0.5% interest on £1,300 bn. But seeing as the government bank is charging the ultimate borrowers 1.1% interest, that looks like a nice little earner for the government, and faced with this sort of threat, I think that banks will toe the line and cap interest rates at 1.1%.
* Total outstanding owner-occupier purchase mortgages excl. 'equity withdrawal' slightly less than £1,000 billion, average interest rate 2.5% and duration remaining approx. 15 years.
=PMT(0.025,15,1000)=£81 billion a year cash coming in.
=PMT(0.011,15, 1000)=£73 billion a year cash coming in.
Saturday, 7 November 2015
Peter D Smith (in the pub yesterday) pointed out another inherent contradiction in that anti-LVT squealing by London First:
5. Where land is brought forward for development in response to the LVT, there is an inherent risk that a hastily brought forward scheme will deliver sub-standard development both in terms of mix and scale of uses and overall design quality.
6. An LVT takes no account of optimum land use planning scenarios from a strategic perspective and runs the risk of encouraging land to be brought forward in a piecemeal manner, where consolidation and master planning of a wider area would have been a more sustainable approach leading to better planning, design and placemaking outcomes.
So, under 5, lots of people will be applying for planning permission and wanting to develop at the same. Probably true. Which of course gives local councils the opportunity to look at all sites in the round and decide some vaguely coherent approach. Bearing in mind that all development in London has been pretty haphazard and piecemeal over the centuries with a complete jumble of residential, retail, office and commercial uses all within yards or even above and below each other on the same site, why any planning officer thinks he knows better is unclear.
In an ideal world, if lots of site owners in one area want to apply for planning and develop at the same time, then they together with the planners can work out a coherent approach between them, including sorting out traffic diversions etc.
Which completely negates their argument 6, which says the opposite of argument 5. So either 5 or 6 is correct but probably neither and they both cancel out anyway.
Just preceding these two arguments is this nugget:
3. An LVT system makes no allowance for a land owner’s ability to bring forward a site for development, for example, to address significant constraints such as flood risk, contamination.
Those are qualities inherent in the location so would of course be reflected in the site value and hence the LVT.
Again, a sensible council would not grant planning for a site which is at risk of flooding or which is contaminated, so no LVT would be due at all. With flood risk, it's the council's job to sort out flood defences, having done that, they can then grant planning and recover the cost from the future LVT receipts.
With contaminated sites, a sensible approach would be to give the owner fair warning, tell him he has two years to sort it out and that in two years time, the site will become liable to LVT. In the intervening two years, they can agree what the planning permission will be.
Emailed in by MBK from The Times:
The taxpayer lost more than £2.2 billion from the sale of the government’s stake in Eurostar after the auction was rushed through before the general election, the National Audit Office said.
While the spending watchdog said that the sale of the 40 per cent stake was well run and provided value for money, it fell well short of the £3 billion that the government invested during the past two decades.
So we didn't lose £2.2 bn from the sale, that loss already existed, that money was already spent or misspent. But the sale was at undervalue as well...
The sale raised more than £757 million and the final price was 90 per cent higher than earlier valuations, a report by the office said.The sale raised more than £757 million and the final price was 90 per cent higher than earlier valuations, a report by the National Audit Office said.
Meg Hillier, Labour chairman of the Commons public accounts committee, said that the government’s focus on Eurostar appeared to have been on short-term cash rather than on long-term value for taxpayers.
“Once sold, the family silver can’t be bought back. Had it kept its share, the government was forecast to pay off over £500 million of national debt over the next ten years using dividends from its 40 per cent share in Eurostar, and receive a further £243 million in dividends from its preference share.”
Friday, 6 November 2015
BenJamin' stumbled across the letter sent by a rent-seekers' lobbying front to the chap looking into LVT for the London Assembly.
There's nothing new in there, just the tired and tested favourites.
The Army of Surveyors
London First approximate that it could be at least 10 years before an LVT could be brought forward...
Firstly, parcelling land and identifying land owners on which the proposed charge will be levied – in particular, where there are multiple land ownerships and complex lease arrangements or where a landowner is unknown will be challenging. It will require a significant capital investment to fund administrative body and the personnel to undertake this work and is likely to be a very lengthy process.
Secondly, navigating the planning and valuations process to determine the optimum land use and its value will also have significant time and financial requirements. Site visits to each land parcel will be essential. Should the site be considered underutilised, its ‘optimum use’ will need to be established.
If the landowner is "unknown" then the land is forfeited. If there is multiple ownership the multiple owners split the bill between themselves. If there are leases, then the freeholder pays tax on his ground rent and the leaseholder can deduct that ground rent from the amount taxable on him.
As to valuations, we can automate the process and it would take a few months.
Nobody - except twats like London First who are deliberately misquoting ever said "optimum use" which is an unknown quantity. The tax is on "optimum permitted use". For 99% of existing buildings, optimum permitted use is actual current use. Empty sites are even easier. The council just has to grant them permission to build up to the same density and type of building as surrounding plots which already have buildings on them and where the site value is a known figure and then taxes them on that. If there's no planning permission, then there's no location value and no tax either, obvs.
The Poor Widow Bogey
Ownership of a piece of land/property is not an indication of a land owner’s financial means to pay an LVT. For example, a ‘large’ dwelling that may have been in family ownership for a number of years may actually be a primary residence and yield no financial returns from which to pay the tax (nor is ownership an indication that those who live there have the ability to pay the tax). The end result is a tax on ownership not a penalty on those not bringing forward land for development.
It's not a tax on ownership any more than making a tenant pay location rent. It's a user charge.
And most LVTers agree that there would be a roll-up-and-defer-until-death option for Poor Widows In Mansions.
It will be the poor and the landless who suffer
We also consider that this approach would have significant implications on affordable housing delivery. The impact of this would in our view artificially inflate site values and impact upon development viability and ultimately, would reduce the level of affordable housing that a scheme could deliver.
We can knock that one straight out of the park as well. An LVT on undeveloped sites is exactly the same as the actual or notional interest cost of owning that land. The value of a finished home is unaffected by this - if a development drags on for years thus incurring a higher interest cost, then this has no effect on the finished selling prices or rental value. It's just that this will turn what is for many a notional interest cost which can be recouped out of development or planning gains into an actual cash cost with a correspondingly smaller planning gain. So no freebies.
And so on.
From the BBC
Talk Talk has given more details of the cyber-attack on their website, saying nearly 157,000 of its customers' personal details were accessed.
More than 15,600 copies of their songs were stolen, the lead singer said.
Customers should continue to protect themselves from pirate copies of The Colour of Spring and Dum Dum Girl, the band added.
From The Telegraph:
It was a heart-stopping moment that could have had painful consequences for Sid Smith, 66, of Sydenham, south London.
He yelped with fright as he had an uncomfortably close encounter with a bumble bee while unpacking his picnic lunch on a day trip to Eastbourne with his wife Doris, 68.
The insect - which packs a painful sting - made a beeline for the retired gas fitter and flew into his anorak during a visit to the sea front. For a few nail-biting seconds, the holiday maker battled to dislodge the bee as a dozen passing day trippers registered his predicament.
It might have felt like an eternity to Mr Smith, but after a short time the bee emerged and flew away to his very visible relief - before the couple roared with laughter.
I am not, absolutely not, a 'customer' of the HMRC. They do not sell me anything I want. I am a 'taxpayer'. Which of course, they aren't.
Similarly there are signs on the back of a local free shuttle bus 'Sponsored by XYZ County Council and ABC Borough Council'. No it bloody well isn't. This service is sponsored (or more accurately, subsidised) by the tax payer/rate payer.
Bastards. Death's too good for them.
Your surpassed yourself this morning by waking me up at 4.37 am. Seeing as I live in the middle of a long road, your earliest victims must have heard you around 4.20 am.
Please leave a comment if your local binmen have ever topped this.
Thursday, 5 November 2015
The Grauniad picks up the idea of the cashless society, meanwhile last week Business Insider had this to say about Sweden:
Sweden is shaping up to be the first country to plunge its citizens into a fascinating — and terrifying — economic experiment: negative interest rates in a cashless society. The Swedish central bank, the Sveriges Riksbank, on Wednesday held its benchmark interest rate at -0.35%, the level it has been at since July.
Though retail banks have yet to pass that negative rate on to Swedish consumers, they face increased pressure to do so as long as the rates remain where they are. That's a problem, because Sweden is the closest country on the planet to becoming an all-electronic cashless society.
Remember, Sweden is the place where, if you use too much cash, banks call the police because they think you might be a terrorist or a criminal. Swedish banks have started removing cash ATMs from rural areas, annoying old people and farmers. Credit Suisse says the rule of thumb in Scandinavia is: ‘If you have to pay in cash, something is wrong.’
Brett Scott in the Guardian thinks the same might happen here:
"There is another – hidden – agenda though. If the only means of holding money is in the form of electronic bank deposits, a central bank can do something it cannot do with cash. It can set negative interest rates to erode people’s money in times of recession, making it costly to hoard it, and thereby theoretically stimulating economic activity. Bank of England chief economist Andy Haldane recently said as much."
Cash is, in fact, a zero-interest loan from the citizenry to the Government. In times of high interest rates this is a good deal for the Government, but if interest rates go below zero, then it's the only money the creditors aren't paying the Government to borrow. If you have a lot of debt, then what better way to pay it down than to get your creditors to do the paying? To do that, though, you have to get rid of cash.
How is the proposal by Bedfordshire's Police to fund its budget shortfall by rigorously enforcing speed limits materially different from the arbitrary road blocks set up in various third world countries by their police solely for the purpose of extorting bribes from motorists?
Update. Mark in Mayenne makes a valid point about road useage. To elaborate, the third world road block bit is usually justified by a 'document check' or similar which can take hours, unless you pay the bribe. And the bribe is often the only 'wage' they get.
Short List 1. Television channels named after a Beatles song.
Short List 2. Joan Armatrading and Tracy Chapman
From this morning's City AM readers' letters:
RE: Don't be stupid: The US won't cut off Britain post-Brexit, Monday
I get the impression that Eurosceptics live in an Alice in Wonderland world of wishful thinking.
As soon as Britain breaks free of the EU, they seem to assume that China, India and the US will be beating a path to our door, begging for the world to be run by Britain once again, unshackled by the realities of economic and military decline.
If the UK wants to lead the world, the government should first try working with our neighbours and British businesses should try exporting good products and stop selling off our companies at every opportunity.
The rest is just fantasy.
I am baffled. Not only is none of that true, the article to which he refers was written by a gloriously cynical American who says that US politicians aren't really bothered either way.
And as per usual for a pro-EU person, he doesn't bother advancing a single argument for staying in. C'mon guys, there must be a few things you can mention. Surely?
Wednesday, 4 November 2015
From the BBC:
A pre-fabricated property dubbed a "shed" in south-east London has been auctioned off for just under £1m. The 1950s bungalow situated on 0.6 acres of land in Peckham contains three rooms, a kitchen and unfitted bathroom.
Described as "dilapidated", Southwark Council said it was "extremely pleased" it sold for £950,000. The money raised for the property, which is not thought to have been lived in since 2002, will be ploughed back into the council's housing programme.
FFS. They did not sell "a shed", they sold land which will be worth at least £3 million* if it had appropriate planning consents, planning consents which the very same local council will now be granting to the lucky new owner.
* Call it four terraced/town houses similar to the ones on the left of the picture along the front of plot, plus another four along the back, sell them for £600,000 each (according to the article) = £4.8 million, knock off 8 x £100,000 build costs = £4 million, round it down to £3 million for margin of error.
From the BBC:
A diabetic MP is asking Coca-Cola not to bring its Christmas truck to Leicester, accusing the company of marketing a "real health hazard".
Keith Vaz insists he does not want to be a "killjoy", but said the truck would send the wrong message in a city where diabetes is rising and a third of children have tooth decay.
He predicts people will protest if the truck does come to the city. Coca-Cola said it was still coming but would not give drinks to under-12s.
Everything you need to know about business rates, but were afraid to ask
"The opposition from businesses on the grounds of their cost is rather strange, because it's not occupiers that end up taking the financial hit. Rather, it's land owners. This is the so called "incidence" of a tax, who ends up shouldering it"
Given that a much higher proportion of residential land is owner occupied compared to commercial land, opposition to higher taxation of such is understandable until you observe that the highest value land is not majority owner occupied (London is majority rented). A very small but vocal group of residential landowners would lose out.
Chris Patten ("As a former EU Commissioner Lord Patten’s EU pension, amounting to around £100,000 per year is removable if he acts in a way which is detrimental to the interests of the European Union", but he doesn't mention that) writing in yesterday's Evening Standard:
It is in our national interest to show full support for Europe.
Woah! Bad start! "Europe" and "the EU" are two quite separate things. It's like the difference between "England" and "the UK government". You can like one while simultaneously disliking the actions of the other.
Boldness should transform the argument for staying in the EU. It is not enough to concentrate the gunfire on the ludicrous proposition that we can have all the benefits of membership — trade, the single market and so on — without paying a price.
I am pleased that Cameron has pointed out what the Norwegians (with whom as a Commissioner I used to negotiate these matters) have to do from the outside in order to get their goods into the single market. They have to follow most of the rules without taking part in deciding what these rules should be. On top of that, they pay heavily for this doubtful privilege.
People who know about these things have patiently explained that Norway has to make sure its exports comply with EU standards. Well of course they do, they have to comply with US standards if they want to export to the US etc. Norway has pretty much a free hand with its internal legislation.
And the Norwegians don't "pay heavily for this doubtful privilege". What they do pay and to whom is listed here.
In any event it's not comparing like with like, Norway is twice as dependent on trade with the EU and the UK is; we are net importers, so would be able to strike a much better deal. I'm not aware that other countries which have a free trade agreement with the EU have to pay very much.
(Perhaps Kj can explain this a bit better? He's the expert).
The article continues in a similar vein, mixing waffle with half-truths and lies. You can tell this by simply asking yourself whether any of the horrors he predicts have befallen Norway or Switzerland. They haven't.
So, my question is, if there are some definite and irrefutable arguments for remaining a Member State, why don't they wheel them out?
Tuesday, 3 November 2015
On the subject of new towns, the BBC states the obvious:
In a revealing article [page 72 onwards of this] published last year, Francis Salway, former chief executive of the largest listed property company in the UK, Land Securities, explained that developers don't relish huge empty sites like the former quarries at Ebbsfleet.
They like "established demand" and "existing communities", he wrote, which prove people really do want to live there. The developers like to "limit the forthcoming supply" - that is, to ration how many homes come on to the market at one time so that the market is not flooded.*
Exactly. Apart from providing shelter, when you buy a house, you are paying for access to an "established community" i.e. jobs, shops, schools, neighbours good or bad, transport links to other towns etc.
The developers - i.e. the bricklayers, roofers, architects and the material suppliers - have to be paid for their inputs to the finished house, of course. But who is 'providing' the "established community"? The developers? The landowners? Methinks not. So why do they get paid for its existence? And if you buy an existing home from somebody who is moving away, what contribution is he going to make to the "established community" in future? Precisely nothing, of course. So why should he get paid for it?
* Which puts the developer in a tricky position, on the one hand they like to drip feed new homes onto the market, but on the other hand, the more homes already exist, the easier the new ones are to sell. Prisoners' dilemma with one prisoner.
Not sure if I've done this one yet.
From Inside Housing:
A City Hall investigation will examine whether a new land value tax in London would cut the number of unused sites under private ownership while boosting public investment in infrastructure.
Labour London Assembly Member Tom Copley will report on the pros and cons of a levy aimed at encouraging developers and landowners to generate income from their land. Currently, owners of empty sites do not pay council tax or business rates, meaning sites can be left empty with minimal financial impact...
However, the Home Builders Federation warned LVT could exacerbate the housing shortage by making house building more risky, uncertain and expensive. A spokesperson said: “Such a land tax might generate receipts but it has the potential to exacerbate a housing shortage that is already having consequences for the economic competitiveness of the capital.”
From the article, it appears that this is not full-on permanent LVT and will only apply to undeveloped or underdeveloped sites, so clearly it will be in landowner's interests to get stuff built as quickly as possible to avoid the tax. If a landowner wants to offload his sites to a proper developer, then the tax is no longer the landowner's problem, it's the developer's.
But from the developer's point of view the "risk, uncertainty and expense" are reduced because the future tax liability comes off the price.
Let's say an untaxed undeveloped site would currently sell for £1 million and the future tax will be £100,000 a year until the finished homes are sold and our developer expects the project to last two years.
Instead of using £1 million cash at 6% interest to fund the purchase of untaxed land (costing £60,000 interest a year), he will use £800,000 cash and pay £48,000 a year interest. He gets his tax back up front and has lower interest costs in future. Paying the £100,000 a year is just part of his normal cost of sales, like bricks or labour.
Assuming the tax is lifted once the homes are sold, his final selling price will be exactly the same and he gets his money back, i.e. he has paid out £800,000 plus two lots of £100,000, and sells the housing for £1 million plus build costs plus profit margin.
If this were full-on, permanent LVT, then the selling price/purchase price of land would be nominal amounts only, so our developer only needs to pay the £100,000 a year until the homes are sold.
This reduces risks and uncertainty down to the barest minimum - it's like hiring a crane for the duration of the job rather than having to buy one and gambling on the price of cranes going up or down rather than focussing on the construction.
Monday, 2 November 2015
The responses to last week's Fun Online Poll were as follows:
Which of the following has a smaller surface area than Israel?
Albania - 7 votes
Latvia - 12 votes
New Jersey - 17 votes
Sicily - 13 votes
Wales - 26 votes
Answer: Wales is the only territory smaller than Israel.
Clearly, up to 15 people didn't understand the question and voted for more than once option (75 votes cast minus 60 voters) when the question clearly asked "which… has" and not "which… have".
Suffice to say, about one-third of people at least have a vague grasp of how tiny Israel is. And I suppose, like Wales, most of the population is crammed into a small part of the country and the rest of it is sparsely inhabited mountains/desert.
Whatever you say about the behaviour of the actions of the 'State of Israel' in the abstract sense, they are not really asking for much in terms of territory.
This weeks Fun Online Poll is inspired by a tweet by Jackart:
Has anyone, anywhere, ever connected to free wifi successfully? pic.twitter.com/nXLm3ueYpl— Jackart (@VeryBritishDude) November 2, 2015
Vote here or use the widget in the sidebar.
From The Evening Standard:
Cash-strapped Chancellors should not be given the temptation to take two helpings of tax from pension savings, the boss of the UK’s biggest mutual life and pensions firm, Royal London, has warned.
Chief executive Phil Loney spoke out on the Treasury’s review of pension tax incentives unveiled by Chancellor George Osborne in July’s Budget.
One of the options being considered is a reversal of the current regime — where pension contributions are tax free with tax deducted on retirement — to a system where contributions are taxed but payouts in retirement are tax free.
But Loney says the potential change — alongside reducing the size of pension pots — hinges on future Chancellors sticking to their promises. “Nobody should be asked to save for 30-plus years without absolute certainty that savings made from their income will not be taxed twice. The public will not trust future cash-strapped governments to honour any current promise of a tax-free ISA-style income in retirement.”
Wel of course they won't! But in the absence of the supposed tax breaks, nobody in his right mind would save into formal 'pension' arrangement in the first place, they would just build up cash, buy shares (presumably in an ISA*) or get into buy-to-let**. Even if they were 100% certain that withdrawals of saved up capital from the fund would not be taxed (a second time) in future, a formal pension scheme is hugely inflexible and suffers colossal charges.
So basically, without the tax breaks (which are all siphoned off by the pensions companies, leaving the saver no better off that if he had saved up outside a pension scheme), the whole pensions 'industry' will shrivel up and die within months.
*With ISAs, there is always the risk that the income and CGT reliefs will be withdrawn, but it is nigh inconceivable that the principal amount will be taxed, seeing as it was saved up out of post-tax income.
** With buy-to-let, there is always the risk that a Chancellor will reduce the tax breaks - a Labour Chancellor might do in the interests of fairness, redistribution or simply 'bashing the rich', and a Tory chancellor might do it because he knows that tenants don't vote Tory so he might find it expeditious to budge a few landlords into selling up to sitting tenants. Oh, a Tory chancellor just did, and presumably for exactly that reason. But it is again nigh inconceivable that the there would ever be a tax charge on the principal amount.