Oh the irony...

AFrom here: IEA launches Breakthrough Prize – £50,000 for your 2,000 word idea to solve UK’s housing crisis:

Richard Koch – the benefactor and supporter of the Prize – is a British author, speaker, investor, and a former management consultant and entrepreneur. He has written over twenty books on business and ideas, including The 80/20 Principle, about how to apply the Pareto principle in management and life.

The Pareto Principle is handy shorthand for many things, but let's not forget that it is based on the fact that "Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population."

Apart from that bit of irony, the whole thing is a travesty, it's like asking Houdini to get out of a strait jacket... without moving. Every premise is false, every statement a platitude and the questions are all (mis)leading questions:

Competitors will be asked to propose a single policy initiative which would:
• Increase the number of houses built so as to markedly reduce the housing shortage in this country (this can be reduced through increased rental or ownership).
• Increase the number and proportion of property owners in the UK.

i. There isn't a housing shortage in absolute terms, as a nation we've got 25 million spare bedrooms. Or as Blissex pointed out on an earlier thread: there's plenty of housing but the jobs are in the wrong places.

ii. Home builders have a profit maximising level of output, which is broadly speaking one new home for every two additional people in the UK. Unsurprisingly, and being fair to the construction industry, they have been building this many on average, even over the last ten or twenty years.

Why on earth do people who claim to understand free markets and capitalism think that "a single policy initiative" will encourage them to build more than this, thus depressing their own profits? (You aren't allowed to mention LVT, of course, but even that would not particularly increase overall construction rates).

iii. As to the second bullet point, private landlords acquired more homes over the last twenty years than were built. It requires government intervention, like restricting interest relief of charging landlords 3% extra SDLT to reverse this trend. (But you aren't allowed to recommend any sort of government action, oh no, that's not "market based").

Jacob Rees-Mogg said:

“Building more houses and supporting home ownership are the two great challenges for Conservatives. A property-owning democracy provides one of the most stable and prosperous forms of society. Its erosion denies people their reasonable life’s ambition."

Sure, until the 1970s, Conservative and Labour governments alike increased owner-occupation rates. They allowed lots of new homes to be built and discouraged landlords from snapping them up (rent controls and punitive taxation of rental income). Labour tended more towards building social housing, which kept a lid on private sector rents, but there was an overall consensus.

That social-democratic principle was gradually binned in in the 1980s and 1990s and now we have full-on Home-Owner-Ism - the aims of which are ever more expensive housing owned by fewer and fewer people. In other words, shifting back to the concentration/inequality which Pareto observed.

Mark Littlewood, Director General at the Institute of Economic Affairs said:

“Market-based policies have the power to dramatically change the economy and society for the greater good... it is time politicians looked beyond Brexit, to the pressing domestic issues of our time – arguably the most pressing of which is the cost of housing.”

T'was only government intervention and regulation which kept prices low until the late 1990s (s21 HA 1988 was changed in 1996-97 to allow no fault evictions, which threw the match on the bonfire which they had been building since abolition of Schedule A taxation of imputed rents on owner-occupied housing in 1963). "Market-based policies" had little to do with it.

Richard Koch said:

“In the twentieth century, home ownership went from one in ten Britons to seven in ten – a terrific achievement in extending a real property-owning democracy. And in the 1980s, Mrs Thatcher enabled millions of people whose families had never owned a home before to get on the property ladder. Today that’s just not possible.

Sure, home ownership increased rapidly, what these "free market" wankers never mention is the obvious corollary, that private landlords were nearly wiped out. That was the key to all this; eliminate the landlords and owner-occupation increases automatically.

And Thatcher could only "enable millions" to become owner-occupiers by flogging off the nicest third of social housing to higher earning tenants at big discounts. I fail to see how one government giving away assets accumulated by previous governments is a "market-based policy". This couldn't have happened if those previous governments had not adopted the distinctly "non-market based policy" of building all that social housing in the first place.