The Disappearing Homes Conundrum

I know that the hard-core Homeys like to play the "disappearing homes" card, but Shelter really ought to know better:

But the evidence, summarised in the table below, suggests that old fashioned controls – setting the rent, not just controlling the increase – would force a significant number of landlords to sell their home, as they could make more money that way.

Now, that might be good for middle earners – a glut of homes suddenly for sale might become available.

But this is where the risk comes in for low earners. They can’t afford to buy and increasingly rely on the private rented sector. As landlords sell up, they would be left with fewer places to live. In the absence of a much larger supply of council and social housing, that risks pushing people into homelessness. This is probably not a gamble worth taking.

FFS.

The number of homes available to rent will fall and the number of potential tenants will fall by a corresponding amount. Those remaining tenants will have lower incomes, so rents would fall naturally anyway. Logic and real life evidence tells us this.

Funny how the UK had rent controls of one form or another for most of the 20th century, and 'homelessness' (however defined) wasn't as acute as it is now. I refer the approach as Georgism Lite.
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UPDATE JB, in the comments: I'm not claiming this has a significant effect, or is what Shelter has in mind; but could it be that some homes disappear when multiple-occupancy homes revert back to owner-occupier homes?

Fair point, and that did cross my mind - if former tenants, now first time buyers, buy a home which is larger than the one they were renting. I'd guess that this likely to be the case - people tend to rent the smallest/cheapest they can manage in, but when you buy, you tend to plan ahead a bit and get somewhere bigger for if/when they have children etc. In this case, the net supply of homes for rent would decrease by more than the fall in the number of tenants. But I'm sure the effect is marginal.

Good work by Shelter on land banking.

Somebody at Shelter has trawled through the accounts of all the large land bankers home builders and confirmed what we had already guesstimated.

From The Guardian:

The government wants to build 1m new homes in England by 2020. This would mean building 200,000 a year, but the existing construction levels of just over 150,000 are well behind that.

Despite the fact the nine listed housebuilders hold more than 600,000 housing plots, they sold just 66,881 homes between them in their last financial year.

The annual figure of 150,000 is not unduly low by historic standards, the average since 1945 is about 160,000 private sector completions. The years when annual completions were nearer 300,000 was because of council house building.

What is interesting is comparing what their PR people say to the media with what they say to shareholders in their annual reports:

Taylor Wimpey also pinpointed the “slow and complex” planning process and said all sides of the housing debate needed to be patient if more homes were to be built. A spokesman said… "Whilst it is improving, the planning process is slow and complex and a number of conditions need to be fulfilled before development can commence on our sites. A shortage of resources in planning departments also often means that delays occur in this process."

Ho hum. From their 2015 interim report (download from here):

Land bank - movements in period

Brought forward +75,136
Plots acquired +3,620
Strategic land conversions* +5,666
Completions -5,898
Land sales -297
Scope changes -655
Balance at end of period =77,372

Planning status
Detailed planning +45,787
Outline planning +22,508
Resolution to grant +9,077
Total =77,372

So in their accounts they boast that they have enough land with planning for about six years' construction.

* The land bank figures only include land with planning. It does not include 'strategic land' which they bought on spec; in this period they managed to obtain planning for 5,666 plots of 'strategic land' which is transferred to their official land bank.

To cut a long story short, TW have no interest in getting planning any faster, their profit maximising output level is whatever it is (taking all house builders together, they restrict their output to one tenth of total sales in any year) and there is no incentive to build more; in turn, there is no point in getting planning permission for land which they have no intention of using for the next seven or eight years.

"Charity slams plan to reduce homelessness"

From Paisley Daily Express:

A HOMELESS charity has slammed the UK Government for deciding to press ahead with penalties for social housing tenants who ‘under-occupy’ their homes.

Shelter Scotland are fuming with MPs for voting to overturn House of Lords changes to the controversial Welfare Reform Bill. One aspect is to deduct housing benefit from tenants who have one or more spare rooms, which has become known as a "bedroom tax"...

Graeme Brown, director of Shelter Scotland, said: "Penalising low-income people for having an extra room assumes there is a ready supply of smaller properties. The consequence will be people stuck in homes with mounting arrears."

That is positively weird.

There's a given amount of social housing, and a heck of long waiting list, and many of the people on the list are homeless. So if reducing homelessness is your thing, then trying to encourage full usage of what social housing there is must be the way forward; price rationing is the best form of rationing, so hiking the cost a bit for people who 'under-occupy' seems like a good plan to me. NB: I thought that such a family over-occupies; but the dwelling is under-occupied, I'm not sure if the article gets these the right way round.

But somehow... the whole thing reminds me of the Poor Widow In A Mansion who has been wheeled out a million times and presented as an argument against LVT, and I for am not buying it. If, for example, the government suggesting scrapping the nonsensical single person's discount for Council Tax, The Daily Mail would be trotting exactly the same non-argument as Shelter do, only on behalf a different special interest group.

More Olympics Fun

Here's another story which puts the extra £1,000 (?) which Tube drivers wangled themselves for turning up to work during the Olympics into stark perspective:

Tenants are being driven out of their homes during the Olympics so their landlords can cash in on soaring rents. Even long-term residents have been told they will be evicted because of the shortage of accommodation expected in London in July and August.

One east London private tenant has allegedly been told to move out for a month during the Games – or sign a new contract permanently increasing the rent by £500 a month. Antonia Bance. from Housing charity Shelter, told Metro the Olympics were creating a ‘perfect storm’, exacerbating the shortage of homes in east London.

She said: ‘It’s a strong possibility that a large number of east London tenants may face eviction, rent hikes and losing their homes as a result of the Olympics.’

Property experts believe the temptation to cash in on the Games boom will be too strong for some landlords. Most could get tenants out legally by giving them notice in April or May. Monthly rent on a two-bedroom flat in Tower Hamlets or Hackney would normally be about £1,400. However, properties are being advertised for the Games at up to £7,500 a week.