In which case, Ed Miliband is far brighter than they give him credit for...

From the BBC:

The Daily Telegraph's] editorial accuses Labour of being "inexorably anti-business", arguing:

"Occasional lip service has been paid to the power of capitalism to create wealth and jobs. But it has been drowned out by attacks on landlords, energy suppliers, railway companies, financiers, bankers and anyone else who appears to be, in Mr Miliband's eyes, a 'predator' rather than a 'producer'."

If you look at that list, those people are predators and not producers!

For example, railway companies are providing services and however much some people hate them, they are providing very important services.

But the simple fact that they can increase their fares year-on-year without any [significant] improvement in their services clearly indicates that they are actually collecting unearned rent rather than just a fair return on capital/labour.

The same applies in spades to landlords, financiers and bankers, and, for that matter airlines and broadcasters. It applies to a lesser extent to energy companies, they are not ripping off 'the consumer' so much as they are ripping off 'the taxpayer' (via all these grants, subsidies, guaranteed prices etc).

(If Red Ed went round slagging off car manufacturers or dry-cleaners, that would be truly anti-business.)

The Daily Mash on Home-Owner-Ism

From The Daily Mash:

LEADING a dull suburban life with a mortgage and two children is now a phenomenal achievement, everyone has agreed.

Modern life has become so challenging that ‘averageness’ is now considered an ambition on a par with becoming an acclaimed novelist, professional sportsperson or successful entrepreneur...

Factory supervisor Roy Hobbs said: “With my small detached house, ‘luxury’ caravan and three ISAs, I’m living the dream, although not a very interesting one.

“My advice is to have the purely coincidental good fortune to buy a house just before a massive property boom that fucks everyone else.”

Obligatory snow photo

First snow we've seen here for about two years:

Pot. Kettle

Here

As far as I am aware this bloke has done nothing in actual production ever.   And now he is paid by me and you to be an 'opposition', yet organises his inheritance like this, which is all fine and legal but might just make him no different to the people he opposes.

And being paid by you me, that is real taxpayers in wealth creating private business, means that he cannot actually pay any tax, as in make any net contribution to the national treasury.

Hypocrite doesn't just cut it somehow.

Selective Use of Data

From the Telegraph

Public attitudes are changing in Germany - as well they might when a small city like the 180,000 population Saarbrücken can boast 100 brothels and a sprawling branch of Paradise.

That's like thinking that Calais has a serious alcohol problem because of all the warehouses selling booze.

House price indices vs average house prices: Another little mystery solved.

What has always puzzled us is how HM Land Registry can confirm on the one hand that the average price paid for a home in the UK in December 2013 was £250,000, but on the other hand, the headline figure in their January 2014 report is 'only' £177,766 (pdf).

(If you download their price paid data for 2014 and take a simple, mathematical average of all recorded selling prices for England & Wales in that year, it is in fact £259,000).

For a very detailed explanation of how the various indices and averages are calculated, see this fine summary by Acadata.

To cut a long story short, the ones called 'Index' (Nationwide, Halifax and HM Land Registry) are just that; they have a hypothetical starting point adjusted up or down for observed price changes.

Or as HM Land Reg put it so succinctly:

1.5 Calculating the standard average price

The standard average house price is calculated by taking the average (geometric mean) price in April 2000 and then recalculating it in accordance with the index change back to 1995 and forward to the present day.

The key word here is 'geometric mean' (which is two words). This is always lower than the mathematical average because of the way it is calculated; and the wider the gap between values at the top and the bottom, the bigger the difference between geometric mean and mathematical average.

So while the geometric mean is a useful indicator, falling some way between the median and the mathematical average, it is completely useless if you are trying to work out the total value of all UK housing. For that you just need the mathematical average.

Hence and why, Savill's recent estimate of the total value of all UK housing of £5,750 billion (average £205,500 x 28 million units) looks perfectly reasonable, even though their estimate of the average value of a unit of social housing (£79,252) looks on the low side to me.

(All of which backs up my assertion that if you wanted to raise £200 billion a year in LVT, that averages out at 3.5% on the potential 2014 selling price of each home.)

To the untrained eye, it would appear that a flat costs more than a semi-detached house.

From page 4 of HM Land Registry's December 2014 House Price Index (pdf):

Average prices by property type (England and Wales)

Detached - £279,298
Semi-detached - £167,069
Terraced - £134,226
Flat/maisonette - £170,822

The relative prices of detached, semi-detached and terraced houses are pretty much in line and as you would expect.

But why is the average price of a flat higher than the average price of a semi-detached?

Simples, it's Von Thünen's law of rent, which factors in transport/travel costs.

People make a trade-off between convenience (living near the centre) and comfort (having a nice big garden), regardless of income. So you end up with flats in city centres and houses in the suburbs, with people being prepared to pay pretty much the same in £-s-d for either.

To exaggerate this effect further, the bigger the city, the bigger the trade-off between convenience and comfort; so the bigger the city, the more flats there will be.

So most flats are in the centre of the biggest cities, where the convenience premium is highest and most houses are in smaller towns and cities and at the outer suburbs of larger cities.

Or put it this way, they are not comparing the price of a flat with the price of a semi-detached house on the same street; they are comparing the price of flats in the centre of large cities (where land is very expensive) with the price of houses in smaller towns and cities and the outer suburbs of larger cities (where land is much cheaper).

Pro Tip

From the Telegraph

Thousands of Virgin Media broadband customers are being transferred to TalkTalk and will lose their virgin.net email address, a move that has infuriated customers.

Virgin Media is in the process of transferring 100,000 non-cable broadband and home phone customers to TalkTalk. These customers will have 12 months to adopt a new email address.
However, customers who choose to move to a different provider instead of TalkTalk will have only 90 days to change their email.

Tim Palmer, a Virgin customer from north London, said the move would cause “huge inconvenience” to his family, which uses the email address as a login for internet banking, online shopping and other services.

This is why I recommend that people get a domain name for their family, doesn't matter what it is. You could just have therobinsons.co.uk or thebrowns.co.uk. Then you create a email addresses for each person (e.g. sandra@therobinsons.co.uk and john@therobinsons.co.uk) and forward them to the real email that it's going to. Costs about a fiver a year, but it does mean that you keep your email address for life. If you stop liking your internet provider, you just sign up with someone else and switch your email to the new address.

The best tax is one you don't have to pay

From the same "Moneymorning" as the last post:

Take the recently completed Vauxhall Tower by Vauxhall Bridge. It is Britain’s tallest residential building – 50 storeys high – and it holds 223 flats. But drive past at night and there are absolutely no lights on.

This is becoming a big social problem. London property is already unaffordable for most locals. The average wage in London is just above £40,000. The average London house price is £580,000. Anger about this is mounting every day – and it only increases when people see so many flats sitting there unoccupied.

Whoever wins the next election will have to find new ways of increasing the tax take. Some kind of property tax looks inevitable. Mansion tax or no, an easy and politically expedient target will be to tax homes that are left vacant – Islington council is already talking about it.


Labour have obviously ducked the more logical policy of simply increasing the Council Tax bands up to £2M and beyond, because that would hit the middle income voters who support them as well as the rich voters that don't. However, increasing the tax on empty flats and houses would mainly hit non-residents who don't vote. So the new higher bands could first be introduced for empty properties only, then perhaps extended to second homes that aren't let out as holiday lets and so are empty most of the year.

I wonder if any of Labour's policy wonks read "Moneymorning"?

This could be interesting

In Moneymorning, Dominic Frisby writes:

There are now 54,000 homes planned or under construction “in the priciest areas of the capital”. Most will cost “close to or above the £1m mark” and most are two-bed flats.

but

..in the same areas last year, just 3,900 homes were sold for more than £1m. That would put potential supply at almost 14 times annual demand.

I should say, not all of the 54,000 properties planned will necessarily be built, and not all will come to market in 2015. (The statistic comes from data company Lonres, researchers Dataloft and buying agents PropertyVision, by the way.) But there is still a surfeit of supply. What's more, many of the 3,900 places that sold in 2014 for £1m or more were houses or had more than three bedrooms. What’s coming to market are two-bed flats."

Who is going to buy these properties, and who is going to live in them?

Families don’t want two-bed flats. ‘Normal’ people can’t afford £1m-plus properties. Even buy-to-let won’t work – factoring in service charges, you'd have to be taking in £40,000 a year in rent to make a £1m property worthwhile. That's a lot for a two-bedder. So you’re left with very successful, upwardly mobile young people in their 20s or 30s. But will that sort of person want to buy some bland new build that feels like living in a hotel? Of course not. He or she will want somewhere groovy in Shoreditch. And like most British people, Londoners prefer period properties. They’ll buy new builds if the price is right. But it isn’t. In many areas, new builds are at least as expensive as period homes per square foot – and they come with higher service charges.

So who’s buying? Well, as Charlie Ellingworth of Property Vision puts it, many new builds are marketed at “unsophisticated” foreign investors."

I’m not suggesting foreign buyers in London will disappear. They won’t. And the overseas market is affected by all sorts of factors beyond anyone’s control – the currency markets (think of the rouble), capital controls, capital flight, capital repatriation and so on.

But markets ebb and flow. The equivalent new-build-for-foreigners market in Manhattan is already seeing a marked slowdown. And the main problem is that even by the standards of London property, these flats are hugely overpriced.

So, we have oversupply. The big question is, will the prices come down, as the "supply and demanders" say they will, or will the flats just stay unsold?