Saturday 23 July 2011

Permanent Vacation

From The Sun:

TRAILER parks have traditionally been seen as home to the dirt-poor living on the poverty line in rundown American suburbs. In the UK, as families struggle in the recession, they are fast emerging as a cheap and cheerful alternative to bricks and mortar.

More than 200,000 Britons - among them the parents of Chelsea star John Terry - now call static caravans home. And experts reckon the numbers are rising every year as more people see trailers as a high-value, low-cost route on to the property ladder. There are now more than 1,000 residential parks nationwide - many so popular they have long waiting lists. They can provide modern, comfortable accommodation - and a sense of real community - at a fraction of the price of traditional homes.

Trailer expert Jon Boston, a consultant for British Holiday & Home Parks Association, said: "Residential parks have the atmosphere of a little village back in the 1950s where everyone knows everyone and you can leave your door unlocked. Most have beautiful surroundings in prime areas with a worry-free living environment. Prices, whether buying or renting, are much lower than in traditional housing. Often a park home costing, say, £50,000 will have similar housing outside the park gate for four or five times as much. Park homes are virtually maintenance free - no worrying about gutters, for example - and almost invariably fall into the lowest band for council tax."

Trailer homes typically start at around £20,000 with most falling in the £30,000 to £80,000 range. An equivalent traditional house just 100 yards away might cost as much as £400,000 depending on the region...


OK, let's call it;
- £35,000 all in per caravan, to include the caravan, roads, utilities, sewers etc.
- 1.6 million households on council house waiting list, most of them claiming Housing Benefit
- total Housing Benefit paid to private landlords £7 billion a year

Why don't we just build enough caravan sites for 1.6 million households, that's a one-off cost of £56 billion, so let's borrow the money and pay it off over eight years using the £7 billion which would otherwise have gone into the pockets of private landlords?

We'd probably need far fewer than 1.6 million static caravans. There'd be fewer tenants competing for each privately owned home, and no subsidy setting a floor under rents, so rents would fall to a level where more people can afford it, they wouldn't need social housing.

30 comments:

Bayard said...

Static caravans are classed as temporary accomodation AFAIK, so come under different planning regulations. Also "right to buy" probably doesn't apply to static caravans (seeing as they are "temporary".

Pogo said...

A couple of minor points..

Why don't we just build enough caravan sites for 1.6 million households, that's a one-off cost of £56 million,

I assume that you mean £56 billion...

And one of the problems not mentioned in the writeup is that static caravans and the like depreciate like cars - and often have to be (a) under the terms of the site agreement, replaced when about ten-or-so years old and (b) can only be sold back to the site owner - frequently at derisory prices, or the site owner takes a large "commission" for facilitating the sale.

Not a very good way of getting onto the housing ladder IMHO.

A K Haart said...

I've wondered about this one too. Presumably more permanent prefabricated houses could be built almost as cheaply but with a longer life.

Jill said...

I think planning restricts residency to 48 weeks a year in most places: residents can't get a GP, get on the electoral roll, or sign on (I know, I know). But I agree, they could be great homes. There is a small park less than a mile from here with "lodges" - 3-bedroom, sell for about £50k for a 25-year lease. They would be more than acceptable homes on a 52-week residency.

DNAse said...

I think planning restricts residency to 48 weeks a year in most places

That's certainly the case for mobile homes but it it so for static caravans? I'm not so sure.

Mark Wadsworth said...

B, if the council builds them and lets people live there, they can class it how they like.

P, I have amended typo. I wasn't suggesting that we pay Housing Benefit to subsidise private land owners, or that people use this as the bottom rung of 'the housing ladder', I said councils could build them. If people are given a low cost rental option, they don't need a housing ladder, they can save or spend more of their own money as they see fit instead of throwing it into the Ponzi scheme.

AKH, yes, they depreciate, but if built to slightly higher standard can easily last fifty years or so (like wooden houses in the USA) so the amortisation is a laughable £500 a year.

Jill, DNAse, the 48-week rule is entirely arbitrary. The same economic rules apply here as anywhere - £50,000 for a 25 year lease, minus cost of actual caravan works out at £1,000 a year - but the only reason that farmers can make this much money (£20,000 per acre per year?) is because the supply of such sites is severely restricted.

I'm trying to help people at the bottom of the pile, save the taxpayer a lot of money and reduce rents and prices on the bottom rung of the 'housing ladder' instead of generating easy money for a lucky few farmers.

Pogo said...

Mark... My apologies, I realise now that your idea is distinctly at odds with the spiel from "The Sun".

Re the idea of building to a higher standard - how about something based upon the idea of the old WW2 "prefab"? They were very solid, incredibly cheap and lasted for a hell of a lot longer than anyone expected. The last inhabited ones in Birmingham were finally taken out of service sometime in the 1990s IIRC, having lasted a good 50+ years.

DBC Reed said...

There's also an awful lot of geezers (OR there's a lot of awful geezers)who got made redundant in the 80's and onwards and, when their relationships went west also, ended up on boats up estuaries and in inland marinas,not exactly vegetating,more plotting sole trader start-ups on the back of plausible inventions.Politically ,they are very anti-Establishment (phone hacking is their dream come true)and look like the types Napoleon said was going to hook up with when he invaded England.

Derek said...

Pogo's points about depreciation and selling the caravan are all too true. And to that I'll add the fact that the site owner retains ownership of the plot that the caravan sits on. Which means continual ground rent payments by the tenants even if they do own the actual caravan. That's another reason why the caravan costs so little compared to a house: it doesn't include the price of the land the caravan sits on.

Having said that I still think that this could be a good way of solving the housing problem but only if the sites are owned by a co-op made up of the tenants or by the local authority. In the hands of private landlords it generally turns out to be pretty expensive to the householders.

Mark Wadsworth said...

P, there is a subtle advantage in building cheaper houses which don't last for ever, that way there's no harm in removing and demolishing them after a few decades - maybe they are no longer needed, maybe the new ones can be spaced closer together or further apart, just depending on demand etc.

DBC, however awful the geezers, they still need homes.

D, you say: "continual ground rent payments by the tenants" I say "land value tax". If the sites are owned by the council, then it doesn't matter who owns the physical houses - the point is that the tax/rent would be collected by 'the community' who has some sort of vested interest in things being run properly, unlike the farmer who banks the premium and rents and then walks away laughing.

Bayard said...

There's a lot to be said for council housing (and Mark has already said the majority of it), but unfortunately the management of such housing can fall into the hands of the lazy or incompetent or fall victim to local petty politics. Having a static caravan site where the sites are owned by the council, but the caravans are owned by the tenants seems to be a way of getting round much of the downside of social housing whilst keeping the upside. It would not be a way "onto the housing ladder", but that's probably a good thing.

Mark Wadsworth said...

B, yes agreed.

The key to all this is that if you get fed up with the site you are on, or get fed up with the council, or get offered a job elsewhere etc, you would (in theory) be able to detach your home from the utilities, gaffa tape everything to the floor, hire a big lorry and go find a site elsewhere.

And as much as people hate paying rent/tax, if a council had two separate sites, and charges £20 a week rent on one of them and £100 a week rent on the other, some people would still choose the latter site because a nicer class of people are living there, less overcrowding, shorter waiting list etc.

Robin Smith said...

£7 billion @ 5% * 8 = ~ < £3 billion in mortgage 'interest'...

Or rent!

Banks are the 21st Century aristocratic landlords.

Mark Wadsworth said...

RS, I'm not sure what point you're trying to make.

Councils can borrow very cheaply (say 3%) and do not need to borrow from banks, so to completely clear the debt after 8 years they'd need to repay £8 billion a year, i.e. £1 billion more than is currently given to private landlords as subsidies.

Surely, those 1.6 million households can be expected to pay an average of £625 a year in 'rent', i.e. over and above the cost of running these parks?

And while interest is rent on money, that £56 billion is not the rental value of land, that's the cost of actually building the sites and installing the caravans. The interest on that £56 billion is not rent of land, it's compensation for late payment.

Robin Smith said...

Show me where the Councils borrow from and I'll agree fully?

Mark Wadsworth said...

RS, they can borrow from the UK government.

And remember - the bulk of the loans will be repaid by diverting the £7 bn a year HB currently paid to private landlords, so it's largely a bookkeeping exercise. They just take the payments currently labelled "Housing Benefit" and relabel them "Repayment of caravan park debts".

Overall, the liabilities/future payments, of the UK government and hence the UK taxpayer will be LOWER under my scheme i.e. there will be LESS government borrowing/spending and LESS rent/tax/interest to be earned by landlords/banks.

And more earned by people who build caravans, dig pipes, tarmac roads etc. What's not to like?

Anonymous said...

Sounds like a good idea but I would probably buy the tiniest place I could find in a safe area, for storage and to have a proper address. I would then have a low LVT bill, but could move the caravan around wherever I wanted. However I guess this sort of thing mostly appeals to poorer people.

Mark Wadsworth said...

Anon, your address is wherever you want it to be and you pay LVT/rent on whichever site(s) you want to occupy. So you'd pay rent on the post box and on the caravan site accordingly.

Of course we are led to believe that this sort of thing only appeals to 'poorer' people because centuries of brainwashing tell us that you are a nobody if you don't 'own' some land.

Under this system, there will still be wealthy people who own two or three caravans and rent the biggest plots in the nicest areas. Just like these billionaires who have the nicest yachts and pay the mooring fees in the nicest harbours or marinas.

It's an analogy or a parable as much as a serious policy proposal, to be honest.

Robin Smith said...

MW I asked you to show me who the govt borrow from exactly. Evidence. Can you do that?

From what I can see they borrow from the banks.

The BoW last time I looked is a private institution since birth.

Mark Wadsworth said...

RS, they either borrow from people who already have money or they just print new money, it's all the same thing. The point is I have showed you how they will repay it.

Even if they borrow it from the evil banks, I still think it is better to pay the evil banks £1 bn a year interest for 8 years than it is to pay the evil landlords £7 bn a year rent in perpetuity.

The is about reducing the cost to society and to the taxpayer. If they are paying less then somebody is receiving less.

James Higham said...

This is going to increasingly be the case and then where is the opposition to the travellers?

Old BE said...

MW, this is a fantastic idea. However it would be even better if

a) the land allocated to this project was allowed to be used to build housing of any type suitable to its location and demand

b) building regulations were relaxed generally so that apart from the risk of fire or collapse people were allowed to build what they liked more generally

c) the whole thing was done very publicly with the "authorities" at the same time admitting that only a tiny fraction of the land in Britain is being used for housing and that a tiny increase in that amount could solve the current housing shortage much more cheaply than by giving huge amounts of tax money to private landlords.

Mark Wadsworth said...

BE, ta.

a) Unless people are stupider than we give them credit for, the stuff that would be built would be exactly that which is in demand.

b) Agreed, qualitative restrictions make sense, quantitative restrictions don't.

c) You'd be amazed. The Daily Mail mentioned some research (based on satellite photos) which said that only 6% of the UK is urban, and maybe half of that i.e. 3% is homes and gardens. One of the first commenters said "Good, and let's keep it that way. If we relaxed planning laws then the whole country would be concreted over."

Bayard said...

BE, the trouble with building lots of new houses is that you would just end up with lots of new expensive houses, as the price of houses is directly linked to the price of money and so long as people contine to view their home as an "investment" it will stay that way. The whole point of the static caravan idea is to enable people to buy a "house" (the cheaper bit) without also buying a plot of land (the overpriced bit).

Derek said...

Oh sure, MW. We're agreed on that. In the hands of private landlords, it's "continual ground rent payments by the tenants", and bad. In the hands of local authorities, it's "100% land value tax", and good. I was really just commenting on my experience of the way things work under the current private system. I'd far rather that the money was recycled into the local economy through the local authority than being sucked out of the local economy into the farmers' bank accounts.

I can also back up what Pogo said about post-WWII rental prefabs. These were basic, tiny but well-made houses. Although I didn't live in one, I remember them from my childhood in Aberdeen. Many people became very attached to them and there was some backlash when they were finally replaced by more conventional housing. We could do a lot worse than design and build a modern version of the prefab as low cost housing.

Robin Smith said...

MW This is about the incidence of rent... in the end. Who finally collects the rent. (or Tax or mortgage interest)

That is all we need to know to understand who is in power. (see Rome for simple support of this)

You have not traced that all the way back. You have only claimed or pressumed it is so. So we can never be certain what you are saying has any support in wealth and equity terms. Councils borrow off banks as do government for nearly all money. Government creates a teeny weeny amount.

Can anything be clearer than that the bank ruling elite are the modern day aristocractic landlords? I dont care about that here, I'm only pointing out that it is there.

You are denying that. Why are you apologising for them?

neil craig said...

Even such caravans suffer from the "planning" parasitism. They mostly aren't ever going to be used as mobile caravans but are required to have wheels and be theoretically roadworthy and the number of parks is still being artificially restricted which always drives up prices.

A number of companies are making homes from containers (or container sized) which don't have the legal quibbles of caravans (no wheels) but are longer lasting, stronger and even stackable - http://media.smallhousestyle.com.s3.amazonaws.com/2009/06/3127442774_4a20baf2b41.jpg

These should be considerably cheaper than caravans and quite a bit larger (8' x 40' to 8' x 60'x 2 for 20 foot high containers turned into 2 stories). I suspect most people would go for the same price but better appointed.

Like most of our problems it is only a matter of preventing government prevent innovation.

Mark Wadsworth said...

NC: "The number of parks is still being artificially restricted which always drives up prices... Like most of our problems it is only a matter of preventing government prevent innovation."

Yup.

I'm glad to hear about stackable, that struck me as the next obvious step for trailer park* dwellers who want it to feel like a proper house, or if we want to build a quasi-block of flats. That's why you're Planning Minister in my Bloggers Cabinet, because you know about this sort of stuff.

* Apologies for Americanism.

Mark Wadsworth said...

RS, OK then, f- it, let's slap the banks with a one-off 1% bank asset levy to raise about £60 billion and we'll pay for all these new homes in cash out of the proceeds. Can you agree to that?

Robin Smith said...

Only if you want to do things the hard way.

If banks ARE the biggest landowners, tax location values and the problem would disappear.

Banks would start doing work for a living again like the rest of us. Their business would be :

1) The safe keeping of money
2) The lending of their own capital
3) The making and exchanging of other peoples credit

A really useful private, free market service once again, deserving wages and interest proper. Simples.