Wednesday, 18 January 2012

Grant Shapps said it, not me...

Rather bizarrely, Grant Shapps has strayed from the Home-Owner-ist path of True Righteousness, which is to give money, directly or indirectly to people who own land, who wish to buy land or who collect rental income (a lot of which is disguised as mortgage interest) without ever asking for anything in return.

His new bright idea is for local councils to build new housing specifically designed for renting to elderly down-sizers, who would of course retain ownership of The Family Home and have the rental income collected and passed to them by the local council. Of all his cunning schemes to give land owners money, this is the least-bad, because at least a few crumbs fall from the table for young tenant households (who can now move into, and pay rent for, somebody else's Family Home) and the construction sector.

Suffice to say, the Home-Owner-Ists have unleashed their usual shit storm from Hell upon him, wailing on about "state interference in telling people where to live [blah blah blah]". Welcome to the club, Shappsy!

Now, it strikes me that the massed ranks of Home-Owner-Ists, Baby Boomers and pensioners absolutely love state interference:
- state interference in restricting planning permission to prop up prices, which clearly amounts to telling young people where to live,
- state interference in taxing other people's incomes to pay for the stuff that props up land values,
- state interference in taxing other people's income to pay for their old age pensions,
- state interference in propping up rents via Housing Benefit,
- state interference in selling off taxpayer assets at undervalue to aspiring owner-occupiers,
- state interference in keeping interest rates down and inflation up to mask nominal falls in the value of the precious houses,
- state interference in shrinking taxes collected from the natural source of national revenue, etc.

But they don't like it when the boot, or should I say fluffy slipper, is on the other foot, or should I say little toe.

H/t Drewster at HPC.


Lola said...

One more bit of authoritarian ant-home-owner-ism doesn't compensate for authoritarian home-owner-ism. Shappsy's tinkering with a sympton, not curing the disease - rent seeking etc etc

Mark Wadsworth said...

L, how is what Shappsy suggested anti-Homey?

Yer elderly downsizer gets the option of a nice new custom built home; gets a free removal service with no hassle with estate agents, solicitors and SDLT; gets a guaranteed rent for his old home (and pockets the difference); his kids still get to inherit the house (albeit with a sitting tenant).

Agreed, it is tinkering with symptoms but it's still the least-bad of all his plans to funnel money to landowners. Hence and why the Hardcore Homeys hate it with a passion. Whether it's authoritarian or not depends on how optional it would be. And it would be very optional.

QP said...

As a move to more efficient use of housing it is positive. It also makes the nature of the rent-seeking far more explicit and I think this is a useful side effect. This is possibly something that the Homeys are railing against - being "forced" to become a landlord and collecting real rents rather than imputed ones.

Also there is only so far that the Homeys can take the argument about being "forced" out of your own home. I know a number of elderly who would be keen to move out of their own, cold and tricky to maintain house and into a nice new one taylored to their needs, if they got helped with the process. In fact my grandmother is about to move in to a care home; as it stands, with the dementia, a lot of the time she doesn't even know that she is in her own house!

Lola said...

MW - As I understood Shappsy - it wasn't very 'optional', hence 'authoritarian'. but I may have misheard him...

Lola said... he seemd to be doing it to sustain house prices, in that people did not have to sell at 'low prices' and the gummint could 'help out' by taking on the properties and getting them rented out by local authorities.

Now, whilst as you well know I am anti H-O-I, I am not pro someone from the gummint turing up with the immortal phrase 'I'm from the gummint and I'm here to help'.

Bayard said...

Lola - it appears to be totally optional, according to the BBC, who, though not completely unbiased, are far less so than the "let's not let the truth stand in the way of a good story" Daily Mail.
QP - I suspect that much of the "being forced out of your home" rubbish is being peddled by those who either don't want to admit, or want to hide the downside of being an owner occupier, like maintenance and heating costs.
Mark - you can't please all the people any of the time. If you stood on a street corner handing out tenners, there'd still be people complaining that it was the wrong street corner in the wrong town or that too any of the undeserving were getting the tenners or not enough of the deserving or that some people were putting on a false moustache and coming round for another one. In fact you'd be lucky if you survived the experience.
This idea does seem to be surprisingly good for a politician to be putting forward: the councils get to build more public housing, with tenants unlikely to cause trouble, they get to have more housing to offer to younger families and presumably they get to own housing protected from the dreaded right-to-buy, as that would make the whole scheme pointless, though perhaps Shappsy just hasn't thought of that snag.

Lola said...

Bayard - If truly 'optional' then acceptable. It's just as wrong to 'evict' someone compulsorily as it is to subsidise H-O-Ism. As you are an honest chap (chapess?) I'll take your word for it...

Mark Wadsworth said...

OP, B, so you agree that this is not Shappsy's worst idea? I'm relieved.

L, you might well be right on the first count and probably on the second, who knows?

Adam Collyer said...

It's really an interesting alternative to the elderly out their house and renting a smaller one. With this new scheme the State can have a piece of the pie too! What's not to like? Sheesh.

Mark Wadsworth said...

AC, but elderly homeowners don't have that much initiative, or else they would do it, and they certainly wouldn't like renting privately. And there's every reason to assume that the downsizers will get tasty below market rents etc.

Adam Collyer said...

Why wouldn't they like renting privately? Wouldn't they like that more than renting a council house?

Mark Wadsworth said...

AC, apply commonsense to the issue. Why would a private landlord, who has no tailor made flats anyway, want to rent to elderly downsizers? If said ED's wanted to rent an unsuitable home privately from a LL, they'd do so. Only the LL doesn't want them and hasn't got anything suitable, certainly not in their price range.

The council on the other hand will build something tailor made, rent it to EDs no doubt for a knock down price and no way, not in a million years will the ED ever be evicted (time is on the council's side, isn't it?), seeing as the council will be sorting out the rental of their Family Home.

I'm puzzled as to what your problem is here. Is Shappsy's plan too Home-Owner-ist for you or not Home-Owner-ist enough? Would you prefer it if ED's were given the freehold of a tailor made flat for free with a £10,000 contribution towards moving costs or something?

Anonymous said...

> And there's every reason to assume that the downsizers will get tasty below market rents

Well that's the first flaw in the plan.


Mark Wadsworth said...

AC1, I didn't say it was a particularly good plan, it's still 75% Home-Owner-Ist. But his other plans were 100% HO, so it's a small step in the right direction.

But the canny Homeys at the Mail are spitting feathers over the 25% of the plan that is not hardcore Blue Socialist, they can tell straight away that something isn't quite right.

Bayard said...

AC1, if the EDs rent privately, they pay tax on the rental income of the Family Home and have to pay the rent out of taxed income. AFAICS, under this scheme, no money changes hands; the rental income from the FH is their rent, so there is nothing to tax except any excess of the FH rent over their council house rent.

Bayard said...

Sorry, that comment was addressed to AC, not AC1.

DBC Reed said...

Shapps seems to be a cheery, rather naive politician.One of his suggestions was that, as a general rule,house price inflation should always be lower than wage inflation.As a believer in the JS Mill/Martin Wolf/Sentinel form of LVT that does not tax existing land prices but clicks in only when they rise "from here on" (Wolf)the interface between wage inflation and HPI might be a useful trigger point for this form of LVT: land prices could stay stable but wage inflation could go down relatively ,setting off the Sentinel alarms.

Pogo said...

Well Mr Wadsworth, I'd never marked you down as such an innocent idealist...

What a great idea. Letting the council (a) build properties for EDs to rent and (b) have the rental income of the erstwhile family home collected and "processed" by said council? This asks an awful lot of councils.

Firstly, they have to build places that EDs want to rent, in places where they want to rent them - not something that somehow seems to gel with my (long) experience of councils.

Secondly, even if (and it's one Hell of an "if") the council could manage an increase in efficiency greater than that seen previously in the known universe and actually manage to pass a reasonable slice of the rent to the ED, how long before they realise that, as with many other things nowadays, they're onto a "nice little earner" and start stiffing the ED with additional charges...? "Inspection of the state of the place", "fire regulation compliance", "needs rewiring before it can be re-rented", "general maintenance", etc etc - all at council-mandated rather than local-tradesman prices.

It's a bloody awful idea, just on the basic efficiency criteria alone. Look at the absurd bureaucratic overhead of processing Tax Credits for example. can you imagine that this scheme would be any better?

Mark Wadsworth said...

Pogo, I completely agree, with a couple of caveats:

- this is the least-bad of Shappsy's bright ideas so far;

- if ED does the whole thing off her own bat and privately, there are still huge transactions costs to her, and she might be ripped off by the removal company, the solicitor, the new landlord, the letting agents (I've only ever dealt with one letting agents, they were super, but this does not apply to all of them, apparently), the new tenant etc.

- as a frail and elderly ED with not much cash, I'd trust the council to look after me better than the private sector.

- the council can impose all these silly inspections on privately owned and let dwellings as well.