Tuesday, 31 December 2013

Random conversation about Council Housing

A while ago (a year or two?) I was having a fag at the smoking shelter near where I work (in London) and struck up a conversation with a middle-aged bloke wearing a delivery driver/removal company-type uniform doing the same.

I asked him, out of the blue, whether his children (I gambled on them being in their teens or twenties) were struggling or would probably struggle to pay the rent/mortgage and he confirmed wholeheartedly that that they were/would.

I followed up by asking him whether he thought it might be a good idea to start building a load of council housing again, so that his children can simply get a council flat/house for £100 a week with no further hassle, the rest of their money would be theirs to keep, no big worries about being evicted if they lost their jobs etc.

Again, he confirmed that he thought the idea had a lot of merit and we chatted on in this vein for a couple of minutes.

As he was stubbing out his fag, he pointed out one possible drawback from his children's point of view: they'd never be able to make a windfall gain by selling a house for vastly more than they paid for it. Which sort of made a mockery of everything we'd agreed on in the previous few minutes.


The Stigler said...

I've tried to explain the "rising house prices will cost your kids" to a neighbour with a buy-to-let property. He just didn't get it. We're fighting against homeownerism that is constantly reinforced by politicians, the media and property porn TV (note: I am not including the lovely Sarah Beeny in that category).

Mark Wadsworth said...

TS, exactly, that was the stage when I abandoned the conversation.

Pablo said...

Two or three years ago a Housing Association house nearby became vacant and has remained vacant ever since. Three or four months ago new windows were installed. Yesterday when I passed, I noticed a "For Sale" sign in front.

DBC Reed said...

Very sad.As the Archbish says, its going to take a generation to change attitudes.

Mark Wadsworth said...

P, I don't like Housing Associations, they are the worst of both worlds.

DBC, not just sad, downright depressing. Putting politics aside, the man completely contradicted himself.

DBC Reed said...

A strange flicker of hope was sparked in my cynical breast by "Concretutopia" by John Grindrod, a fairly hefty book which I got as a Christmas present.This is wildly unfashionable, or in advance of fashion, by being a paean to post war town planning ,particularly the development corporation model of compulsorily purchasing agricultural land and the development corporations taking all the planning uplift by building new towns.( The unreformed private sector has made such a market failure of the development business that LVT may not be enough).The insidious pleasure of this book is that Grindrod finds these post-war houses chic; prefabs are particularly reverenced collectors' items which he goes out of his way to spot the same way some people search out manky, but wonderful, 50's 78's.There's some theory that revolutions are often preceded by changes of fashion.

Mark Wadsworth said...

DBC: "The unreformed private sector has made such a market failure of the development business..."

I don't really like the over-used expression "market failure", because what we are looking at with land and housing (or banking for that matter) is not "a market", it is "a monopoly" which always leads to failure, it is inherently a failure from the word "go".

(The fact that there is a free-ish market in shares in the monopolies is a side-issue).

Kj said...

DBC: where I'm at, municipalities are heavily involved in new developments, including getting land value uplifts to pay for infrastructure through buying/planning/selling land. Hasn't helped. Just serving up new mortgage contracts for banks really.

DBC Reed said...

The development corporation model made money by building houses and letting them ,generating a lot of steady income.Also houses were sold at a profit I believe: they certainly were in Milton Keynes.As the Margaret Thatcher everybody-his-own-property- speculator model based on over-reliance on the private sector has resulted in an enormous deficit in houses,h.p. inflation and a property+ bank crash in 2008 it might be the time to go back to basics and a system that actually worked.
Christmas television watching suggests Thatcher was a Manchurian Candidate come to ruin capitalism.

Kj said...

DBC: ah. Similar to Letchworth Garden City, that did land leases?
Yes, it´s all and well that the public company gets land value uplift from developing sites, like a private company would, but it doesn´t do anything as it´s just part of the build it, flip it and get the one-time gain model of building houses.

DBC Reed said...

Not saying there should n't be Land Value Tax as well though this would have to be on the from- here-on land value increases only type. (Or the initial selling price would have to very low.)
Howard planned for five year lease revaluation on housing land but this idea got dropped early on. I believe frequent revaluations are still in operation for commercial and agricultural land and a lot of communal revenue is raised.
Still don't see why there is reluctance to call the present mess market failure: it shows what happens when you try to run a natural monopoly on market lines. Close enough to me.

Mark Wadsworth said...

DBC, there are many things which market forces will sort out, but they cannot sort out monopolies.

(Free market forces alone might not have led to slavery being abolished, for example).

So you cannot accuse normally benign market forces of failing to sort out the land monopoly, they are not designed to or capable of doing it.

Bayard said...

"but they cannot sort out monopolies. "

Or cartels, for that matter.

Mark Wadsworth said...

B, monopoly or cartel is a question of degree, that's all.

DBC Reed said...

Natural monopolies + monopolies +cartels. Does n't leave a lot does it?It might be fairer to say these "benign market forces" do not arise naturally and are only benign under tightly controlled conditions. As you know I am the last surviving proponent of the old British system of Resale Price Maintenance which was suppressed by the demands of the Common Market (as was).Even on right wing websites any mention that the supermarkets are operating a retail cartel which has killed off high streets and vast swathes of specialist British manufacture is greeted by the usual buffoonish defence that the big corporations must do what they want.

Jason said...

I just thought I'd chip in with this link to yesterday's Daily Mail...
It seems that buy-to-let landlords, citing market forces, are now favoring East European tenants over British welfare recipients, as they have a better record of paying rent on time.
It did cross my mind that perhaps we should sit back and let the corpulent Mr Wilson and other self-righteous land monopolists vent their spleen on this one, as this sort of thing could always prompt the government to build more social housing to accommodate the wave of dispossessed DSS tenants.
Of course, at the same time, if Mail readers also got their way on tightening immigration restrictions, then they might just wind up cutting their own throats by tanking the rental market :-)

Mark Wadsworth said...

J, good spot, but what makes you think that the Tories want to stop immigration of cheap migrant workers? They love it.

OTOH, they despise welfare claimants, whether UK born or from overseas. So they'll just say to the dehoused DSS claimants "Tough shit, go and get a job like those nice Polish people. And if that means taking such low wages that you have to sleep four to a room, well see if we care!"