There is much ballyhoo in Labour's manifesto about building 100,000 new affordable homes, but you have to dig really quite deeply to find out what these "affordable homes" consist of. A read through their green paper elicits the fact that the vast majority of these affordable homes will be new social housing (hurrah!) and a small minority will be new homes for sale on subsidised land.
However, even here, "Labour have got it": from the green paper, Housing for the Many:
48. Low-cost ownership homes. FirstBuy homes will be a new type of home to buy, discounted so the mortgage payments are no more than a third of average local household incomes. The discount will be locked into the home so that future generations of first-time buyers benefit too. These homes will be aimed at working families on ordinary incomes, key workers and younger people. Shared-ownership and rent to buy homes will be other low-cost options included in this category.
49. A FirstBuy home in Warwick could be sold to first-time buyers at a 17% discount to the going market rate, allowing a first-time buyer almost £5,000 off a deposit as well as lower mortgage repayments. In Exeter, a FirstBuy home could mean a 26% discount and £7,000 off the money needed for deposit.
So well done Labour for presenting an economically literate housing strategy in a way that looks to the lazy like a Tory style get-rich-quick sell-off of undervalue land.
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11 comments:
Yes, that's all lovely, but we know what will happen a few years down the line.
A Tory government will simply abolish the restriction on resale prices 'to enable hard working home owners to unlock the value in their homes', 'to spread housing wealth' and 'because price caps always lead to bad outcomes' or some such drivel, and we are back to Square One.
"These houses will be aimed at working families on ordinary incomes, key workers and young people."
They may be 'aimed' at these groups, but will more likely be occupied by illegal immigrants from the middle east or Africa, union officials loyal to the ultra left, friends and relatives of council officials or, as has happened in the past, central and local politicians. Anyone who is white, Christian, not in favour of McDonnell's Marxist Momentum Party, or a Tory voter, may as well pee into the wind.
How will these homes be allocated? It will have to be a lottery. But unlike the National Lottery, everyone is forced to participate. They're trying to get a private scheme like this approved near me. TfL sells the land to them at the best part of £10m below market value, then they flog the homes at 20% off market value. But they are all 1 bedroom so no families are eligible to enter the lottery, and the threat of the 'enforced' discount being scrapped down the line and the inevitable black market looms over us forever. The max household income to be eligible for the lottery is an astonishing £90k
"16. Making work pay. Genuinely affordable housing not only helps people into work but also makes work pay. Lower rents mean better work incentives as tenants get to keep more of their pay packet..."
Hmm. What currently disincentivises a worker moving from a lower pay region to London for a higher salary? A. higher costs including housing? So therefore if the costs of housing are reduced, employers can attract more workers, and this supply will, over time, reduce the pay on offer.
"Half of (affordable home) households now have at least one member with a long-term illness or disability."
What is Labour's policy for this half?
An 'key workers' is one of those phrases, like 'housing ladder' that makes me want to 'reach for my Luger.
I am afraid to say that this policy has boondoggle and favours for favourites written all over it. You toe the party line, you get the house.
Why not just do LVT and rent taxing as it should be done and let markets work?
Mark, yes, that's very likely, it would be the council house sell-off all over again, but You can't really expect Labour not to do something simply because the Tories might undo it later.
P, that sort of corruption is not confined to the left wing and again, if corruption is a valid excuse for not doing something, it's a valid excuse for not doing anything.
M, yes, and people sublet social housing for market rents. That's not really a good reason not to have social housing.
"Why not just do LVT and rent taxing as it should be done and let markets work?"
You know why, because under LVT, the rich can't avoid paying their fair share of tax and the rich are them wot runs this country, even under a Labour government.
B Ah. I see. And yes. But I'd rather push for the 'right' solution' than apply some ramshackle compromise that still will not deal with the core issue and leave power and privilege unreformed.
Meet me on the barricades?
Why low cost ownership homes? These appear to just be a claim on future local wage growth for the lottery winners. You get to buy for x, wages go up by 15%, all things being equal, they sell the home (tax free to boot!) for 15% more with no value added whatsoever. Only improvement on the current model is that the mortgage payments are lower than high cost homes.
L, I have this theory that all newly-elected MPs are taken to a windowless room in the Palace of Westminster, where a pair of men in grey suits explain to them what exactly will happen to them if they step too badly out of line. Trying to bring in LVT definitely qualifies as stepping out of line by a big leap.
M, yes, but most people aren't going to think it that far through. I mean, you have to read all the way through the housing manifesto to point 48 before you find out what "100,000 low-cost homes" actually means, let alone working out that the few "low-cost homes" that aren't social housing are not exactly the give-away that the Right to Buy was.
P: "They may be 'aimed' at these groups, but will more likely be occupied by illegal immigrants from the middle east or Africa, union officials loyal to the ultra left, friends and relatives of council officials or, as has happened in the past, central and local politicians."
OK, an exaggeration, but let's assume it's true. That still reduces competition for privately rented housing, so even if you are "white, Christian, not in favour of McDonnell's Marxist Momentum Party, or a Tory voter*", you will find it easier to find somewhere to rent or even buy.
* Tory voters should be refused council housing on principle, because they vote for a party that wants to sell it all off.
OTOH: " if the costs of housing are reduced, employers can attract more workers, and this supply will, over time, reduce the pay on offer."
Clearly not true. We know this because for decades, the UK had rent and mortgage caps to keep rents and prices down (and many other countries still do); wages were not lower as a result. Or can you point to evidence that wages go up after rent and mortgage caps were abolished?
Wages are set at a fair chunk of the extra gross profit that they make for their employer, not rents.
In an unregulated market (i.e. the UK today), rents are set by wage differentials. Wage differentials are NOT set by rents (however high or low). You have put the cart before the horse.
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