The morning's headlines will be dominated by the Tories plan to extend the 'right-to-buy' scheme to housing association tenants. Reports suggests that up to 1.3 million people will get this right at discounts of between £77,000 and £102,000 if they get their way.
I want to out this in context. That is a planned giveaway of assets that do not belong to the government of at least £100 billion, or more than last year's whole deficit.
The first thing to say is that this is profligacy on a scale that is reckless beyond imagination. Any suggestion that there is a shred of prudence in this is impossible to sustain.
Nor can there be any pretence that there is any logic to this plan. If Thatcher's plan was to boost private ownership and a private rental market when the state was dominating the supply of rental property it was a poorly reasoned logic, but at least there was some logic to it. Now there is none: it is social housing that is in desperately short supply and this policy will simply deny opportunity to millions who need it in the future.
Third, the random largesse of this plan is offensive. I am in favour of redistribution of wealth but not random redistribution.
Fourth, this plan will inevitably end up as a boost to the private rental market: half of all former council properties sold by right-to-buy tenants are now in that sector. This will not then be a mechanism for providing an opportunity for home ownership for many. It will instead increase the concentration of asset ownership in the UK, which is the last thing we need.
Fifth, this makes no economic sense at all. When what we need is more housing this will divert funding into an expansion of the second hand housing market with focus being on asset sales and not new house building. Employment opportunities will be lost as a result as well.
Sixth, when many housing association properties are, inevitably, in areas where there is need meaning this this policy can only increase the polarisation in society. And when many housing association properties are also now what are called section 106 properties that create areas of mixed housing it is almost inevitable that these houses will sell first and again reduce diversity.
So what is this about? I suggest there are three reasons for this policy.
The first is hatred of the state. This is deliberately designed to undermine social provision.
Second, I think this is about plundering state assets for the benefit if a few in society.
And third this is about deliberately increasing inequality when its impact is already very apparent in our society. Housing is one of our most basic rights. This is a policy that seeks to deny that to many.
I am sickened by this policy and all that it represents. I cannot pretend otherwise.
I have instead, with the Green New Deal Group, been patiently arguing for the use of green QE funding for the building of new, sustainable, social housing. Green QE would release state funding for this purpose. Local management could be assured by the structure proposed. Social, environmental and economic goals to provide opportunity, work and secure futures would be at the heart of that policy. Instead we get a proposal to asset strip a rare resource that the UK still has.
I would love to hear all other parties condemn the Conservative plan today and refuse to work with it, which would kill it in its tracks.
I would love to hear parties commit to building new housing.
I would love to hear them commit to house building funded by Green QE, pension funds and others.
I would love to hear their commitment to all young people who need to know that whether they can buy their own home or not they can have the prospect of somewhere secure where they can live, and have a family if that is what they want.
I would love to hear the housing associations yell in protest. And councils too.
I would love to hear Scotland, Wales and the English regions say that this is just wrong.
I would love it if this motivated those who want homes to vote.
I would love it if out of this policy driven by greed we got a new, magnanimous policy of house building for social purposes.
I would love it if such a policy was built on the idea that community embraces diversity.
And I believe all those things are possible.
My bit has been supplying the ideas on how to fund this. And let me assure you, that is possible.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Yes, I think that you have a clear understanding of the motives that drive this policy.
Those who lack this insight will bleat about the evils that ensue as if the were a failure and a folly; and their bleating will be ineffectual , because the worst outcomes of extended right-to-buy are desirable and profitable to the policy’s promoters and beneficiaries.
Bleating will do little to persuade the wolves: they do not regard themselves as mistaken, and they see themselves and their rapacious evil as the pinnacle of virtue.
So we would do well to look at countering the propaganda that will make the policy popular – resentment, envy, greed, denigration and demonisation of the ‘undeserving poor’, and an aspirational narrative of the ‘deserving’ hard-working familes who will be liberated.
This will be difficult in a polity where propaganda broadcasts – ‘benefit street’ and the scrounger narrative – have already proved effective.
There is, of course, the minor obstacle of economic fact: if the hardworking heroes exist at all – the economic niche for workung-age homeowners has been eroded by starvation wages and ‘precarity’ of employment – they are the children of the former middle classes. So the propaganda has to navigate an awkward question as to why the children of the affluent are in a situation where they need to ‘escape’ social housing.
I suspect they’re offering this policy now as someone at Tory HQ has been reading Speye Joe and realised the overall benefit cap, endorsed by both major parties, will bring an end to social housing as an entity during the passage of the next parliament. This is their last chance, then, to use the policy.
You are not wrong Bill.
There is a pattern here. Supply side economics:
1) ‘small state’, In your words “hatred of the state”.
2) ‘privatisation’, as you put it “plundering of state assists”.
3) ‘a docile workforce’ or, as you point out “deliberately increasing inequality”.
Some will -mistakenly-identify with the idea of being part of the property owning class who need to defend themselves against ‘re-distributive politics’ and others will be forced into greater insecurity. Robert Reich, the American blogger, recently asked why people in poor states voted for a party which denigrated environmental and employment protection laws. His conclusion was that that they were afraid of losing that which they had by opposing the corporate interests.
There other part of the pattern is that it is happening in the health service and in education, with state assets being turned over to pseudo-charities.
“they were afraid of losing that which they had by opposing the corporate interests”
This is a key insight and the kernel of why change is now so difficult and why a narrative for the left cannot be easily found. It is as if the air supply were privatised and that opposing it would mean instant asphyxiation. In Detroit the water supply was cut off -we are now dealing with a culture that marginalises (or even eliminates) those that either will, or cannot be financialised.
I would like if I may to put forward a different hypothesis or two as to why change is so hard.
Firstly, Yanis Varoufakis – the current Greek finance Minister put forward the view that whereas the left tries to appeal to people via concerning itself about concepts of equality and fairness for example, it is only neo-liberalism that appeals to people’s concepts of freedom or personal liberty so directly.
Therefore neo-liberalism is associated with freedom more than the left which also promotes freedom but via a route through equality etc.,. Neo liberalism is sort of ‘freedom/liberty direct’. Could it be that Adam Curtis’ ‘Century of the Self’ concept also resonates alongside this analysis?
http://www.theguardian.com/news/2015/feb/18/yanis-varoufakis-how-i-became-an-erratic-marxist
Also, can I recomend the documentary ‘The Four Horseman’ on Youtube?
It postulates that human beings are very resilient and this explains how we have become a very successful species. However, our resilience – putting up with crap – also means that we are less likely to seek change and endure instead – something that dominant and destructive hierarchies (or voodoo economics) are therefore essentially passively propped up by
This resonates with a study I have been fortunate to finish doing an MBA recently and the subject of my study was a small team of people in a small business start up who were trying to introduce a knowledge management solution to their working practices in order to help things run more smoothly.
As it happended, even though we involved team members in introducing what was an organisational learning mechanism (OLM) for the team (something that captures and records activity that contributes to processes and the development of knowledge about how to do the job for the team and the org’), some team members still resisited its introduction.
After a journey from management theory that ended up in the individual psychology of learning, the conclusion was that those team members resistant to change were actually more comfortable with the chaos and unhappiness of the job as it was because they were familiar with it; they were actually less comfortable at the prospect of change because it was basically fear of the unknown even though there is no doubt that the OLM has improved the working of the team as evidenced by those who have used it.
There are other theories as to why change is difficult (for example, path dependency theory). But it seems to be the familarity we have with even bad situations that makes us too mnay of us prone to get on with it rather than seek change.
Aside of the reckless voodoo economics of this and other housing policies of the UK Coalition Govt, there is the seeming ignorance of the social consequences. This was shown in the car-crash Theresa May interview on BBC R4 this morning. She more than once boasted that her Government would ‘encourage’ Housing Associations to sell off their ‘most expensive houses first’. So the stock in the more affluent neighbourhoods will go first. In other words, an impact(or aim?)of extended Right to Buy will be to socially cleanse the better-off neighbourhoods through the removal of social housing. The neighbourhoods left behind will be those with increasing concentrations of social renting housing. This housing will be only for those with the very most desperate needs to ‘entitle’ them access to the diminished social renting stock.
Precisely, and as I predicted
Edward, agreed. And once done it’ll be much easier to fence these areas off and control them as out and out ghettos. And so we continue down the road to that 19th century “ideal” of society so beloved of Tories – or even more ideally for a contemporary Tory such as Osborne, Cameron or Johnson, 21st century serfdom.
This is quite clearly a ruse to buy votes – just as it was under Thatcher. Once the lying, cheating b**s are back in power, if the policy is actually rolled out, it will continue the Thatcherite masterplan to divide and rule the working class.
The other thing about this is it’s a really *dumb* policy even if you just boil it down to cynical political spivery: doing it with the idea that in “creating” more home owners, they’ll “create” more Tory voters. Within the life of a couple of Parliaments a massive chunk of those owners will have sold onto a Buy-To-Let landlord and they’ll have contributed to creating even *fewer* home owners in the medium term – never mind the long. Forget about their morals or where they come from, how could I trust the country with a bunch of spivs who can’t even figure out how to save their own skins?
Agree with every word, Richard: and of course at an individual as well as societal level this policy focuses on dressing up and promoting greed and divisive self interest as “aspiration”- much as every other Tory policy has done for the past five years.
Unfortunately, what we can be assured of is that the Tory press – so much of which is read by the people this is aimed at – will make hay with this, conveniently leaving aside all the negative outcomes this policy carries with it. And with reports in The Guardian this morning of the Tories pulling clear of Labour the next week, could be crucial to the campaign, as the Tory press goes into overdrive to promote every aspect of the Tory manifesto as if it were some kind of nirvana.
Sadly, I still see a Tory/UKIP/Unionist coalition as the likely outcome of the election, as I did back in the autumn. But at least it still looks likely the Lib Dems will be decimated, and Clegg loose his seat, which is at least some payback for their craven, pathetic and ultimately futile time in office.
Ivan
I remain an optimist
I think there will be a Labour led government
Richard
I’m more optimistic than Ivan on the polling. ICM looked like a clear outlier and their polling methodology doesn’t seem to be v good anyway. If anything the average of recent polls shows a (very slight) Labour lead. I guess the Tories could pull something out of the hat but it seems to me they have few shots left in the locker and their campaign is looking tired. By contrast, Labour, although their manifesto is fundamentally disappointing on the central question of fiscal policy, have run a reasonably energetic campaign, so I don’t anticipate much movement in the polls. Cameron looks v tired and I’m not sure he even wants to win that badly. So my prediction is Labour as the largest party, forming a minority govt with support from the SNP and/or Lib Dems.
I agree
I have seen today’s headlines. It’s all quite disgusting.
This measure can only further distort an already broken market by further stoking demand, presumably to ensure the home buyer ISAs can be claimed to be working. It could only be semi-justified if the receipts were channelled exclusively into a building programme.
Not only that, but it is likely to cost us more. Andrew Neil raised the issue that if Housing Associations use rental income to fund debt repayment who is going to service the debt when the housing stock is sold? It won’t be the non-doms or the multi-nationals so who is left?
This is beyond appalling and one can hear the tinging of the cash registers of finance capitalism (whose beneficiaries include many Tories).
This will exacerbate wealth inequality further and enhance an already bloated rentier economy.
What amazes me is that the the chimera of home ownership to those that cannot afford it is still so hypnotic in a culture of low wages and job insecurity. Social tennants should tell the Tories where to stick this-in any case, even with a 35% leg up, many will still not be able to afford it or even take the risk (I live in social housing and could not possibly afford to buy even with a 70% subsidy which I wouldn’t take).
No doubt this will lead to the economic cleansing of London as poor tennants are made ‘offers they can’t refuse.’ Apparently , Theresa May has stated it offers tennants @a more secure future'(http://www.ft.com/cms/s/0/8f4bedbe-e1f1-11e4-bb7f-00144feab7de.html#axzz3XGwT3YvV) surely she’s extracting the uric acid here?
Another step towards the total financialisation of the populace-it’s as if the whole culture can’t sink lower but then discovers a trap door to further depths!
This Tory policy is totally wrong headed and smacks of desperation. It is also deeply depressing that social housing is again put to the back of the agenda; “thrown over-board” by the Toffs. The Tories are blitzing new policies to see which give traction without thought of the “Chaos”, “Fear”, “Confusion” caused, whilst not advancing sustainable social policy one atom.
Where are the new ideas for housing and community development. £100B invested wisely in social housing could have huge impact for better housing, communities and employment.
1. Social housing should be built by the local community (likely occupants), in that approach there is a strong buy-in by those who live and work in the community, including small businesses, all of whom will benefit from investment in social housing.
2. Investigate different models of social housing and community development.
3. Get the UK electorate use to arguments of new funding models – like Green QE, in place of the “Rentier” option. Raise and use local money for investment.
4. Sustainability – Green ideas. Housing must be as close to energy neutral use as possible, built using high-quality sustainable materials by skilled workers who are hired to take care and build to last for a lifetime, not the renewal / throwaway cycle so often used today.
5. Use a large apprentice base as a workforce, train those who did not make higher education. Use day release courses to train apprentices in other skills such as economics, bookkeeping, record keeping, IT skills, interpersonal skills, safety and management of people.
6. Use Brownfield sites. Develop properties that are abandoned or not in use.
7. Build communities and local work programmes, reduce reliance on long travel distances to work. Promote local solutions, along with housing projects, for delivery of goods and food from local farms and businesses.
I’m interested in this statement: “half of all former council properties sold by right-to-buy tenants are now in that sector”
I’d like to know a lot more about it eg whether it is geographically based what happened to the original right to buyer’s and who is now in that housing, but can’t find the original research through Google or Bing, do you have a link, please?
I did find a link to an IPPR report from 2012 that, surprisingly for the IPPR, appears to support right to buy:
“By encouraging those who can afford it to buy their homes and by then using all the
proceeds to increase and improve the social housing stock, we can take some of the
most vulnerable households off the waiting lists, out of temporary accommodation, and
give them stability and security. At the same time, we can bring home ownership back
within reach.”
Thanks in advance
There is a lot from IPPR I do not agree with
The data on social housing comes I think from JRRF
Professor Paul Spicker – a very well informed student of the welfare state has made some points here as to the ramifications of this policy:
https://paulspicker.wordpress.com/2015/04/14/the-sale-of-housing-association-property-the-conservatives-answer-to-the-threat-of-sausage-rolls/
My view is that given the way in which the HA house buidling is funded, this could be one of the most expensive privatisations (infact a privatisation of a privatisation) for the tax payer ever. It constitutes a direct subsidy to the new owner. But the HA and the banks will surely want to be fully compensated for cutting short what is essentially a mortgage on each property that could in many cases being ended prematurely in order to transfer ownership.
HA s will need the full cost of the house to come in to support their development programmes (or cease exisiting) and banks will need to be compensated for potential loss of interest to be recovered as well as any loan itself.
And as for the claim that proceeds will be used to build more houses – the discount eats into the potential receipt which means that there is actually less money to fund replacement properties. As we have seen in Council RTB.
This is really desparate stuff from the Tories but could also be very effective.
I fear that there are lots of gullible short-sighted people out there – and not just in the Tory party. Will they fall for it?
Not only has the Scottish Government stated that right to buy is wrong, it has taken action.
Right to buy in Scotland will end on 1 August 2016 for all council and housing association tenants as a result of the Housing (Scotland) Bill. This Bill was passed by the Scottish Parliament on 25 June 2014, and became an Act when it received Royal Assent on 1 August 2014.
Good news
I believe Labour has already committed itself to a large amount of housebuilding, if that party gets to form the next government.
I found this in Labour’s manifesto: “We will increase competition in the housebuilding industry by backing small builders, including through our Help to Build scheme, and by getting the public sector building again.” The interesting bit is about getting the public sector building again.
There was another part I found yesterday about using money from a scheme to funding council building programmes, but I can’t seem to put my finger on it today.
Are we seeing the Tories pushing right-to-buy while Labour wants to build council houses again?
If any housing association has borrowed money to build predicated on the rents – who will pay that debt off?
Err……taxpayer comes to mind.
This aspect is a really worrying part of this
Did the Tories think about it?
It gets worse – as I understand it Housing Associations will have the discount refunded from the forced sale of the high value Council houses. Obviously this prevents HAs being out of pocket and lenders having their security impacted but…
Without going into the specifics of this policy, surely as long as the proceeds of the sale go into building new social housing, the principle is ok? I know of many tenants of social housing that have been in the same house for many years, thus effectively taking that property out of the system. If the effect of ‘right to buy’ is that more house can be built as a result then good, but if the proceeds just line the pockets of a few, then that’s were it fails.
We need more social housing – and can raise the money to fund it without selling what we have
Your logic is just an excuse
And the history of replacement building is dire
The big lie concerning RTB is the one that says each sale funds a direct replacement. It does not, and never has because the effect of the discount reduces the receipt of the sale and therefore the proceeds towards the development of a new house often fall short of the actual cost of new construction.
Therefore to build another replacement house, you’d either have to supplement the sale revenue with say any reserves in your housing revenue account (public money), or apply to the Homes and Communities Agency (HCA) for Social Housing Grant (again, more public money).
For a long time, Councils were made to keep the proceeds from RTB and use that money to service paying for any debts or as strategic reserves because they were related to keeping the PSBR in check. Receipts were also clawed back by the Treasury through the social housing funding regime for management and maintenance.
So really, RTB is a one way ticket – it only benefits those who are lucky to be living in a council house at the time RTB takes place. In other words once the RTB is over and the ex council house is now part of the private housing market, no real further opportunities are being created to extend RTB to future tenants by creating a replacement house because the real aim of RTB is to deplete the stock – not add to it. This is exactly what could happen in the Housing Association sector too.
Councils do get the first opportunity to purchase an ex RTB property if it comes back onto the market so that it can be returned to rental stock. However, I’ve dealt with a number of these and they always come back in terrible condition because very often the new owner is well below median income and cannot afford to maintain it or the expense of paying for it. The Council then spends money to get the property back to a lettable standard, a new tenant moves in and hey presto another RTB application goes in and off the property goes back into the market for a final time in tip top condition thanks to public money.
All I see is waste – public money being used to make up the short fall of the sale (no like for like replacement at all) or paying out for the failure of the new homeowner to manage and maintain the property.
The whole thing is a con. RTB is nothing but a purchase grant for an individual homeowner funded by the public purse. As a housing professional I would love RTB if we could replace what was sold and at least give others the same chance – but I assure you that it does not work like that at all.
I am astounded as you are. Will the electorate see through this verging on criminal policy?
Barmy, voodoo economics is a good description. The property market is messed up already by too many interventions with unintended consequences.
So why not extend it to private landlords as well .This is just a cynical ploy to eradicate social housing and put it into the hands of private landlords so they can charge whatever rent they feel like.
and the taxpayers will fund more housing benefit?
It’s simply crazy. I’m a councillor who serves on the local Planning Committee and since the inception of the NPPF, the Tories have done what they can to please their doners in the building trade and destroy social housing (affordable housing is the euphemism)via killing S106 agreements.
This attacks the social housing stock directly and as the figures already show HA’s will be out of pocket, and, I predict, out of business within a few years of this insanity.
Also, highly questionable are the legalities of this. HA’s are independent of local councils are they not, and the stock’s been transferred once already (the privatisation within a privatisation comment above)? So who owns these dwellings? Not the government, that’s for sure.
I suppose they could pass a law giving themselves the right to sequester these assets – which is what it would amount to – but how does that make them any better than thieves and con artists? Oops, perhaps that’s the problem with the Tory party, as that’s exactly what they are, and on today’s showing, they intend to brazen out such illegality and immorality.
Agreed
I think this the next step in the policy that saw the abandonment of s106
If I may, councillor, social housing is finished in the near future whichever of the major parties gets in as the overall benefit cap is designed to end it https://speye.wordpress.com/2015/04/14/labour-manifesto-is-the-end-of-social-housing-and-the-incompetent-sector-doesnt-even-realise/
The effects of the benenfit cap have been criminally ignored since its inception – I think that the bedroom tax hogged the limelight.
The benefit cap needs to be scrapped pronto by an incoming alternative government.
You are absolutely right Bill; the Labour manifesto talks about this in the context of ‘tackling the root causes of rising spending’ without telling us what the real causes were: banks creating housing bubbles (under their watch)-so the benefit cap is then a double injustice!
Ad nauseam I re-quote Brown in 1997:
‘I will not allow house prices to get out of control and put at risk the sustainability of the recovery.’
Lying Liars and the Lies they Tell?
What a disaster Bill. I can not see a public reaction to a lack of social housing now, in our desensitised modern world. Although I do remember the outcry in response to Ken Loach’s 1966 “Kathy Come Home”.
But Tories say it’s great now – and “Labour will take Britain back to nasty 1970s” – Boris Johnson. http://www.theguardian.com/politics/2015/mar/31/boris-johnson-labour-britain-nasty-1970s
Back in 2012 I read an article in The Daily Telegraph property section enthusing over the rise in rents and predicting a further rise, indicating a nice little earnier for ‘aspiring’ types; Bulldog Kirkham smelled a rat immediately. I also suggested a workable alternativce: “If cheap houses become available in some of Britain’s best areas, it could provide golden opportunities for canny investors. Certainly, it is time to end the snobbery and acknowledge the truth. Many local authority homes are fashionable, built to last and brilliantly located. For every hideous tower of cheaply built flats requiring demolition, there are spacious low-rise mansion blocks. These date from the public sector heyday of the Thirties, now considered retro-chic.” Deep irony all the way through that statement; ‘certainly it’s time to end the snobbery and acknowledge the truth’. The real snobbery lies with the writer and the readers of this article who are thinking that houses which are fashionable, built to last and brilliantly located are not to be lived in and enjoyed by the very people they were built and acquired for, people on lower incomes, but are instead meant for wealthier private owners and landlords who do not see them as homes, a place in which to be part of a community to be enjoyed by all, but as a ‘golden opportunity for canny investors’ who most likely can already well afford to live in the ‘best areas’ where they already live, to be ooh-ed and aah-ed over in The Daily Telegraph property section. Why is social housing valued at such a high price, often at a higher price than surrounding private properties in such areas? I suspect a number of factors:
1. Social housing tends to be built with primary consideration for people without access to private transport, within walking distance and with a mind to social and community needs, such as easy access to public transport, schools, parks, shops and other amenities. In most places such properties attract a premium valuation.
2. Room size in much social housing, whether built or acquired as such, tends to be greater than in many privately built or sub-divided dwellings. This is especially true of properties built before the Parker-Morris standard on dwelling space was abolished in the 1980s, even that ‘hideous tower of cheaply built flats requiring demolition’ probably has larger rooms than a more recently built flat. Again, this attracts a premium valuation.
3. This might be the nub it; the properties that are most desirable for private buy-to-let landlords are those which offer the best guarantee of a secure and long-term tenant. This especially applies to social housing due to the relatively lower cost of rents and the fact that people want afforable living places to be within easy access of their workplace and local amenities and most importantly, family and friends who’ve been resident for decades and generations before local property prices became unafforable for many less affulent people. The buy-to-let market boomed during the last decade as we all know. Could this be why social housing is valued at a higher price than many surrounding properties in these areas? Do valuers suspect that government had a plan to force councils to sell of this housing eventually, thus pricing it accordingly?
“Buy-to-let landlords profit as rents rise 4.3% Demand among tenants continues to grow and surveyors predict rents will rise a further 3.9% over the next 12 months”
http://www.guardian.co.uk/mone…
So local authorites selling off properties which are valued as such will simply remove much needed affordable housing from their housing stock. Again, the poor are penalised for being poor, especially if they have the temerity to want to live in a pleasant area, close to all amenities, the very reason why their affordable social housing is available in the first place. We know that all property is overpriced in many parts of the country, especially the most ‘affluent’; many such areas have large, less affluent populations whose families have lived there for decades and generations, areas such as Islington, Caledonian Rd and Portland Rd in London. If one of these people falls on hard times because of austerity, why should they have to move because all affordable properties have been sold on via a cosy tie-up between government, surveyors and private landlords?
A fairer alternative would be for second home owners in affluent areas to lose their council tax discounts as, in the main, ‘affluent’ areas contain most second homes. This is something already proposed by government. The extra revenue gained from removing council tax discounts on second homes in affluent areas could then be redirected to local authorities in more deprived areas to allow for more building in our poorest communities. Eric Pickles’ new council funding formula seems to favour wealthier areas areas anyway. There aren’t many second home owners in cheaper areas such as Bradford. The current government proposal is to use the extra income from abolishing the discount to reduce council tax in those local authority areas with large amounts of second homes ownership. The ‘average’ reduction in council tax in areas with large numbers of second home owners will be ‘around’ £ 20 a year. Presumably this reduction will be greatest in areas where there are a lot of second homes and if the average reduction is set as a percentage of local council tax, more will come off council tax for those paying higher rates, of which there will be more in the areas where there are a large number of second homes. This seems unfair when poorer areas are struggling.
Under the governments new homes ‘bonus’, councils will be rewarded each time a new home is built; the rewards are based on which council tax band the house sits in, with bonuses paid for each of the first six years the property is occupied, meaning homes in higher council tax bands will attract greater rewards. So councils in those areas where second homes are in high demand, and where there will always be a market for the wealthiest to buy a second home, could possibly build more properties that are bought as second homes placed in a higher council tax band meaning they get even more revenue once the council tax discount has gone, which would do little to alleviate housing shortages for locals in such areas, as they are priced out of the types of homes that are being built and bought in their area. And it still doesn’t address the increasing discrepancy in funding between north and south/rich and poor areas. Redistributing the income to poorer areas as suggested would solve that and still leave affordable, social housing available in ‘affluent’ areas.
This policy only forces the price of housing even higher and even further put of reach of first time buyers when investment should be put into social housing.
This whole policy was largely brought about to provide a bonanza for the banks.
It has been suggested that the policy should have been called ‘Help To Sell’ rather than ‘Help To Buy’.
I think that’s spot on.
”So let the message ring out from this generation of Conservatives: you’ve worked hard, you’ve saved, the home you live in, it’s yours to buy, yours to own — the dream of a property-owning democracy is alive — and we will fulfil it”
If you’ll pardon the vernacular, he’s finally found his true calling – a bullshitting estate agent.
Isn’t this just vote buying when the election is a tight race?
The people who find this objectionable on the grounds you talk about would not be voting Tory anyway – so no vote loss in this policy there.
But those who will get cheap property out of it, who I would expect are not, by and large, Tory voters, will, on grounds of individual gain, vote Tory.
So all pluses in voting terms
Of course it satisfies a lot of the other suggested aims too, in the process.
I am a little confused as to why local authorities and housing associations have a such a huge role in the housing market anyway. Instead of worrying about who owns these properties (government, housing associations, private landlords, owner-occupiers) and whether changing that balance might increase/decrease/destabilise the rental market and house prices, how about simply increasing the supply of housing by reforming the planning system.
I live on the outskirts of London and see all around me empty fields which are of very little agricultural value which could be built on, and endless low-rise developments which could be built up. People want more properties in these areas, but they are simply not getting built due to ridiculous green belt restrictions or planning restrictions.
If there was a loosening on the planning rules constraining new builds, there might not be such an imbalance between supply and demand. Increase supply, and both the rental market and purchase market will become a bit more sane, decreasing the need for any kind of social housing. Those in need should always get housing benefit, but why is the state in the property business anyway? They’re trying to solve a problem that is partly of their own creation- their own planning regs.
I recently looked into what it would take to build a new house on undeveloped land, and the biggest hurdle is finding land which can be built on. Tons of land for sale, but I can’t build on it. My situation is a tiny example of a wider problem- I want to add one unit to the country’s total housing stock, but it is very difficult for me to do so.
Lifting planning restrictions would go a long way towards decreasing inequality between the those who are lucky enough to be on the property ladder, and those who have some means to buy a home but are priced out of the market.
A massive increase in supply is the only thing which will solve the ongoing problem of house prices.
AH yes, let’s tear up the Green Belt
Why not – let developers rip and yeild a return to landowners they have neve earned
Or, instead, manage the building of houses to meet undoubted demand using public funds wisely to aid the process
Mayhem or management then
You decide
It wouldn’t be the mayhem you suggest. Yes, there would be capital gains going to owners of previously ‘unbuildable’ land, but these gains would be taxed, leading to a healthy CGT receipts for government. There would undoubtedly be some falls in land value, as there would no longer be an artificial scarcity of buildable land, but this is what is needed to let the air out of the housing bubble.
As for the green belt- ask a person struggling to find housing if he would prefer we preserve the green fields surrounding our towns or a comfortable home to live in? It’s a question of priorities, and I believe housing trumps green pastures in most situations. The green belt only really benefits those whose house prices are protected or even bolstered by the vast expanses of unbuildable land at our fingertips.
Also, if the green belt is so crucial, how about lifting all planning restrictions on building tall buildings- bring in tax incentives that reward high density developments. How about half rate stamp duty and discounted council tax for developments above a certain specified density? How about CT discounts for profits derived from high density developments?
Either way, the solution to the problem is not more state ownership (ownership is irrelevant), the solution is building more units- and it doesn’t matter who owns them as long as the overall supply adequately reflects the very real demand.
Oh dear
You totally ignore affordability
Pretty unwise if you are planning mass house building
Richard- I’ve ignored ‘affordability’ because it is not an intrinsic quality of any particular unit of housing. It isn’t an attribute of a property such as ‘2 bedroom flat’ or ‘made of brick’. Surely you could agree that ‘affordable’ is an attribute which any unit of housing can have dependent on the overall conditions of supply and demand. The most luxurious mansion could be ‘affordable’ if demand crumbles- look at the prices of some McMansions in Detroit. The key to ensuring that a greater proportion of the housing stock is ‘affordable’ is not to limit who is or is not allowed to live in any particular unit, or obsess about who the owner is, but ensuring there are enough units available.
Supply side madness….
It isn’t ‘supply side madness’ to solve a problem with the shortfall in the supply of housing by… boosting supply. There isn’t a demand problem with housing, there’s plenty of that. There’s a lack of supply, so figure out a way to increase it.
The alternative is to cut demand- make it harder for people to borrow, increase stamp duty to dissuade buyers, and cut housing benefit rates to ensure those pesky landlords can’t increase the rent- I doubt that’s really what you would propose.
When the problem is with demand- as was the case with much of the economy after the financial crisis, I would agree that the solution is to bolster demand (i.e. not to cut demand with austerity policies but rather to increase government spending). That is not the case here.
A point where we might agree is that I would support local authorities being able to borrow to build more social housing, as this would increase the number of available units. I am not bothered, however, by who owns these properties- why does ownership matter?
You miss the point
The problem is not just a housing shortage
It is lack of affordability of any housing to the vast majority of young people
New first time buyer average age now 39
Get real – building new houses will not solve that for decades
Hence need for social housing
You are just wrong as a result
New social housing won’t help first time buyers directly- they can’t buy those properties! Surely if you are concerned about the plight of first time buyers, you either enable them to borrow more (which ends in a disastrous debt crisis), or you ensure that prices stabilise or fall. I would love to understand from you how more social housing would result in lower prices for first time buyers.
Is your argument the following:
1. More social housing leads to…
2. Rents fall in the private rental market due to demand being better met by social housing, which leads to…
3. House prices fall as rental yields fall, making them less attractive to the buy to let market, which leads to…
4. First time buyers can now afford that flat as it has fallen in price?
That seems very much like a supply argument to me, and I don’t see how it’s any different to:
1. More housing units are allowed to be built (by whoever wants to build them, and at whatever price point);
2. Increased competition for occupants (both renters and buyers) at all levels of the market lowers prices as adequate supply is provided to meet demand;
3. First time buyers can now afford a property earlier in their lifetime as property prices have fallen.
The only difference that I can see is that the first argument requires massive state intervention which is a) politically ‘ambitious’ to say the least, and b) requires increased state spending which will result in either higher debt or higher taxes.
Providing housing to those who cannot afford market rates is a legitimate and worthwhile role of government. But simply providing subsidised affordable housing without addressing the overall problems of supply simply acts to divert more and more of our society’s resources (both public and private) to housing elevated to unsustainable prices by artificial scarcity. Wouldn’t our society better off and better balanced if we removed those artificial sources of scarcity which drive up housing prices?
I am sorry – you assume unregulated markets
And you assume instant price signal responses
I’m sorry – those are just naive
Real markets don’t work like that
Oh dear.
My basic understanding of economics is that when you produce a lot of a good, the unit price goes down because of economies of scale.
However, assets behave differently – so you can have loads of assets for sale but the price tends to remain high or go up. The sure sign of a bubble.
So – what is a house – a good or an asset? Well, I think it is both because it offers the utility of a place to live (it is a ‘good’ that is consumed) but it is also an asset whose utility is to behave as a store of wealth.
I therefore question if producing more housing will actually bring down the cost of it as it is at the moment. I’m not sure that more supply would have a major effect because it is the asset value of housing that is determining prices not its value as a place to live.
The only thing an increase in supply would be to increase the amount of private debt (and it may well increase house prices as well) which the banks would love.
You could see the so called ‘housing supply crises’ as yet another form of disaster capitalism – an artificial crisis whose one is aimed is rubbishing the green belt, changing the planning system and using up our farm land.
What we really need is more low cost housing to buy as well as more public housing to rent and better use of ex inner city brownfield sites.
I’m not sure why you think that assets as opposed to goods do not obey principles of supply and demand. Gold is an ‘asset’ whose price has often fluctuated dependent on supply (think of the South American gold brought over by the Spanish.)
Housing is unaffordable because there are not enough units to provide for our growing population and evolving lifestyles; produce more units and the prices will stabilise or even fall.
The protection of the green belt is the protection of vested interests- those people who already own property.
And one final point- as a homeowner, I have greatly benefited (on paper) from this massive increase in house prices. It is completely against my own interests to hope for the lifting of planning restrictions.
However, my sense is there are a great many left-leaning property owners (this is not an insult- I count myself as one), who are searching for a solution to the housing crisis that does not involve the cratering of the values of their own properties. The only way to do this, of course, is for government subsidy of housing to massively increase (either in the form of housing benefit, or in the state funding and building more social housing). I do not believe there is the political will to do this on the scale needed, and even if there was, I’m not sure it would be such a good idea. The state would essentially be diverting money away from other parts of the economy into the housing market, which is already over-inflated. Surely letting the air out the bubble (this could be done gradually) by relaxing planning rules is a cheaper alternative which has some political chance of succeeding.
The Green Belt exists to prevent market abuse
Alexander
Just to clarify. I am not saying that supply is not a problem in providing and pricing housing – it could very well be PART of the problem but I also believe that housing’s asset value (as a store of wealth to access further borrowing; as a virtually tax free rental/income stream to landlords) is what is really driving up house prices because the banks and the estate agents are essentially tapping into the money generated by home ownership. So the supply problem could very well be being overstated when in fact the real problem is the amount of personal debt through loans created by house prices – one affects the other.
As far as I am aware, the ‘Gold Standard’ rules (a historic way of harmonising world wide economies?) is no longer used. So to mention gold seems rather spurious to me. There is a limited supply of gold which I understand is based on most of it that we have got out of the ground thus far but it’s supply grows very slowly because as we know it is a rare metal. So you see its price as fluctuating – fair enough. I don’t know enough about the behaviour of the price of gold and what affects it to really comment.
However, what is gold used for now? It’s not in general circulation in a big way as say houisng is – so as I said, comparisons maybe be spurious.
But generally, many economists will say that even if there are loads of assets – their prices tend to go up or be maintained at least until the supply of credit runs out and then the bubble pops. This behaviour is opposite to a ‘good’.
But I feel that I know enough about housing to seriously question if we do indeed have a supply crisis.
House prices have fluctuated too but the long term trend has been for them to get more and more expensive. A family member living in West London bought their house of £450K in the the early 2000’s and could sell that now for well over £1 million.
I think that it is fair to ask you to realise that we have a housing bubble (high prices) and that one of the engines of that bubble is the amount of debt being made available to fund it (debt as fiat money that can just be created by a bank from nothing from which they can earn money from interest or the Government’s Help to Buy scheme and even RTB policies). This behaviour concerning assets is well documented elsewhere and I’d recommend that you become aquainted with it. Everyone is clamouring to get on the property owning bandwagon.
Please watch the documentary film ‘The Flaw’. It focuses in on the workings of the sub prime crisis and the housing market based crash of 2008. It is very lucid. Also check out ‘The Four Horseman’ for a wider view.
The reason why I’d advocate more social housing or cheaper housing to buy is that it would hopefully cool off the excessive debt market that is being created by house price inflation – a bubble that can only eventually burst.
I wouldn’t mind if it did, because then some sort of correction takes place because the amount of credit on tap is reduced and might pull house prices back to a more normal levels thus making it cheaper to access. However, almost paradoxically, this might curtail housebuilding because the previous profits made from it are no longer there. Again, this is where social building could take up the strain at lower cost.
But what I really worry about is that there will be another crash and once more the public purse will be used to put things right and once more, certain vested interests will tell us that we can’t afford an NHS, pensions or a social security system etc.
We will have permanent austerity just so we can prop up a system of debt. That’s not on.
It isn’t just *housing* we need – we need *sustainable* housing.
Built to passivhaus standards – at a stroke you begin to address climate change, the lack of social housing, rising energy bills, apprenticeships, unemployment, the housing bubble and the unbalanced economy.
I don’t mean to say those things will be *solved* by a massive sustainable social house building program – but you can make a huge contribution to making them better.
Who pays for this ? Green QE puts in the upfront cost – rents provide the long term finance. Even if lowering CO2 emissions alone was the only net gain, it would be worth doing – the fact that it addresses all the other issues at the same time makes it a no-brainer.
Agreed
No problems with any of that – a step in the right direction – a sort of ‘Housing Plus’ approach.