I have just noticed that a letter I was a signatory to was published in The Observer yesterday:
Tackling the housing crisis
Polly Neate is right that “social housing and homes for first-time buyers don't have to be either/or”.(“Britain has a housing crisis: First Homes is just a comfort blanket”, Comment) They do have to be a both/and.
A new way out of our dire housing crisis into truly affordable housing for low- and middle-income, renters and first-time buyers must be found. The growing numbers of homeless demand it, as do nurses, police, bus drivers, carers, cleaners and others in low-paid essential services.
For too long, local authorities have used high-value public land to help developers build private housing with rents and prices that are too high. All public land ought to be reserved for building only truly affordable social housing to rent or to buy, while prioritising building homes for low-income homeless renters. Also, the length of time that land or property can be left unused or empty should be limited to six months.
Reverend Paul Nicolson, Taxpayers Against Poverty; Tom Burgess, Progressive Policy Unit; Professor Danny Dorling, University of Oxford; Fred Harrison, Land Research TrustStephen Hill, director, C2O futureplanners; Will McMahon, director, Action on Empty Homes; Professor Richard Murphy, City, University of London; Jennifer Nadel, co-director, Compassion in Politics; Paul Regan, chair, London Community Land Trust; John Tizard, social activist & strategic adviser
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
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!
Genuine question, what is “affordable”
That which can be lived in on a living wage and afford the other requirements of family life
The (current) MINIMUM wage is £8.21 which leaves around £1100 (back of a beermat calculation) per month after tax and NI, that’s without council tax and essentials, a visit to https://www.entitledto.co.uk/ is needed to see if any Universal Credit would be forthcoming.
(I am fully aware that the NMW is not a living wage)
I would also say the housing situation could be sorted with the Green New Deal, also some form of Job Guarantee scheme.
There are many (in the North of England anyway) well built empty houses that require a little TLC, these could, in partnership with local colleges, be brought up to standard by apprentices and bought/let at affordable prices.
New schools, doctors etc… would also have to be provided.
The many empty retail spaces in town centres could also be converted, bringing much needed footfall to declining town centres, these would have to be coupled with good civic spaces, libraries etc…
Thoughts?
Jim,
Rent (or mortgage) should be less than a third of your income. That’s a benchmark that is commonly accepted throughout the western world.
https://www.cnbc.com/2018/06/06/how-much-of-your-income-you-should-be-spending-on-housing.html
I still do not know why Tony Blair and Gordon Brown did little or nothing to enable local authorities to build during their time. The right to buy receipts restrictions on councils seemed to stay in place. or have I missed something?
Straightforward error of judgment at the time
Nothing error about it. The whole of the New Labour project depended on forcing up housing costs to facilitate the indebtedness of the 99% to the 1%. While most we’re asleep at the wheel Finance Capitalism in the West was given a free hand to destroy Industrial Capitalism.
Well said, John.
Land Value Tax should be applied. I’m in favour of LVT with a reduction to income tax. Monopolising land is not productive and is negative for society (rent is an extraction from the economy, as no economic value added?), Labour is productive. Land hoarding and monopolisation should be discouraged, productive Labour should be encouraged.
This would reset the parameters, and make it much easier and cost effective for local councils to build public housing and the low income private housing.
Beneficial side effects would be increase in social mobility, access to housing, reduce spiv land speculation, & reduce criminal investments/money laundering in property.
I am all in favour of LVT
But it is no panacea
And to claim it answers all questions on abuse etc is just wrong
Tax incentives for property speculation are just as important (eliminating them that is) . The two issues are related of course.
A tax on land’s rental value drops its selling price to zero precisely because it transfers incomes to those that find housing unaffordable now.
So for a typical working UK household, their disposable income would increase by >£10K pa, resulting in a >3.5 improvement in affordability, as measured by ratio of discretionary incomes to prices.
Indeed, the selling price of land is really just a measure of economic injustice and excessive inequalities. Which is why housing issues can only be solved by requiring landowners compensate those they exclude, via the tax system.
Furthermore, the tax levels the playing field between all tenures, allowing the market to rationalise existing stock, negating the need to wastefully build the number/type of housing currently projected.
Do you think all landlords are making such sums?
Do you have the evidence?
Again, I do not argue against LVT, but you are assuming a tax rate that is very high in many cases
As a planning issue I think that the “three questions” clarify the problem:
Where are we? Long running crisis of lack of poor quality private rental, declining public sector housing.
Where do we want to be? Quality, long term private rental, substantial public sector housing.
How do we get there? Stop right to buy, change rental rights, set standards for rental properties controlled by inspection, set targets for local authorities to build and maintain public sector housing as proportion of total local housing stock.
I have oft thought that local authority planning departments were an oxymoron. Certainly where we live, they are always on the back foot as far as anything useful is concerned – environmental, build quality, roads, cycling, buses, play areas, community facilities usw.
Farmland that surrounds a settlement, village or town is ripe for development – particularly in the south east. It has seemed to me that local authorities should be able to earmark that land, purchase it from the farmer/owner at an above agricultural land rate (the planning conditional on selling to LA) and then sell it on to developers at market rate. They would / should then invest the ‘profit’ in community infrastructure and social housing etc, saving any argument about developer contributions etc. All of this would be done with transparency and local involvement.
This may result in better local planning taking place with new homes being thought about and in the public domain, rather than what happens at the moment.
Dream on!
And before anyone says LA’s shouldn’t be involved in commercial matters like this – our LA is buying commercial property to let out (or not as is the case at the moment locally) using low cost Govt finance.
The price of new housing and the cost of rents needs to be tied to average earnings. At present, in many parts of the country, someone needs to earn two, three or even four times average earnings to be able to afford an average house. This is patently absurd.
Until about 1960, land purchased using compulsory purchase orders was valued based on its current use. Legislation changed this and the valuation became based on its intended use. This seemingly innocuous change has driven land prices, house prices and rents steadily higher, compared to average earnings, for the past 60 years.
The situation was made considerably worse by the decision to sell off council housing without replacing the stock. Council house rents used to act as a benchmark against which private rents and house prices could be judged. Nowadays, that benchmark has been lost.
Financial market deregulation then resulted in a massive growth in the buy-to-let sector. These landlords have built up large portfolios and this has driven up rents. many of these properties are former council houses. As rents rose relative to earnings and became unaffordable, the government started to pay out more and more in housing benefits, tax credits and help to buy schemes. Instead of affordability acting as a cap on house prices, the intervention of various governments caused house prices and rents to spiral ever higher. This encouraged yet more investments in the buy to let sector and such buyers are able to greatly outbid private buyers, thus preventing them from getting onto the property ladder and further increasing the demand for buy-to-let properties, driving prices yet higher.
In my opinion, the solution to the problem is to change the law on the valuation of land for compulsory purchases. Housing is a basic human right and it should be affordable. Someone on average earnings should be able to afford to buy or rent an average house on a single income. An average house for an average family should be a three bed semi or equivalent. Average earnings are +-£30K depending on location and a maximum mortgage is typically four times earnings. That means that an average house should cost +-£120K. It’s easy to build the bricks and mortar, fixtures and fittings of an average house for that price but most of the cost of a house is not these things but land.
In order to solve the housing crisis, poverty, low living standards, countless health and social issues etc the price of land for new housing needs to be regulated such that someone on average earnings can comfortably afford to buy or rent an average new-build house. This will then create a building boom along with hundreds of thousands of new jobs; probably millions of jobs once the economic multiplier effects of such a policy take effect. It will massively cut spending on tax credits, housing benefit and various other benefits, it will improve the life chances and quality of life for tens of millions of people and all it needs is to pass a law that regulates land prices to a level where people can afford the basic human right of decent affordable housing. It will have a further benefit of acting as a benchmark for the rents and prices of the existing housing stock. The effect of this is likely to be slow and steady, rather than catastrophic, because it will take many years for supply to meet demand.
Another step I would take is to outlaw the private buy-to-let sector. It serves no useful purpose in society other than to impoverish many for the benefit of very few. I would give buy-to-let landlords a limited period, perhaps three or five years, to sell their portfolios. Subsequently, only properly licensed and regulated, not for profit, housing associations should be allowed to operate in the private rented sector and they should be required to build their own portfolios rather than buy from the existing housing stock. Tenants in the private rented sector should have a right to buy at current valuation.
Successive governments of every colour have failed to recognise that the root cause of most social and economic problems in the UK is land prices. Instead, every measure they have taken has simply made the problem worse by throwing money at it. Who benefits from all of these fiscal interventions? It certainly isn’t the home owner or the tenant. The money passes straight through their hands and into the pockets of buy-to-let landlords and land owners. It’s way past time to end this madness but our politicians can’t seem to see the elephant in the room.
It may not seem too relevant to the present discussion, but I did notice recently a news item that suggested that the prefab could be due for a comeback. Certainly such a solution would, if implemented, go some way to alleviating the current shortage of adequate housing.
At the time of the mass implementation of the original policy in the 1940s, I was only a teenage schoolboy but the people I did know who moved into them had no complaints – unlike the Tory Press of the day. Fake news is not a new development!
Of course, if a move like this were to be adopted, there arises the question – who would design and build the units. More germane – would a Tory government like the present one even entertain the proposition?
Off site built housing to very high environmental spec is vital as far as I can see
Build in hulls and we might tackling some flooding too…
🙂
Prefab is a great idea, but maybe one of the past. With the building representing only 20% of a property purchase, and land being the remaining 80%…. A prefab house will still cost 80%+ of a ‘normal’ house, if the land is to be bought with it. Land speculation would continue unabated. I would be in favour of permanent bricks and mortar public housing, funded by LVT.
Allowing land be monopolised is accelerating inequality.
https://members.tortoisemedia.com/2019/04/16/land-barons/content.html?sig=QHzzSsSLLJIGQfRv_VwzBlr7KPaRC8Vlqwhp-DPNBus&utm_source=Twitter&utm_medium=Social&utm_campaign=16April2019&utm_content=Home_truth
It’s not the cost of the structure of a house that is unaffordable, whether that be a prefab or a traditionally built house. It’s the cost of the land. You’ll still need to buy or rent the land that the prefab sits on and that will still drive the costs to unaffordable levels. If the prefab is cheaper to build than a traditional home, it’s very likely to have the affect of driving land prices yet higher and the public purse will still have to provide subsidies via housing benefits, tax credits, help to buy schemes and the likes. You can’t tackle the housing crisis without regulating the price of land and outlawing the private buy-to-rent sector.
In suggesting reviving prefabs as an interim solution, I was not thinking of them as suitable for owner/occupiers but rather as a replacement for council housing lost due to the iniquitous “right-to-buy” travesty. In my borough I believe that the waiting list has some 20.000 applicants, few, if any, of whom are ever likely to aspire to buying their own homes. It was for such people that the post-war Labour Government adopted prefabs as a temporary solution while more traditional housing was being built.
It’s definitely an idea to look at maybe in the short term. But like government subsidies of private landlords, this will exacerbate the problem if seen as the answer – the economic forces creating the crisis remain (And who buys the overpriced land for the prefabs?)
What I would say is that there are more homes being built faster than three are households. The distribution of those homes are the issue – with wrong types of luxury home being built (due to financialisation of housing , hoarding of housing and land). The fix is out there, but the political will is not. Tweaks to the tax system could have a profound positive effect.
Land like all commodities, is largely owned by the wealthy and powerful – most of whom would have achieved that power and wealth by acquiring land by some means. Common acquisition techniques include being given huge chunks as reward for service by the monarch, or purchase using cash generated by making vacuum cleaners. US governments gave away lots of land to settlers, most of which wasn’t theirs to give
Power and value growth are the reasons for owning land. What is needed is access to land for the variety of reasons such as agriculture, housing, public buildings and infrastructure, and economic enterprise. Any rational society would ensure land rested in the hands of the community to decide its allocation and use. A first step to a better and more equal society would be to nationalize land, a relatively easy task for government. Many people subject to the whims, fancies and machinations of landlords would agree.
Nationalise land..what annex the property of the working man who has just paid off a 25 year mortgage.. see how that goes down at the ballot box. Give your head a shake man. Idiot statements like this by the left is a major reason the Labour Party is unfortunately completely unelectable.
Labour is never going to propose this
Why draw such absurd conclusions?
The fool is you – not the person trying to think through what is a real issue