The devil will be in the detail. We mustn’t pay more than a fair price for the homes, which will mean that the building firms will have to suffer significantly. Also we will have to ensure that they do not just use the money to get out of the market completely, which some may try to do, otherwise the skills will be lost anyway.

Finally, which firms do you help out, why not individual homeowners etc etc?

In any case this seems by far the best way for the council to acquire houses. I don’t suppose it will build them very efficiently itself, however few or many contractors and PFI deals are involved. But on the open market you pay commodity prices rather than government-premium prices.

Property slump or no, investment in property is rarely a bad idea. Newcastle has been one of the most thriving parts of the country in recent years so the value of these houses will go up.

The bottom line is that Newcastle LDs are in the business of winning elections and this is a great initiative.

Surprised to be Mark Littlewood on here. Surely he’d be more comfortable on Conservative Home…

This move shows that LibDems are pioneers in the sense that we are taking a lead on trying to avert some of the worst hardships for the most vulnerable, but the tone of this discussion shows how vulnerable WE are to bad language in the way the specific dealings are described.

The need for intervention in the housing market highlights how the way it has been regulated has created distortions which lead to the instability, when a properly liberal policy would have prevented the loss of confidence that has resulted in this inevitable slowdown/slump.

There will always be a need for some level of social housing which isn’t held in private hands (individual or corporate), but it is paramount that we are also able to concentrate on the quality of that housing, not just the cost – low-cost doesn’t necessarily equate to affordable or economic.

Both the anti-market statists and the market absolutists are wrong in their ideological prescriptions, and I would criticise them from both liberal and democratic perspectives.

The key fact in the North East (and probably elsewhere) is that if a council wants to increase its social rented stock, as most Lib Dem councils do, then it is really hard for it to buy land as most suitable land is owned by developers. Better to work with them whilst they are still solvent than to wait till they go out of business and then risk trying to buy them in a public auction of their assets.

Newcastle house prices have dipped in the last quarter like everywhere else but does anyone who seriously analises the historical trends for domestic property doubt that values will rise? Newcastle is buying these houses to provide much needed homes for people who can’t afford them. The housing list is a big one in Newcastle and the council is showing the long term vision required of it.

Contrary to what people may think I’m definitely a proud economic Liberal in the party. I just think the public sector should be allowed to benefit from market failure.

I think it is possible to do this – at least as far as construction – though you can only require completion not “seize the land”. There would be big issues with that as what would the developer get for the 50-60-70% etc of the development they had built and paid for.

Inhabitation would be a more difficult area. I suspect it would lead to increased prices as developers factored in the risk of losing a development due to changing market conditions resulting in the property being unoccupied.

I’m sure someone will be along to point out (correctly IMV) that completed but vacant properties could be better dealt with by SVR

In that situation, any enterprising Council that has borrowing consents available and an unmet demand for social housing should get in there and make some low offers for suitable property. That, I assume is roughly what Newcastle are doing. If so, they will deserve the praise for good value for money which will be coming their way from the Audit Commission.

What worries me is the rumour that Gordon Brown is about to “copy” Newcastle by throwing a mountain of money at the housing market. Over-do it and you will find the bargains disappear – everyone will up their prices to get a share of the gravy train. Local taxpayers will get a bad bargain and the necessary lowering of prices in the housing market will be slowed down – or reversed for the time being. I guess that if Vince Cable were Chancellor he would feed borrowing consents for the purpose in careful tranches for the local authoritiues to use as they saw fit; and monitor the market to see that house price:income ratios keep adjusting down to historic levels. On their record, Brown/Darling are unlikely to do anything so sensible.

But if they have paid something close to market price then in a falling market that is pretty silly, both in the short term (paying over the odds) and in the medium term (making developers feel that they cannot lose).

There is clearly both market failure and govt failure in the housing market. I wonder whether the way to stop ugly half built and abandoned developments is to give time constrained planning permission that says that by the end of the period the properties must either be built and inhabited, or that the site will lose the planning permission, and will be rezoned as community land. At that point the buildings would get finished come what may.

Tom Papworth’s they should never do anything like this.

There isn’t anything wrong with being a free market liberal. But if all you do is advocate free market solutions then that is something you quite definately aren’t.

That will be news to some members of this party!

The devil in this deal depends on the detail. It’s clear that councils need to look forward and work out what is to happen to the rising number of reposessed properties, as well as to the more rapidly (at the moment) rising number of unfinished developments being put on hold, like the one round the corner from my house and the eyesore round the corner from that where the developers have gone bust.

It is clear that the market for some of these developers have dried up; the private elements of some new build around me are empty while the affordable sections are full. The so-called ‘market gurus’ here are so far off the solar system, that they do not understand it makes sense for everyone involved (potentially even including the developers) to get the properties occupied (off private developers’ books, and off local authorities’ waiting lists).
Let’s give a lesson to the so-called market Liberals. One of the main reasons the state should intervene in markets is when they fail. If the housing market hasn’t failed (and give me two minutes with the camera on my mobile phone, and I can give them at least 3 pieces of evidence), I’m a banana.
It will be interesting to find out the final detail of what goes on in Newcastle. It may be well worth rolling out across many other areas.

Councils should provide housing but why should the taxpayer be there to bail out building companies who have caught a cold through sheer greed.

Sustaining this Ponzi scheme that is the housing market will do no one any favours in the longer term and, although it is very rare, I disagree with the excellent Vince Cable on this although the discomfort he inspires in the government is great.

We need house prices to fall to a sustainable level to allow first time buyers a chance to get on the property ladder and yes, there is nothing wrong at all with being a free market liberal. It is not a dirty word.