A fair housing target is a fairer democracy

Our Liberal Democrat London Mayor challenger Rob Blackie, wrote a great article on determination to meet housing targets. His first statement “Britain spends more on housing benefits than any other rich country,” hits the mark on the choice we can make: increase home ownership and maintain a fair democracy for Britain.

We can continue spending on housing benefits, but our current model has a few issues. First, our social housing strategy has shifted towards rental accommodation in the private sector. No longer are councils owning sufficient housing to provide affordable rentals. This meant shared ownership and social credits to rent privately were the only solutions. The former further distorts the market as, in essence, gives free public money to expand property developers into bigger landlords. This is the kind of market distortion faced in Berlin where most Berliners used to rent. They are effectively providing quantitative easing to property developers. The latter, private rentals, is funding an unregulated market to exploit the less privileged. Because of the security this had offered to the private lessor, they find it easier to simply offer a shelter without the necessary up-keep while monthly rentals are directly paid into their accounts by the council. It is effectively a secured, fixed-deposit investment for private lessors; so secured they have no incentives to upkeep the property they leased out. This is quite similar to New York City where the rent ceiling exacerbated the issue.

The solution can only be ownership. The responsibility of a citizen can be driven either through harsh and unjust punishment or through providing a sense of belonging. The logic is infallible because of social psychology. The state can employ harsh laws to imprison rule breakers with long incarceration or allow for the creation of individual opportunities where each has a stake in the society they can treasure.

A democracy can be built upon the rule of law. But a liberal democracy must be sustained through private equity.

If we rely on the state, similar to Labour’s strategy in post-war years, we are providing mass shelter, but we are also creating a powerful state. If we rely on the Conservative’s strategy, we are not distributing wealth fairly. We must, as Liberal Democrats, create national housing targets to enable equity and empower citizens.

“We could give every citizen a stake in our economy,” says Paddy Ashdown in 1989 at the birth of the Liberal Democrats. Westminster needs to devolve public money collected from taxes to local areas. These monies are to set up community-funded developers where local residents build homes for future generations. Town planning will be in the hands of residents, unity will provide efficiency for home building. Profits should go back into a local future fund for infrastructure, education and the local NHS.

We are now a secured political influence since Paddy’s leadership in 1989. We must embark on this radical policy for our democracy. And as radical as it may be, this is the only fair deal for our constituencies if they were to give us a contract in Parliament.

* Nicholas Chan is a Liberal Democrat member training in Criminal Law. He is Vice-Chair of Liberal Democrat Friends of Hong Kong.

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  • Adam Smith in the Wealth of Nations wrote
    “Ground rents are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Ground rents are, therefore, perhaps a species of revenue which best bear to have a particular tax imposed upon them.”
    “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce.”
    “A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground.”
    “The sea in the neighbourhood of the islands of Shetland is more than commonly abundant in fish, which make a great part of the subsistence of the inhabitants. But in order to profit by the produce of the water, they must have a habitation upon the neighbouring land. The rent of the landlord is in proportion, not to what he can make by the land, but to what he can make both by the land and water. It is partly paid in sea-fish.”
    For Westminster to devolve public money collected from taxes to local areas, it needs to collect those taxes from landowners (including owner-occupiers). National housing targets won’t change that and the housing benefit bill will keep rising regardless of what targets are set for private sector housing. Supply constraints will only be eased by actually delivering on achievable Targets for council housing and rezoning to provide for greater intensity of private sector urban housing where it can be and is supported by public amenities and infrastructure including water, electricity, roads, schools and medical centre’s. We need targets for public housing and planning reform for private sector housing, but they must be targets and reforms that can and will be delivered upon.

  • Tristan Ward 21st Sep '23 - 3:26pm

    @Joe bourke

    Ground rents (and every other kind of rent) are of course taxed like any other income.

  • In the Wealth of Nations, Smith made the observation that the distribution of value created by the working population was allocated between land, labour and capital with the bulk of that value going to Land, the owners of physical capital and the providers of finance.
    Rents (on both land and buildings) today are taxed as unearned income (bearing no national insurance). While interest charged on financing of land acquisition is subject to business taxes, realised capital gains are taxed at lower rates than earned income.
    Smith also observed that the more value a worker, farmer or business owner created the more value would be extracted for land rents.
    In Smith’s time the aristocracy lived off of land rents and interest on debt leaving merchants to deal with the vulgarities of trade. Today, we have a similar oligopoly that controls the production and price of the basic necessities of life. Most of the population will spend their lifetime earnings on these basic necessities, with the largest element being rents or mortgage payments for the privilege of being able to occupy or share a small plot of land on which to live. As in Smith’s time, the more value that is created in the economy by the working population the more value that is extracted for land rents and interest charges.

  • I understand the writer’s fear of an over powerful state, but arguing that Labour’s post war building was some how a failure because it was only to provide cover not roots is mistaken. Housing was provided by local authorities to replace homes lost through bombing, and to replace the vast slums left over from poor victorian town expansion. In building these homes Labour did create communities, communities that Margaret Thatcher chose to denigrate as part of her campaign to defeat Labour.

    We need to be honest. Not everyone will be able to own a house, and certainly not everyone leaving their family home (or local authority care for those who are looked after by the state) will have the funds to do so. The provision of council housing serves to provide homes for those people who are shut out of the so-called ‘housing market’, and supported by the state to develop connections and roots that are necessary to create well-functioning societies.

  • It also meets a core aim of our party, “to build and safeguard a fair, free and open society, in which we seek to balance the fundamental values of liberty, equality and community, and in which no-one shall be enslaved by poverty, ignorance or conformity”.

    We must find way to support more people who can own to own, especially where they can demonstrably afford existing astronomical private rents but through the poor working of the mortgage market are locked out of the opportunity. That requires more than just building new homes, it requires fundamentally restoring equity and fairness to our financial systems. It should not be easier to buy a home to rent out than it is to live in it.

    There is now an increase in private sector organisations building properties for long-term rent (akin but not exactly like those in continental Europe) but they will not serve, and do not wish to house, those who cannot afford ‘market rents’; council housing is the only route for those people, many of whom work in the public services that keep our country (just about) running.

    Private renting, from small buy-to-let or single property owning landlords, should not be the only alternative, let alone the safety net, for the ‘not quite poorest’ in our society. It has a place to play, but it should be a handmaiden to Council provision and ownership, not its governor.

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