LibLink: Farron – we need to be honest about the housing crisis

Tim Farron writing at politics.co.uk is calling for 300,000 homes a year to be built to end the housing crisis in contrast to some of the less ambitious policies around.

The key issue in housing isn’t that first-time buyers can’t get on the ladder, nor that rents are too high. ‘Help to Buy’ isn’t the cure-all to our ills and whilst a rent cap might help renters in the short run, in the long run it will only disappoint. The politicians who propose these short-term measures will also disappoint, unless they have a more thorough approach. Unless we aim to end the housing crisis in its entirety, instead of just tinkering at the edges, we are just short-changing people for short-term electoral gain.

I got involved in politics to represent people’s concerns and to try to tackle the problems that they face. This requires fair representation of the problem itself, as well as the people affected by it (whether directly or indirectly). I didn’t come into politics to dodge the problems we face by appearing to solve them in order to distract from the most important issues.

That’s why the Lib Dems will take the long-term, ambitious and holistic approach needed to solve this crisis. We need to get up to building 300,000 homes a year. We need new communities of all sizes, a change in attitude that sees councils and housing associations being set free to build and more powers to secure cheaper land to build better quality communities than in the past. Anything less than this will sell the public short – if our voters want us to end the housing crisis, then we must be honest about what is required, and ambitious in our efforts to deliver it.

Tim has been consistently pushing for this kind of ambition on housebuilding; see for example his Beveridge Lecture earlier this year and his speech to the party conference.

* Joe Otten was the candidate for Sheffield Heeley in June 2017 and Doncaster North in December 2019 and is a councillor in Sheffield.

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46 Comments

  • Matthew Huntbach 28th Nov '14 - 9:56am

    He has missed a key aspect here, so he’s just another politician who disappoints by dodging the problem.

    Building 300,000 homes won’t help unless we ensure they go to those who need them.

    So long as housing is treated as an “investment” and owning housing makes more money than any other investment, we will NEVER build our way out of the housing crisis. We will just keep on building more and more, concreting over the land, and it will get snapped up by those using it as an investment rather than a place to live in.

    If we really want to solve the housing crisis we need to be honest and admit that means measures to discourage people from holding on to more than they need. Any such measure is unpopular – proposals for such things always get howled down (see the reaction to the “mansion tax”, just about the tiniest measure one could take here) by those who will lose out from them, while those who will gain are rarely vocal on such things and, indeed, rarely themselves have the political and economic sophistication to be aware of how much they would help.

    However, the point needs to be made strongly – those howling down measures to discourage holding on to more housing than you need also tend to be those who howl the most at any proposals to build on green land surrounding their housing. We need to make it clear – you can’t have it both ways.

  • Maurice Leeke 28th Nov '14 - 10:15am

    I think Mathew Huntbach is unfair in his criticism. Most of the people who buy houses as an investment without living in them themselves rent them out – reducing the housing shortage, if not the unmet aspiration for home ownership.

    Further, the more houses that are built, the less excess profit that can made on the “investment” because the disparity between supply and demand is reduced.

    Matthew is quite right, of course, that there will be squeals from opponents of building on green fields near where they live.

  • I agree with Matthew Huntbach about the need to make new homes available for those in need.

    Allowing property spivs to build road after road of “strictly for profit investments” and “buy to let” simply adds to our problems.

    Tim Farron is right to keep talking about housing and shoving the subject of ‘housing need’ up the political agenda.
    He is right to say we need a change of attitudes and Matthew Huntbach is right to highlight the main attitude that has to be changed.

    I am encouraged when Tim Farron says —
    “…We need …… a change in attitude that sees councils and housing associations being set free to build and more powers to secure cheaper land to build better quality communities than in the past.
    Anything less than this will sell the public short – if our voters want us to end the housing crisis, then we must be honest about what is required, and ambitious in our efforts to deliver it.”

    I get the impression that Tim Farron has a much better understanding this kind of thing.

  • Simon McGrath 28th Nov '14 - 10:35am

    Mathew and John appear not to understand the basics of markets. If more homes are built and then prices and rents (all else being equal) will fall .

    It was an excellent speech by Tim: the real test though will be if he can persuade the LD NIMBYs around the country to stop their opposition to home building. He could start with the Party in York

    http://yorklibdems.org.uk/en/petition/save-our-green-belt

  • Simon McGrath

    Mathew and John appear not to understand the basics of markets. If more homes are built and then prices and rents (all else being equal) will fall .

    Only if supply outstrips demand. Building 300,000 homes won’t even come close to doing that. And which builder in their right mind would build an excess of houses so the price they get for selling them falls unless they were compelled to? And if they were compelled to it wouldn’t be a free market so your market arguments wouldn’t apply anyway. Besides, in many places house prices reflect the underlying value of the land they are built on, not necessarily the local demand for housing.

    A reasonable solution, not relying on the market, would be for the government, whether local or national, to reinvest in building social housing. The sell off of council housing stock was an absolute disaster.

  • Simon McGrath – There is no evidence from anywhere in the world that building more houses has reduced prices and rents. In fact as we have seen, we’ve been building houses all over the country (ie. outside London) for decades and still the biggest demand for housing is in London… I think the first set of NIMBY’s that need to be persuaded as those living in London. London can easily satisfy it’s own housing need from within it’s boundaries and still be less density populated than Paris and other major cities..

    Under any sensible LVT system, the most valuable lands are the green fields and natural environment, as without them the cities can not survive. We may choose, as we have done, to charge a much lower rent on such land and permit its ‘ownership’ to change hands at reduced prices whilst it’s usage continues unchanged, that however doesn’t make it cheap. So I’m interested to know where all this “cheap land” that Tim refers to is.

    Being honest about the housing crisis also requires honesty about our population and it’s long-term sustainability, which in turn requires honesty about the ponzi economic system our society currently relies on.

  • Simon McGrath 28th Nov '14 - 12:34pm

    @Roland – i didnt really think i needed to say that the homes have to be built where people want to live as i would have thought this was obvious.

  • Simon McGrath 28th Nov '14 - 12:36pm

    @John – can you point to some evidence that there are significant numbers of homes deliberately left empty as investment s outside a few much publicised blocks of flats with overseas buyers ?

  • Definitely the right policy in general.

    Matthew

    Your dystopian view is not reflected in the fundamentals. You have expressed concern elsewhere on this topic that foreign investors will continue to buy in to the UK (particularly London) property market and keep pushing up prices.

    For th3ese investors it is rather like the build up to 2008, it all looks good until the music stops. If you look at the fundamentals of some of the recent large recent developments the stress is already showing. The pricing of the Nine Elms developments are too high to make them economically viable for an investment perspective. Rents will not cover the loans or the opportunity costs of other investments. The cash rich investors will buy in until they sense the tide is turning and then rush to exit.

    These (rather foolish) investors are pumping in money that is being used to build the new property but when the stampede to exit comes and these investors face massive losses the beneficiaries will be the domestic market who will be able to purchase as the market has dropped.

    The housing that will have been built will still exist for the domestic population the biggest loosers will be the foreign investors (who should have known the risk they were taking).

    You may claim that the investors will not sell, but wait for the rebound. Well in the Far East where a lot of these ridiculous projects are currently being pitched they have experienced property collapses that have lasted longer than investors can manage to wait. People will want out. Add ant leverage in to the deals and as soon as a loan on a falling property starts to default the Banks will want to foreclose and get it sold as fast as possible to cover themselves.

    I know it has been a long time incoming but sometimes these things are.

  • JohnTilley

    You claim that flats will be built and left empty, well actually that can happen in the short term, funds and private investors can afford to pay maintenance, interest, council tax etc. in the short term while an asset’s paper value rises, but at some point the cash starts running out as you can only burn through so much, at that point the flats have to generate a return to cover their short term costs. Also an investor will be expecting a return if it isn’t meeting expectations they will be looking to move the investment again another drain on cash.

    Of course a LVT would speed the correction (note a “Mansion Tax” probably wouldn’t) but we are away from getting a policy like that. This is all exacerbated by the foreign currency risk, for overseas investors. If the currency slides in the wrong direction the investors will be reported a loss in their investments, even when the cash position is still safe. Once foreign investors look to exit the investment at the price they had expected it would be worth and find they can’t then word spreads pretty quickly. When it does the stampede will not be nice to be on the wrong side of.

  • Paul Howden 28th Nov '14 - 1:25pm

    Must remember to build houses away from rich people too. A quick internet search reveals quite a few Lib Dem MPs and PPC’s who indulge in nimbyism protesting against new houses being built next to their constituents homes. Until we deal with these double standards then most new homes will never get beyond years of planning application red-tape and huge legal costs! We need to practice what we preach a little more!

  • Matthew Huntbach 28th Nov '14 - 1:56pm

    Simon McGrath

    Mathew and John appear not to understand the basics of markets. If more homes are built and then prices and rents (all else being equal) will fall .

    I understand it perfectly well. The same argument could be used to say that no-one would ever buy shares just as an investment because prices could fall if more shares are issued, there could be a crash in the stock market etc. Oh, no, no, no, we need not worry about people just buying shares as an investment and not because they want active involvement running the company, that would never happen, would it … er …

    Of course house prices are going to go up and down. There was a really big crash in the mid-1970s after the early 1970s boom, but it was disguised by house prices remaining the same while the price of everything else rocketed. In the long-term, however, given that there’s always going to be reluctance to concrete over green land, and there’s always going to be places which are particularly desirable to live in, housing will be a good investment.

    I’m not saying we shouldn’t build new houses, but I’m sceptical of the claim that this alone will solve all our housing problems. The line “don’t worry, private landlords may buy it all up, but it will still be there to rent out to those in need” sounds SO MUCH like the line Ian Gow gave to me (when he was a local MP and the Housing Minister, and I was a Young Liberal activist in Brighton – a place with severe housing problems due to its geography) when I wrote to him expressing concern about how the “right to buy” would affect the next generation. Well, sure, as Mr Gow told me “Don’t worry your simple little head, the housing will still be there” (or words to that effect), but in private hands it’s no longer being allocated on a needs basis but on a who-can-pay-most basis, so local people HAVE been diddled out of it. Where they do get a tenancy, rent can be three or so times what cost price rent of it is when it is still council housing – so creating the huge Housing Benefit bills we are stuck with now, and putting tenants into a BIG poverty trap because they have to earn huge amounts before earning more actually gives them more income as opposed to just a cut in Housing Benefit to balance it.

    It is just not going to be the case, is it, that we can build enough houses so that anyone with a minimum wage income can just go to their local estate agent and pick one up? Especially in areas of high demand like where I was brought up. Where are all you rich types going to get your cleaners and carers from when you get old, when you “solved” the housing problem by building houses hundreds of miles away? Oh, I know – import cheapo immigrants who don’t mind sleeping in broom cupboards and rabbit hutches. And you can turn your nose up and adopt a superior attitude when that makes the native working class feel unhappy, especially as they aren’t good at using posh language to put it in the sort of way that doesn’t offend trendy liberals.

    There are plenty of houses left empty or semi-occupied because there’s no big cost element in doing so, and quite a big chance of doing well from rising house prices. All I’m saying is that we do need to consider mechanisms for ensuring there is a bit more equitable distribution of housing on a needs basis. I appreciate this is a hard sell to the general public, who will always take the “Poor little old lady forced out of her house” line, though in reality no little old ladies need be forced out that way, it can be paid in equity, and it’s the big dollop of cash the heirs get that gets reduced. However. maybe it can be more easily sold if it’s put more clearly “OK, so the alternative IS that we concrete over the Downs and the Weald etc”. Because, Simon et al, that IS what you are proposing in the end.

  • The construction of new homes has to happen, but the critics here are right – we won’t solve anything by perpetuating the buy to let thing, which in any case falls into issues around generational inequality far too quickly anyway.

    I am also very sceptical of g’s answer to build social housing, though. Surely these tenants of the state would be vulnerable to the very same processes that have eroded the idea of social housing already? And is that answer really the most empowering solution for people? In my opinion it is not, and merely leaves people powerless at the whim of a different landlord.

    The UK is pretty much unique in Europe and the English speaking world in that it lacks any significant amount of cooperative housing. Perhaps this model of financing and managing housing for and by residents is worth looking into.

  • William Summers 28th Nov '14 - 2:15pm

    Building more homes is laudable and necessary. However I think there is a certain irony with Lib Dems calling for honesty in the housing debate whilst claiming they could MORE THAN DOUBLE house-building numbers in just 4 years. Even if a Lib Dem Government and got cracking from day one there simply wouldn’t be enough skilled labour to make it happen, and nor would these numbers have time to be integrated in local plans. The 300,000 number seems to be completely plucked out of the air and disappointingly doesn’t seem to have any real plan behind it to make it happen other than giving councils and social housing providers ‘more flexibility’ to build (currently accounting for around a quarter of all new homes, around 30,000). I suspect the figures of 300,000 was primarily chosen to better Labour’s commitment of 200,000 a year. Incidentally, Gordon Brown promised 250,000 a year but made no real impact on housing numbers at all.

    I am not against the ambition of it, I would just prefer to see workable policies put forward instead of a housing targets ‘arms race’ between the parties. Ultimately we need a huge financial investment in social housing of several billions, scrapping the borrowing caps for local authorities, a giveaway of spare public land for housing, and also probably some fairly meaty incentives (or penalties) for private developer to encourage them to use up their land supply. Oh, and also to get over the huge political issue about maintaining house prices, which I am convinced is the primary reason no government has properly tackled the housing crisis, ie because ultimately governments are petrified the reaction of the home-owning middle classes to falling property values.

  • I suggest certain technical issues need to be adressed.
    1. Legislation of brownfield /contaminated land is often overly burdensome and poorly understood by regulators which puts pressure on the greenbelt as the land becomes expensive to remediate.
    2. Poor design of flats , especially noise, lack of space, lack of large balconies, lack of private shared gardens combined with a lack of enforced legislation against bad neighbours, means that many people prefer houses. In places such as Switzerland and Austria much larger flats are built with storage and large balconies ( large enough to take dining tables and chairs ) which combine with strictly enforced rules on conduct .
    3. I suggest blocks of flats not than 6 stories , well sound proofed, with large balconies, secure underground parking , private shared gardens ( blocks built around private gardens ) , plenty of space with strictly enforced rules would be attractive . Bad neighbours is major reason why people do not like high density flats. The flats shown in the Hercule Poirot series border Hyde Park and they are highly sort after.

  • William Summers

    “Even if a Lib Dem Government and got cracking from day one there simply wouldn’t be enough skilled labour to make it happen, and nor would these numbers have time to be integrated in local plans.”

    Well that depends on how it was done, there needs to be a separation of the building for ongoing need and the building for “catching up” with the short fall due to under supply of recent years. The LinDems are pro-EU, which is the only way that the additional “catch up” capacity cold be built without storing up a skew in the UK Labour force. The “catch up” would require an influx of temporary skilled labour, most of whom would move on when the demand in the UK slowed and other countries had greater demand.

    “The 300,000 number seems to be completely plucked out of the air”

    Can’t disagree with that though.

    “also probably some fairly meaty incentives (or penalties) for private developer to encourage them to use up their land supply”

    I think this is an over egged claim, house builders build small numbers at a time for a reason, firstly think about the demand for types of skills you don’t want to have all your brickies going flat out to get all the waqalls up then having nothing to do as all your roofers are flat out all the time your plumbers and electricians are kicking their heals until that is done so they can start. You have different houses at different stages, you have some plans waiting for planning, you have some stock being sold which takes ages. It is easy to make sweeping claims when someone is a North London career politician but somehow it is always more complex if you actually speak to people who work in the industry (who don’t tend to hang out on Hampstead Heath).

    “Oh, and also to get over the huge political issue about maintaining house prices”

    In the past this was done by inflation, Matthew cites the early 70s real fall, the same happened between 1989 and 96 where real values were eroded.

  • Just buzzing through the comments, we always seem to talk about building lots of houses being an important but rarely the quality of housing. What we’re building just isn’t good enough. I was recently in the position of selling a house that was built about a hundred years ago. The estate agent was positive about the house and said ruefully ‘It’s a shame we don’t build more homes like this nowadays’

    What’s the matter with us! Admittedly this is Wales, so responsibility might be with WAG, but how can we not build the sort of quality of properties we did a century ago?

  • Glenn Andrews 28th Nov '14 - 3:04pm

    Is there still time to put a million Council houses on the front of the manifesto?

  • Glenn Andrews 28th Nov ’14 – 3:04pm
    Is there still time to put a million Council houses on the front of the manifesto?

    Excellent idea — especially if all of the one million houses have solar panels on the roof so that not only does the building of the houses provide jobs, the provision of the houses provide homes for people in need, but the energy security of the country is greatly improved whilst supplying the tenants with cheaper fuel and a source of income.

    I make that a win, win, win and win scenario.

  • John – You raise a very important point about joined up thinking, something many keep forgetting…

    From a green agenda viewpoint, there simply isn’t any point in approving any substantive new build before the (diluted) 2016 Building Regulations come into force, since any such new build under current Building Regulations would only add to the mountain that has to be climbed to achieve our green commitments.

    The only other negative I have with your proposal, is the one I’ve mentioned previously on LDV, currently the solar panels would have to be sourced from abroad, adding negatively to our balance of payments. Something that could be addressed by simply scrapping the smartmeter rollout and investing some of the monies in a local factory (I’m sure one of the manufacturers would happily help, particularly as it would give them greater access to the EU market).

    Also given the number of houses we should not overlook: geo-thermal, community heating schemes (facilitated by having a neighbouring power station with lots of heat on tap that needs to be got rid of, like nuclear) and small scale wind. Plus rain water run off (no real reason why the toilets need to be connected to the mains and rain water with minimal treatment is suitable for washing machines).

    So if the LibDems are serious about building then perhaps they also need to get serious about joined up thinking!

  • Roland
    Not much for me to disagree with in your last comment.
    I especially agree with you on water systems. We spend a fortune pumping drinking grade water round the country so that people can flush it down the toilet — madness.

    If the 2016 regs you refer to will do what you say – why could they not be effective from tomorrow?

    As for solar panels I would lke to generate so much demand that it would become profitable to make them here. We have so many square miles of roofing in this country that could be generating electricity it astonishes me that all governments for the last twenty years have done so little to generate demand.

    It is almost as if someone was bribing ministers to import Putin’s gas or China’s nuclear waste. It is difficult to imagine any other logical reason for ministers’ failure to boost clean, safe, home-produced electricity.

  • Won’t happen.

    It’s like this. Once you fall below a certain social/economic status no mainstream political party could give a hoot about you. If you are poor then you simply do not matter. Realise this, no matter why they say, the poor simply don’t matter to the powers that be.

    Also, the younger you are, the less politicians care about you. This is why the elderly (now the richest section of society by the way) have not had to shoulder any of the brunt of the Con/Lib cuts. Pensions were index linked and ‘triple locked’, the other really expensive service that the elderly use disproportionately (the NHS) was ‘ring fenced’. Who had to carry the full cost of the cuts? Obviously the poorest and most vulnerable in our society, the people we really couldn’t care less about.. Seriously, they had to carry the entire load with the bedroom tax and the cuts whilst the Lib/Cons gave the very high earners an income tax cut and protected the elderly who are most likely to vote. Students being some of the least likely to vote got ‘saddled with a life time of debt’.

    Now, who would gain and who would lose from a mass house building program, the elderly who have paid their mortgages would lose. The rich who own more than one property or BTL’s would lose.

    Who would gain? The young who can’t afford to buy now would gain. The poor who just need a roof over their heads would gain, and their kids if they have them.

    W-I-L-L N-O-T H-A-P-P-E-N.

    Seriously, why do you think Scotland’s two poorest cities (Dundee and Glasgow) voted for independence? For the poor there really is nothing left to lose any more.

  • John

    “If the 2016 regs you refer to will do what you say – why could they not be effective from tomorrow?”

    From my understanding there is nothing in the proposed regulations that couldn’t of been implemented years back. I think a large part of the problem we have is both government perception of the construction industry and the construction industry’s experience with ‘new’. I think both government and the house building industry are in some respects in denial about the changes that have been wrought and the further changes that will be necessary to enable an industry to move away from build to assemble on-site, something that needs to happen if we are to substantially increase delivery rates of new homes (also we the customer need to understand that these new homes won’t necessarily be constructed or look like the traditional style of houses that we’ve become accustomed to. These changes will also change both the nature of the workforce and its skills

    We’ve seen something similar in agriculture and specifically crop harvesting, where many farmers now use dedicated (and skilled) workforces (typically from former eastern European countries) to do picking that was even in the 80’s done largely by casual unskilled local labour.

    The other aspect is that these features do add cost, something both builders and those wanting to keep prices down don’t like. But then factory building components that are assembled on-site etc. may contribute to cost savings…

    “It is difficult to imagine any other logical reason for ministers’ failure to boost clean, safe, home-produced electricity.”
    When I first looked long and hard at micro generation, I came to the conclusion that the fundamental problems were revenue and control and turkeys voting for Christmas. With local generation, the government basically gets revenue (VAT) on the capital costs and then negligible regular income, whilst the home production could be metered, it would be difficult to control and hence revenue would leak all over. With centralised generation the opposite applies and the government can offload most of the work (generation and tax collection) to business.

    Hence we see government adopting this centralised mindset with renewables, it enables the collection of taxes but does very little in real terms for the country; as all can see from the discrepancy in the total operational wind farm generating capacity and the level of output actually generated.

  • The government has been informed that in England (only) there are 1.8 million households on the local authority waiting lists. It was expected that in 2009 it would be 2 million in the whole UK. The National Housing and Planning Advice Unit believe that we should be building 290,500 a year from now until 2031 to meet the annual increase in demand and the shortfall since 2007.

    Therefore 300,000 homes a year is not really ambitious enough. If we assume than 240,000 new homes are required each year to meet the annual increase in demand and that by building 200,000 new homes a year in ten years we would have built enough homes for those on local authority waiting lists, then we should have a target of 440,000 new homes a year. More than 50% of these new homes need to be in the social housing.

    @ Glenn Andrews
    There is no way we would put 1 million council houses on the front page of our manifesto, especially if we only had 1.5 million homes there.

    However if we said we wanted to build 2.2 million homes and 1.2 million will be social housing we would be getting there.

    @ Mr Wallace
    You may be right that mainstream political parties nowadays don’t do enough for the poor. However as liberals part of our philosophy is giving everyone similar social conditions in which to be free, and so building enough homes for everyone, including the poor should be important to us

  • Roland 28th Nov ’14 – 9:31pm

    Yes, I think we share the same outlook on these things. Government and building industry attitudes need to change.

    In the 1970s, I lived and worked in a short-life housing association. We took on empty properties (some owned by councils, some by developers) usually in a poor state of repair. In return for a peppercorn rent and a commitment to vacate premises at very short notice we were able to rehabilitate and return empty housing stock to use and house people from council waiting lists. I had myself worked in the building industry (nothing grander than bricklayer’s mate) but even then I was amazed how conservative with a small and large “c” the industry is.

    Later when I was a councillor on the Housing Committee in the 1990s little had changed. Another twenty years have now passed and still very little has changed. When you consider that the Huf Haus Company can assemble a large ‘made to measure’ house in around six days it is crazy that in the UK the industry build houses more slowly than the Victorians did.
    The Huf family company of course build luxury houses at a fancy price but the essentials of their approach could easily be adapted to social housing. We knew this in the 1920s but still we have a house construction approach which is more like the 1820s. Many people are now familiar with them as a result of the Grand Designs TV programme but the UK building industry fails to advance or innovate.

    I had first become aware of solar panels in their earlier much less efficient form in the 1970s and it amazes me that forty years later these are not standard on new-build. It is like building a house without any gas or electricity supply and then expecting the owner to buy it in as a optional extra afterwards. Hugely wasteful and inefficient, and results in a failure to reduce the cost by economies of scale. The production costs of solar have dropped dramatically in the last fifteen years but the construction industry continues to build poorly insulated boxes rigged up to the National Grid, which as you point out is a money spinner for the treasury rather than an efficient way to distribute electricity. The National Grid is 1940s thinking, a technology suitable for the age of Winston Churchill and Stalin but pur government hangs on to it in 2014.

    The slavish worshipers of the “free market” seem blind to the backwards-looking, uneconomic wastefulness of unregulated capitalism. The house-building industry in the UK provides a perfect case study of decades long failures to modernise and apply new technologies.

  • I may have done the Huf Haus people a dis-service.
    It would appear that they also provide homes at much less than luxury prices.
    A friend has just sent me this link –
    http://www.telegraph.co.uk/property/newhomes/8403932/Huf-Haus-Houses-that-deliver.html

  • There certainly is a need for more housing, but it is not the only problem. We are very reliant on the illusion of wealth property investment creates. It looks good on the books, hides the erosion of falling wages and keeps a lot of peoples retirement plans afloat. The point is that Governments since 2010 did everything possible to avoid a severe crash in the housing market which means the price of property remains artificially high, which in turn means they are not affordable. At which point you have to ask yourself how much property is really worth if no one is buying? Building more houses would only correct this if the price was low enough but then, as Matthew Huntbach points out, property companies have the capital to bulk buy which would then drive up rents. My simplistic answer is more social housing with fixed rents.

  • John Tilley
    Your blanket condemnation of the construction industry ignores the fact that plots of land and houses come in all sorts of sizes and shapes. Homes have to fit the human demand and the size and shape of the land.

    If we want to examine some of the worst housing post WW2, then most council owned properties come top of the list.
    Mitchell , WW1 RE officer bought Wimpey and came up with the old fashioned idea of producing homes people wanted to buy, in particular private bath rooms rather than shared ones.

    The idea that regulation is itself good is absurd; what needs to be defined is what are the regulations trying to promote and what are they trying to prevent. Regulations in Germany promoting thermal insulation have resulted in damp problems. One of the major problems in Britain is the cool and damp climate which until the mid 1950s helped to create the conditions for TB. Consequently , we need dry and well ventilated homes . Radon can be problem in parts of the UK , especially Cornwall. The traditional drafty homes mean they are well ventilated and prevent build up of radon.
    Many of the housing schemes which resulted in break up of communities has caused many of our social problems. A prof of Geography at King’s , London has shown how bad design has promoted criminality.,

    I would suggest that Peabody and Guinness trust flats have the best record, in part because they are very strict with regard to bad behaviour. In Glasgow many small flats have been merged into larger ones. Prescott has demolished vast areas of 19C properties and caused a disaster. I suggest it is time people are asked where and in what they wish to live and the rules controlling conduct.

    One aspect of cost that people can borrow more. Pre 1970 people needed a 10 % deposit and could borrow 3x salary for single person. This keeps maximum price at about 3x average earnings plus 10%. Once people can borrow 125% mortgages and 4x two people salary this means average house price can rise to 8x average salary. House prices from about 1900 to about 1970 tend to rise with average earnings.

  • Matthew Huntbach 29th Nov '14 - 8:59pm

    Charlie

    One aspect of cost that people can borrow more. Pre 1970 people needed a 10 % deposit and could borrow 3x salary for single person. This keeps maximum price at about 3x average earnings plus 10%.

    This was at a time when only a minority owned homes, so people buying homes were most likely first generation home owners.

    Nowadays, it’s not just the 10% deposit and mortgage that pays for the house, it’s also the big dollop of cash gained from inheritance, itself mainly coming from house sales, though more likely passed from grandparent to grandchildren than parents to children. So this means the price of houses feeds into the price of houses, creating a feedback effect which must have the effect of pushing house prices way beyond what could be afforded just on the basis of salary.

    This is why it is so essential to have a balancing property tax. Without it, we will see a permanent division, with those who do not have access to inheritance and shut out forever, generation after generation, from the possibility of owning property

  • Matthew Huntbach 29th Nov '14 - 9:00pm

    Sorry, forgot the close italics tag. Only the first paragraph in my previous message was a quote from Charlie. The rest was mine.

  • Matthew Huntbach 29th Nov '14 - 9:06pm

    Charlie

    If we want to examine some of the worst housing post WW2, then most council owned properties come top of the list.

    Immediate post WW2, council housing was often high quality. It was only when trendies started pushing big tower blocks and the like as obviously better because more “modern” that standards fell.

  • Matthew Huntbach
    Good comments , the LCC pre WW1 constructed many good blocks of flats. A Bevan said ” If we do not build enough homes we will be criticised in 2 years time, if we do not build homes of good enough quality we will be criticised in 10 years time “. The construction of high blocks of flats occurs from the mid 1950s when reinforced concrete beams were introduced .

    A major problem is the area around London. I think we should look at capital gains tax on properties where owners are not domiciled for tax in the UK. Those who wish to invest in property in the UK because of the political and economic stability should pay tax for their security. If Britons do not want to pay tax by living overseas, then they should be told that security costs money : they expect the UK Government to protect their homes and and their person when they are in the country . I think all property should be owned by a British company registered in the UK, if the owners are not domiciled in the UK for tax purposes.

    Many foreign companies agree to accept British Law when settling disputed because they respect the competence and honesty of the British legal system. I think it is time that foreigners not domiciled for tax and Britons who wish to live as tax exiles, paid for a thousand years of political and economic stability, which was bought with the lives of those who died in two world wars and the bankruptcy of this country.

  • Charlie

    “I think we should look at capital gains tax on properties where owners are not domiciled for tax in the UK. Those who wish to invest in property in the UK because of the political and economic stability should pay tax for their security. If Britons do not want to pay tax by living overseas, then they should be told that security costs money ”

    A carefully designed and properly thought through LVT would be more effective.

    Also some Britain’s live abroard not to be tax exciles but because work takes them there temporally, be careful hot to sound like you are attacking people who are periodically taken away by work. I don’t think that was your intention but it could be an interpretation.

  • stuart moran 30th Nov '14 - 4:13pm

    CGT on house sales…

    it is capital, it is unearned and it is a gain.

    Any home improvements can be taken into account, and the tax can vary according to time owned.

    The Swiss do it why can’t we?

  • stuart moran 30th Nov '14 - 4:20pm

    Simon McGrath

    Unfortunately the law of supply and demand only works in a ‘free market’ and is dependent on many factors. The market we have is not free and, unfortunately, the assumption that all urchasing entities havethe same level of knowledge is also false

    We live in a quasi-free market where there is a huge amount of information available to the few that is unobtainable by the many. This leads to the situation we have now!

  • Stuart Moran

    “Unfortunately the law of supply and demand only works in a ‘free market’ ”

    Well that is clearly not the case. Supply and demand still apply in restrictive markets just the outcome is different if you impose artificial restrictions on supply you will still get higher prices.

    The point us there is a shortage of housing (in the locations people want to live) if you can’t see

  • PSI
    Need to consider impact of LVT on rural land. Farm land is already hitting £8000/acre . Any increase on the cost of land will increase building costs.

    When it comes to increasing density, WSP and Cambridge have been putting forward the idea of building homes above public buildings.

    Would need to be classed with HMRC as tax exile, therefore would not effect short term overseas workers: suggest a minimum 2-5 year period.

  • Eddie Sammon 1st Dec '14 - 11:51am

    Charlie, you are right that Land Value Tax would be bad for farmers. When it comes to Tim’s support for building 300,000 houses per year: I am yet to be convinced this is worth the environmental cost.

    Environmental damage has a human and an economic cost, so I do care about it, but I don’t often lend my support to green campaigns because too many of them seem to think if we have a kind of second industrial revolution, but add some green taxes, then it will somehow be good for the environment. It won’t – it’s class politics mixed up with environmental politics.

    Regards

  • Charlie – The cost of farm land has zero impact on building costs, it’s impact is on the final sale price and is then largely dependent on the number of properties per acre.

    Also given how land significantly increases in value once it is “known to the system” (ie. owner has flagged a development interest with the Council – in my area such farmland is being traded for around triple its agricultural value – and I use the word ‘traded’ deliberately, for prices in excess of £21,000) and then increases further in leaps and bounds as the land changes designation and moves from greenfield to building plot with infrastructure services. I see the impact of the increasing price of farm land being minimal on house prices.

    No the real challenge is that with the politicians wanting to build lots of houses in a hurry and hence needing lots of land, they are creating a market which is making it more remunerative for farmers to sell for development than to retain land for farming – potentially destroying a whole sector of industry. Because why sell land notionally based on agricultural productivity when you can sell it for three times that or more to developers et al?

  • Roland,
    Largely, agree. In most cities housing density is low and there are vacant lost. What we need is well designed, built and managed blocks of flats with shared gardens, good sound proofing, good waste collection, underground parking and large balconies. we tend to have are poorly designed , built, managed flats with no balconies, underground parking or shared gardens , so many people want houses.

    Too much brownfield legislation just provides income for environmental engineers which results in land remaining unused.

    WSP and Cambridge U suggestions of building over public buildings could result in more homes. If one looks at affluent parts of European cities contain g good quality flats in buildings up to 6 stories . The cost of a house is largely land, foundations and roof. Offsite construction being developed by Laing O’Rourke could greatly reduce costs and building time.

    The CPRE has shown that many Georgian developments have higher densities than post blocks of flats and no-one complains about them.

    I would suggest that a major problem is the lack of quality blocks of flats , not more than 6, perhaps 8 stories in height.
    Flats with 2-3 reception rooms, 10-12 ft ceilings, 3-5 bedrooms , large halls , kitchens, 2-3 bathrooms are often the homes of the wealthy in most cities. There is no reason why flats cannot be built using offsite methods and designed with Georgian exteriors.

    What needs to be done is write a list of all reasons why people do not like living in flats and solve the problems.

  • Charlie,

    I suspect (and could probably bet on it) that politicians will steer clear of substantive urban redevelopment as it causes too much confrontation with the electorate, far better to wave the wand and simply reallocate some farm land in the middle of ‘nowhere’ to create a new “garden city” for the London overspill, because as we all know the NIMBY’s only live in the countryside and not in our cities…

  • Charlie

    “Need to consider impact of LVT on rural land”

    An LVT would decrease the purchase price of land. Like buying a piece of land with a negative perpetuity attached.

    Any system would have to be very gradually introduced and with the implementation path clear from the beginning to avoid shocks. So if that was the case the Housing market for land would adjust to accommodate the tax. It would not be fast and it is not the magic bullet some think it is but at the end of the day it is a more efficient tax.

  • Charlie

    “I would suggest that a major problem is the lack of quality blocks of flats, not more than 6, perhaps 8 stories in height. Flats with 2-3 reception rooms, 10-12 ft ceilings, 3-5 bedrooms , large halls , kitchens, 2-3 bathrooms are often the homes of the wealthy in most cities.”

    Got to agree with that. In the UK there is often a trade off between better sound and heat insulation of new flats and the space of flats in converted old buildings.

    I think there will always be a slight preference for a house in the UK population but that could be overcome if there were flats with the same space and facilities (secure parking and storage) and really good locations due to being able to build close to key locations.

    I understand that there are regulatory barriers in the planning rules to providing these kinds of floats though (an unforeseen consequence of poor legislation from the last 20 years), though I don’t know the details of which bits cause it.

  • Seeing the news this morning about the “new garden city” – I expect to see at some stage Nick Clegg claiming some sort of policy victory over this, one thing about this announcement court my eye: “Plans for a new settlement in Bicester, Oxfordshire, containing up to 13,000 homes, will be funded with nearly £100 million of public spending and loans.”

    Oop’s! that works out to a little under £77,000 of tax payer subsidy per home. Which would seem to indicate that if the LibDems wish to build 300,000 per annum, they will need to find about £2.3 billion of taxpayer’s money every year to fund their dream…

  • Apologies for my English, should of been ‘caught’ not ‘court’!

  • Roland,

    Urban development has become a problem for following reasons
    1. Over zealous brownfield regulation which is not needed. Biggest contamination risks are ex- military sites in rural areas on top of aquifers and next to trout rivers NOT ex-factory sites underlain by clay in urban areas.
    2. EA and LAs lack adequate knowledge of contamination.
    3. Prescott allowed gardens to be declared brownfield which enables councils and builders to buy large detached and semi-detached houses, knock them down and build several houses while declaring a ” brownfield site had been remediated “.The former gas works/factory was left as being too difficult.
    4. Building in the green belt is an easy answer. The consultants WSP, ARUP, Cambridge, Oxford and Imperial plus the CPRE are all showing how good quality and high density homes can be built in urban areas and Peabody and Guinness show how they can be managed.
    5. The problem is that the politicians, civil servants and chaterati are clueless.
    6. There are plenty of flats being built( up to 20 stories ) but quality is poor, too few rooms, too small rooms, no large balconies, no underground parking , no shared private gardens ( see London Squares ).
    7. Many of the flats /homes built by councils up to 1950 were of good quality, they just need more and large rooms, underground parking( secure ) and private shared gardens.
    8. Too many architects are on ego trips and do not want to serve the people and too many developers lack aesthetic judgement.
    9. If Wren managed to design St Paul’s , 50 churches and private homes why are so many modern builders, planners and architects useless?
    10. In Stoke , council give people a house for £1 and they have to renovate , cost about £30K- see Observer. About the only common sense I have heard from politicians for years.

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