People need new homes. But pumping houses into the economy isn’t the only answer and may be more destructive as an isolated solution than Quantitative Easing will surely prove to be…
Has anyone noticed how politicians love to pick up an issue that plays on people’s minds and then they play with it, mutilate it and reshape it to suit their own ends?
Party Conference Season is of course a great time to see this approach to taking responsibility in its finest form and Nick Clegg’s sound-bites about the Lib Dem role as the moral anchor of future Coalition Government and Ed Milliband’s socialist branding on the Cost of Living Crisis and Energy Prices are themselves very fitting examples of cynical – and impractical views or policy, which in reality would demonstrate just how out of touch these people really are.
Policy bandwagons that appeal to public opinion, but lack the depth and thought for their real and long term implications are by far the worst, because in appearing to solve a problem, they actually create a whole lot more besides and usually in ways which are far more damaging to individuals, communities and businesses than the initial problem ever had been.
Perhaps the most notable of these policy faux pas that politicians keep lining themselves up to commit is with strategic planning for development and house building in particular. I know that I am far from alone in wondering just how practical, ‘real world’ and problem solving our leaders think this continuous drive to concrete across this Country actually is…
In terms of the day-to-day political scene, house building has become an almost obsessive issue for all of the Parties and one that they would happily have us all believe can only be addressed by significant development.
Generally speaking, the spin that politicians place on these plans is that building more houses will make them cheaper and therefore more available. But how many new developments have you seen being sold at less than the local like-for-like rate or at a rate which genuinely reflects the cost to build plus a realistic profit margin?
They say that building houses will create jobs. But other than within the industry that builds houses and the services that will then provide them, what jobs ever get created by the construction of a house?
They tell us that building houses is good for the economy. But how can that be so when prices keep going up, people have to borrow to afford them and the houses built are rarely located where people can benefit most from them without commuting and spending a whole lot more money on travel, from which they will rarely be left with very little afterwards to show?
They legislate that housing ‘supply’ should be determined up to 20 years in advance. But how can anyone in any location or Local Authority area truly know or understand what housing need there will be unless it actually exists already or they make a judgement on what may be needed within a year or two, based on what jobs may be coming to the area?
In Westminster derived terms, politicians are convinced and in turn try to convince us of the need to build, build, build. But the housing problem looks very different to those who are experiencing it firsthand. Where are the policies that consider that:
The entire housing market is overpriced. Commission-hungry estate agents, easy borrowing, speculation, buy-to-let ownership, investment, property developers and builders; all have contributed to the sometimes exponential house price rises. The value of property is vastly inflated and a major contributing factor to the vulnerability of the banks and financial system – as illustrated by the banking collapse in 2008. Devaluation of the entire UK property portfolio would be the answer, but would cause as much mayhem and fallout in isolation as devaluation of the Pound will, should the UK’s Debt, Deficit and economic situation go where it very well could.
Lower priced housing is rarely located where people would most like it. Rarely is development of any good size located where people most need it, and where it is, the prices are even more overinflated than they are elsewhere. People have to commute sometimes long distances to the homes that they can afford which itself is financially costly, but is also very expensive in terms of commuting time – and this is private time that can never be replaced.
Mortgage deposits are too high. The Chancellors Help to Buy Scheme is noted. But it doesn’t escape from the fact that one of the main reasons that people can’t afford mortgage deposits is that the housing market is overpriced and the value of an average house in the UK is currently £242,415.00 compared with the average wage of £26,500.00; over 9 times bigger. Insuring buyers is not a longer term solution and the Government has to get prices back within the reach of average-wage-earner ownership without using the easy promise of Taxpayers money to help.
The rental market is overpriced. Properties of all kinds and sizes are required for rental, but the houses most commonly sought are 2-3 bedroom properties which are typically the same as those sought by first time buyers and those in the buy-to-let market. This interest creates a false floor in pricing and Landlords who do not have mortgages have little to gain by undercutting those who do.
There isn’t enough Social Housing. There will always be a requirement for social housing but the deficit between what Local Authorities can access and what they require needs to be significantly smaller. Right to Buy hasn’t helped with availability when Councils haven’t replaced stock which has been sold through the scheme.
There isn’t enough of the right kinds of social housing. Probably the greatest number of housing related enquiries I ever have from residents within my own Council Ward is from those seeking social housing who cannot obtain a tenancy because there isn’t one that meets their needs or that of their families. Social housing development is very prescriptive and doesn’t currently reflect the normal diversity in family types and sizes that generally exist in most communities.
Second homes are leaving local people without having the option of just one. People now have the ability to travel distances like never before and this has made second home ownership much more practical for weekend use. It has however meant that property prices in rural and seaside locations have exploded as high earning city folk have found it easy to buy such property. The downside is that they have priced local traditionally-low-earners out of their own markets. With inadequate levels of social housing and responsive development which is ‘affordable’, people who want to leave home and remain in the communities in which they grew up are now finding that they simply no longer have that choice.
House ownership has become speculative beyond basic investment and security. People now buy property as an investment and typically seek the same properties as first time buyers, thereby eliminating many of the opportunities for owner-occupation, whilst forcing house prices and rental values up at the same time.
These are the real and for many, very painful aspects of the UK housing market as they stand today, and they will not be addressed simply by allowing development on a scale which is only certain to exacerbate the problems as they stand, potentially create a whole lot more problems beside and only truly benefit the developers whom the whole Planning system seems to have been created for.
Politicians must do much more to recognise and understand the issues facing people as they consider their next home. They then must develop genuine well-thought-out solutions that actually help and assist the people who need the help to avoid or remove themselves from misery and doesn’t reward those who deliberately or otherwise make profit from creating more of it.
There is so much more that our politicians could do. For instance, why don’t they:
- Add additional stamp duty to buy-to-let mortgages on 2-3 bed homes – those typically bought by private property investors.
- Add a tax or levy to the monthly repayments on buy-to-let mortgages on 2-3 bed homes
- Restrict or halt new property transactions to foreign nationals who will not be UK Taxpayers.
- Place an obligation on developers to provide a percentage of the properties on a new development for social housing use which is not dedicated or allocated at their choice OR alternatively provide an alternative or additional site within the same Local Authority area which reflects that same percentage and types and sizes of housing, relative to their own developments granted permission within that financial year.
- Legislate that future or existing sales revenue from Council owned stock must either be used to build new properties or purchase existing ones with a priority given to property types most sought on the local Waiting List.
- Penalise weekday or week-time non-occupation of homes through a tax or levy.
- Legislate to require the deposit or equity value on second home mortgages to be 50% of value or even higher.
- Require Estate Agents to work on a fixed-fee, non-commission basis.
- Consider outlawing ‘gazumping’
Without more creative thinking and policy intervention, the role that housing development could play in contributing to the economic never-never fantasy land that has been under construction is quite frightening.
Just as Quantitative Easing (QE) is having a detrimental and savage effect on the savings of many people who have been responsible with the accumulation of their wealth, continuous building at the rates that Government would have us believe necessary, whilst failing to address all the other underlying issues facing those who need homes, will surely prove to be just as damaging for many more, if not worse.
You can’t address real problems without real solutions and its time that politicians thought about the real consequences of their actions rather than the power and electability they will achieve by playing with sound-bites and words.
What is in effect ”quantitative building” might make good headlines, but it isn’t going to help those who need new homes most right now and the only long-term beneficiaries will be the money men who own the companies that build them.
Courtesy of Adam Tugwell