5 comments on “Timmy Elsewhere

  1. On the price of housing we have limited supply and fashion-driven high demand. Sounds like bubble territory to me, except that it’s much harder to come up with Ponzi schemes that will super-inflate to bursting point.

    Mind you, the hooky new build mortgages will provide some the Enron-style fraud we need to seriously distort balance sheets to make a loud pop sound when the end comes.

  2. Nothing to do with building more homes, there’s plenty of evidence to support that building more homes does not dampen house price bubbles (see, USA, Spain, Ireland) Land Value Tax is the only thing that’ll sort it out.

  3. A hugely relevant question that has emerged from the run to withdraw deposits in Northern Rock is the extent to which house prices in Britain are being boosted by by the numbers of sub-prime mortgages on offer:

    “Northern Rock stands accused of ‘reckless’ lending after it emerged this weekend that the beleaguered bank is still offering mortgages of six times salary to potential borrowers.

    “Despite provoking the worst banking crisis for decades, the bank last week offered a reporter posing as a first-time buyer a £180,000 mortgage even though he had a salary of only £30,000.

    “The loan was at least £30,000 more than other leading lenders were prepared to offer. Repayments for the loan would have accounted for more than 60% of the fictional buyer’s take-home salary.”
    http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2512384.ece

    “A BBC investigation has found evidence of serious mis-selling in Britain’s sub-prime mortgage market. Industry insiders have described how people have been advised to lie about their incomes to take out loans far bigger than they can afford.”
    http://news.bbc.co.uk/1/hi/programmes/file_on_4/7010415.stm

    “Sub-prime mortgages are set to grow faster than mainstream mortgages, independent market analyst Datamonitor has said.”
    http://news.bbc.co.uk/1/hi/business/6288738.stm

    There seem to be no sanctions applying now to financial institutions generating sub-prime mortgages and the consequences of that are not hard to predict:

    “Average house prices have nearly tripled across the whole country during the past decade, says the Halifax.”
    http://news.bbc.co.uk/1/hi/business/6090972.stm

  4. Mark,

    There is already a considerable land tax, its called planning gain, for example this is a site I recently looked at – affordable housing – 15% cash contribution to the council based on land value, educational support – primary £80K plus £6k a house towards secondary, public art (i shit you not) – £50k for every 100 houses, a travel plan for each home by an approved agency (10k up front and £250 per house, public park and open space – 60k for play area, plus 30% of the total land area, On another site they asked that we pay for upgrading the councils staff car park.

    All in all the 20% development tax recently proposed would reduce the take of local government and go straight to the treasury – thats why they are against it, they’ve already got a bigger stake in the land price bubble.

  5. Mark,

    There is already a considerable land tax, its called planning gain, for example this is a site I recently looked at – affordable housing – 15% cash contribution to the council based on land value, educational support – primary £80K plus £6k a house towards secondary, public art (i shit you not) – £50k for every 100 houses, a travel plan for each home by an approved agency – 10k up front and £250 per house, public park and open space – 60k for play area, plus 30% of the total land area, On another site they asked that we pay for upgrading the councils staff car park.

    All in all the 20% development tax recently proposed would reduce the take of local government and go straight to the treasury – thats why they are against it, they’ve already got a bigger stake in the land price bubble.

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