Polly and numbers

Just don\’t mix all that well, do they?

A quarter of a million new homes a year are needed just to keep pace. Last year just 100,000 were built, the fewest in decades, with only 16,000 so-called \”affordable\” homes, still unaffordable for many.

\”Affordable\” is a euphemism for housing association and local council. Who built more like 34,000.

This may or may not be enough but it\’s certainly different from 16,000.

She does love to return to this argument, doesn\’t she? As a dog returneth to its own vomit.

Even in the boom years, when average prices rose by £50 a day between the owner going to work and returning at night, developers refused to build. They sat on land banks watching values rise. Sitting on prime land with planning for 300,000 homes, they build in neither boom nor in slump, when borrowing is cheap. Only government intervention breaks that deadlock, with threat of fines or compulsory land purchase.

Hands up folks. How long does it take to get planning permission? Whay\’s that? Two to three years you say?

So an industry making sure that it has sufficient inputs given the time it takes to replace those inputs is what? Speculating on land prices or being fucking sensible?

One golden key is to entice investment into good new homes for rent. Local authority pension funds should invest in local building on land released by councils.

What? If building homes for rent is a good idea then great, invest in them under the normal fiduciary duty to maximise returns on pension assets. And why limit it to local authority pension plans?

And if it\’s not a good idea to do this financially then why screw the local authority pensioners? It\’s not the building houses for rent thing. It\’s why should one specific pension plan get privileged or screwed?

Oh dear God:

Also expect Dromey\’s first step to promise decent terms for the burgeoning numbers of private tenants, especially families. No more six-month tenancies, as a million people are moved on every year. Leases will be long term, with action to prevent soaring rents.

The cunts are going to bring back rent controls. As has been pointed out, nothing destroys the housing stock better than this: other than aerial bombing.

The tightrope walk for Labour is to banish the frenetic culture of house-price gambling without discouraging home ownership; to grow new investors in good private rentals while curbing profiteering landlords; to release land for building, and force developers to do their job. Above all, to use that painfully familiar phrase, use firm regulation to abolish boom and bust – at least in house prices.

There\’s a terribly simple way to do this. The majority of the market value of a house these days is the value of the permission to build it. Planning permission. It ain\’t the house and it ain\’t the land. It\’s the ability to put one on the other which costs all the cash.

So issue more and the price will come down. It just isn\’t that damn difficult.

21 thoughts on “Polly and numbers”

  1. How are you finding that shortage of housing stock in Freiberg, with its unlimited leases and rent controls?

    Tim adds: 1) Things might be a little different in an area which has in recent decades lost 20% of it population.

    2) I found one and only one flat that I could rent.

  2. ‘…rent controls. As has been pointed out, nothing destroys the housing stock better than this: other than aerial bombing.’

    No argument with your point, but what would happen now if rent controls or suchlike were introduced?

    The buy-to-lets etc. wouldn’t just evaporate. An increase in houses for sale with a consequent price fall?

  3. Hands up folks. How long does it take to get planning permission? Whay’s that? Two to three years you say?

    It’s something like a 2 year land bank (from getting planning permission). Which sounds like a long time, until you consider that you often need to clear a site, get roads, pipes, telecoms and sewers built before you start building the houses.

    What would be the advantage of sitting on land, anyway?

  4. What would be the advantage of sitting on land, anyway?

    Oh, get with the programme.

    It allows the evil baby-eating crapitalist 1%er class to screw over the poor, hard-working Guardian reading classes.

    I’m not sure of the actual mechanism by which this happens, of course, but then since when has that mattered to fearless crusading (if we’re allowed to say that in such diversity-conscious times) journalists like the obviously oppressed and underprivileged Mz Toynbee.

    Alternatively, it is more effective than sitting on water?

  5. Rent controls, loved by middle class socialists because they can game the system and rent a palace for peanuts for the rest of their lives, while working as a volunteer at their local Marxist organic hemp sanctuary.

  6. Yes, issue more planning permission, we don’t want to look at anything like green open spaces, we want concrete and plastic cladding as far as the eye can see!

    What’s that? Infrastructure? Nah, I’m sure it’ll cope!

  7. Everyone must have moved out just after you moved in. A popular real estate website lists 105 apartments for rent in your Freiberg, prices ranging from €130 to €1026. Only about 10% of those will be advance-fee scams.

    Thus a top-end apartment in Freiberg costs about the same as a bottom-end apartment in Frankfurt (where there is a serious housing shortage, has been a chronic housing shortage here for decades) does. But that’s because Frankfurt is physically too small.

    I really can’t regard the UK rental market as being so stratospherically wonderfully better than the German one that we’d want to import it

  8. Also if Polly is really worried about evil capitalist developers sitting on huge land-banks, the answer is still to free up the planning system.

    Currently it’s tilted towards big developers. Make it easy to get planning approval (or, even better, issue blanket approvals for big areas) and anyone can buy a bit of land and build on it.

    Once planning approval is that common, the developers wouldn’t be able to corner the market even if they wanted to.

  9. First of all, the supply of housing would be better utilised if it didn’t cost a fortune to move. I have clients who would like to have more money but blanche at the prospect of moving costing them most of a years pension.

    Next, get rid of the term “affordable” homes. However you look at it, it is subsidised, being paid for by someone else. And they garm up the market too. Better to help the person, not the house.

    ISTM, that if property prices (and hence rents) were lower, there would be even more incentive for even more immigration. This has been running at 250,000 net under Labour, which corresponds quite closely to Polly’s shortfall.

    If I were a greedy speculator, rather than sit on the land and watch it’s value rise, I’d build houses and let them, watching the value rise while receiving rent in addition. In truth, major housebuilders have had a torrid time in recent years, and made large losses. The problem has been the decrease in supply of mortgages. Forcing more construction will not work without other measures.

    While it seems to be generally acknowledged that housing is overpriced because of the previous boom and current ultra-low interest rates, it would IMO be better to try to keep prices stable, and hence falling in real terms rather than create losses and negative equity for mortgage-holders.

    For the future, if house prices start to overheat, why not have a variable tax on mortgage interest, rather than varying the interest rate in general or the supply of mortgages. (I intend this to be revenue neutral. Use the money to reduce taxes elsewhere). At the moment, there is a direct conflict between those without houses who want prices to fall, against those with houses who love it when the rise. Bad news all round.

    I agree with Tim that the crucial factor which prevents houses being built is planning permission. And in my experience, councils are all too wiling to defer decisions for months, hence the need for 2 years landholdings.

    Notwithstanding all the caveats about Keynesian solutions, ISTM that the government could consider borrowing to build new housing. It costs them under 2% pa to do so. They would probably recover that in CGT from the land value, plus all the taxes paid by the builders. These could be let at commercial rents (subsidising the occupants where necessary, as now) to generate more revenue. And the houses could be sold in due course to pay off the money borrowed. The problem is that it would take too long to address the present crisis, and NIMBYs are pretty effective too.

    (Of course, there is a more extreme version of NIMBY, the BANANA. Build Absolutely Nothing Anywhere Near Anyone. ? )

    If Dromey got his way, the supply of houses for rent would fall and rents rise for new tenants. As Tim says, Oh dear God! As for “profiteering landlords’ what on earth are they letting property for, if not for profit…?

  10. JuliaM,

    Yes, issue more planning permission, we don’t want to look at anything like green open spaces, we want concrete and plastic cladding as far as the eye can see!

    Take a look at Google Earth sometime, zoom in to the UK and you’ll see that a tiny amount of it is developed. You could double the amount of housing in the country and you’ll still have plenty of green spaces.

  11. @11
    Yes and no, it depends where you’re talking about and some of the open space, quite a lot in fact, isn’t very suitable for housing. then as JuliaM suggests there’s infrastructure to consider and more people want to live in the South East than anywhere else, the area with least available land and the biggest infrastructure problems. There is scope for more development but in my experience as a South Easterner there’s a fair bit of it happening already with as many gaps being infilled as possible, my own area is now almost completely developed for a distance of some twenty miles along the coast and several miles inland. I don’t see any easy way round the conflicting interests and shortage of building land and just saying issue more planning permission isn’t really going to change much as long as we are a property obsessed nation and before anyone mentions it, I don’t believe the magic LVT fairy would solve anything either.

  12. Richard @9
    I rather favour that let people build what they want approach. I think it would produce a very interesting mix of housing and indeed other land use, we might find the countryside reverting to a patchwork quilt of hamlets, villages and smallholdings interspersed with open fields and woods, instead of the agri-desert so much of it is now. At least that’s my rather romantic vision, I’d certainly be up for buying a plot and building a hut in the woods.

  13. Thornavis,

    I don’t see any easy way round the conflicting interests and shortage of building land and just saying issue more planning permission isn’t really going to change much as long as we are a property obsessed nation and before anyone mentions it, I don’t believe the magic LVT fairy would solve anything either.

    People would be less inclined to protest about development if they saw (in a roundabout way), that they were compensated for it. We would see NIMBYism diminish and development would become more normal.

    I’m not even sure what the problem is with infrastructure. There’s plenty of land to build more roads, railway lines. If you want more water, there’s plenty of space for reservoirs.

    The alternative actions would be to move a lot of the state out of London. If we moved parliament, whitehall, the museums and the galleries to rural Herefordshire then the demand for people wanting to live in London would go down.

  14. Yes, issue more planning permission, we don’t want to look at anything like green open spaces, we want concrete and plastic cladding as far as the eye can see!

    It’s been a year or two since I looked at the UK Land Use statistics (and they were quite hard to find), but developed land in the UK – including roads and industrial sites – is somewhere around 4%.

    What gives the impression that Britain is already a concrete jungle is that people say they want to live in the countryside, but in actual fact don’t want to be too far from decent services and infrastructure, so the margin at which the “happy compromise” between the two is continuously being shifted outwards much to the annoyance of those who bought previously. If you want countryside, go to live in West Wales. If you want countryside but also to be able to go to the cinema at the drop of a hat, prepare to pay through the nose. Trade offs, and all that.

  15. I don’t believe the magic LVT fairy would solve anything either.

    People would be less inclined to protest about development if they saw (in a roundabout way), that they were compensated for it.

    Right. So the LVT goes to the government and somehow, unlike any other tax ever, people magically see exactly how each little bit of development in their area translates into improved services in their area.

    We would see NIMBYism diminish and development would become more normal.

    Is there still space in your personal utopia or is dbc reed squatting there?

  16. SE,

    Right. So the LVT goes to the government and somehow, unlike any other tax ever, people magically see exactly how each little bit of development in their area translates into improved services in their area.

    No, as the value of their land falls, so would their LVT.

  17. Tim Newman,

    The more central bits of Wiltshire are like that, and the house prices reflect it. Marlborough costs more than Swindon, but Netheravon which is miles from anywhere is cheaper than Swindon.

  18. No, as the value of their land falls, so would their LVT.

    More utopianism.

    If the value of their land fell, the per-£/acre rate would rise to ensure that the level of dane-geld would but increase. See nearly every government everywhere.

  19. SE,

    If the value of their land fell, the per-£/acre rate would rise to ensure that the level of dane-geld would but increase. See nearly every government everywhere.

    Not quite grasping the “land value” bit, are we? If you build an airport in Oxon, it reduces the value of the land in Oxon, not in Cornwall. The tax falls in Oxon. Now, it would be the case that government would have to raise the general overall tax slightly to make up for the tax loss in Oxon, but what would remain would be the differential, that the land in Oxon would get cheaper than the land in Cornwall, or in a roundabout way, there would be a wealth transfer from everywhere else to Oxon.

    You know, this “utopianism” is currently practised in Estonia, Singapore and Taiwan. Three countries that seem to be doing rather better than we are.

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