Charging developers for affordable housing

I have to admit to being confused here:

Now ministers have gone too far even for developers, by scrapping payments that those converting empty buildings formerly had to make to finance affordable homes. The Westminster Property Group, whose members – including firms like Land Securities and Grosvenor Estates – stand to benefit by hundreds of millions of pounds, has condemned it for imperilling London’s social fabric.

Officials at Tory Westminster Borough Council, which expects to lose £1 billion for cheaper housing, call it “insane”. Don’t take it from us, Prime Minister. Listen to them.

So the aim is to increase the supply of houses that people can afford. We do this by making conversions into housing more expensive.

So, how does this work then?

13 thoughts on “Charging developers for affordable housing”

  1. Affordable doesn’t mean that people can afford it; it means cheap rents for people on benefits. The purpose is not to help people wanting housing but to keep the benefits bill down.

  2. Westminster Property Group members are, of course, entirely free to put the money they will save towards lower priced housing if they feel strongly.

    Or is this just empty PR?

  3. “Affordable housing” is absolutely *not* for people on benefits, in London at least (in the north, where a house costs 10p, it doesn’t really matter either way). That’s social housing.

    Affordable housing charges 80% of market rent; the people who live there are the people who do the kinds of jobs in London that make it possible for well-paid people to buy full-priced houses.

    It’s not at all surprising that developers support compulsory affordable housing contributions, because unlike armchair libertarians, they’re well aware that their expensive developments would be worthless without people to clean, cook and put out fires.

    Re “Why don’t they just build some?” – it’s a basic collective action problem, absolutely Econ 101. It’s in all developers’ interests that affordable housing is built, but it’s in no individual developer’s interests to cut the number of expensive houses on their own project.

    Government action is a sensible way of intervening to maximise everyone’s utility.

  4. bloke (not) in spain

    “Affordable housing charges 80% of market rent; the people who live there are the people who do the kinds of jobs in London that make it possible for well-paid people to buy full-priced houses.”
    ” it’s a basic collective action problem, absolutely Econ 101. It’s in all developers’ interests that affordable housing is built, but it’s in no individual developer’s interests to cut the number of expensive houses on their own project. ”

    No the Econ101 answer would be if you don’t subsidise “the people who live there are the people who do the kinds of jobs in London that make it possible for well-paid people to buy full-priced houses.” then the full price of a house will be lower due to reduced demand. Because there’ll be less ” people who do the kinds of jobs…etc.” Making them less attractive. So ultimately the market will reduce rents to the “affordable” level..

  5. BiS:
    Yes, obviously, that’s what happens in the absence of intervention. But the intervention where all developers are compelled to provide some social housing is the one which maximises overall utility.

  6. bloke (not) in spain

    How does that work out? The net result’s the developers get to charge house buyers higher house prices. The only utility being raised is the developers’.

  7. JohnB78–socialist bullshit. As has been pointed out on this blog fuck knows how many times planning permission from political/bureaucratic pork is the main issue in house costs.

    Building houses is getting technically cheaper all the time. The Chinese now have a giant 3d printer that can create either a five story house (looks like a mini block of flats) or a very nice concrete McMansion (roughly the size of both sides of 3 semi detached houses-ie 6 semis ) for 4800 US dollars each. You would have to pay more for fittings etc but the total cost would still be a joke compared with UK house prices.

  8. bloke (not) in spain

    ““Building houses is getting technically cheaper all the time..”
    Regrettably, MrX, that’s far from true. Yes building’s getting cheaper. If I was doing site carpentry now I’d be 10 times as productive as in the mid eighties. But houses are no longer built to mid eighties specs. As fast as production costs fall, regulatory requirements rise.
    Be nice to print houses in concrete, au Chinois. Except the Statutory Risk Assessment Report would be costing you more than US$4800 before you could fire your printer up. And be stopping after five minutes & waiting a fortnight for Building Control to inspect the work completed..

  9. In the end we can have a world where people are homeless–who need not be–because of the shite you report on BN(I)S or we can tell them to shove their Statutory Risk Assessment Report right up their arse.

    That is what it comes down to. They won’t ever voluntarily walk away from thieving or lording it over us in any area of life. They will have to be told to fuck off and that expletive will have to be made to stick.

  10. I know it’s Geoffrey Lean and so we shouldn’t take any of it seriously but: what pretty village has ever been “besieged” by expensive homes? And when has the answer to this, er, problem ever been to insist those developments include social housing or affordable homes.

  11. It’s Geoffrey Lean so it’s complete prpoaganda bullshit.
    Gordon Brown introduced a tax break for those converting space above shops into “affordable housing”.
    I looked at one of these schemes – the housing was affordable to young graduates with a decent job – coincidentally the sort of person that westminster Property Group wants toi attract since they will later be able to purchase really nice houses.

  12. bloke (not) in spain

    It’s not just that Lean spews propaganda bullshit. It’s that he cribs propaganda bullshit off of total bullshitters. And can’t even do that properly.
    There was an article a while back, he had it the Mongolians – using special Mongolian techniques known only to Mongolians – could reduce the protein in an entire cow to a lump the size of a man’s fist. Some mean physicists, these Mongolians. Crunch the numbers & you’re looking at a density, there, of about 50 times uranium. Little more work & they could create themselves a tame singularity. Maybe rendering down Lean’s head’d do it. There’s not much denser material as a starting point.
    I’d love to know what he’s got on the proprietors.of the Torygraph. Must be something considerably alarming, they keep employing the old fool.

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