Oh well done Mr. Mason, well done!

But we can ask ourselves the following questions:

First: how much space are people entitled to live in? The market sets no limits; even such formal rules as they still exist (they are being weakened) are flouted by the young salariat.

Second: what is the optimal balance between the private, social and state-owned rented housing and the owner-occupied sector? This cannot be hard to fathom since many cities in the 1980s and early 1990s achieved housing markets that “cleared” in economic terms: in Leicester in the 1980s I had no problem finding a secure private tenancy; no problem getting the council to hound my landlord to maintain it properly; very little problem moving from there to a housing association flat; very little problem transferring, as a key worker, from there to a council flat in London. Yes, London.

Third, what do we mean by “affordable”– when it comes to either rents or prices on state-specified newbuild homes? Under both Labour, Coalition and the Conservatives the concept of affordability has become delinked from incomes and attached to a percentage of the market rate. The same state that decided nobody should be repossessed during the 2008-11 housing slump could decide that nobody has to pay more than a fixed percentage of their incomes on housing costs.

If you’re going to discuss house prices in the UK, as Paul Mason does, then you really do need to ask the one important question. Why in buggery don’t we just issue more planning chitties? That’s not even the elephant in the room, it is the room.

Note that Mason entirely fails to even mention this.

51 thoughts on “Oh well done Mr. Mason, well done!”

  1. So Much For Subtlety

    First: how much space are people entitled to live in?

    How much of a sh!t do you have to be that this would be your first thought?

    Entitled?

  2. Ah yes, a “key workers”. All animals are equal but some are more equal than others, etc etc.

    One thing that never ceases to amuse me about the modern total state is that while it insists that it can and should manage every aspect of life, it cannot even cope with simple questions like there being insufficient dwellings, which is one of those basic needs humans have been sorting out for the entire 100,000 years (give or take) of our existence as a species.

    And can’t control the border either, which is the other most basic job of collective administration of about the same vintage.

  3. Rent control? That’s worked well wherever it’s been tried hasn’t it!

    Perhaps the reason Mason had no problem getting housing subsidised by other people is that he’s a pushy leftist. Allocation by political contacts/influence? I’d rather take my chance with the market!

  4. If you’re going to discuss house prices in the UK, as Paul “Mason does, then you really do need to ask the one important question. Why in buggery don’t we just issue more planning chitties? That’s not even the elephant in the room, it is the room.

    Note that Mason entirely fails to even mention this.”

    Because he is peddling socialist propaganda–not imparting facts or valid, relevant info.

    He is the type of leftist scum who would announce his trips to the bog if there was some way to use such announcements in an attempt to advance the leftist cause.

  5. That Paul Mason is employed to be “economics editor at Channel 4 news” and yet talks such unaduterated cobblers about such a topic tells us that Channel 4 news is not a serious organisation.

  6. So Much For Subtlety

    very little problem transferring, as a key worker, from there to a council flat in London. Yes, London.

    An economics editor at Channel Four? How does an economics editor at Channel Four get classified as a key worker? Key in what sense? And what do economics editors at Channel Four get paid that they need a council house?

  7. He’d have no trouble finding a private tenancy in Leicester today either. It’s secure as long as he pays his rent on time and doesn’t trash the place.

    In the 1980s London was synonymous with poverty and crime. People were fleeing inner London; it’s population bottomed out in 1988. In that environment it’s no wonder Mr Mason was able to find a council flat.

  8. SMFS,
    Wikipedia says he was a music teacher at the time. No doubt teachers count as key workers (although music teachers are never in short supply). He moved to London in 1988, used his Key Worker status to get a council flat, then quit teaching to take up journalism instead.

    I wager he didn’t hand back the keys to his council flat when he left teaching.

  9. “I’ve done amazingly well from sucking on the government teat, so why can’t everyone?”

    Well done that man.
    *slow hand clap*

  10. Gotta love the greens here in Swissland:
    No to building in the countryside
    No to building in the towns
    Yes to more immigrants

  11. How many times am I going to have to tell you that its not just a case of ‘issuing the planning chitties’?

    I am intimately involved in a large urban extension project (from the landowners perspective) and from my personal knowledge I can state that its not the concept of granting planning that is the slowing down factor, its all the regulation and bureaucracy that surrounds building houses that stops houses being built with any sense of urgency. The actual decision to build houses in my case was made several years ago, yet not a house has been built yet, nor is likely for several more years. The regulatory paperwork associated with building those houses are now so huge, that it takes years for the official paperwork to be organised and signed off, and costs a fortune. Then there’s the huge amount of costs the local authority pile on to the projects in what used to be Section 106 agreements, now Community Infrastructure Levies, which mean that house building, while a profitable business, is no longer the licence to print money it once was. And as such the housing firms want to make 100% sure their sums add up and they don’t screw up their own businesses by suddenly flooding the market with houses when they are operating on tighter margins.

    The State has effectively taken the super profit element out of housing development (that it created in the first place via planning permission) and turned it into a normal business, operating on normal (ish) margins. If housing development companies could make super profits, regardless of the state of the housing market, because the difference between what it cost them to build the houses and what it could sell them for even if it flooded the market , then they would build houses as fast as they could. But they can’t because the State has reduced the profit margin sufficiently to mean they have to control production to maintain a profit.

    My local authority is itself the owner of hundreds of acres of land, all zoned for housing, has been for more than a decade, yet have built not one house on it, because they fucked up the finances prior to the financial crash, and can’t make the figures add up so the developer can make a profit building houses on their land, despite it having ‘the planning chitty’ you keep banging on about.

    Its a bit more complex than that. It is of course (as ever) all the fault of the State and its meddling, but just issuing more planning permissions under the current development legislative system would not result in one more house being built, as no developer could afford to build them.

  12. “Ben S
    February 9, 2016 at 10:42 am

    Gotta love the greens here in Swissland:
    No to building in the countryside
    No to building in the towns
    Yes to more immigrants

    Same as Tories, Labour,Greens and Lib Dems in the UK

  13. very little problem transferring, as a key worker, from there to a council flat in London. Yes, London.

    Hmmm. According to Wikipedia:

    Mason lived in Leicester from 1982 to 1988, working as a music teacher, and lecturer in music at Loughborough University.

    Mason has lived in London since 1988, where, after 1991, he became a freelance journalist.

    That definition of “key worker” is somewhat broad.

  14. So to summarise, the problem (or at least a problem) here is the retention of Stalinist land controls, which were implemented by Attlee and which have never been seriously dismantled in the same manner as Attleean industrial controls, etc. Mainly because of Tory voters who had no problem with closing the coal mines (for instance) but suddenly find they like nationalisation when it stops somebody building something that will affect their house price.

    The interesting other thing being that the British native population is trying to fall, which ought to reduce pressure on land, but we keep importing people to increase the numbers.

    So, a falling population would make England a greener and pleasanter land, and maybe eventually mean you might even get a seat on the 7am train one day, but nobody will let that happen. Neither will they agree to the infrastructural expansion necessary for an increasing population.

    None of this makes a great deal of sense, does it?

  15. AndrewM,

    People forget what London was like. Funnily, though, I thought London was more exciting and interesting back then. You had loads of music venues, it was where the new tech came in first, new films, arthouse cinema, it was where exotic food was. You can get all of that anywhere now. OK, you don’t have hipster popup wank in Northampton or Reading, but you can get the rest.

    And yes, this housing crisis is mostly London and the South East. I know a couple of sisters – mid 20s. One of them is struggling to buy an ex-council flat in Oxford. That’s with her boyfriend, and both of them are on good wages. The younger sister has just bought a 2 bed house with her boyfriend in Yeovil.

  16. I remember London in the 80s being pretty awesome. And it still had some actual Londoners in it. I was in Camden. Amazing place to be, mid 80s.

  17. People forget what London was like. Funnily, though, I thought London was more exciting and interesting back then.

    That pretty much applies to any city which has gotten wealthier and cleaned itself up a bit.

  18. ‘even such formal rules as they still exist (they are being weakened) are flouted by the young salariat.’

    People flouting rules supposedly in place for their own protection is a pretty strong sign that the rules are actually getting in way of them having the life they want.

  19. Ian B,

    It’s a tragedy of the commons problem.

    There was talk of building some houses at the end of our road. I don’t really care. I deliberately chose not to buy a house overlooking a field (I would only do so if I could own the field). But the people near the field were really pissed off. And I asked them where their kids were going to live. And there’s the problem – everyone wants homes, no-one wants them disrupting their house price. It’s why LVT works – if your house falls in value because of that, you pay less tax as a result. All square.

    If Labour were serious about winning an election, they’d put housing and raising land taxes right at the centre (and lowering income taxes). The one policy that was hugely popular, and not only with Labour voters was the mansion tax. It was also reasonably sound in that it wouldn’t disrupt the productive economy.

  20. If Labour were serious about winning an election, they’d put housing and raising land taxes right at the centre (and lowering income taxes). The one policy that was hugely popular, and not only with Labour voters was the mansion tax. It was also reasonably sound in that it wouldn’t disrupt the productive economy.

    The problem with that is that Labour are physically incapable of reducing any tax. So we’d end up with the current high levels of income tax, plus the current high levels of council tax, plus a new high level of “mansion” tax (which would pretty soon apply to any house rated Band D or higher).

    I think the popularity of the “mansion” tax was due to the fact that the details hadn’t yet sunk in and those telling the pollsters they agreed with it all assumed it would apply to everyone else and not them.

  21. “‘even such formal rules as they still exist (they are being weakened) are flouted by the young salariat.’”

    Flouted, eh? How dare people (young people! On a salary, of all things!) do this!

    Later, a young Mr Mason blagged himself a flat as a “key worker”, being a music teacher (salaried).

  22. “Tory voters who had no problem with closing the coal mines”: nor did Labour voters, back when Wilson was closing more mines than Thatch ever would.

  23. Rob,

    It’s even worse than that. His link to the formal rules takes us to a document about minimum space standards. Curse those hard-working young people with salaries, how dare they live in homes which are too small!

  24. “Gotta love the greens here in Swissland:
    No to building in the countryside
    No to building in the towns
    Yes to more immigrants”

    One of their recent wheezes to add to this list is that everyone should live near to their work.

    Then we’ve got “No” to a 2nd Gotthard tunnel “cos it’ll increase traffic” (although there’s miles and miles of solid traffic jams either side of the existing tunnel all burning fuel for nothing whenever it gets even slightly busy, which is most days)…

  25. And in terms of minimum living space sizes, the Soviet standard was something like 50 m^2 for a family of 4, with shared bathroom and kitchen facilities.

    But then if you’ve got nothing to put in it other than a couple of beds, one change of clothes and some State approved books………

  26. @JIm, you’re completely correct, but in this context “planning chitty” is shorthand for the entire total heap of bureaucratic foulups that prevent housing from being built when and where it’s needed.

    It’s valid to lump it all together because it’s ALL under the control of the State – that same state that bemoans the “shortage” of housing and waffles about “market failure”, while all the time the failure is manifestly and undeniably its own.

  27. People forget what London was like. Funnily, though, I thought London was more exciting and interesting back then.

    And we were younger then too.

  28. @Jim
    Jim torpedoes his whole essay on the housing market by making the LVT supporters’ basic argument: …” the housing firms want to make 100% sure their sums add up and they don’t screw up their own businesses by suddenly flooding the market with houses.” (There are plenty of people, including Jeremy Corbyn, who advocate LVT to stop housing firms restricting the supply of houses by land-banking.)
    Or as Adam Smith said “The monopolists by keeping their market constantly understocked ,by never supplying the effectual demand , sell their commodities much above the natural price”

  29. Adam Smith believed in the Labour Theory Of Value too. Frankly, he’s overrated for a man who talked so much bollocks. He even stole the pin factory example.

  30. “The market sets no limits…”

    I thought the market did set limits, the limit being “how much can you pay?”

    If there weren’t any people prepated to pay umpty-million for flats in London, flats in London wouldn’t be selling for umpty-million.

  31. @:DBC Reed: Well what do you expect the housing firms to do, build houses at a loss? No manufacturer is going to flood the markets with its own product and sell them at a loss if they can help it. The point is the State has reduced house builders profits. They thus can’t just build willy nilly like they did in the 80s. Their costs (almost all State imposed) have risen so much that they have to control production to try and keep control of pricing. You can impose LVT or whatever, it won’t make any difference unless all the regulatory costs imposed on house building are reduced. Its a simple sum the builders do – add up all the costs (A) estimate what the selling price will be (B), if B is suitably larger than A, start building. If not, sit tight. If LVT adds even more costs into the sum, then even less houses will be built. You appear to think you can force people to produce at a loss by taxing them, but then you’re socialist so thats par for the course.

    I suppose DBC Developments would be happy making a loss on every house built though?

  32. I know of a patch of desolate swampland going by the name of “Hyde Park”. Pretty conveniently located as well. I’ve often wondered why they don’t build on that.

  33. I grew up in London in the 80s and 90s and it was fun and shit at the same time. Used to get mugged in Central London quite often so we always kept a spare fiver in our shoe so we could get home after a night out. Rubbish and graffiti everywhere. Huge tracts of wasteland in and around the centre.

    Yeah, London is much worse now…

  34. @ Jim AND DBC Reed
    One result of Gordon Brown’s getting rid of “boom and bust” and replacing it with “bubble and bust” is the inability of buiklders to get bank finance for speculative deveopments with a non-negligible risk of loss. As part of my work during the Brown years I investigated a secondary bank which mostly provided trade finance and finance for machinery but had a smaller division providing property finance, mostly bridging finance. That division always took security on the property *and* (not or) a persoinal guarantee from the developer. That bank went bust because the losses after the Brown bubble burst wiped out not just the companies and the directors but the bank (whose other divisions made satisfactory profits) as well.
    So many of those developers are now out of business and those remaining (or replacing them) are finding it difficult to borrow money for any development which is less than 98% safe.

  35. So, how come, a music teacher is a key worker? And I know journalists know very little about anything but I wouldn’t go to my music teacher if I wanted to know about economics.

  36. Jim and John 77
    You are answering an entirely different point. The question is: how can developers ” supply the effectual demand” for houses without crashing the market prices of houses already built? Answer is : they cannot ,so “dribble out” the limited number of houses that leaves the inflated average price of houses unchanged.

  37. DBC

    “The question is: how can developers ” supply the effectual demand” for houses without crashing the market prices of houses already built?”

    “Answer is : they cannot ,so “dribble out” the limited number of houses that leaves the inflated average price of houses unchanged.”

    Whereas the answer should be perhaps they could if the Curajus State simply removed a lot of the legislative crap (and hence cost) that Jim refers to above. Does that help?

  38. @ DBC Reed
    No, I was answering the point Jim made.
    As to your latest question the answer is that the developers *would* crash the price if they were allowed to build the houses. The drop in costs (including the interest charge) would halve prices if they maintained profit margins. The competition between builders would resultin lower margins.
    Yes, it can happen because this has happened before, not just in 2007-12 when the UK index fell 20% although we had horrendous planning burdens because competition led to all the builders trying to sell houses despite your belief that they would do anything to maintain prices; in 1989-93 the price of existing houses fell 17%.
    As a homeowner without a mortgage I am naturally in favour of sensible house prices (i.e. around one-third of the current level – still look high until you take into account the debasement of the currency) as the price of my house is irrelevant to its value and I should like decent housing to be available at a reasonable price.

  39. “The question is: how can developers ” supply the effectual demand” for houses without crashing the market prices of houses already built? Answer is : they cannot ,so “dribble out” the limited number of houses that leaves the inflated average price of houses unchanged.”

    No you dimwit, the question is how low can developers sell houses and still make a decent (but not excess) profit? If that figure is ‘Not much lower than todays house prices’, which I know for a fact it is, then there is no way to increase supply of houses by increasing the amount of land that may be built on, or by introducing LVT, or anything else. The only way to get developers to increase supply is reduce their costs, which would mean they could increase supply and still make a profit if the market dropped 30% (or whatever figure you wish to drop house prices by).

    It may have escaped your notice but house building pretty much dried up in the post financial crash years. Its only 7-8 years later that house prices have risen back enough for developers to consider turning on the taps again.

    Repeat after me – You cannot stimulate the production of X by increasing the costs (whether production inputs or taxes) associated with producing X. If you reduce the costs associated with producing X, you tend to get more X.

    Its not complicated.

    And incidentally, what is your ‘Effectual demand’ for houses? At £1/ house its infinite. At £1m/house its pretty low. What arbitrary price are you suggesting that a house should cost (regardless of whether it can actually be produced for that price)?

  40. @ Jim
    A large increase in the supply of land that may be built on *would* reduce the price of land and hence the cost of the house. The actual cost of building a house is less than the price of the building plot around here.
    You may well reply that the other costs dwarf both – I don’t know because I got moved off covering the construction sector in 1984.

  41. “A large increase in the supply of land that may be built on *would* reduce the price of land and hence the cost of the house.”

    The cost of the land ie what the landowner gets paid for it, is c. £20k/house. The entire rest of the price is made up of construction costs, infrastructure costs, local authority section 106 demands, regulatory costs etc etc. And the developers profit margin of course. You could compulsory confiscate the land for zero, and it wouldn’t make that much difference to the selling price. A few years of inflation of building and infrastructure costs, new regulations and local authority greediness and you’d be right back at the starting position.

    The only way to make developers build more houses is to let them do it more cheaply. Stop telling them how to build houses, how many bus lanes and cycle paths they have to build, how many pointless ecological studies and reports they have to do, how many stupid green ‘initiatives’ they have to incorporate into their developments (at vast cost), what the houses should look like, the list goes on. Let house builders build what they like, And if its shit, no-one will want to buy the houses and they’ll go bust. Just like the old days, which strangely enough was when all the houses that people all want to live in nowadays were actually built. No-one goes ‘You know what I really fancy a house built in the 1970s’, but plenty want Victorian terraced houses, and 20s suburban villas.

  42. Glad to see another person pointing out that house builders are constraining supply. When I suggested it a few months ago, I was roundly abused. Some folks even told me it was impossible. How views evolve over time.

  43. @ diogenes
    What Jim is saying is that builders won’t build houses at a loss. You said that housebuilders were refusing to build houses at a profit.
    Two very very different things.

  44. Jim

    “£20k/house”

    Depends on location. Somewhere unpleasant up north with an oversupply, obviously less, inside the M25, can be a lot more.

    Ie, in the south east – whilst I agree 100% with all that you say about the legislative crap in addition – those chitties, just in themselves, from “farming price per acre” to “price with planning per acre” can be worth a lot more than £20K per house.

    It doesn’t change the fundamental issue. Ie, reduce the cost and difficulty – planning chitties (where the with/without planning per acre differentials are high), legislation, etc – and more houses would inevitably get built.

  45. @ Jim
    Some years ago I asked an acquaintance (because he was in property) what the value of a site in Stafford would be with planning permission for housing and he said he personally would buy it at £500k/acre. I grew up in a semi- that, with garden, covered one-third of an acre. Hence I get a number nearer £200k than £20k.
    One can buy a decent ex-council flat in Glasgow for £50k, down here its more than £150k, which means the location is worth more than what’s built on it.
    If, of course, you are talking about the price of land without planning permission then £20k is plausible – but I was talking about eliminating the vast mark-up due to scarcity which would destroy the council’s ability to blackmail the developer into paying the odd £million for their pet projects.

  46. @john77: it depends on the size of the site. A small site that can piggy back on existing infrastructure (roads/sewers/utilities/schools/hospitals/parks etc) will be worth considerably more.

    I’m talking about the value of the land in large urban extensions, the sort of green field sites that will eventually have thousands of houses on them. The sort of developments that will supply the large numbers of houses required. These developments have to not only fund the houses themselves but also the entire infrastructure that surrounds and creates a town or city. And all that has to be paid for somehow, and it comes off the value of the land, there is nowhere else for it to come from.

    Thus if you own (say) a factory site in an urban area, and get planning for 50 houses, then yes that land will be worth considerably more than the same area of land in an urban extension of 5000 houses, because you already have a town around you rather than having to build one from scratch.

    Then there is also the thing that trips many people up when talking about the value of ‘land with planning permission’. The high figures per acre often quoted in the press etc are always actually for ‘serviced’ land with planning permission ie land that already has the major roads in place, the utilities already on site, the drainage and sewers in place. All the house builder has to do is work out where to put the individual houses and start building them. And all that infrastructure is priced into the serviced land price. It may still be a field, but its a field that had a lot of money spent on it to get it to a position that bricks can start to be laid. And thats reflected in the price per acre.

    If you take a large greenfield site, with zero infrastructure in place, and a planning permission in place on paper only, then you are talking values of £100-150k/acre across the site. Given 50% of the land will be non-developable (roads, open spaces, schools, drainage ponds etc) and has zero value, the entire value is in the 50% that can be built on, so £200-300k/acre. Given an average of 15 houses per acre that works out at £15-20k per house for pure land value alone.

    These figures will be higher the closer you get to London and vice versa, but the % of the house selling price that is the land alone will be a fairly fixed % – roughly 10%, certainly no more than 15%.

  47. @ Jim
    Thanks for the explanation. That makes more sense (although I then wonder why they build so many pokey little boxes if land is so small a %age of the price)..

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