Jock's Place - Housing, housing, housing? No, it's location, location, location that matters, Gordon! - Comments

Not sure I agree with all of

Jock — Sat, 21 Jul 2007 16:45:28 +0000

Not sure I agree with all of that (not least I don't understand why you think I think the problem is all in one place?). I certainly agree with your closing sentiments, but I do also think that it is just such people as you and I who feel that who can make a difference to the outcome by making our voices heard.

Here in Oxford the shortage is not small flats for example, but family homes. And I certainly cannot think of anyone I know who can simultaneously afford 2 or more bedrooms than they need (ie underoccupy) but not children! The reverse appears more to be the case - that they have children and then cannot afford to accommodate them properly.

I think if we are completely reliant on the financial sector we are scuppered anyway, but for the value that brings into the country it still involves a very small number of people (that's not retail financial services of course but international finance).

There do appear to be at least two different types of "market failure" though in the market - clearly if you have a city where house prices are out of reach but there is lots of land and even unoccupied housing, there's something else going on than what's happening in London and parts of the south east. I'd say that general inflation is more to do with the debt-money system, which is something that LVT would squeeze out wherever it is, regardless of local supply and demand issues.

I think there are plenty of opportunities for encouraging some economic activity away from the south east still though. For example, much of the high tech industry - both IT and biotech - and its attendant supply chain need not be clustered around Heathrow.

The other thing about LVT, especially if, like me, one wants it to completely replace other taxes on production like income and capital investment taxes, is that these taxes are tarrifs on production and international competitiveness. Replacing such taxes with LVT would help to diversify our economy away from reliance on the financial sector.

An interesting

Anon — Sat, 21 Jul 2007 14:44:32 +0000

An interesting analysis.

It's not true, however, that the house price situation is just in one area.

It is the worst in the south east but ridiculous prices are everywhere in the country, and even spreading through europe due to Britons "investing" in a foreign home.

The reason that homes are underoccupied are because of family breakdowns, young people not being able to afford children and investors. The way we live here now needs a lot more 1 bedroom flats.

While spreading economic activity through the country is a good idea, and land value tax is also a good idea, most of the new money coming into the economy is through London because of the finance corporations. These tend to like being in London, and would probably not locate to Hull, therefore discouraging economic activity in London may not give benefits to other areas.

The solution to house prices is simple. If more 1 bed flats are built, the prices go down, the investors stop buying more houses and land value falls over the entire country. Unfortunately, the housing will have to be high density, as the strong demand is in London, there isn't any brownfield land there and our infrastructure cannot cope with more commuter towns.

I just hope they don't end up like the ugly 60s monstrosities like in elephant and castle.

If house prices don't fall sharply in the next few years we will start to see huge economic problems. I don't see a future in Britain anymore and a lot of my friends are planning to emigrate. All the skilled workers will start to leave in large numbers as the quality of life decreases for us.

Housing, housing, housing? No, it's location, location, location that matters, Gordon!

Jock — Sun, 15 Jul 2007 02:33:23 +0000

There's lots of stuff in the weekend press about the government's plans to tackle housing shortages. The Observer runs with "It's housing, housing, housing as Brown builds a new vision" and is typical of the genre...

"The new Prime Minister has signalled his intent by kick-starting what could be the biggest building programme for 30 years, writes Nick Mathiason

"Sunday July 15, 2007
"The Observer

"Since 2000 Labour has promised a major change in the number of new homes. Headline-grabbing announcements from ministers came and went. But though Britain is now in the midst of the most prolonged housing price boom ever seen, the number of homes built annually has hardly shifted from 80-year lows of about 185,000 a year. Meanwhile, whole swathes of the population have been priced off the housing ladder.

"To remedy a chronic supply shortage, last week Gordon Brown unveiled plans to build 3 million homes by 2020. While it is easy to dismiss his announcements as yet more froth, Whitehall officials, housebuilders and regeneration specialists say radical reform and even action is in the air."

Yet, as Tristram Hunt points out in his defense of nice views for the haves against housing for the have-nots (the BANANA argument), we are told by other government figures that there are at least 65,000 hectares of derelict or underused brownfield type sites in urban areas (which is space for 2.6 million of the three million Gordon wants to see built at current urban density guidelines of forty per hectare). While Anne Ashworth, in Friday's Times, reported that the PropertyFinder website claims that 420,000 homes stand empty in disrepair in England - enough, you will notice, with the underused urban land figure, to complete Gordon's 3 million properties without putting a single JCB into the greenbelt.


Low density	High density
Which would you prefer?

But also, we have to realize that there are not 1.5 million households (the council house waiting list) out on the streets. They are mostly living somewhere - often in overcrowded and/or unaffordable conditions. Whilst research also suggests that up to 46% of all housing is "underoccupied" - with 2 or more unused bedrooms, and that contrary to the usual cris du coeur that people should be allowed to stay in their family home regardless of how empty it is, 45% of households aged 50+ say they are open to the idea of downsizing before or after retirement - though most don't and cite a lack of suitable local properties to which to downsize into as the main factor.

All of this suggests that the better way to address current housing needs is not in fact to build net new units on virgin land at all, but to promote policies that bring empty homes into use, derelict land into bloom, and remodelling of existing communities so that the needs of different ages, for downsizing as well as for growing families, can better be accommodated without chucking anyone out to the farthest flung edges of a new suburban edge of city sprawl.

But, as the TV development programs tell us, location, location, location is what matters. We are a small island. It doesn't take long to get practically anywhere. We also need mechanisms to promote natural population movement to areas that are now economically down at heel and suffering from blight - since it would probably be a good guess that most of the empty homes and a high proportion of the unused urban land is in such areas.

And here it is not just land use policy that could make a huge difference. Many international inward investors want to be near to their global markets - which means proximity to ports and airports; much of the concentration of high tech businesses in the "western arc" of the South East region is put down to proximity to Heathrow - they are competing not with Hull, but with Silicon Valley or Osaka. A proper market in landing slots encompassing all airports in the UK could make a big difference to the viability of international traffic into regional airports, and so also attractiveness for international businesses to set up around those regional airports instead of around the London ones and bring employment, and therefore housing demand, out of the South East to those airport hosting regions.

But in the final analysis, the only measure that could achieve all of these in one, together with providing a replacement revenue stream for both local and national government, and recovering government and community financial inputs to localities from the beneficiaries who see their property values rise with regeneration money and so on (Sarah Beeney et al will explain it no doubt - it is fact not conjecture), is Land Value Tax.

All other things being equal, if your corporate tax bill (or even your competitor's) in, I don't know, Bolton, is a quarter what it would be in Bracknell, and your wage costs are a quarter less because your employees don't have to pay as much for that most basic of life's needs, a home, given the chance, wouldn't you, or rather your shareholders, jump at the chance for that extra post-tax profit? And, on top of that, your investment in that low value area would be far better for that area than continuing welfare payments because of a lack of economic opportunity for the people who live there - saving huge amounts of current government redistribution welfare payments.

Land values are by nature unearned by the occupier. They are created by the growth (or decline) in the popularity of a location, the expenditure of others, including government, that goes into the services and infrastructure that creates that popularity, and the effective monopoly current occupiers have in a location. Property values are also a "false" kind of wealth - for most people, those who live in their one and only property, they only really matter in relation to their next desired home. Those land values then, are a supremely appropriate thing on which to base a tax. And the non-doms, currently the fashionable whipping boys of the property market, cannot escape them to boot.

Who could possibly ignore an idea that claims to be able to achieve all of this with one simple reform. No more forcing urban expansions where people don't want them. Lower welfare transfer payments because of a more balanced regional economic outlook. Recovering money spent on an area from the people who benefit most from that expenditure. Lower housing costs. More efficient use of the housing we've got. And encouraging redevelopment of blighted areas or underused land. It's win-win. A no-brainer. A one size really does suit all package.

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