The stich up keepiing homes unaffordable

CLAPTON

ILW wrote: »

There will always be a buyer if the price is right and a substantial tax on just holding the land undeveloped would ensure that the buyer would build.

There would be winners and losers, but there would also be more houses.

Basically you are saying that builders will be discouraged from holding a forward stock of land because of the extra cost.

How does that encourage building except in the very short term?

michaels

Sorry if this is already in the thread.

I don't beleive that builders have to 'mark to market' their building land. so if they purchased land in 2007 at peak prices even with permission the value of the houses sold plus build cost may not cover the land purchase cost so the builder is effectively insolvent if he builds the houses. However assumign he can afford the interest he can keep the land on his books ar purchase price securing his debts and keeping him in business. In lots of the country away from the SE house prices are sharply down on peak so if all the planning permission is for flats in northern cities it is not surprising that they are not being built.

This could of course be solved by making builders mark to market in their accounts, go bust and have the sites sold at their current value at which time the purchaser would have no reason not to build.

CLAPTON

Graham_Devon wrote: »

There IS sufficient demand. That's why they sell and why prices are going skyward.

There are people signed up waiting for the home to be built. They prolong is so that the demand increases.

How long that there been this demand?

How many disappointed buyers were they last year and the year before : do you have any figures ?

Why have most building companies made no profit until this year?

Before the financial meltdown, the builders were building and selling a lot more properties.
Why did they suddenly decide to hoard the land when you believe there were lots of people queuing up to buy (with the necessary funds)?

Graham_Devon

CLAPTON wrote: »

Basically you are saying that builders will be discouraged from holding a forward stock of land because of the extra cost.

How does that encourage building except in the very short term?

They need land to build. If they don't have land they can't build houses and they fold.

At the moment builders are profiting from land banking. Without that profit, they would have to build to make a profit.

Are you against building clapton? You appear to have issues with anything which encourages building? I always assumed you were pro building?

ILW

CLAPTON wrote: »

Basically you are saying that builders will be discouraged from holding a forward stock of land because of the extra cost.

How does that encourage building except in the very short term?

The current problem is short term.

Loughton_Monkey

michaels wrote: »

Sorry if this is already in the thread.

I don't beleive that builders have to 'mark to market' their building land. so if they purchased land in 2007 at peak prices even with permission the value of the houses sold plus build cost may not cover the land purchase cost so the builder is effectively insolvent if he builds the houses. However assumign he can afford the interest he can keep the land on his books ar purchase price securing his debts and keeping him in business. In lots of the country away from the SE house prices are sharply down on peak so if all the planning permission is for flats in northern cities it is not surprising that they are not being built.

This could of course be solved by making builders mark to market in their accounts, go bust and have the sites sold at their current value at which time the purchaser would have no reason not to build.

I believe Chewy confirmed that builders can indeed hold the cost price of land in their books. A bit dodgy in my view, but I believe it.

So your argument for them holding onto it is sound....

But I wonder if they have considered an alternative - which might be to build anyway, but instead of selling, they could rent them out - presumably at reasonable ROI in the interim - and await the rise in values to sell them at a profit.

ILW

Loughton_Monkey wrote: »

I believe Chewy confirmed that builders can indeed hold the cost price of land in their books. A bit dodgy in my view, but I believe it.

So your argument for them holding onto it is sound....

But I wonder if they have considered an alternative - which might be to build anyway, but instead of selling, they could rent them out - presumably at reasonable ROI in the interim - and await the rise in values to sell them at a profit.

Doubt they want to increase supply as it would reduce prices and rents.

CLAPTON

ILW wrote: »

The current problem is short term.

No, we have a long term requirements to build properties for our growing population so we need sustainable policies to ensure adequate supply, not just for the short term but for the foreseeable future.

A sudden tax to 'force' the sale of land is a very uncertain weapon even if there are queues of well funded builders waiting to buy the land and in a position to build more quickly than the present owners

N1AK

CLAPTON wrote: »

This year, builders are showing profits for the first time in about 5 years.

Given we live in a greedy capitalistic economy I am very surprised that other builders didn't leap in during the period of deliberate non-building and clean up with massive profits.

Of course some (totally deluded) people think the low level of house purchases (both new and existing stock) had something to do with the world wide financial collapse.

Neither of the points you make are arguments against the premise. If land for building is a restricted resource then hoarding it stops other companies from correcting the market. People have already pointed out the reasons why sitting on land can be worthwhile both from a financial reporting and long term profit point of view in this thread so I won't repeat it.

I bought some limited edition product that I didn't need a few years ago because I was confident that production would be insufficient to cover demand. I bought 30 units at £3.50 each back in 2011. I'm still sitting on 24 of them, having sold 6 of them for an average of £16 so far. I don't need the profit from the others and the price keeps increasing so I have no motivation to sell the others and the market is actually encouraging me to sit on it for longer.

Now that's pretty harmless when we're talking about something that is a glorified toy but when it's land and desperately needed housing that is being hoarded it's beneficial to intervene.

Graham_Devon

ukcarper wrote: »

But it will entail borrowing and that is what the government is against.

Then we are doomed and theres absolutely nothing that can be done. Ever. Market is what it is.....

....Unless they want taxpayer guarantees, then we can find solutions to everything.