House price rises 'must stop'

CLAPTON

Jason74 wrote: »

This is a point that's often made, and would be very valid but for the massive difference in how private renting works in the UK compared to most of the rest of Europe. In countries in Europe where long term renting is more "normal", you generally have regulated rents, and secure long term tenancies. These enable tenants both to have a degree of security of tenure and certainty of long term costs that private tenants in the UK simply don't have with the assured shorthold model.

If we want to move to a housing structure where longer term renting is both common and "fair" in the way it is in much of Europe, then we need some fairly radical reform of the private rented sector in the UK to make it work more in line with the "European" model.

most of Europe have a higher level of owner occupation than the UK and most countries don't have meaningful rent controls.
Rent controls merely increase demand whilst deducing supply.

Graham_Devon

wotsthat wrote: »

I feel a bit sorry for the him and the way he is willing to trade credibility in exchange for media time.

Interesting that you see this ruining his credibility.

I feel he has more credibility speaking up against the perceived wisdom of the rest of his peers.

He's said some guff in his time, but when an MP is willing to stand up for what he thinks is right, against everyone around him, that deserves respect, especially considering he's essentially right here.

Of course, you could just state he's just wanting the limelight to write all of his points off, but I genuinely don't think that's the case here.

Jason74

CLAPTON wrote: »

most of Europe have a higher level of owner occupation than the UK and most countries don't have meaningful rent controls.
Rent controls merely increase demand whilst deducing supply.

You are right on a Europe wide basis, I was replying to a previous post and was alittle sloppy in my reply. To be fair I was thinking primarily about Germany, where an element of rent regulation has been in place for many years, and was tightened by new federal laws last year.

Imho, the German model around housing, indeed around most things economic, is far superior to the UK approach.

CLAPTON

Jason74 wrote: »

You are right on a Europe wide basis, I was replying to a previous post and was alittle sloppy in my reply. To be fair I was thinking primarily about Germany, where an element of rent regulation has been in place for many years, and was tightened by new federal laws last year.

Imho, the German model around housing, indeed around most things economic, is far superior to the UK approach.

maybe

I don't know the details on how the German model works but others have said the rules on rent control can be easily overcome
the German population isn't increasing in the way we are here


and the principle will remain that rent controls will increase demand and reduce supply

Jason74

CLAPTON wrote: »

and the principle will remain that rent controls will increase demand and reduce supply

In one sense yes. Reduce the price of any good (particularly something as vital as housing), and more people will want it.The propensity of the market to supply it will also be reduced if there is less profit to be made.

The flip side of this, will be a lot of properties currently in the private rented sector being returned to the owner-occupied sector as landlords sell up due to the model no longer being economic (and if this doesn't happen, supply does not reduce so the whole argument becomes moot). The trend of properties being taken out of the owner occupied sector and into private rented sector will also go into reverse. Both of these things are in themselves desirable imho from a "social justice" perspective (although I recognise that this is a matter of opinion), but you are right in that they don't solve the fundamental problem.

Which is why, ultimately the solution has to be more building, particularly of social rented housing. The only times in the post war period where house building has kept pace with demand, has been when there has been an element of public funding to produce it. Such funding directly pays for itself in the long term, as the rent received on the property eventually covers the cost of building and maintaining it (not to mention that a portion of the money comes back to the govt. in tax receipts anyway).

You can then peg rents to affordability, meaning that people can afford a decent home. Prioritising access to these new homes to people with a certain history of NI contributions will also make work pay far more for many people than it does at present.

That kind of process will never happen of course, as we have a view around housing in the UK that "the market" is a sacred cow that cannot be touched. However, the fact is that the market is not working for a large number of people in the UK at present, and that number is steadily growing. When it is possible to alleviate the housing crisis by in effect by passing the market, it is bordering on criminal imho that we are choosing not to do so.

CLAPTON

Jason74 wrote: »

In one sense yes. Reduce the price of any good (particularly something as vital as housing), and more people will want it.The propensity of the market to supply it will also be reduced if there is less profit to be made.

The flip side of this, will be a lot of properties currently in the private rented sector being returned to the owner-occupied sector as landlords sell up due to the model no longer being economic (and if this doesn't happen, supply does not reduce so the whole argument becomes moot). The trend of properties being taken out of the owner occupied sector and into private rented sector will also go into reverse. Both of these things are in themselves desirable imho from a "social justice" perspective (although I recognise that this is a matter of opinion), but you are right in that they don't solve the fundamental problem.

Which is why, ultimately the solution has to be more building, particularly of social rented housing. The only times in the post war period where house building has kept pace with demand, has been when there has been an element of public funding to produce it. Such funding directly pays for itself in the long term, as the rent received on the property eventually covers the cost of building and maintaining it (not to mention that a portion of the money comes back to the govt. in tax receipts anyway).

You can then peg rents to affordability, meaning that people can afford a decent home. Prioritising access to these new homes to people with a certain history of NI contributions will also make work pay far more for many people than it does at present.

That kind of process will never happen of course, as we have a view around housing in the UK that "the market" is a sacred cow that cannot be touched. However, the fact is that the market is not working for a large number of people in the UK at present, and that number is steadily growing. When it is possible to alleviate the housing crisis by in effect by passing the market, it is bordering on criminal imho that we are choosing not to do so.

I too am all for more owner occupation however it is likely that property moving from rented to owner occupier will have result in 'lower people to house' ratio and so put more pressure on rents (ie. people renting in general occupy minimum space to keep the rent down whilst owner occupiers buy the best they can afford).
Where that meets your criteria for 'social' justice' is for you to say.


The period when there was a large council housing program wasn't a period when supply kept pace with demand.
What happened was that large areas of our towns were demolished and 'better' housing was produced.

The councils were, of course exempt from planning rules, (as they made them ) and could push through compulsory purchase orders quite easily: as much of what was being pulled down were slums or war damaged properties anyway there was general support for these large building programs.

We could easily build more properties today if the planning rules (introduced after WW2) were relaxed and government levies and tax on new builds were reduced.

State owned subsidised property is not the solution to our housing problems.

Jason74

CLAPTON wrote: »

I too am all for more owner occupation however it is likely that property moving from rented to owner occupier will have result in 'lower people to house' ratio and so put more pressure on rents (ie. people renting in general occupy minimum space to keep the rent down whilst owner occupiers buy the best they can afford).
Where that meets your criteria for 'social' justice' is for you to say.


The period when there was a large council housing program wasn't a period when supply kept pace with demand.
What happened was that large areas of our towns were demolished and 'better' housing was produced.

The councils were, of course exempt from planning rules, (as they made them ) and could push through compulsory purchase orders quite easily: as much of what was being pulled down were slums or war damaged properties anyway there was general support for these large building programs.

We could easily build more properties today if the planning rules (introduced after WW2) were relaxed and government levies and tax on new builds were reduced.

State owned subsidised property is not the solution to our housing problems.

On the housebuilding issue, you are right that some of the property being built in the era of large scale council building was indeed replacing existing slums. Perhaps it would be more accurate to say "the period where most house were built involved large scale public building" and "the period where we came closest to keeping up with demand involved large scale public building". I'm talking about the post war era here, and I think it's hard to factually argue with either of those statements.

In terms of subsidy, the reality is that we already do have a "state subsidised" property environment, via housing benefit. We currently spend £21 billion pounds a year on this benefit, and that is expected to rise to £25b by the end of next year. That is effectively "dead money" providing no benefit whatsoever beyond the months rent that it provides. This is a particular problem in areas like London given the level of private rents in those places.

So whether we like it or not, Government subsidy is a fact of life in housing provision. The only ways to eliminate subsidy are to either control the price of housing (which is unacceptable to you and many others), or to abandon the idea that as a last resort, the state has a duty to ensure that it's citizens are adequately housed (which is unacceptable to me, and I would hope most people).

The question therefore isn't if we subsidise, it's how we do it. I can't see any way in which putting money in the pockets of private landlords is a better option than building up a stock of publicly owned homes that can be rented out to meet housing need at affordable costs, at a lower long term cost to the taxpayer than the Thatcherite approach of "let(ting) Housing Benefit take the strain".

antrobus

AndyGuil wrote: »

... Home ownership isn't for everyone though, we already see this in Europe.

Do we? Home ownership in the UK is about the European average. Or at least it was; it's probably slightly below the average these days.

CLAPTON

Jason74 wrote: »

On the housebuilding issue, you are right that some of the property being built in the era of large scale council building was indeed replacing existing slums. Perhaps it would be more accurate to say "the period where most house were built involved large scale public building" and "the period where we came closest to keeping up with demand involved large scale public building". I'm talking about the post war era here, and I think it's hard to factually argue with either of those statements.

In terms of subsidy, the reality is that we already do have a "state subsidised" property environment, via housing benefit. We currently spend £21 billion pounds a year on this benefit, and that is expected to rise to £25b by the end of next year. That is effectively "dead money" providing no benefit whatsoever beyond the months rent that it provides. This is a particular problem in areas like London given the level of private rents in those places.

So whether we like it or not, Government subsidy is a fact of life in housing provision. The only ways to eliminate subsidy are to either control the price of housing (which is unacceptable to you and many others), or to abandon the idea that as a last resort, the state has a duty to ensure that it's citizens are adequately housed (which is unacceptable to me, and I would hope most people).

The question therefore isn't if we subsidise, it's how we do it. I can't see any way in which putting money in the pockets of private landlords is a better option than building up a stock of publicly owned homes that can be rented out to meet housing need at affordable costs, at a lower long term cost to the taxpayer than the Thatcherite approach of "let(ting) Housing Benefit take the strain".

I have no ambition to eliminate subsidy: I think it proper that as a civilised society we make appropriate provision for the poorest in our society.

I do however, believe we ought to provide support for people when they need it and not that we should provide support for specific houses irrespective of whether the occupants are rich or poor.

The argument that government can provide housing 'cheaper' than the private sector via HB, depends upon the fallacy that the public sector housing assets have no value : i.e. a property 25 years old that has had it's building cost covered is somehow worth zero.

And no, I don't see it is the state's job to see people are adequately housed although I do think we need to support the poorest.

AndyGuil

antrobus wrote: »

Do we? Home ownership in the UK is about the European average. Or at least it was; it's probably slightly below the average these days.

Depends which countries we look at. Germany is very rent orientated. Lots of private companies own properties there as well. Rents are somewhat cheap in the UK, 50% of salary is often the case in Germany. Look to Asia and it is the norm to hand over a large amount of cash up front which you get through a loan or the bank of mum and dad, £30k isn't unreasonable (plus rent).

Edit: I see Germany mentioned earlier. They would like to own but don't go crazy when they can't. It is not the end of the world. It is a British obsession.

Edit 2: Just asked some friends in Asia. They said for a 3 bed flat just outside of Seoul, nothing special, they paid £60k up front to rent the place. :eek: