C4 Dispatches - The British Property Boom

Generali

antrobus wrote: »

And yet public sector workers are paid on average 14.5% more than those in the private sector.

It's too simplistic a metric. There aren't many planning officers employed privately and not many train drivers employed publicly. You're comparing apples with oranges.

The likelihood is that some jobs will pay better in the private sector, some better in the public sector and many you have no or little choice as to which sector you work in. Until a few years back, my sector as was (investment banking) was basically a private sector job.

That has changed thanks to a little local difficulty. It would be interesting to see whether Investment bankers do better in the public or private sector.

alexanderalexander

antrobus wrote: »

And yet public sector workers are paid on average 14.5% more than those in the private sector.

As others have said this isn't comparing like with like. In addition to Generali's very sensible point above, it's worth pointing out that almost all low-level ancillary jobs (cleaning, catering, etc.) in the public sector (as well a fair amount of low-level delivery work e.g. street cleaning) has been contracted out, which makes them private sector jobs for statistical purposes. As such, the people who remain directly-employed in the public sector are disproportionately senior.

antrobus

Generali wrote: »

It's too simplistic a metric. There aren't many planning officers employed privately and not many train drivers employed publicly. You're comparing apples with oranges....

That would be true if you were considering the question of whether or not public sector workers were being paid the correct salary.

But that's not the question. The question is regarding the affordability of housing. If you're being paid more money, you are better able to afford a house. It doesn't matter why you're paid more money, or whether or not you deserve that extra money, the fact is that you have that extra money, and that's all you need to know.

alexanderalexander wrote: »

As others have said this isn't comparing like with like...

And as I've pointed out that is irrelevant to the issue.

Public sector workers are paid on average 14.5% more than those in the private sector. That is a fact. There are likely explanations for that fact. People should stop trying to imply that there is some kind of moral judgement implicit in stating that fact.

ruggedtoast

Britain's public sector is the envy of the world. Every day our public sector workers give their all to deliver world class services to the public for ever diminishing returns.

Time and again the British public have been shown to be behind the workers 100%.

Jason74

Cornucopia wrote: »

I'm not sure it's a particularly useful distinction, and it's certainly not one shared by other anti- posters.

The problem that you have is that it's the default for our country to have a mix of OO, BTL/Private LL and Social Housing. I've not seen a cogent argument for walking away from any of those options, merely incoherent whinging about the costs and proportions.

There is a market out there. You cannot buy Buckingham Palace for £50k, and you cannot rent it for £50/week.

Personally, I'm not interested in paying £400k for a 2-bed house in Walthamstow. But as long as that house has a queue of interested parties 50 or 100 long, someone will. That is a market.

At the other end, there is a market for properties you can pick up for £15k-20k.

There are choices. And unless you've exhausted all of those choices, and a few "thinking outside the box" options, there is no justification to claim to be priced out.

Even a couple of pages in, we have yet to have any cogent argument as to why BTL is even an issue in that debate...

... still waiting.

You're right of course in that there has always been a mix of housing, and if we take a purely "post war" view of history, there can be little doubt that all three tenures have a role to play. The question is, what is the role of those three tenures, and what is the right "mix" between the three.


You say that there has been "no cogent argument as to why BTL is even an issue", but I think that one of the problems is that there are very different views about what a cogent argument actually is. I make no bones about the fact that I look at housing as primarily a social issue rather than an economic one. I suspect that you look at it as primarily an economic one, and to be fair, your view would probably be the majority one on this forum (and possibly beyond).


But if we do look at housing from a social perspective, it is clear that of the three main tenures, private renting (in it's current form) is in the long term the worst housing option for most people. It has higher costs and lower security than social housing, and doesn't provide the asset accumulation of home ownership. These are not opinions, they are facts.


Now that doesn't mean that private renting doesn't have a place. but if we're talking about maximum social benefit, that place is effectively limited to provide accommodation for those who are for whatever reason not wanting (and note that I'm specifically talking about not wanting, rather than not able) to make a long term commitment to particular housing.


What's clear at the moment, is that the above scenario is not where the balance currently is. Private renting is becoming a larger and larger slice of the housing cake, while in percentage terms, both social housing and home ownership are in decline. What's more, many people are in private renting because not because it "works" for them, but they are unable to access any other tenure. I'd consider Shelter the most reliable source on this subject, and they estimate that about 70% of people in private renting are there because they effectively have no other choice.


All of that adds up to a situation where from a social perspective, private renting is a larger portion of the housing mix than is ideal. Of course, what you do with that information depends on your perspective. If you are someone who views housing from the point of view of it being an economic issue where the market is king, then the likely reaction is to shrug your shoulders, and effectively say "that's how markets work, there are winners and losers, and we shouldn't be interfering with that process".


But while the above approach is certainly a legitimate one, as someone who sees housing as first and foremost a social issue, it is clear that the balance of tenures is being driven more by market buying power (in this context particularly from landlords) than occupier need (be that owner occupiers or tenants). For me, this is a problem that needs to be addressed, and while being far from the whole solution, curbing BTL would certainly be helpful as part of a package of measures to address this issue.

ukcarper

Jason74 wrote: »

You're right of course in that there has always been a mix of housing, and if we take a purely "post war" view of history, there can be little doubt that all three tenures have a role to play. The question is, what is the role of those three tenures, and what is the right "mix" between the three.


You say that there has been "no cogent argument as to why BTL is even an issue", but I think that one of the problems is that there are very different views about what a cogent argument actually is. I make no bones about the fact that I look at housing as primarily a social issue rather than an economic one. I suspect that you look at it as primarily an economic one, and to be fair, your view would probably be the majority one on this forum (and possibly beyond).


But if we do look at housing from a social perspective, it is clear that of the three main tenures, private renting (in it's current form) is in the long term the worst housing option for most people. It has higher costs and lower security than social housing, and doesn't provide the asset accumulation of home ownership. These are not opinions, they are facts.


Now that doesn't mean that private renting doesn't have a place. but if we're talking about maximum social benefit, that place is effectively limited to provide accommodation for those who are for whatever reason not wanting (and note that I'm specifically talking about not wanting, rather than not able) to make a long term commitment to particular housing.


What's clear at the moment, is that the above scenario is not where the balance currently is. Private renting is becoming a larger and larger slice of the housing cake, while in percentage terms, both social housing and home ownership are in decline. What's more, many people are in private renting because not because it "works" for them, but they are unable to access any other tenure. I'd consider Shelter the most reliable source on this subject, and they estimate that about 70% of people in private renting are there because they effectively have no other choice.


All of that adds up to a situation where from a social perspective, private renting is a larger portion of the housing mix than is ideal. Of course, what you do with that information depends on your perspective. If you are someone who views housing from the point of view of it being an economic issue where the market is king, then the likely reaction is to shrug your shoulders, and effectively say "that's how markets work, there are winners and losers, and we shouldn't be interfering with that process".


But while the above approach is certainly a legitimate one, as someone who sees housing as first and foremost a social issue, it is clear that the balance of tenures is being driven more by market buying power (in this context particularly from landlords) than occupier need (be that owner occupiers or tenants). For me, this is a problem that needs to be addressed, and while being far from the whole solution, curbing BTL would certainly be helpful as part of a package of measures to address this issue.

I'd agree with you that the mix of the three tenures is not ideal but I can't see how curbing BTL without putting alternatives in place would help.

Thrugelmir

alexanderalexander wrote: »

As such, the people who remain directly-employed in the public sector are disproportionately senior.

Huge numbers are employed in would could be described as administrative or support functions. In no way senior positions.

CLAPTON

Jason74 wrote: »

You're right of course in that there has always been a mix of housing, and if we take a purely "post war" view of history, there can be little doubt that all three tenures have a role to play. The question is, what is the role of those three tenures, and what is the right "mix" between the three.


You say that there has been "no cogent argument as to why BTL is even an issue", but I think that one of the problems is that there are very different views about what a cogent argument actually is. I make no bones about the fact that I look at housing as primarily a social issue rather than an economic one. I suspect that you look at it as primarily an economic one, and to be fair, your view would probably be the majority one on this forum (and possibly beyond).


But if we do look at housing from a social perspective, it is clear that of the three main tenures, private renting (in it's current form) is in the long term the worst housing option for most people. It has higher costs and lower security than social housing, and doesn't provide the asset accumulation of home ownership. These are not opinions, they are facts.


Now that doesn't mean that private renting doesn't have a place. but if we're talking about maximum social benefit, that place is effectively limited to provide accommodation for those who are for whatever reason not wanting (and note that I'm specifically talking about not wanting, rather than not able) to make a long term commitment to particular housing.


What's clear at the moment, is that the above scenario is not where the balance currently is. Private renting is becoming a larger and larger slice of the housing cake, while in percentage terms, both social housing and home ownership are in decline. What's more, many people are in private renting because not because it "works" for them, but they are unable to access any other tenure. I'd consider Shelter the most reliable source on this subject, and they estimate that about 70% of people in private renting are there because they effectively have no other choice.


All of that adds up to a situation where from a social perspective, private renting is a larger portion of the housing mix than is ideal. Of course, what you do with that information depends on your perspective. If you are someone who views housing from the point of view of it being an economic issue where the market is king, then the likely reaction is to shrug your shoulders, and effectively say "that's how markets work, there are winners and losers, and we shouldn't be interfering with that process".


But while the above approach is certainly a legitimate one, as someone who sees housing as first and foremost a social issue, it is clear that the balance of tenures is being driven more by market buying power (in this context particularly from landlords) than occupier need (be that owner occupiers or tenants). For me, this is a problem that needs to be addressed, and while being far from the whole solution, curbing BTL would certainly be helpful as part of a package of measures to address this issue.

does this mean you don't see the issue as primarily one of shortage of supply and too much demand?

Jason74

ukcarper wrote: »

I'd agree with you that the mix of the three tenures is not ideal but I can't see how curbing BTL without putting alternatives in place would help.

In some respects, you have a point (although I think even in isolation, curbing btl would be a positive move, but the case there is certainly less clear cut), which is why I said that curbing BTL in itself was "far from the whole solution". You also need to be looking at large scale building of social housing (and by that I mean, proper social rented housing, not the ironically titled market based "affordable rent" stuff that social landlords are being increasingly pressured to build). Unfortunately there is little hope of that happening right now, because the prevailing political ideology is effectively that "the market is always right".


The problem with that logic is that if there's one thing that is consistently demonstrated by the history of housing in this country, it's that leaving the market to it's own devices leaves large sections of the population without access to safe, secure (including security of tenure) housing. We accept that leaving the market to its own devices is unacceptable in fields like health and education, and there was a time when we took a similar approach to housing. If we're going to deal with the problems that exist in UK housing today, we need to get back to some of that approach imho.

Cornucopia

Jason74 wrote: »

The question is, what is the role of those three tenures, and what is the right "mix" between the three.

Is that the question, though? Are you/others committed to social housing as some kind of ideological position, or simply because you believe that it would be automatically be cheaper and better (in a practical sense) than other options?

You say that there has been "no cogent argument as to why BTL is even an issue", but I think that one of the problems is that there are very different views about what a cogent argument actually is. I make no bones about the fact that I look at housing as primarily a social issue rather than an economic one. I suspect that you look at it as primarily an economic one, and to be fair, your view would probably be the majority one on this forum (and possibly beyond).

By cogent argument, I mean a robust analysis that shows a causal link between the existence of BTL and the alleged crisis in housing (which we probably also need a rigorous definition for).

I see housing (like many popular political issues) as fundamentally having social and economic dimensions. In particular, I'm sure everyone wants to spend less on their housing, but I'm not convinced that it makes economic sense for the taxpayer to pick up the slack. (And I also see some of the arguments being made by anti- posters about future debt as fundamentally contradictory).

Whilst I as an individual LL am happy to deliver my social obligations to my tenants, the thing I cannot do is fundamentally alter the markets for either rental or purchase. Leaving the profession would be a futile gesture, I think.

But if we do look at housing from a social perspective, it is clear that of the three main tenures, private renting (in it's current form) is in the long term the worst housing option for most people. It has higher costs and lower security than social housing, and doesn't provide the asset accumulation of home ownership. These are not opinions, they are facts.

I fundamentally do not accept that everyone is looking for the same things in housing, or even for individuals the same things over time.

I can't speak for other LLs, but I'm not opposed to giving tenants greater security of tenure. In fact, I think that it's strange that the Law for eviction for cause and without cause is pretty much the same. It doesn't need to be that way.

...that place is effectively limited to provide accommodation for those who are for whatever reason not wanting (and note that I'm specifically talking about not wanting, rather than not able) to make a long term commitment to particular housing.

I think you underestimate the importance of that group, especially in London and other major cities.

What's clear at the moment, is that the above scenario is not where the balance currently is. Private renting is becoming a larger and larger slice of the housing cake, while in percentage terms, both social housing and home ownership are in decline.

Do you have figures?

All of that adds up to a situation where from a social perspective, private renting is a larger portion of the housing mix than is ideal.

I'm not sure I understand why people are renting privately if (as you say) the costs are higher than buying. I appreciate that 100% mortgages are no longer available, so is that the issue?

Of course, what you do with that information depends on your perspective. If you are someone who views housing from the point of view of it being an economic issue where the market is king, then the likely reaction is to shrug your shoulders, and effectively say "that's how markets work, there are winners and losers, and we shouldn't be interfering with that process".

My approach is that it is for the Government to make policy to address the social needs, such as they are. There is a lot that could be done at little or no cost in planning, for example. The underlying issue is lack of supply to meet excess demand, with a secondary issue being regional disparity in prosperity.

From a personal perspective, I need to see a fair return on my investment. If the Bank wants 3.5% for its share, I'm going to want something similar, and to cover my other costs. That points to a rent of something like 0.4% of the property value per month. I'd like to understand what objection you have to that kind of arithmetic.

... the balance of tenures is being driven more by market buying power (in this context particularly from landlords) than occupier need (be that owner occupiers or tenants)...

How does that work, though? I can see that a cash buyer might have more strength in the market, but someone using a BTL mortgage requires a mini business plan for the property. If the figures do not add up, then no mortgage. And without willing tenants, no point.

For me, this is a problem that needs to be addressed, and while being far from the whole solution, curbing BTL would certainly be helpful as part of a package of measures to address this issue.

I don't have a issue with Government altering the balance of incentives/disincentives slowly and with a rational social purpose. However, I am not convinced that restricting private letting will achieve anything other than higher rents in high-demand areas. And this will lead to greater demand for limited social housing and limited supply to purchase. It's possible there might be a slight dip in HPI, but I suspect it will be short-lived.