Corbyn promises 'radical reboot' of council house building to tackle housing crisis

CLAPTON

martinsurrey wrote: »

So social hosing becomes more expensive to the public purse? without the subsidy from the private sector (in return for planning permission), which is passed onto new build buyers, that is the logical conclusion.

And without significant planning reform, the council would get blocked from building, by the council.

The rates HA's buy property's from developers is slightly higher than build cost, its the land cost that the private buyers subsidise, reduce the price of land and this subsidy falls away, you reduce land prices by freeing up planning (land gains value by about 1000%+ on successful planning).

I bang on about it again and again, the only way to get more houses built is to get land prices down to a sensible level, and you do that by opening up planning.

builders don't subsidise social housing : it is the buyers of the new builds (often first time buyers) who are paying for the social housing (the poor old FTB who pays for both houses often ends up with a worse house than the social tenant.)

In London nearly all building is on brown fill sites so the land price premium doesn't apply in the same way.
The extra cost heaped on new builds made them artificially expense and so discourage building.
Of course the existence of social housing in the the same development also makes the new places less attractive to buyers.

martinsurrey

CLAPTON wrote: »

builders don't subsidise social housing : it is the buyers of the new builds (often first time buyers) who are paying for the social housing (the poor old FTB who pays for both houses often ends up with a worse house than the social tenant.)

In London nearly all building is on brown fill sites so the land price premium doesn't apply in the same way.
The extra cost heaped on new builds made them artificially expense and so discourage building.
Of course the existence of social housing in the the same development also makes the new places less attractive to buyers.

in London the land premium is on the granting of permission for conversion of an office block to apartments, or permission for conversion from low level to high level development , but I agree its not as large, but its still pretty big!

its the lack of develop-able land which makes demand for houses outstrip supply, making private houses more expensive, I mean who among us would love to build their own house, but cant becuase build plots are like hens teeth, and just as expensive.

as I say, the build cost isn't the issue, the HA pay for their builds, they just don't pay much for the land, If you gave land to a developer for free, they could knock out HA houses all day long.

builders will always build if there is a margin in it for them (and not even that large a margin), at the moment the HA subsidy is faaaaar exceeded by the massive land prices in the UK for sites with planning.

for example, I know of a deal where the land owner got £20m and 50% of any gross profit over 22% for a site with only £60m of houses on it, they made more money than the developer for none of the work, just for getting a stamped piece of paper from a planning office.

and cheap land comes from a relaxed planning environment.

CLAPTON

martinsurrey wrote: »

in London the land premium is on the granting of permission for conversion of an office block to apartments, or permission for conversion from low level to high level development , but I agree its not as large, but its still pretty big!

its the lack of develop-able land which makes demand for houses outstrip supply, making private houses more expensive, I mean who among us would love to build their own house, but cant becuase build plots are like hens teeth, and just as expensive.

as I say, the build cost isn't the issue, the HA pay for their builds, they just don't pay much for the land, If you gave land to a developer for free, they could knock out HA houses all day long.

builders will always build if there is a margin in it for them (and not even that large a margin), at the moment the HA subsidy is faaaaar exceeded by the massive land prices in the UK for sites with planning.

for example, I know of a deal where the land owner got £20m and 50% of any gross profit over 22% for a site with only £60m of houses on it, they made more money than the developer for none of the work, just for getting a stamped piece of paper from a planning office.

and cheap land comes from a relaxed planning environment.

I agree that planning permission without strings is the key ingredient.

whether or not the land price is more expensive than the social housing subsidy, it is quite wrong that a FTB has to pay both for their own house as well as a council house too.

the issue of windfall profits on planning permission is a valid area for tax as are land value taxes in general.

martinsurrey

CLAPTON wrote: »

I agree that planning permission without strings is the key ingredient.

whether or not the land price is more expensive than the social housing subsidy, it is quite wrong that a FTB has to pay both for their own house as well as a council house too.

the issue of windfall profits on planning permission is a valid area for tax as are land value taxes in general.

you keep saying this "FTB has to pay both for their own house as well as a council house too"

but it is manifestly wrong.

I have just looked at a historic development and the HA paid (in cash) £292 per sq ft for its units and the average Open market unit on the same site sold for £349 per Sq ft. meaning the HA got a 17% discount, given that HA is about 25% on a site that 17% discount is only about 3-4% of each OM units price.

however, land was over 30%

CLAPTON

martinsurrey wrote: »

you keep saying this "FTB has to pay both for their own house as well as a council house too"

but it is manifestly wrong.

I have just looked at a historic development and the HA paid (in cash) £292 per sq ft for its units and the average Open market unit on the same site sold for £349 per Sq ft. meaning the HA got a 17% discount, given that HA is about 25% on a site that 17% discount is only about 3-4% of each OM units price.

however, land was over 30%

interesting
what source is that?

if it's true then the state paying the entire cost would be trivial

martinsurrey

CLAPTON wrote: »

interesting
what source is that?

if it's true then the state paying the entire cost would be trivial

that's the lowest discount I found, they range from there to up around 35%

building 100,000 houses a year at £292 a sq ft and 700 sq ft per 2 bed (about average) is £20billion a year, hardly trivial, in fact you'd have to shut the NHS down for almost 2 months a year to pay for it.

cepheus

Sole reason for not building council houses is the certainty that it would reduce house prices & burst the monstrous bubble.

CLAPTON

martinsurrey wrote: »

that's the lowest discount I found, they range from there to up around 35%

building 100,000 houses a year at £292 a sq ft and 700 sq ft per 2 bed (about average) is £20billion a year, hardly trivial, in fact you'd have to shut the NHS down for almost 2 months a year to pay for it.

it's either trivial or it isn't

that £20 billion is coming from buyers of new builds

essentially a tax on new builds

if the government determines that social housing is desirable then it should fund it by higher taxation and not a hidden tax on buyers of new builds

Graham_Devon

martinsurrey wrote: »

so again, where is the cash going to come from? unfunded borrowing? and how will the cash be repaid, if all of the houses are used as social housing?

martinsurrey wrote: »

So social hosing becomes more expensive to the public purse? without the subsidy from the private sector (in return for planning permission), which is passed onto new build buyers, that is the logical conclusion.

In my view you are missing a trick here.

The cost of social housing already exists. It's called housing benefits. In many respects it's a transfer of tax payers money to private landlords.

Now, sure, there is a cost element of initially building X amount of council houses, but theres also a savings element. Once the houses are built, they will cost X amount to run and maintain. However, that amount will be far below the amount of housing benefit handed out by the state for the equivalent number of homes.

So although there is a huge upfront cost element, there are savings to be had also for as long as the house remains council owned and the famil are housed there rather than shelling out housing benefit each month.

You state that it would cost £20bn to build 100k houses. That's a one off cost.

The housing benefit bill is around £35bn annually.

So lets say we house 100,000 families in these new homes and each is getting an average £500 a month in housing benefit. Straight away you have saved £600m per year. Project that over 10 years and £6bn has been saved (more if you factor in the saved inflation on the benefits). But that's not the end of it, as rents across the spectrum will have reduced due to the new supply, reducing housing benefits across the board....another annual saving.

Then theres extra taxes paid by all those employed to build them.

In time, the houses pay for themselves.

Thrugelmir

cepheus wrote: »

Sole reason for not building council houses is the certainty that it would reduce house prices & burst the monstrous bubble.

I would have said it's more down to politicians having no in depth understanding of what's actually required to achieve such an objective. Be far more plausible if there was a real focus on apprenticeship training for the unemployed under 25's. So that there was at least the trained manpower in the years to come. No one is going to start building a new brick factory unless there's certainty of demand.