Right to buy: Housing Associations

ukcarper

cells wrote: »

they don't necessarily need to be "relaxed" the qotas just need to be higher.

As I keep saying some councils issue 3 x the average quota, some 1/3rd the average quota.

They should all be forced to issue quotas that meet actual need. That means overall all the councils together need to issue 300,000 quotas a year (actually probably need to issue 400,000 a year as a portion of quotas cant/wont be built

the need for property is not uniform and the ability of councils to put land aside for building is also not uniform also marking land for development does not mean it will be built on.

CLAPTON

ukcarper wrote: »

Were house cheap in 70s I think you will find that in relation to earnings for a large part of the 70s prices were far from cheap.

houses were cheap in the 70s

ukcarper

CLAPTON wrote: »

houses were cheap in the 70s

5x average earnings compared to 6x now .

cells

ukcarper wrote: »

the need for property is not uniform and the ability of councils to put land aside for building is also not uniform also marking land for development does not mean it will be built on.

but the fact that councils who give out a larger quota see more building shows us that its a primarily quota driven system

It is true that some councils may not have free land to build upon, for instance a lot of the inner boroughs of London don't have much free space. However that's a minority of councils maybe as a guess 10% ? Those cases need to be dealt with by other councils allowing a little more to account for those councils that are truly land limited and/or the councils in those land limited cases need to do better redevelopment. For example the councils in inner London sometimes knock down old estates and replace them with new ones at twice the density.

cells

ukcarper wrote: »

5x average earnings compared to 6x now .

it should have gone the other way, instead of 5 to 6, 5 to 4

Graham_Devon

On planning, came across this from an article in another thread.

Yet even when planning permission is forthcoming, housebuilders have held back. As of October 2013, of the 507,000 units of land with planning permission, half had yet to see any building. For reasons that economists do not fully understand, for 40 years the construction of new houses has been a remarkably stable one-tenth the number of houses bought and sold. Mr Hudson says this relationship probably holds because housebuilders try to sell new-builds at a price in the upper decile of those prevailing in the local market. The number of transactions has steadily fallen since the 1980s, putting a ceiling on the probable number of new-builds.

Jason74

Graham_Devon wrote: »

I was suggesting it's likely a better use of money to build council housing and home those people in receipt of housing benefit in these homes.

If anyone can provide an argument as to how this would cost more over the long term I'd be all ears. But no one ever does.

The reason nobody makes that argument is because it doesn't really exist. Current grant (government "subsidy") on a new social property is about 20% of the build cost. If we used say £200k as an average build cost for a 2 bed flat (which is on the high side for that kind of property, although larger houses would be more), that would give a subsidy of £40k,

Lets then put that property in a typical area of outer London or the South East, and assume the market rent would be £1000 per month. Typically a new social rent would be about 65% of market value (the rules allow for rents up to 80%, but most HA's set a little lower in practice), meaning £650 per Month (so £4,2000 a year less than private)

If we then assume that 70% of residents require some form of housing benefit to pay the rent (around two thirds of social tenants in London and the South East) receive some housing benefit, and the number needing this would be higher still at full market rent so 70% is likely an underestimate). If the rent is £4,200 per year lower in the social model compared to the private, then the average saving on benefit per unit built would be 70% of this (to reflect 70% of residents receiving benefit), so £2,940 per year.

For the sake of argument, lets also say that the Government pays 3% interest on the money used to provide the grant (which is of course high in the current climate but may not always be so), and doesn't repay any capital until the subsidy is recovered in full. Interest would then be £1,200 per year per unit, so the net saving in annual HB averages at £1,740 per unit.

What all of the above means, is that the social unit requires an initial subsidy, but after 23 years (not long in terms of the life of a house), that subsidy is paid for. The social unit then generates a year in year out cost saving to the treasury of £2,940 (the difference in rent, as there is no interest paid by the Government at that point). Indeed, if we use the above numbers as a guide, and assume an 80 year lifespan for a property, the overall saving to the public purse from each social unit over its lifespan is well over £150k. And that's before you start on the benefits for residents themselves, or the fact that the subsidy to social housing gets much needed homes built that otherwise wouldn't be.

Just running the numbers makes it clear. In the long term, compared to the "AST market rent" private rent model, social housing (certainly in areas of high demand) generates long term benefits to the taxpayer, gets additional homes built , and creates better outcomes for the people living in the properties. These aren't opinions, they're facts. That's why you will never see people making the argument that social housing costs more longer term. It simply doesn't. But acknowledging that reality doesn't suit those who are ideologically opposed to state involvement in housing , so they simply ignore it.

princeofpounds

Just running the numbers makes it clear. In the long term, compared to the "AST market rent" private rent model, social housing generates long term benefits to the taxpayer, gets additional homes built , and creates better outcomes for the people living in the properties. These aren't opinions, they're facts.

I do like the way you have dressed up a bunch of assumptions and basic calculations on future scenarios as facts.


The big problem here is that your premise is totally flawed. You present a false dilemma, where the only options are current private rentals or the current economics of social housebuilding.


There are many other ways to skin a cat. The most obvious, perhaps, is the model currently employed in practice now, where councils (rather arbitrarily) tax planning permission via affordable housing requirements. Cost to taxpayer, zero (directly - indirectly huge cost to the population). There is no need for the public sector to employ thousands of bureaucrats to manage a building program when it can just enable the private sector to do it and cream off a proportion of the build.


Or, simply allow people to build to house themselves, rather than Stalinist micromanagement of land supply as we currently have. Agricultural land is dirt-cheap. Building itself is not very expensive. You would find that a vast proportion of people who are currently cannot afford their own accommodation would suddenly be able to. Housing costs would fall for everyone in society, capacity would increase, and the burden of housing benefits would massively fall, again with no requirement to put up any capital.


The main reason the social housing model you describe appears cheap at the moment is not because it is genuinely cheaper. It is because you are incorporating the planning/rental premium that results solely from government restriction of the accommodation supply into the profits of the model.


It's not hard to make your own efforts appear cheaper if you cripple other players in the space with planning restrictions and Section 106 taxes.

Graham_Devon

princeofpounds wrote: »

The big problem here is that your premise is totally flawed. You present a false dilemma, where the only options are current private rentals or the current economics of social housebuilding.

Didn't actually read that way to me. The poster didn't describe 100% social stock for those receiving housing benefit. That in itself would be almost impossible to deliver.

All they stated was the cost benefit of each unit of social stock. That holds true whether you build 100 or 100,000.

There will always be a need for private rental. I, and I don't think anyone else has suggested otherwise. The issue at the moment is the almost sole reliance on the private sector landlord to deal with social issues. It's not only not really working in many scenarios, it's also costing us as taxpayers, more than it needs to.

Of course, it has to be recognised that this cost to the taxpayer is of huge benefit to many, normally wealthier taxpayers who are on the receiving end through either renting out their properties or making gains from the general shortage. So of course you'll never get agreement across all sectors of society.

By when looking at the finances only and removing ones viewpoint, it's almost impossible to argue that the private sector is financially or socially beneficial.

As for the 106 taxes. There was a trial not long back somewhere where they were removed. It made absolutely no difference to the price of the homes. All it made a difference to was the profit margin....and of course, the area suffered as there was no play area or buses serving the place.

wotsthat

ukcarper wrote: »

How exactly would you want planning rules relaxed?

I'd stop the corrupt practice where councils accept bribes in return for planning being granted. On a lot of sites you'll see a board or information listing the things the builders are funding in the local economy. Many of these will be a mechanism to pass council spending to homebuyers rather than the taxpayer at large. Others will be pure pet projects and money that doesn't need to be spent at all.

This would reduce the burden on homebuyers and lower the barrier for competition.

Here's a bit from Taylor Wimpey's blurb about a site in Cambridgeshire - I've highlighted the bits where the council has been so clever in extracting cash from the builders little realising (or not caring) that it's the (predominantly) young buyer that's being bilked.

We provided full funding for the construction of a sports centre, which is also managed by the parish council, a new pavilion and sport changing rooms, and various sports pitches including tennis courts, a cricket oval, and bowling greens. Opened in 2011, these sporting facilities have enabled local clubs and teams to develop. We also funded ‘The Big LEAP’, a £100,000 Bronze Age themed playground. This was designed, in collaboration with the parish council and local schoolchildren, by architects Randall Thorp and opened in time for the 2011 school summer holidays.

The local centre contains a thriving high street, including a Morrisons supermarket. Plans have been approved for two additional retail units along the high street and another three in the retail area behind it. We have also provided significant funding for a number of public buildings including a fire station, police station, doctor’s surgery, library and a communal health building. Extensive and complex infrastructure has been delivered, including major new road junctions, a new dual carriageway section on the A428 and the Caxton Bypass, and three new foul water pumping stations. We have also funded upgrades to local public transport to benefit both the people of Cambourne and their neighbours in surrounding areas.

How are Devon & Wotsthat builders meant to compete against that?