Right to buy: Housing Associations

CLAPTON

ukcarper wrote: »

Much to simplistic an argument and the infrastructure is required now not in the next 40 years. If you believe that if planning permission is granted on a green field that the price of properties built on that site would we reflect the price of that green field site I think you are living in a fantasy world, the increase in value would either go to owner or builder and the properties would sell for as much as the builder could get for them probably at a premium of properties being built in urban areas.

it is broadly true that the builder will charge whatever the market will stand.
it's broadly true that the planning premium goes to the owner and not the builder (well, unless the owner is particularly stupid)
however he will have a margin that he wish to work to.
if his costs are too high then he simply doesn't build: not the best solution


in any event much of the new infrastructure is money down the drain as anything 'free' is nearly always wasted.
clearly relevant infrastructure directly related to the new builds may well be appropriate

cells

Jason74 wrote: »

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.

If the state is the best builder in the country then fantastic let it build good quality homes for fantastic prices and SELL them to the public

If you assume a decent 2/3 house can be built for £100,000 and a flat for even less then a single person on about £21k income can buy that house (a couple on minimum wagea can easily buy it)

With unemployment at under 6% that would mean 94% of the population can afford to buy these state homes.

So what's the need to make 18% of houses rented from the state? Over 40% in some councils.

Why do we need such a high figure. You never hear the socialists put a number on it which is stupid. So what's the ideal figure 100% of homes as social? 90%? 10%? 5%?

Its good or bad certainly changes according to how much we have.


Anyway to repeats once more why make 18% (and plead for more) as rent slaves when it needs be 6% or less? If the state is so good at building houses then great it can sell the public them at fantastic prices and make over 90% of the population owners rather than trapped rent/benifit citizens

cells

CLAPTON wrote: »

it is broadly true that the builder will charge whatever the market will stand.
it's broadly true that the planning premium goes to the owner and not the builder (well, unless the owner is particularly stupid)
however he will have a margin that he wish to work to.
if his costs are too high then he simply doesn't build: not the best solution


in any event much of the new infrastructure is money down the drain as anything 'free' is nearly always wasted.
clearly relevant infrastructure directly related to the new builds may well be appropriate

Its clear that councils that allow a higher quota get more new builds and councils that don't get less.

The build rates vary hugely from more than 3x or less than 1/3rd across councils all depending on the quota issued

We are in such a shortage of homes situation that the CIL or S106 is almost irrelevant in London and the SE. You could ask a builder to send kids with cancer into space and would probably get it if you allowed a developments of 500 homes to go ahead

cells

Graham_Devon wrote: »

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.
.

If the governments can build houses at fantastic prices why does it not sell them and make people owners rather than tenants

85% owners 15% renters sure sounds better than 15% renters 18% social (and pleading more more) and 68% owners (and pleading for less)

What you definitely don't seem to understand is that in the long run in a market with sufficient supply (or a falling population) it isn't more social equals less private renters. Its more social equals less owners

This has already been proven. The homeownership rate hit 70% at one point clearly that couldn't have been possible if the state kept social renting at its more than 30% high

wotsthat

ukcarper wrote: »

Never said that extracting as much money from builders was a good thing, the increase of value from giving planning permission on green field sites is substantial I don't see why all of that should go into builders pockets which is what will happen if you think otherwise I believe you are mistaken.

Land with planning is worth more than that without. I'd assume the differential was in no small part related to the complexity and cost of buying the permission in the first place.

If planning is easier and cheaper the premium will fall and the lower barrier for entry will increase competition - buyers will have the choice to use builders operating on lower margins.

You're worried about a problem that, if it exists now, wouldn't in the future. Lower costs and competition would provide a cure.

The main beneficiaries of the premium are already rich owners of green fields who hit the jackpot when house building is mooted. I tend not to worry about the finances of lottery winners although one of the unintended consequences might be reduced supply of land to market if the current bounty to landowners is reduced.

Graham_Devon

cells wrote: »

If the governments can build houses at fantastic prices why does it not sell them and make people owners rather than tenants

The only person even mentioning the government "building houses at fantastic prices" is you.

It's a strawman argument. No one has suggested the government would be able to build a house at "fantastic prices".

As for selling the stock the government owns, the key reason for not doing so is that that housing unit can help X amount of people in it's lifetime. (now that lifetime tenancies have been axed anyway) If you sell it to it's first tenant, it's helped one person. It also then doesn't have the potential for cost savings (such as Jason outlined) further down the line.

ukcarper

wotsthat wrote: »

Land with planning is worth more than that without. I'd assume the differential was in no small part related to the complexity and cost of buying the permission in the first place.

If planning is easier and cheaper the premium will fall and the lower barrier for entry will increase competition - buyers will have the choice to use builders operating on lower margins.

You're worried about a problem that, if it exists now, wouldn't in the future. Lower costs and competition would provide a cure.

The main beneficiaries of the premium are already rich owners of green fields who hit the jackpot when house building is mooted. I tend not to worry about the finances of lottery winners although one of the unintended consequences might be reduced supply of land to market if the current bounty to landowners is reduced.

Perhaps it's the owner that benefits not the builder but someone profits enormously by the simple act of granting planning permission what I am saying is some of that money should go to improving infrastructure.
Building more properties will decrease demand and prices will fall but I don't believe they will fall enough to enable everybody to buy, price is not determined by the builders profit margin but supply and demand.L

wotsthat

ukcarper wrote: »

Perhaps it's the owner that benefits not the builder but someone profits enormously by the simple act of granting planning permission what I am saying is some of that money should go to improving infrastructure.

If someone profits enormously by the simple fact of granting planning that can be solved with less complexity and cost in the planning system.

Farmers don't have to pay for infrastructure to support any houses on land that the next owner may or may not build so easing planning isn't going to affect infrastructure spending either way. If you think not enough is spent on infrastructure that's a different problem requiring a different solution.

ukcarper wrote: »

Building more properties will decrease demand and prices will fall but I don't believe they will fall enough to enable everybody to buy, price is not determined by the builders profit margin but supply and demand.L

Supply and demand aren't independent of other factors like cost. If costs are lower and there's competition then assuming everything else is equal selling prices will fall. Obviously there's no chance of prices ever fall sufficiently to allow everybody to buy. Currently I'd say it's almost fantastical to hope for closer links between HPI and general inflation.

I can't see the private sector being let loose and I can't see the taxpayer ever being duped into building a ton of council houses again so it's moot anyway. We might need to get used to more of the same for a while before anything changes.

CLAPTON

Graham_Devon wrote: »

As for selling the stock the government owns, the key reason for not doing so is that that housing unit can help X amount of people in it's lifetime. (now that lifetime tenancies have been axed anyway) If you sell it to it's first tenant, it's helped one person. It also then doesn't have the potential for cost savings (such as Jason outlined) further down the line.

you can't seriously believe this total nonsense.


the number of people years worth of housing isn't dependent upon the whether it is OO, private rental or social housing

Graham_Devon

CLAPTON wrote: »

you can't seriously believe this total nonsense.


the number of people years worth of housing isn't dependent upon the whether it is OO, private rental or social housing

I can't even figure out what you just said.