Housing

With just over 4 weeks to go before votes are cast Labour policy offerings on the housing situation continue to disappoint.

In last Thursday’s leaders debate on the ‘housing crisis’ Ed Miliband repeated the usual mantra on helping young people onto the housing ladder, and with regard to the private rental sector, continued in the same vein of vagueness with promises to encourage long-term agreements, clamp down on letting agencies and deal with rising rents.

Also quite revealing was the word association going on; rent and ‘the young’. Labour need to get up to date; some 9 million people rent privately and a substantial portion are not young or using private rental as a waiting room or staging post to get onto the housing ladder, a lot of these people are renting for the long term and enjoy the freedom and flexibility. They are entitled to some sort of ‘consumer protection’.

So what’s wrong with Labour ‘offerings’ on housing, apart from the vagueness;  well, I doubt that they will work, I also doubt that Labour are all that serious given their abysmal record on this subject 1997-2010. There is no pledge on housing in the top 5 Labour pledges; immigration, at number 4, makes the cut. Of course they have to say something; all parties in this election have housing in their ‘shop window’.

No more on immigration from me, but it is rather comic, ironic that the immigration pledge is almost an ‘anti housing pledge’; we need our fellow citizens in the EU to help us build the 200,000 homes mooted by Labour. Does the housing pledge, if it exists, have a number, 11 or 27, maybe?

We clearly need more housing starts; the poor record on house building of the current government and even more so, New Labour underpins the current crisis for both buyers and renters.

So why do I think the latest Labour house building plan won’t work. Well, the bit about ‘encouraging’ the banks to lend to developers using the money stored in the new ISA provides a clue; since when have the banks bowed to encouragement, also the money is there and has been for a while. Quantitative easing (QE) was a programme to increase the monetary base; it did, unfortunately it benefitted mainly buy-to-let investors (mainly taking stock away from first time buyers) and other speculators; it helped the rich get richer. So QED on QE.

Housing is a national scandal and will approach the red bit on the warning dial unless proper solutions are adopted.

I am always amazed that people fail to understand that things are the way they are for a reason; X is over there, Y over here, Z in that position, because that is because certain people or interest groups want it that way. To come up with an effective policy framework one needs to understand that policy that does not cause loud protest from an interest group is not policy at all, it is just a sop.

So what should Labour do on housing, if it wins on 7th May?

The problems with the rental market are complex and solutions will need to mirror that; the law of ‘unintended consequences’ waits in the wings. Crude rent caps will not work without grants and tax breaks to address the particular character of private rental stock, its old and in poor condition. The majority of private landlords own just one property and contrary to popular myth it is not a money spinner, which is why I pulled out. Buy-to-let empires are different and that is where the bulk of any new legislation should fall; in particular the odious clause, often imposed by banks, to not rent to those on benefits.

 

So just two things for now…

  • Raise money on the bond market for a dedicated large scale house building programme (at least 500,000 units each year for ten years); the money distributed to local councils and authorities to address the specific needs of their area with rents set at an affordable level, prices for those who want to buy, also set at an affordable level. Right to Buy should be kept but with stricter rules on re-sale by the buyer.

Borrowing to invest in national assets is always sensible; there will also be the multiplier effect with the creation of skilled jobs. Interest on the bonds will be met from the substantial drop in the Housing Benefit bill.

Warnings on national debt are over played; we are not Greece. UK has a sophisticated tax raising system and political stability (for now).

The squeals of outrage will come from existing homeowners worried about flat or sliding house prices and also the associated policy need to relax planning law and loosen the iconic status of the Green Belt.

 

  • Immediately legislate to fast track re-possession of empty units; use it or lose it. There are currently some 800,000 units nationally, lying empty and unused, this is a national scandal. These units should be seized, renovated and used to provide affordable housing. No prizes for guessing which interest group will squeal here.
  • De-criminalise squatting. Civil remedy existed for decades. It is completely wrong to burden young people with a criminal record just for seeking shelter from the elements in an unused building.

 

That’s it.

 

 

 

 

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