I tuned into BBC news this morning to see a debate on the ‘housing crisis’. (I use the inverted commas because we do not have a housing crisis, we have an affordable housing crisis. We do not need more fuel for the property market; we need homes for those on low and modest incomes).

The ‘experts’ they interviewed seemed to include just a developer and an estate agent. So the BBC’s ‘neutral’ approach included two people who directly profit from expensive housebuilding. Of course, the opposite of a balanced, impartial debate ensued, with the developer particularly parroting coalition propaganda. When asked about what should be done about even rents seeming out of reach for many youngsters, he kept referring to ‘Help to Buy’, which will actually have an adverse affect on rent prices if anything by increasing demand without significantly increasing supply. You don’t have to be an expert to know that, just somebody who doesn’t directly profit from the opposite approach. This childish rhetoric about the ‘housing crisis’ makes the country sound like dimwits. All we keep hearing from ‘experts’ is “well, we must build more houses”. So why don’t we?

1) Since Thatcher sold off the council houses with ‘Right to Buy’ and refused them permission to use the proceeds to build more, every political party has essentially seen the State not as builders of homes, but a gateway for private developers to pass through. This means the Government is only reactive, never proactive. Asking the Government to build homes is futile, because they don’t allow councils to. They only react to applications.
2) Land speculation means it is incredibly valuable, and thus, overpriced. Regular bouts of money printing tend to only increase it in price, as well as ‘artificial scarcity’. Basic free-market knowledge says that to make a commodity increase in value, you either need to increase demand by making it better, more efficient, or, easiest of all, restrict its availability. This is ‘artificial scarcity’ and drives up the price. The less homes a developer builds, the more their land is worth, and the more subsequent properties are worth. Of course, they will cash in now and again, but it is not in their economic self-interest to build plenty of homes fast.
3) Developers will use the affordable housing crisis to force the hand of government in removing regulations preventing them from developing on green belt land, and force these unpopular applications through in the name of ‘easing the crisis’.
4) Developers will gerrymander planning applications, usually by gaining permission with specific provisions for a proportion of affordable homes. Once this outline permission is obtained, the land becomes more valuable still, and they will endeavour to sell it on to another developer, who will renege on these affordable housing pledges, having not agreed to the original agreement themselves. Why build cheaper houses when you are an entity that purely exists for maximising profit?
5) The whole economy is predicated on the housing market, and voters tend to vote for a healthy economy, so the toxic bubble continues to be inflated artificially. When houses become unaffordable for the masses, the Government acts with idiotic short-term fixes that exacerbate the long-term issues (see Help-to-Buy). A sensible way of helping people afford mortgages would be making houses cheaper, or salaries worth more. Instead, the Government only does the banks a favour by underwriting deposits for enormous mortgages that takes a lifetime to pay off on an average wage.

So by acting meaningfully on the crisis, the Government may well crash the economy, so they would lose an election. There is literally no motivation for even a thoughtful government to fix the situation.

It’s easy of course to complain and not offer solutions. So here are my suggestions:

a) Devolve more power to local councils to raise their own funds and instruct them to spend it on regular council house building projects. Give target numbers based on likely population growth, and initially prioritise those on low incomes with local connections to the area. When the waiting list eases, allocate council homes to anyone with a local connection, ensuring demographically diverse communities.
b) Initiate a Land Value Tax, affecting all land not in productive use, (i.e. with residential/business/charity property on, agriculture or full public access). Offer to take any unwanted land into public hands if tax cannot be paid. This will prevent land-banking and landed gentry hoarding unproductive acres without contributing to those denied land.
c) Introduce incentives for companies and developers to bring derelict and scrub land back into use. Offer abandoned properties to first-time buyers for nothing, with a low-interest loan for approved renovation to bring them back up to standard. This loan would then act as the mortgage on the property.
d) Reduce planning approval validity periods to one year. If construction has not begun by this time, approval will expire and LVT would kick in until a new permission is gained. This will again prevent land-banking and speed up house-building.
e) At the same time, review and implement an updated version of the old Parker-Morris space and quality standards (previously abolished by Thatcher) nationwide and legislate to ensure the private sector must adhere, to prevent the spate of modern extortionate rabbit-hutch homes. http://en.wikipedia.org/wiki/Parker_Morris_Committee
f) End Quantitative Easing programmes.
g) Reintroduce rent controls based on average salaries in an area, ensure longer, more secure tenancies, and have all landlords officially registered.
h) End Buy-to-Let mortgages. They may have once filled a gap as part of a thriving mixed economy, but they are now simply a method of exploitation; a way for young people whose parents give them a deposit to get others to buy their house for them.
i) End Right-to-Buy until these measures have fully stabilised the housing market. Ensure there is a clear division between secure, rented social housing and private market properties.

These are by no means new ideas, in fact some are already being implemented or are in party manifestos…just not the Neoliberal Establishment parties.

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