The Great British Housing Famine(himbonomics.com)
himbonomics.com
The Great British Housing Famine
https://www.himbonomics.com/p/the-great-british-housing-famine
13 comments
In our town even when new housing is approved litigious and wealthy homeowners will delay the projects with lawsuit after lawsuit.
Meanwhile we have derelict properties and a lot of empty commercial real estate.
I don’t know how to solve it but it seems to only takes a handful of homeowners to scuttle a project. And I fear my town will slide into irrelevance and decay at this rate.
And for some reason popping up another strip mall or box store doesn’t cause the same ire? It’s all very strange.
Meanwhile we have derelict properties and a lot of empty commercial real estate.
I don’t know how to solve it but it seems to only takes a handful of homeowners to scuttle a project. And I fear my town will slide into irrelevance and decay at this rate.
And for some reason popping up another strip mall or box store doesn’t cause the same ire? It’s all very strange.
I don’t know how to solve it
The first step is to move these questions back up to the national levels. Localism has been a policy disaster.
The first step is to move these questions back up to the national levels. Localism has been a policy disaster.
So the disaster can spread nationally rather than being contained locally?
The true solution is simple, reverse the infringement on property rights that is causing the issue in the first place.
The only one who should have any say about what gets built in a plot of land should be the owner.
The true solution is simple, reverse the infringement on property rights that is causing the issue in the first place.
The only one who should have any say about what gets built in a plot of land should be the owner.
> So the disaster can spread nationally rather than being contained locally?
The local vs global incentives differ, which is why removing local power will help. At the global level, voters care (a bit) about things like social unrest, homelessness, their kids being priced out of housing. And the 'burden' of increasing housing is shared roughly equally across everyone. At the local level, the incentives work very differently. If the local community restricts housing, they get all the benefits and push the costs (homelessness, housing crisis, etc) onto broader society.
The local vs global incentives differ, which is why removing local power will help. At the global level, voters care (a bit) about things like social unrest, homelessness, their kids being priced out of housing. And the 'burden' of increasing housing is shared roughly equally across everyone. At the local level, the incentives work very differently. If the local community restricts housing, they get all the benefits and push the costs (homelessness, housing crisis, etc) onto broader society.
You seem to have rose-tinted spectacles for an earlier time, in which there is no 'infringement of property rights'. Yet, no such time really existed since the Norman Conquest at the latest. Contemporary to when the first building regulations were invented in the middle ages, we had everything from socage to slavery: so yes, property rights were rather strong if you were lucky to be one of the 0.1% with some aristocratic background.
I would posit that the real tragedy is the inclosure Acts, which in a couple of decades undid centuries of social progress away from feudalism towards community-focused common land use, which was not only an efficient system but also a fair one.
I would posit that the real tragedy is the inclosure Acts, which in a couple of decades undid centuries of social progress away from feudalism towards community-focused common land use, which was not only an efficient system but also a fair one.
Perfect as the enemy of the good and all that.
[deleted]
If one company sued another the defendant would countersue and attempt to drown the plaintiffs in cost. But when a homeowner sues a city, a city can’t easily countersue to bury plaintiffs in legal costs.
That said I feel like making NIMBY plaintiffs really deal financial pain of frivolous lawsuits is part of it. Maybe by tax payers demanding NIMBY plaintiffs pay the city and developer legal costs?
That said I feel like making NIMBY plaintiffs really deal financial pain of frivolous lawsuits is part of it. Maybe by tax payers demanding NIMBY plaintiffs pay the city and developer legal costs?
pydry(1)
In the UK a significant number of people think there's no need for more housing, not just in their back yard, but anywhere. They're BANANAs.
The excuses are typically a mix of
1) Too many immigrants
2) Lack of rent controls
3) Greedy developers
4) AirBNB
5) Empty houses
Depending on their political views.
The excuses are typically a mix of
1) Too many immigrants
2) Lack of rent controls
3) Greedy developers
4) AirBNB
5) Empty houses
Depending on their political views.
All those are factors.
They also leave out the biggest single problem: years of very low interest rates inflating prices, making it hard for people to afford deposits though. There is BoE research showing interest rates are the biggest factor in the earnings to house price ration.
"Immigrants" also leaves something out. Foreign investors and rich foreigners buying holiday homes/second (or third or fourth etc.) homes are a factor in some places (especially London) - in much the same way that people from London and other big cities push up prices in places like Cornwall.
They also leave out the biggest single problem: years of very low interest rates inflating prices, making it hard for people to afford deposits though. There is BoE research showing interest rates are the biggest factor in the earnings to house price ration.
"Immigrants" also leaves something out. Foreign investors and rich foreigners buying holiday homes/second (or third or fourth etc.) homes are a factor in some places (especially London) - in much the same way that people from London and other big cities push up prices in places like Cornwall.
Housing seems to be a disaster almost everywhere in the world these days. This makes me think the issue is not a local one (or perhaps there are some traits in all of us as humans that are causing this mess). What is odd to me is that previous real-estate bubbles have been localized. Now, every single place I would consider living has had significant housing price increases/bidding wars, etc.
From an economics perspective, lets assume there was no govt regulation at all. I am not sure if the problem would be fixed. There is a trite old sayings .. "they aren't making any more land" or "location-location-location". But this inelastic supply of land is nothing new. So why is this happening now?
From an economics perspective, lets assume there was no govt regulation at all. I am not sure if the problem would be fixed. There is a trite old sayings .. "they aren't making any more land" or "location-location-location". But this inelastic supply of land is nothing new. So why is this happening now?
> Housing seems to be a disaster almost everywhere in the world these days
Interest rates have been ultra low (versus historic norms) in the developed world for two decades. And prior to that they were on the decline.
Similarly, the developed world has largely not been building housing in line with population growth. For decades.
We are at the natural conclusion of decades of bad policy and we aren’t going to squeeze out of it in a few years. It will take decades of good policy to fix this and our leaders don’t seem programmed for maintaining good policy for more than a few years until there’s a hint of prosperity and then they fritter it away.
Interest rates have been ultra low (versus historic norms) in the developed world for two decades. And prior to that they were on the decline.
Similarly, the developed world has largely not been building housing in line with population growth. For decades.
We are at the natural conclusion of decades of bad policy and we aren’t going to squeeze out of it in a few years. It will take decades of good policy to fix this and our leaders don’t seem programmed for maintaining good policy for more than a few years until there’s a hint of prosperity and then they fritter it away.
Low interest rates _should have_ allowed builders to build more homes too, but they haven't.
In the US housing supply did keep pace with demand until about 2006. Witness the reversion of prices to historical norms (briefly) after the housing crash. So the response of home builders to interest rates is mixed.
The problem here at least is that many homebuilders went bankrupt after the housing crash and the supply of skills and willingness to build homes decreased for a generation.
The problem here at least is that many homebuilders went bankrupt after the housing crash and the supply of skills and willingness to build homes decreased for a generation.
House building was stronger when interest rates were low, but still constrained by bad zoning and labour availability.
I hunted for my question and found an interesting Economics Explained video on youtube. That hypothesizes that Baby Boomers essentially voted to change policies to favor themselves as a cohort.
Was that the one saying, "you would expect a large generation to be poorer than a subsequent smaller generation because of more intragenerational competition, but actually the larger generation can use politics to favor themselves precisely because they are more numerous?"
https://youtu.be/PkJlTKUaF3Q
The situation is even more extreme in places like Italy where the young are even less numerous compared to the old than in the UK.
It's the political equivalent to deflation. If every generation is smaller than the last, you end up with a gerontocracy and no-change society. To maintain pro-growth policies, you need a critical mass of young people who embrace change and want to grow. Otherwise you get stuck in a positive feedback loop of more and more power and money concentrated among the old which depresses the birthrate.
https://youtu.be/PkJlTKUaF3Q
The situation is even more extreme in places like Italy where the young are even less numerous compared to the old than in the UK.
It's the political equivalent to deflation. If every generation is smaller than the last, you end up with a gerontocracy and no-change society. To maintain pro-growth policies, you need a critical mass of young people who embrace change and want to grow. Otherwise you get stuck in a positive feedback loop of more and more power and money concentrated among the old which depresses the birthrate.
Yup .. that's the one.
Setting aside the 'how' that's certainly what the outcome has been, at least in the UK.
We desperately need a pro growth government next. Desperately.
We desperately need a pro growth government next. Desperately.
Foreign money is far more of a problem than foreign people.
Notoriously, many newbuild flats end up empty because not many people can afford the rent, and they're really just investment tokens anyway.
Property is like Bitcoin with bricks.
Notoriously, many newbuild flats end up empty because not many people can afford the rent, and they're really just investment tokens anyway.
Property is like Bitcoin with bricks.
Reality isn't like that, according to a pressure group that says empty homes is a major problem (and are thus unlikely to be underestimating)
https://www.actiononemptyhomes.org/
London, where the main problem is (two people on minimum wage can buy a 3 bed house pretty much everywhere in the country outside the south east) has under 2.5% either empty, in use for short term lets like airbnb, or used for people who have a flat in London and a family home elsewhere.
https://static1.squarespace.com/static/6553693f7d629a133b6a4...
https://www.actiononemptyhomes.org/
London, where the main problem is (two people on minimum wage can buy a 3 bed house pretty much everywhere in the country outside the south east) has under 2.5% either empty, in use for short term lets like airbnb, or used for people who have a flat in London and a family home elsewhere.
https://static1.squarespace.com/static/6553693f7d629a133b6a4...
"two people on minimum wage can buy a 3 bed house pretty much everywhere in the country outside the south east" source? Because it doesn't feel like that at all.
https://www.theguardian.com/society/ng-interactive/2023/jun/... take a look at this map - all the bits of Britain that are actually nice to live in are in "can't buy, can rent" or worse.
Prove me wrong, give me an example area?
https://www.theguardian.com/society/ng-interactive/2023/jun/... take a look at this map - all the bits of Britain that are actually nice to live in are in "can't buy, can rent" or worse.
Prove me wrong, give me an example area?
Also worth seeing that London has about 9 million people, and the south-east has another 9 million. That's 27% of the UK's population in the now-unaffordable area. Throw in some expensive areas outside the south-east (Cambridge, Bristol, seaside resort towns) and that goes up to 30% easily.
Indeed. That's before you've even gotten to places like Manchester, Edinburgh and the like.
Instinctively it feels like about 2/3rds of people live in "unaffordable to buy" areas. Worse it's probably the best paid 2/3rds of the country.
Instinctively it feels like about 2/3rds of people live in "unaffordable to buy" areas. Worse it's probably the best paid 2/3rds of the country.
Anywhere in the world demand is where there is supply for wages. Most places just have not succeed matching that demand with supply on the housing. While supply of wages has still gone on... Very often where there is no well paid jobs or even paid jobs the demand is low, so housing is cheap.
Urbanization has been failed. Supply of housing has not kept up with labour around in most urban areas.
Urbanization has been failed. Supply of housing has not kept up with labour around in most urban areas.
Many people are likely to lie about second homes, because their London property will be more expensive so they will want to claim the exemption from capital gains tax for their main residence.
> Foreign money is far more of a problem than foreign people.
Maybe in the UK, but in Canada we have the same problems (larger by the looks of it) and our government blocked foreign money with zero noticeable impact.
I think foreigners are a scapegoat for the cumulative impact of decades of bad government policy at all levels of government, including bad monetary policy.
Maybe in the UK, but in Canada we have the same problems (larger by the looks of it) and our government blocked foreign money with zero noticeable impact.
I think foreigners are a scapegoat for the cumulative impact of decades of bad government policy at all levels of government, including bad monetary policy.
I think the UK is very different, London in particular. The most expensive parts of London the most: https://www.standard.co.uk/business/london-housing-market-fo...
Those numbers do not count the people who moved to the UK (mostly London) to avoid paying tax under "non-domiciled" exceptions which the government has promised to abolish next year. The main opposition party has endorsed this policy AFAIK so things should start changing from next year as far as those go.
Those numbers do not count the people who moved to the UK (mostly London) to avoid paying tax under "non-domiciled" exceptions which the government has promised to abolish next year. The main opposition party has endorsed this policy AFAIK so things should start changing from next year as far as those go.
Yes, hard to measure but my feeling is you are right.
Definitely so in London where you also get a lot of very large houses (big enough to be converted into multiple flats) being bought by the rich and super rich. Talk to someone in a business linked to luxury London housing and see how long phrases like "family office" take to come up.
Definitely so in London where you also get a lot of very large houses (big enough to be converted into multiple flats) being bought by the rich and super rich. Talk to someone in a business linked to luxury London housing and see how long phrases like "family office" take to come up.
I think we can add "high interest rates" to the above list. That is a symptom, not a cause. If we built more houses it wouldn't matter anywhere near as much.
We can't have a situation where demand is outstripping supply to this extent and expect our economy to grow. We need workers able to live somewhere near where they work, we need them to not have a mortgage so high that they feel unsafe in moving jobs, starting a business or going freelance. We need folk with disposable income to spend on other sectors besides overheating the property market.
All this promotes growth in our economy, housebuilding also of course generates work for builders, electricians, trades, road designers, rail companies etc etc
We can't have a situation where demand is outstripping supply to this extent and expect our economy to grow. We need workers able to live somewhere near where they work, we need them to not have a mortgage so high that they feel unsafe in moving jobs, starting a business or going freelance. We need folk with disposable income to spend on other sectors besides overheating the property market.
All this promotes growth in our economy, housebuilding also of course generates work for builders, electricians, trades, road designers, rail companies etc etc
(1), (3), (4) and (5) are all covert admissions that there's not enough available housing. For example, (1) says that net migration is outstripping housing, (3) usually comes down to the "land-banking" theory or this idea that heterogeneous developers are colluding to restrict housing, while (4) and (5) are about investors restricting housing for tenants.
In my experience, the people adopting these explanations are usually neutral or hostile to actual new housing, aside from their pet solution of punishing their chosen scapegoat.
The challenge is there's a grain of truth to all of these explanations. House prices and rents would go down if vacancies were outlawed. But these solutions that target scapegoats are probably insufficient to move the dial much. The vacancy rate in Ireland has gone down over the last decade while prices and rents have skyrocketed. AirBNBs are a small fraction of housing.
The two biggest things you can do to reduce prices and rents is to build a lot by removing obstacles (whether private or public housing), and reduce incentives (tax and otherwise) for investors to buy and hold land.
In my experience, the people adopting these explanations are usually neutral or hostile to actual new housing, aside from their pet solution of punishing their chosen scapegoat.
The challenge is there's a grain of truth to all of these explanations. House prices and rents would go down if vacancies were outlawed. But these solutions that target scapegoats are probably insufficient to move the dial much. The vacancy rate in Ireland has gone down over the last decade while prices and rents have skyrocketed. AirBNBs are a small fraction of housing.
The two biggest things you can do to reduce prices and rents is to build a lot by removing obstacles (whether private or public housing), and reduce incentives (tax and otherwise) for investors to buy and hold land.
> (1), (3), (4) and (5) are all covert admissions that there's not enough available housing.
Well, (1) isn't. It says demand outstrips supply, as the birth rate on its own would be a shrinking population in the UK. The obvious, low cost answer is to reduce demand. An 'x' in a box, saying no to immigration. Instead we have yes, and then thousands of pounds buying land, building houses, co2 emissions, loss of countryside, environmental destruction, loss of arable land and so on.
We could reduce immigration to pre 1997 levels, when the economy grew at similar rates to now. The arguments for mass immigration in the UK are unproven simply because stopping immigration and seeing the result hasn't been tried. You could argue that with 10x 1997 levels we should have a measurable increase in annual GDP better than pre-1997. We don't. With a shrinking population, Japan's economy has stagnated and contracted a little. But nothing catastrophic. Perhaps the pursuit of 'GDP' is simply the wrong thing to be concerned about.
House builders are happy with the current situation. They're pretty much a cartel, as they're solely responsible for the supply of new houses. They don't want to lose money on sites they've paid over the odds for. They don't want to be told to deliver more houses, if they could, as more supply would be competitive and prices would potentially drop, as would profit. Which is why they donate huge amounts to the national political parties, as well as locally as well to keep the status quo.
Near me there's several fields of Grade 1 land owned by Bellway and Redrow for the last 2 decades. 20 years. The land has permission. They've not yet built on it. Can't think why.
Well, (1) isn't. It says demand outstrips supply, as the birth rate on its own would be a shrinking population in the UK. The obvious, low cost answer is to reduce demand. An 'x' in a box, saying no to immigration. Instead we have yes, and then thousands of pounds buying land, building houses, co2 emissions, loss of countryside, environmental destruction, loss of arable land and so on.
We could reduce immigration to pre 1997 levels, when the economy grew at similar rates to now. The arguments for mass immigration in the UK are unproven simply because stopping immigration and seeing the result hasn't been tried. You could argue that with 10x 1997 levels we should have a measurable increase in annual GDP better than pre-1997. We don't. With a shrinking population, Japan's economy has stagnated and contracted a little. But nothing catastrophic. Perhaps the pursuit of 'GDP' is simply the wrong thing to be concerned about.
House builders are happy with the current situation. They're pretty much a cartel, as they're solely responsible for the supply of new houses. They don't want to lose money on sites they've paid over the odds for. They don't want to be told to deliver more houses, if they could, as more supply would be competitive and prices would potentially drop, as would profit. Which is why they donate huge amounts to the national political parties, as well as locally as well to keep the status quo.
Near me there's several fields of Grade 1 land owned by Bellway and Redrow for the last 2 decades. 20 years. The land has permission. They've not yet built on it. Can't think why.
(1) is as an admission of a lack of housing, because "demand is too high" is the same as "supply is too low". The interaction makes the price, and we can't say only one side causes the imbalance unless there's some hard structural reason why the other side can't adjust. People that promote (1) focus on the demand side of the equation because that gives them their desired policy outcome of restricting immigration, but that's a sneaky rhetorical device (begging the question) more than a useful analysis that honestly considers all the different factors that contribute to the housing crisis (investor demand for capital assets, zoning, materials and labor cost inflation, credit costs, rural to city urbanization migration, etc).
The problem is that we can't just wave a magic wand and increase supply instantly, or even with a year, or perhaps 5 years (lack of trades, materials, and so on), but we could, at the stroke of a pen, flatten demand right now.
The fact is that the UK is creaking at the seams and the elephant in the room is too many people. Yet, for the NHS it's 'Tory underinvestment' (despite never having more money, and the highest ever staffing levels), and for all the potholes it is again... Tory underinvestment, despite vastly more traffic and no new roads. Similarly with pretty much everything else. Demand is people using the NHS. Demand is people using the roads. And yet somehow we've not raised silly amounts of extra tax from the extra people to pay for any of the extra stuff.
But it's always fashionable to blame the Tories (as they're mostly in power), rather than apply a bit more critical thought to the problem. Next 5 years at least, will be Labour, but it will still be the Tories' fault. And I'll place a small wager than net immigration to the UK will still be 200k per annum, so another 1mm people, but that will be ignored in favour of 'Tory underinvestment'. Every government casts a shadow on the next one, some shadows are longer than others. This one started in 1990, and got worse in 1997.
> honestly considers all the different factors that contribute to the housing crisis
It's not really a 'crisis', it's just, well, business as usual. I remember the same topic covered in the late 80s and early 90s. 'We're not building enough', 'there's a housing crisis'.
Sadly the UK housing market is so entwined in the economy, it will be decades for a correction to happen. Homeowners won't sell below purchase price. House builders won't sell without making a profit. Lack of house sales paralyses the economy. No labour mobility, loss of stamp duty and so on.
We cannot force prices down without causing problems in the economy - tradesmen, solicitors, estate agents, investors, and so on. There needs to be a multi-decade plan from 'the Government' to somehow reduce house prices. But that seems to be well above the level of ability of our politicians and political system.
The fact is that the UK is creaking at the seams and the elephant in the room is too many people. Yet, for the NHS it's 'Tory underinvestment' (despite never having more money, and the highest ever staffing levels), and for all the potholes it is again... Tory underinvestment, despite vastly more traffic and no new roads. Similarly with pretty much everything else. Demand is people using the NHS. Demand is people using the roads. And yet somehow we've not raised silly amounts of extra tax from the extra people to pay for any of the extra stuff.
But it's always fashionable to blame the Tories (as they're mostly in power), rather than apply a bit more critical thought to the problem. Next 5 years at least, will be Labour, but it will still be the Tories' fault. And I'll place a small wager than net immigration to the UK will still be 200k per annum, so another 1mm people, but that will be ignored in favour of 'Tory underinvestment'. Every government casts a shadow on the next one, some shadows are longer than others. This one started in 1990, and got worse in 1997.
> honestly considers all the different factors that contribute to the housing crisis
It's not really a 'crisis', it's just, well, business as usual. I remember the same topic covered in the late 80s and early 90s. 'We're not building enough', 'there's a housing crisis'.
Sadly the UK housing market is so entwined in the economy, it will be decades for a correction to happen. Homeowners won't sell below purchase price. House builders won't sell without making a profit. Lack of house sales paralyses the economy. No labour mobility, loss of stamp duty and so on.
We cannot force prices down without causing problems in the economy - tradesmen, solicitors, estate agents, investors, and so on. There needs to be a multi-decade plan from 'the Government' to somehow reduce house prices. But that seems to be well above the level of ability of our politicians and political system.
For the last 5 years we've had a 300k houses a year target. We're over half a million short on that number.
Stamp duty is terrible, it stops movement. Replacing with increased property tax (say at 1/10th of stamp duty per year) would be far more sensible. Or we could just tax the land -- good look offshoring that.
Stamp duty is terrible, it stops movement. Replacing with increased property tax (say at 1/10th of stamp duty per year) would be far more sensible. Or we could just tax the land -- good look offshoring that.
Unless I've been imagining it we have been desperately trying to reduce immigration since around 2016, it was what most of Brexit was about, after all. I literally can't turn on the news without some politician crowing about how they are stopping the boats, or sending 'them' all to Ruanda.
What has happened to house prices since 2016 for example?
(I actually don't agree that legal immigration is bad, if folks want to come from wherever to buy our houses, work in our cities and so on that's actually great for our economy. However we do need to build new housing in line with that, not just pretend it's not happening)
What has happened to house prices since 2016 for example?
(I actually don't agree that legal immigration is bad, if folks want to come from wherever to buy our houses, work in our cities and so on that's actually great for our economy. However we do need to build new housing in line with that, not just pretend it's not happening)
Stopping immigration will also stop housing construction, a large proportion of builders are immigrants. Official numbers that say 90% of builders are British are hilariously inaccurate - construction is notably a cash-in-hand informal industry in the UK, and neither employer nor employee has any incentive in reporting their relationship. Source: several unrelated friends in the industry.
By "stopping" do you mean reversing immigration? If so, then yes that could "stop" housing construction. Reducing net immigration by any amount wouldn't stop house building as those workers are already UK residents.
No, because those immigrant builders tend to return to their original country once they have made enough money. For example, there are ~30% fewer Poles in the UK now than in 2017, which has led to a big shortage of plumbers and builders. Anecdotally, my neighbour is a Romanian builder, and will go home once he can buy a nice house in the mountains.
(1) more than just a grain of truth, more like the elephant in the room; net migration into the UK is more than 4 times higher than France, and population density is currently almost 3 times higher, and rising.
But the ratio of workers:non-worker is reducing
Population of 18-65s and percent of total population
2008: 39.2m, 63.4%
2018: 40.9m, 61.6%
2028: 41.3m, 59.3%
2038: 41.3m, 57.2%
Given that tax relies heavily on taxing working people, and the number of working people, and that immigrants tend to be of working age, immigration is essential in stemming the retiree-centric population.
The other alternative would be to swing more of the economy to looking after non-workers (mainly the over 65s), but we won't tax those people despite the massive wealth they have.
Population of 18-65s and percent of total population
2008: 39.2m, 63.4%
2018: 40.9m, 61.6%
2028: 41.3m, 59.3%
2038: 41.3m, 57.2%
Given that tax relies heavily on taxing working people, and the number of working people, and that immigrants tend to be of working age, immigration is essential in stemming the retiree-centric population.
The other alternative would be to swing more of the economy to looking after non-workers (mainly the over 65s), but we won't tax those people despite the massive wealth they have.
Not sure how much immigration is really needed; due to improvements in healthcare, working conditions, and machinery, the length of time for which people are able to stay in active work and contribute positively to the economy is increasing at a comparable rate.
France has a higher proportion of young people, and yet lower immigration. Why? Could it be that the decision to have children is correlated with population density?
Britain's problem is cramming everything into the London areas and surrounding counties. There's plenty of space in the midlands and up north. What should happen is that Parliament be relocated from London to Manchester and other city-state services moved to the rest of the country. A huge rebalancing of investment will quickly equalise and normalise the lopsided weighting that this country has.
Manchester has the same house price issues as London these days. Leeds or something could be appropriate though.
The problem is the Tories were re-elected on the basis of 'leveling up' the regions but f-all has actually happened so the metaphorical well has been poisoned.
The problem is the Tories were re-elected on the basis of 'leveling up' the regions but f-all has actually happened so the metaphorical well has been poisoned.
Pff, or it's massive amounts of immigration?
>A focus on affordability over supply puts the cart before the horse.
You have to have this discussion again and again. People simply refuse to accept this simple fact. Increasing supply is the best way to make housing affordable.
Instead of making limits to housing prices, create mandatory new zoning and housing construction when there is not enough affordable housing. People who can afford expensive apartments are in lower numbers than those who can afford low cost housing. Just build more and prices drop and quality of housing increases.
You have to have this discussion again and again. People simply refuse to accept this simple fact. Increasing supply is the best way to make housing affordable.
Instead of making limits to housing prices, create mandatory new zoning and housing construction when there is not enough affordable housing. People who can afford expensive apartments are in lower numbers than those who can afford low cost housing. Just build more and prices drop and quality of housing increases.
> Increasing supply is the best way to make housing affordable
It’s also the best way to redistribute wealth from the 50%[0] who own their own homes, and tend to vote, to those who don’t, while also giving those home owners with mortgages negative equity. By which I mean, it’s a total non-starter politically forever.
I don’t own a house and I’d like to, and this affects me directly, but this is purely and 100% an issue of politics and has no solution[1]
0: ish, I can’t find any decent numbers that aren’t completely contradicted by others
1: That I’ve seen, that could get through parliament
It’s also the best way to redistribute wealth from the 50%[0] who own their own homes, and tend to vote, to those who don’t, while also giving those home owners with mortgages negative equity. By which I mean, it’s a total non-starter politically forever.
I don’t own a house and I’d like to, and this affects me directly, but this is purely and 100% an issue of politics and has no solution[1]
0: ish, I can’t find any decent numbers that aren’t completely contradicted by others
1: That I’ve seen, that could get through parliament
What do you think of these solutions;
1 - Create a independent body for housing growth "The house bank of England" and thier responsibility is to ensure 0% YOY house price growth by increasing supply to the point prices no longer rise, but no further. No negative equity created but also no above inflation price rises for a decade or two. This is not particularly different than when they do QE (for the middle class/wealthy who are often savers).
2 - growth areas: I'm thinking south London, Cambridge, Oxford, Leeds, maybe Manchester. Government builds houses and commits to buy any house for the value of it on $scheme_announcement_date for houses brought before that date. Scheme will last 25 years. Increasing the density of a city should actually draw house prices up in the long run as it will bring better transport links, more economic activity with greater productivity/efficiency.
1 - Create a independent body for housing growth "The house bank of England" and thier responsibility is to ensure 0% YOY house price growth by increasing supply to the point prices no longer rise, but no further. No negative equity created but also no above inflation price rises for a decade or two. This is not particularly different than when they do QE (for the middle class/wealthy who are often savers).
2 - growth areas: I'm thinking south London, Cambridge, Oxford, Leeds, maybe Manchester. Government builds houses and commits to buy any house for the value of it on $scheme_announcement_date for houses brought before that date. Scheme will last 25 years. Increasing the density of a city should actually draw house prices up in the long run as it will bring better transport links, more economic activity with greater productivity/efficiency.
The second is something I’ve thought about and probably the closest to something that could work, although I think the UK is naturally too free-market minded to accept it.
I suspect the status quo is much more popular with the voters though.
I suspect the status quo is much more popular with the voters though.
I honestly believe it does depend on the voter. For 2) Conservatives would never be able to even if they wanted this, however labour have the option of picking say Oxford or the home counties to do this in where they have very few voters to lose in the first place. They would still get in on a national election.
Oxford has two MPs - one Labour and one Lib Dem. But in a town as expensive as Oxford, there's probably lots of voters keen on lowering housing costs.
Hah, didn't know that. I think the point stands though, plenty of areas where doing this would gain a net benefit in terms of national (and perhaps even local as you say) voter support.
I mean you also need to account for the fact that government and parliament aren’t the same, and that it’s parliament who can and would ultimately need to legislate to wave away green belt and local planning objections.
Far from clear that that gets through a Labour majority parliament, even if the government wants it to.
re Oxford, there’s a shed-load of ugly and very well connected land around Kidlington that you could dump a large, high-density town into, and Oxford West is a Con/LD swing seat, but local opposition is fiercely against.
Far from clear that that gets through a Labour majority parliament, even if the government wants it to.
re Oxford, there’s a shed-load of ugly and very well connected land around Kidlington that you could dump a large, high-density town into, and Oxford West is a Con/LD swing seat, but local opposition is fiercely against.
I think you're right but supply alone isn't enough. Density is another issue. We need to learn to build up. Commutes are getting crazy and sprawl is intense. Most people who I know to own their own property end up so far from london they barely ever go in, only ever coming in for work because they have to. They let their connection wither and lead less interesting lives.
That's a bit condescending on your part to judge other's lives, just because world doesn't revolve around your values doesn't mean others are wrong and their life is shit.
I for example hate places like London with moderate passion, living there I consider very low quality life and certainly prefer touch with real nature, no crowds, little to no air/noise pollution, and society being more... social, to certain point of course.
40 minute commute 2x a week is fine with me, most Londoners have way more (not from there nor GB, what I write applies to all big cities to some extent). For raising kids there is no discussion, cities mostly suck despite all benefits and many kids from there show it very clearly.
I for example hate places like London with moderate passion, living there I consider very low quality life and certainly prefer touch with real nature, no crowds, little to no air/noise pollution, and society being more... social, to certain point of course.
40 minute commute 2x a week is fine with me, most Londoners have way more (not from there nor GB, what I write applies to all big cities to some extent). For raising kids there is no discussion, cities mostly suck despite all benefits and many kids from there show it very clearly.
I think you're underestimating how much of London is quite pleasant green suburbs. It's not a very dense city, especially when you get out of Zone 1 and a few adjacent places like Tower Hamlets. I grew up in a rural farming town, and there's no way I'd move back.
What I describe could be understood as extreme since I didn't give enough details, what you describe is opposite extreme and I understand your opinion, would probably have the same.
The golden middle path, as usually, works the best for many after certain point in life. To be more concrete - smaller villages surrounded by vineyards and wild forests, 3 min by car from highway, 20 mins from a million-sized conglomeration with tons of work, 25 min from another bigger city, 5 minutes from beautiful crystal clear 100km wide lake. Village with well-equipped kindergarten, primary and secondary school, few shops and restaurants, in middle of wineyards, on foothills of beautiful mountains, looking at the alps few tens of kms away.
Paradise to many. Expensive one of course. London can be great compared to many places (and its ranked very high on greenery lists), but sorry it doesn't even compare unless you are properly die hard city type.
The golden middle path, as usually, works the best for many after certain point in life. To be more concrete - smaller villages surrounded by vineyards and wild forests, 3 min by car from highway, 20 mins from a million-sized conglomeration with tons of work, 25 min from another bigger city, 5 minutes from beautiful crystal clear 100km wide lake. Village with well-equipped kindergarten, primary and secondary school, few shops and restaurants, in middle of wineyards, on foothills of beautiful mountains, looking at the alps few tens of kms away.
Paradise to many. Expensive one of course. London can be great compared to many places (and its ranked very high on greenery lists), but sorry it doesn't even compare unless you are properly die hard city type.
There 's not enough earth for everyone to live the way that you want to.
High-rise new-builds are tainted until we have leasehold reform; £8k p/a service charges and several hundred pounds ground rent, with failure to pay leading to the confiscation of your £1MM apartment by the freeholder, is insane, and is literal rent-seeking by the developers on properties that are ostensibly owned by their occupiers.
They don’t want to build more, because they would also have to lower their service charges significantly or see them fail to sell once they’ve saturated the section of the market that can afford them.
They don’t want to build more, because they would also have to lower their service charges significantly or see them fail to sell once they’ve saturated the section of the market that can afford them.
I used to own a flat back in 2008 (completed literally the day after northern rock went bust). I owned 1 of 42 shares in the management company responsible for the management of the block. Sure we had to spend money maintaining the gardens, internal areas, lift, door system, etc.
Each year we had an AGM where we elected directors (I was one for a few years) and make the appropriate decisions.
Ground rent (especially those expoential ones) is a problem, but all leaseholders have a right to manage their flats even if it's not set up that way.
The far bigger problem is the fleecehold houses, where there is no right to manage, or even see the invoice -- https://inews.co.uk/news/housing/new-build-homeowners-nda-so...
Each year we had an AGM where we elected directors (I was one for a few years) and make the appropriate decisions.
Ground rent (especially those expoential ones) is a problem, but all leaseholders have a right to manage their flats even if it's not set up that way.
The far bigger problem is the fleecehold houses, where there is no right to manage, or even see the invoice -- https://inews.co.uk/news/housing/new-build-homeowners-nda-so...
That’s fine if you have a share of freehold. Lots of people don’t, and are beholden to the whims of large commercial landlords.
Replacing the management (or attempting to purchase the freehold) is tricky in buildings where the majority of units are sublet under ASTs; leaseholders who are landlords themselves generally don’t care how effective the management is, as long as it isn’t so bad as to disrupt their own income.
Even when a critical mass can be found, the up front costs associated mean that it is often impossible unless all the residents have access to large amount of capital.
Replacing the management (or attempting to purchase the freehold) is tricky in buildings where the majority of units are sublet under ASTs; leaseholders who are landlords themselves generally don’t care how effective the management is, as long as it isn’t so bad as to disrupt their own income.
Even when a critical mass can be found, the up front costs associated mean that it is often impossible unless all the residents have access to large amount of capital.
If you have a leasehold flat you have a right to manage
https://www.gov.uk/right-to-manage-a-guide-for-landlords
Nothing to do with the freehold
If I own a lease and then rent it out on an AST I want to reduce my costs to increase my profits. If I can manage the block myself for £4k and an annual vote for a director, or let the freeholder manage it for £8k, then clearly I'll do the former.
Same incentive as if you are an owner-occupier leaseholder.
https://www.gov.uk/right-to-manage-a-guide-for-landlords
Nothing to do with the freehold
If I own a lease and then rent it out on an AST I want to reduce my costs to increase my profits. If I can manage the block myself for £4k and an annual vote for a director, or let the freeholder manage it for £8k, then clearly I'll do the former.
Same incentive as if you are an owner-occupier leaseholder.
I misread your original comment, but I don’t think replacing the management company is any easier than purchasing the freehold, aside from capital considerations.
The right exists in principle, but 50% of flats (as I understand it, all of them, including flats that are not demised under lease, but under AST from the freeholder, and who do not form part of the quota) must agree to form a management company before it can take effect.
> If I own a lease and then rent it out on an AST I want to reduce my costs to increase my profits.
In a demand-skewed market you will just pass the higher cost on in rent; it’s not going to make it any less likely that you manage to let it out.
Furthermore, even contacting the owners of sublet flats, let alone convincing them they should spend money and endure potential disruption, can be difficult, making it hard to reach the threshold.
In a small block it might be easy, in a high-rise with 200 apartments, it’s trickier.
The right exists in principle, but 50% of flats (as I understand it, all of them, including flats that are not demised under lease, but under AST from the freeholder, and who do not form part of the quota) must agree to form a management company before it can take effect.
> If I own a lease and then rent it out on an AST I want to reduce my costs to increase my profits.
In a demand-skewed market you will just pass the higher cost on in rent; it’s not going to make it any less likely that you manage to let it out.
Furthermore, even contacting the owners of sublet flats, let alone convincing them they should spend money and endure potential disruption, can be difficult, making it hard to reach the threshold.
In a small block it might be easy, in a high-rise with 200 apartments, it’s trickier.
> In a demand-skewed market you will just pass the higher cost on in rent; it’s not going to make it any less likely that you manage to let it out.
In a demand skewed market you'll charge the same regardless.
Two people owning identical flats, one with a 90% mortgage at 5%, one with no mortgage at all, will charge exactly the same rent.
Costs don't come into the rent charged, this is a lie perpetrated by landlords who want tax breaks.
In a demand skewed market you'll charge the same regardless.
Two people owning identical flats, one with a 90% mortgage at 5%, one with no mortgage at all, will charge exactly the same rent.
Costs don't come into the rent charged, this is a lie perpetrated by landlords who want tax breaks.
> Two people owning identical flats, one with a 90% mortgage at 5%, one with no mortgage at all, will charge exactly the same rent.
Identical flats in the same building will have the same management charge.
Flats in different buildings are not identical, and will generally have different rents; the difference in management charge is one factor that will determine this.
Identical flats in the same building will have the same management charge.
Flats in different buildings are not identical, and will generally have different rents; the difference in management charge is one factor that will determine this.
No they won't have different rents, if they are identical then they can charge the same amount. The costs (service charge, mortgage, etc) doesn't come into it.
Think about it - if I'm a landlord and have a lower service charge why would I charge less? That just reduces my revenue.
If I am a tenant and see one charging more than another why would I pay for the more expensive one?
Think about it - if I'm a landlord and have a lower service charge why would I charge less? That just reduces my revenue.
If I am a tenant and see one charging more than another why would I pay for the more expensive one?
Westminster is not known for its desnity, especially given Hyde, Regents, Green, and St James Park
However if the entire of Greater London suddenly became as dense as wesminster you could house another 9 million people.
However if the entire of Greater London suddenly became as dense as wesminster you could house another 9 million people.
Transportation is massive for this situation, and the gutting of HS2 was entirely to prevent people being able to commute to London from further afield and wrecking the housing in London.
If we were able to get a better network of transport it would unlock a lot more of the country where there is land, and there is already empty housing.
If we were able to get a better network of transport it would unlock a lot more of the country where there is land, and there is already empty housing.
I rent an ex-coucil house in SE London. It takes around 45 minutes to get into the centre. The local drug-dealers hang out next to the house, there is graffiti on the walls, and it is next to one of the busiest roads in London. There have been multiple murders on the estate since I moved in. It is in the 96 percentile for air pollution. It is apparently worth six hundred and fifty thousand pounds.
Assuming a £100K bung from mum and dad for the deposit, a 25 year repayment mortgage at 5%, and further assuming you spent 50% of your income on the mortgage, you would require an income of £122K to afford it. That would put you firmly in the top 1% of earners in the UK.
Despite your high income, and paying £45K/year tax, you would live in one of the most deprived parts of the country and your local hospitals and schools would be in special measures.
Assuming a £100K bung from mum and dad for the deposit, a 25 year repayment mortgage at 5%, and further assuming you spent 50% of your income on the mortgage, you would require an income of £122K to afford it. That would put you firmly in the top 1% of earners in the UK.
Despite your high income, and paying £45K/year tax, you would live in one of the most deprived parts of the country and your local hospitals and schools would be in special measures.
First time buyer mortgages are 35 years, you’d buy as a couple so it’s two incomes, and 1% is £180k
Also either your description is wrong or the valuation is wrong. 1 mile from e.g. Orpington would be around £500k for a 3 bed house
Also either your description is wrong or the valuation is wrong. 1 mile from e.g. Orpington would be around £500k for a 3 bed house
In the new cross area it's a minimum of 600k for a three bed and I'd say it meets pretty much all of the above criteria.
Bingo
It was a tragically accurate description then. Also worth noting it is one of the cheapest places in zone 2, and only has trains or overground. It does feel (and is) genuinely unsafe, particularly if you don't get home from work until it's started getting dark. It may be slightly cheaper to buy in zone 4,5 or 6 but most of the saving in house prices is going to go straight out the door on more expensive travel cards.
The poster above mentioned 500k in Orpington, well that's zone 6 so a travel card is an extra 140 per month per person so if there is two of you you're spending alot of what you've saved in the house price on that and you also both have to spend a extra 30mins in travel time each way, so an hour of extra lost time a day. Is it worth all of that to save 100K on the purchase price?
The poster above mentioned 500k in Orpington, well that's zone 6 so a travel card is an extra 140 per month per person so if there is two of you you're spending alot of what you've saved in the house price on that and you also both have to spend a extra 30mins in travel time each way, so an hour of extra lost time a day. Is it worth all of that to save 100K on the purchase price?
Orpington has fast trains so you can be at London Bridge in under 20 minutes and Charing Cross in slightly over that (+ walking time to the station). As long as you pick the right trains, it’s similar in commuting time - just a bit less flexible
I don’t live in Orpington, but I do live in zone 6. My door to door commute is also 45 minutes
I don’t live in Orpington, but I do live in zone 6. My door to door commute is also 45 minutes
For the last fifty years municipal governments around the world have thought it really neat that they could control what could be built. They have relatively few levers to pull, so they continuously added more and more regulations to what could be built, each time adding complexity, uncertainty and cost. And this went well beyond the canonical example of “we can’t have nuclear power plants next to daycares!”. They just kept going with their new and quirky rules.
In concert with this they started adding fees, and then more fees and more fees onto construction. Development fees, parkland dedication, public art, you name it, they found a creative way to shove the cost into the price of newly built buildings.
The housing crisis today is 100% the result of government, and now government is acting like individuals caused the problem by buying units to rent on AirBNB, or bidding the prices up too high (also due to government’s ridiculously low interest rates for too damn long!)
It’s wild to watch inept politicians fumble around looking to blame anyone but their predecessors for the problem at hand, and in the process hurt a lot of people.
The only answer is more housing, and it will take likely as long to fix this issue as it has to create it - decades. There aren’t enough trades available, material has skyrocketed and will get worse due to demand, and now interest rates are high which makes the economics even more challenging. Essentially, costs have risen faster than rents/sales prices and it takes a long time for either to move in the right direction.
In concert with this they started adding fees, and then more fees and more fees onto construction. Development fees, parkland dedication, public art, you name it, they found a creative way to shove the cost into the price of newly built buildings.
The housing crisis today is 100% the result of government, and now government is acting like individuals caused the problem by buying units to rent on AirBNB, or bidding the prices up too high (also due to government’s ridiculously low interest rates for too damn long!)
It’s wild to watch inept politicians fumble around looking to blame anyone but their predecessors for the problem at hand, and in the process hurt a lot of people.
The only answer is more housing, and it will take likely as long to fix this issue as it has to create it - decades. There aren’t enough trades available, material has skyrocketed and will get worse due to demand, and now interest rates are high which makes the economics even more challenging. Essentially, costs have risen faster than rents/sales prices and it takes a long time for either to move in the right direction.
The problem is that regulation is popular. And the same people who want to regulate everything also complain about the price of everything going up. It's fair to say that the majority of people cannot/do not assess the consequences of what they are voting for, and this manifests in many ways, for example with misguided green regulation like EV subsidies, or the looming pension/healthcare crises. Politicians use their tools to redirect the externalities/damage back to the population, so politicians are not to be expected to solve the problems that they helped create. We need some kind of institutional 'politician watch' to save our democracies from self-sabotage
Some semi-random observations, lack of housing supply semi-aside:
One of the exceptional things about the UK is the 'right to buy' scheme introduced in 1980 which offered people in Council homes the opportunity to buy it, with up to a 60% discount on its guide price depending on how long they've rented. A lot of working class people in Council schemes took them up on that offer and so the amount of available housing stock to cheaply rent diminished sharply. IIRC in Scotland it was ended in the 2010s to curtail that trend. There is surely a generation of older people living in 2/3/4 bedroom houses that don't really need that space, but aren't willing to pay today's prices for a smaller place that hasn't been made their own home- this could affect the affordability of up and coming families. There was a 'bedroom tax' imposed on people still living in Council housing that had empty bedrooms which didn't apply to private housing.
In Scotland the average house price is closer to £200K while in England it's closer to £300K, yet GDP/capita is broadly similar in both countries. UK house prices generally get more exorbitant the closer you get to London, though they're high in Edinburgh also. Would've hoped/thought that with WFH being more normalised with COVID that people could migrate to more affordable areas without sacrificing job opportunities and without much change in culture/climate etc.
Where I live in the Scottish Borders, a couple on minimum wage can buy the average house price at well below 5x their salary. For WFH folks in unaffordable areas, get some research done on somewhere agreeable and take the leap.
One of the exceptional things about the UK is the 'right to buy' scheme introduced in 1980 which offered people in Council homes the opportunity to buy it, with up to a 60% discount on its guide price depending on how long they've rented. A lot of working class people in Council schemes took them up on that offer and so the amount of available housing stock to cheaply rent diminished sharply. IIRC in Scotland it was ended in the 2010s to curtail that trend. There is surely a generation of older people living in 2/3/4 bedroom houses that don't really need that space, but aren't willing to pay today's prices for a smaller place that hasn't been made their own home- this could affect the affordability of up and coming families. There was a 'bedroom tax' imposed on people still living in Council housing that had empty bedrooms which didn't apply to private housing.
In Scotland the average house price is closer to £200K while in England it's closer to £300K, yet GDP/capita is broadly similar in both countries. UK house prices generally get more exorbitant the closer you get to London, though they're high in Edinburgh also. Would've hoped/thought that with WFH being more normalised with COVID that people could migrate to more affordable areas without sacrificing job opportunities and without much change in culture/climate etc.
Where I live in the Scottish Borders, a couple on minimum wage can buy the average house price at well below 5x their salary. For WFH folks in unaffordable areas, get some research done on somewhere agreeable and take the leap.
I am not sure the comparison between England and Scotland is valid. Scotland is is much less densely populated has much smaller cities. The population of the whole of Scotland is much smaller than that of greater London.
> There is surely a generation of older people living in 2/3/4 bedroom houses that don't really need that space, but aren't willing to pay today's prices for a smaller place that hasn't been made their own home
Yes, but what do you do about it?
In the areas I know all sizes of house have gone up in price, so they would make a MUCH bigger profit on downsizing than when they bought houses a few decades ago.
> There was a 'bedroom tax' imposed on people still living in Council housing that had empty bedrooms which didn't apply to private housing.
I thought it applied to housing benefit? You no longer get housing benefit to pay for the extra room. Its also not empty rooms as such: its having more rooms than the govt thinks you need, so things such as young kids having their own rooms rather than sharing.
> There is surely a generation of older people living in 2/3/4 bedroom houses that don't really need that space, but aren't willing to pay today's prices for a smaller place that hasn't been made their own home
Yes, but what do you do about it?
In the areas I know all sizes of house have gone up in price, so they would make a MUCH bigger profit on downsizing than when they bought houses a few decades ago.
> There was a 'bedroom tax' imposed on people still living in Council housing that had empty bedrooms which didn't apply to private housing.
I thought it applied to housing benefit? You no longer get housing benefit to pay for the extra room. Its also not empty rooms as such: its having more rooms than the govt thinks you need, so things such as young kids having their own rooms rather than sharing.
>I am not sure the comparison between England and Scotland is valid
Granted it's not exactly apples for apples, it's just my comparison as I live in Scotland and the affordability problem seems to be more of an English one, hence the GDP comparison on a pure monetary basis.
>Yes, but what do you do about it?
Removing right to buy, and laws on landlords tax benefits that have changed IMO have already changed the idea that being a landlord provides good ROI, in the main. I had a second property (my previous home) and having to pay 42% income tax on the rent, maintenance, any rent issues and then any potential capital gains certainly doesn't sound appetising vs selling and having cash.
>Its also not empty rooms as such: its having more rooms than the govt thinks you need, so things such as young kids having their own rooms rather than sharing.
You are perhaps right. General gist being that there's housing stock that'd better suit other people, which I guess was the spirit of the law.
Granted it's not exactly apples for apples, it's just my comparison as I live in Scotland and the affordability problem seems to be more of an English one, hence the GDP comparison on a pure monetary basis.
>Yes, but what do you do about it?
Removing right to buy, and laws on landlords tax benefits that have changed IMO have already changed the idea that being a landlord provides good ROI, in the main. I had a second property (my previous home) and having to pay 42% income tax on the rent, maintenance, any rent issues and then any potential capital gains certainly doesn't sound appetising vs selling and having cash.
>Its also not empty rooms as such: its having more rooms than the govt thinks you need, so things such as young kids having their own rooms rather than sharing.
You are perhaps right. General gist being that there's housing stock that'd better suit other people, which I guess was the spirit of the law.
> Removing right to buy, and laws on landlords tax benefits that have changed IMO have already changed the idea that being a landlord provides good ROI, in the main. I had a second property (my previous home) and having to pay 42% income tax on the rent, maintenance, any rent issues and then any potential capital gains certainly doesn't sound appetising vs selling and having cash.
It should have an effect, but has not had that much yet. There is a lag so maybe we will see it some time soon. However, we have also had rent increases and falls in house prices in real terms so that might offset it.
It should have an effect, but has not had that much yet. There is a lag so maybe we will see it some time soon. However, we have also had rent increases and falls in house prices in real terms so that might offset it.
Have you tried buying somewhere in Scotland recently? Nowhere (in cities at least) sells for less than 20% over home report price. You can't get a mortgage for anything over home report price, so a £189,000 (median price) property requires almost 60k in cash up-front.
As of 2022, the median salary in Scotland is £27,000. It's pretty unaffordable for the average person who doesn't have money from their parents.
As of 2022, the median salary in Scotland is £27,000. It's pretty unaffordable for the average person who doesn't have money from their parents.
60K maybe if you want the best interest rates.
In this example we're now talking about first time buyers (presumably and as a couple), wanting an 'average' priced home (could start lower) earning 4K above minimum wage.
In this example we're now talking about first time buyers (presumably and as a couple), wanting an 'average' priced home (could start lower) earning 4K above minimum wage.
As someone old enough to remember right-to-buy, and old enough to have grandparents in World War 2. Both sets of grandparents lost their own houses in the Blitz. They were subsequently housed in council houses, and received nothing for their destroyed houses other than a token payment from the state. There was no insurance back then. When they were then able to buy their council homes, both of my grandparents did that and finally owned their own homes again.
Right-to-buy wasn't this 'awful' thing lots of people made it out to be.
Right-to-buy wasn't this 'awful' thing lots of people made it out to be.
I think wartime just has to be considered an edge case here. There was no way that Britain could have afforded to rebuild like-for-like after the war, and compensation for bomb damage couldn't have been done fairly.
Who gets priority? Do Lord and Lady Middlecott have their stately home rebuilt first? Or does it start with the least valuable property and work upwards, meaning that Mr. Horace Hodge's garden shed is number one to be restored? It clearly can't be exactly proportional, otherwise his Lordship would get one wing of his mansion and Horace would get one wall of his shed, which helps nobody.
I don't think it's callous of me to suggest that providing council housing for those like your grandparents was the only humane thing to do that the country could have afforded. Rather than directly restoring the pre-war social order, the post-war system was orientated towards comfortably housing the masses, and it did that with documented success.
Who gets priority? Do Lord and Lady Middlecott have their stately home rebuilt first? Or does it start with the least valuable property and work upwards, meaning that Mr. Horace Hodge's garden shed is number one to be restored? It clearly can't be exactly proportional, otherwise his Lordship would get one wing of his mansion and Horace would get one wall of his shed, which helps nobody.
I don't think it's callous of me to suggest that providing council housing for those like your grandparents was the only humane thing to do that the country could have afforded. Rather than directly restoring the pre-war social order, the post-war system was orientated towards comfortably housing the masses, and it did that with documented success.
It's entirely possible that certain groups benefitted from a policy that was awful for society at large. If it benefitted absolutely no one, it wouldn't have existed in the first place.
Right-to-buy isn't fundamentally bad. What's bad about it is how much local councils lose on the deal.
I have no problem with it. I'm fortunate in that my own parents took advantage of it and I'll likely inherit it with my siblings.
Part of what I was meaning is that a lot of people did take advantage of it from the boomer gen but they're staying in homes bigger than they necessarily need, maybe just a 'bump' of old activity that will even out over the next 10-20 years.
Part of what I was meaning is that a lot of people did take advantage of it from the boomer gen but they're staying in homes bigger than they necessarily need, maybe just a 'bump' of old activity that will even out over the next 10-20 years.
There are very severe restrictions on local councils that limit how many houses they can build. So on average they've been building 1400 a year, across the UK.
There are also some quite generous tax breaks for landlords, including mortgage relief.
The playing field is slanted very heavily towards private ownership and (literal) rent-seeking.
There are also some quite generous tax breaks for landlords, including mortgage relief.
The playing field is slanted very heavily towards private ownership and (literal) rent-seeking.
My understanding is that the restrictions aren't on the local councils - they can choose to approve more housing, like what Croydon did a few years ago. It's just most councils don't.
Working From Home doesn't dissuade people from wanting to live near densely populated areas because of the social opportunities that people get out of such places. It's mostly young people driving these trends, anyway.
But alleviates the market of people who are in densely populated areas that aren't particularly precious about living there.
> so the amount of available housing stock to cheaply rent diminished sharply
And so did the number of people needing to rent.
> There was a 'bedroom tax' imposed on people still living in Council housing that had empty bedrooms which didn't apply to private housing.
A tax massively opposed by the left.
A couple on minimum wage and 37.5 hours a week has a £3,200 a month net wage after tax. Even just 33% on a mortgage means you can get a c. 180k mortgage at 5%, enough to buy a 3 bed house in many parts of England, assuming you can find the required deposit.
https://www.rightmove.co.uk/properties/146612411#/?channel=R...
https://www.rightmove.co.uk/properties/146822492#/?channel=R...
https://www.rightmove.co.uk/properties/146953640#/?channel=R...
https://www.rightmove.co.uk/properties/147046655#/?channel=R...
https://www.rightmove.co.uk/properties/144397493#/?channel=R...
https://www.rightmove.co.uk/properties/144533690#/?channel=R...
https://www.rightmove.co.uk/properties/146820380#/?channel=R...
One problem the UK has with wages is while minimum wage has nearly doubled in real terms since 1999, median wage has increased just 27%. This means far more people earning about the same, and many jobs simply aren't worth the extra time to do it. Why spend 6 years in education and below-minimum-wage training when you can just stack shelves or roll pizzas for basically the same wage.
The other problem we have with housing is the south east, but the solution to that is easy -- just move. You can live in 80% of the UK with a minimum wage job, so drop the sentimentalism and move 100 miles. Hell Americans think 100 miles is a trip to the local theatre.
And so did the number of people needing to rent.
> There was a 'bedroom tax' imposed on people still living in Council housing that had empty bedrooms which didn't apply to private housing.
A tax massively opposed by the left.
A couple on minimum wage and 37.5 hours a week has a £3,200 a month net wage after tax. Even just 33% on a mortgage means you can get a c. 180k mortgage at 5%, enough to buy a 3 bed house in many parts of England, assuming you can find the required deposit.
https://www.rightmove.co.uk/properties/146612411#/?channel=R...
https://www.rightmove.co.uk/properties/146822492#/?channel=R...
https://www.rightmove.co.uk/properties/146953640#/?channel=R...
https://www.rightmove.co.uk/properties/147046655#/?channel=R...
https://www.rightmove.co.uk/properties/144397493#/?channel=R...
https://www.rightmove.co.uk/properties/144533690#/?channel=R...
https://www.rightmove.co.uk/properties/146820380#/?channel=R...
One problem the UK has with wages is while minimum wage has nearly doubled in real terms since 1999, median wage has increased just 27%. This means far more people earning about the same, and many jobs simply aren't worth the extra time to do it. Why spend 6 years in education and below-minimum-wage training when you can just stack shelves or roll pizzas for basically the same wage.
The other problem we have with housing is the south east, but the solution to that is easy -- just move. You can live in 80% of the UK with a minimum wage job, so drop the sentimentalism and move 100 miles. Hell Americans think 100 miles is a trip to the local theatre.
>A couple on minimum wage and 37.5 hours a week has a £3,200 a month net wage after tax. Even just 33% on a mortgage means you can get a c. 180k mortgage at 5%, enough to buy a 3 bed house in many parts of England, assuming you can find the required deposit.
That a couple on minimum wage can save for a £20k deposit within any meaningful time horizon is a pretty significant assumption.
That a couple on minimum wage can save for a £20k deposit within any meaningful time horizon is a pretty significant assumption.
Oh sure, and that's the rent trap. You end up spending more on rent than you would for a repayment mortgage, and can never raise the deposit.
To be fair, you can take 25% off that with a Lifetime ISA, so 15K needed.
4k savings gets a 1k bonus per year so;
-It's 16K -They need to wait 4 years.
The point stands if they are aware of the scheme when they start saving and save exactly 4k a year every year (more realistically it will be 2k year 1, 4k year two, 7k year 3..)
-It's 16K -They need to wait 4 years.
The point stands if they are aware of the scheme when they start saving and save exactly 4k a year every year (more realistically it will be 2k year 1, 4k year two, 7k year 3..)
Thanks yes, your maths is better, 20% on top.
Having to save for 5 years doesn't seem unrealistic for people who don't have the bank of mum and dad. Totally doable - though below average house price in any area, preferably somewhere more affordable.
There are a lot of tax instruments available today that never existed a generation ago.
Having to save for 5 years doesn't seem unrealistic for people who don't have the bank of mum and dad. Totally doable - though below average house price in any area, preferably somewhere more affordable.
There are a lot of tax instruments available today that never existed a generation ago.
I'm not sure in what would someone on minimum wage would be able to afford to buy an average house
You can get a 3 bed semi in dozens of towns across the UK though. Sure you won't be living in a 5 bed detached with a swimming pool on minimum wage. I don't see that as a terrible thing.
You can get a 3 bed semi in dozens of towns across the UK though. Sure you won't be living in a 5 bed detached with a swimming pool on minimum wage. I don't see that as a terrible thing.
I do agree but I think not enough people become aware of it when they start saving. In a sense it would probably be easier on all if the government just said we'll top up your deposit by 25% upto the value of 5k when you buy your first house.
"Just" 33% is £60k. Most minimum wage jobs are zero hours or part-time. So the idea that our lovely couple are going to find it easy to save £60k is... rather optimistic.
As is the implication that those earnings will be stable and reliable and not subject to periods of unemployment.
As is the implication that those earnings will be stable and reliable and not subject to periods of unemployment.
Full time minimum wage for two people is over £3k a month.
Yes if you work less than full time then you'll earn less than £3k a month.
Yes if you work less than full time then you'll earn less than £3k a month.
My impression too is the housing crisis is only really in high demand places. Not only London either - nice villages can be equally expensive. However, there’s still plenty of safe places with jobs near by where houses are more affordable prices
> nice villages
Well given that "nice" here is presumably "one of the top 25% nicest places in the country", it makes sense that not everyone can live there.
How would you ration it if not based on cost? Nepotism? Lottery? Sexual favours?
All four are used to distribute housing in the UK, rather than simply building enough for everyone.
Well given that "nice" here is presumably "one of the top 25% nicest places in the country", it makes sense that not everyone can live there.
How would you ration it if not based on cost? Nepotism? Lottery? Sexual favours?
All four are used to distribute housing in the UK, rather than simply building enough for everyone.
I think this issue is in stasis until the older generations of homeowners pass away. They have made their opinions known, many times. They do not want more housing.
The only question is if younger generations of homeowners remember their experiences as renters and follow a different path.
The only question is if younger generations of homeowners remember their experiences as renters and follow a different path.
It looks like the traditional get-older-vote-Tory path is broken, so it wouldn't surprise me if this happened. Pity it'll be too late for me to benefit though.
Britain has a perpetual housing famine, and the real truth is that they want it. They want the inequality and class hierarchy that derives from property ownership vs not.
Insufficient supply is due to insufficient production, and the essential cause is cumbersome building regulations that hinder the construction of new homes.
Total rubbish, building regs are if anything not strict enough (see flammable cladding, new build house quality)
The restriction is planning permission e.g where are developers allowed to build housing. To a lesser extent the large house builder oligopoly is not great either but fixing the former will probably sort that out.
The restriction is planning permission e.g where are developers allowed to build housing. To a lesser extent the large house builder oligopoly is not great either but fixing the former will probably sort that out.
I don’t think the regs slow stuff down too much. We could build like the Americans and stick frame our houses - but people don’t seem to like that here
It will only get worse. As long as there isn't a substantial amount of people angry enough to commit murder; it will only get worse.
There always seems to be implicit assumptions or unstated points of interest in articles about the UK housing market: 1. too much immigration is somehow unsavoury so we'll gloss over that; 2. a price correction should happen quickly; 3. and that the UK ever had 100% home ownership.
The UK has at least 10 million more people since 1997 in a country that had 58 million people, we're now over 70 million. Everything is creaking. The NHS queues, the traffic, the roads, the trains, everything. But somehow all of that is always the fault of the current government, where people pick their own arbitrary point in time, not the cumulative result of the last 25 years of 100k+ people every single year. (edit- we don't have 20% more of everything that we had in 1997, but we do have almost 20% more people)
A price correction in housing will take decades. Home owners won't sell below what they bought at, rarely. House builders won't lower prices either, their prices are locked in. I've only once lived through negative equity in the early 90s and it lasted a couple of years. People stopped moving until prices picked up.
And lastly, the UK has never had 100% home ownership. In fact, IIRC, the peak was 60% or so, during right-to-buy.
The UK has at least 10 million more people since 1997 in a country that had 58 million people, we're now over 70 million. Everything is creaking. The NHS queues, the traffic, the roads, the trains, everything. But somehow all of that is always the fault of the current government, where people pick their own arbitrary point in time, not the cumulative result of the last 25 years of 100k+ people every single year. (edit- we don't have 20% more of everything that we had in 1997, but we do have almost 20% more people)
A price correction in housing will take decades. Home owners won't sell below what they bought at, rarely. House builders won't lower prices either, their prices are locked in. I've only once lived through negative equity in the early 90s and it lasted a couple of years. People stopped moving until prices picked up.
And lastly, the UK has never had 100% home ownership. In fact, IIRC, the peak was 60% or so, during right-to-buy.
Insufficient supply is due to insufficient production, and the essential cause is cumbersome building regulations that hinder the construction of new homes.
I'd love to see the AI prompts that made the pictures.
I’m not seeing anyone point at monetary/trade policy here. Every western government is running the same playbook of loose monetary policy and (at least in aggregate across the monetary unions) large structural trade deficits. We buy manufactured trinkets, and what do those countries do with the money, when we’re not offering enough goods and services to balance the trade? Some of it goes to eg US treasuries, but presumably, because we’re running inflationary monetary policy, a lot of it goes to buying assets, like property and companies. (I would dig up a foreign investment balance chart, but the gist is that the US went from investing in everyone else/buying up everyone else’s assets to the opposite happening).
We’ve basically been living well above our means for quite a while, paying with the wealth we’d stored up, and now our assets are getting bid up past the point where much of our populations can afford it.
We’ve basically been living well above our means for quite a while, paying with the wealth we’d stored up, and now our assets are getting bid up past the point where much of our populations can afford it.
They will fight it at every turn.
Not openly, of course. You cannot openly oppose affordable housing. But through lobbying, they will prevent rezoning, put hurdles in the way of easing building regulations. Ensure that NIMBYs protest cheap housing near their upper-class neighborhoods. Whatever it takes.