Public interest in housing and parks should trump private profits

[Ferdinand]

Hmmmm. Letter to the Guardian.

 

https://www.theguardian.com/politics/2017/may/31/public-interest-in-housing-and-parks-should-trump-private-profits

 

Quote

Over the last decade we have been involved in a dozen public planning inquiries over towers of luxury housing stretching from Blackfriars to Battersea. Design is considered, the impact on heritage and views, daylight and shadowing, wind, parking, traffic generation, sustainability – everything except the need for yet another tower of luxury housing (The great London property squeeze, The long read, 25 May).

 

Whitehall rewards councils that meet their housing targets, and planning permission for 800 luxury flats on the South Bank means targets are met for another year – never mind that they will be unaffordable to Londoners. Meanwhile housebuilders landbank, sitting on planning permissions for over 600,000 new homes in the UK, pushing land prices inexorably upwards.

 

The problem is structural. The richest 1% own 50% of the world’s capital, and they need to invest it in something. Property in global cities gives the biggest returns. Politicians and decision makers revel in the bling of it all.

 

A simple decade-long moratorium on private housebuilding would bankrupt housebuilders, scare off the capital, and collapse the price of land, allowing councils and social housing providers to purchase land and build homes that Londoners desperately need.
 

Michael Ball
Waterloo Community Development Group, London

 

For me this is an example of someone with a very specific London perspective on a London problem wanting to put their local sticky plaster on the whole country, and perhaps being deliberately provocative! 

 

+I do not believe the "sitting on 600k Planning Permissions" comment - that is standard misinformation / sh*tstirring in the definition of "sitting on". 600k is a 3 year pipleline at current rates of approx 190k new dwellings per year for PPs that only last 3 years. There are many which are far further out on developments which will take perhaps a decade to build.

 

eg The Westminster Council Chelsea Barracks Planning Brief was dated 2006. Outline PP was 2011. Completion due 2018.

https://www.westminster.gov.uk/chelsea-barracks

 

There are several more interesting letters on the page.

 

Ferdinand

Edited June 2, 2017 by Ferdinand

[Jeremy Harris]

It's also glossing over some facts, to the extent of conveniently ignoring them...................

 

Local authority housing targets are a good example.  The present rules are that local authorities are required to show that they have plans for their specific 5 year housing needs.  Each local authority undertakes a housing needs survey, and their local plan then reflects this in the mix of housing that they grant PP to, or at least tries to.  As an example, our local authority will only approve developments of more than around half a dozen houses if the development includes a mix of house types and prices that matches local need.  In general the developers are already aligned to this requirement, as they aim to build houses that will sell, which, almost by definition, are those that there is a high demand for in the local area. 

 

This development that is fairly local to us is a good example: https://www.redrow.co.uk/news/south-south-east/new-homes-in-wilton .  It has a broad mix of housing, from single bedroom apartments, a care home, homes specifically designed for military veterans, plus some larger detached houses.  It has this broad mix because the local authority housing need pretty much dictated what would gain PP.

 

For that Grauniad writer to claim  that any type of development satisfies a local authority housing need target is just untrue, but then I find that a fair proportion of the stuff in that particular newspaper is often just as inaccurate and poorly researched.  Over the years, the Grauniad seems to have dropped to a level where it's barely better than the Daily Mail in terms of reporting accuracy.

[Crofter]

7 hours ago, JSHarris said:

For that Grauniad writer to claim  that any type of development satisfies a local authority housing need target is just untrue, but then I find that a fair proportion of the stuff in that particular newspaper is often just as inaccurate and poorly researched.  Over the years, the Grauniad seems to have dropped to a level where it's barely better than the Daily Mail in terms of reporting accuracy.

 

You appear to have somewhat glossed over the fact that this is a letter to the paper, not a column or editorial. I agree with you that the viewpoint is almost certainly deliberately provocative.

 

The underlying assertion that wealth is becoming too bound up in the hands of a small number of people is true. It is leading to economic stagnation. Low interest rates are leaving the capital-rich with nothing to invest in except property, and unfortunately this impacts others people's lives.

 

I don't have an answer to it, but I would assert that speculation-driven land price inflation is a problem that has to be tackled before housing can become more affordable.

[Jeremy Harris]

Sorry, I missed that, and was responding primarily to @Ferdinand

 

The fact still remains that the writer is distorting the way that local authority housing need targets are defined.

Edited June 2, 2017 by JSHarris

[MikeSharp01]

The problem is not just about London it's about how affordability has run away with our children's ability to buy a home.  You can argue that buying is not all it is cracked up to be and that rental has several advantages but in the end we are where we are. We could not afford to buy our current home even with a couple of top few percent salaries on a 25 year repayment plan stress tested at 7% before I retired. Yet we purchased our first home in London with just one graduate starter salary 30 plus years ago. Both our children have good graduate starter salaries in the south east and neither could afford to buy anywhere. They feel they have no stake in the society they have grown into because they see 'stake' to mean property owning somewhere near where they work. As your correspondant has hinted the fundamental problem lies somewhere in the supply and demand equation with a globalisation facet that actually makes London and the south east a supra national place. Such places are beyond the control of national governments because they have no locus of control over what happens beyond their borders. Mr Trump is learning this and we need to recognise it also. These places in the UK are a key stressor of the us and them view seen in the UK, and perhaps even sometimes on this forum. However this is not the complete picture a further facet of which sadly perhaps does include you and me because most of us would find it quite hard now to accept the price crash that would be required to reset the market. Not the least because of the way the private  housing equity growth has been used as a cash machine and or a pension scheme. A consequence of this may have been to starve the entrepreneurial aspects of the economy of funds because lending on homes, sub prime accepted, has been a lot less risky over the past 60 years.

 

None of which leaves us anywhere other than where we are with, I might argue,  a moral responsiblily to sort it out for current and future generations across the whole of the UK but we probably need to accept that we will need to reach beyond the UK to do it.

[Crofter]

@MikeSharp01 some interesting points there. You mention the need for a national level of control to counter the distortion of housing and land values by overseas investors. This same effect happens at local levels too, though. In many parts of rural Scotland (and I'm sure other places as well) the housing market is distorted by money coming in from outside. In an area with low average earnings, houses and land naturally have to be cheap- but then they get snapped up as holiday or retirement homes by people coming in from stronger economic areas.

 

So essentially it is the same problem: the cost of a house must reflect the economics of the local area. If these factors are not matched, houses end up as investments.

[MikeSharp01]

10 hours ago, Crofter said:

So essentially it is the same problem: the cost of a house must reflect the economics of the local area. If these factors are not matched, houses end up as investments.

Absolutely agree.

[SteamyTea]

Purely as an academic exercise, has anyone tried to work out house prices based on current income distribution.

If one makes some basic assumptions that young people generally buy smaller and cheaper places, families have larger places and retired people have smaller, but more expensive places in "nicer areas", and assuming that a standard income multiplier of 4 times earnings is 'sustainable' (at current interest rates), then a more realistic price for property should be calculable.

I suspect it will be below 50% of what we currently pay.

[ProDave]

Having tried for 2 years to sell our old house, I have a very different view of the market up here.

 

Houses are under priced because there is little (or in the case of large houses almost no) demand.  When I say under priced I base that on the fact even with the low cost of building plots up here, if you bought a plot, and built a house, even doing a lot yourself to save money, you would be doing very well indeed if you then managed to sell it for enough to cover your costs.

 

The housing demand in this country is largely skewed towards the SE of England, where demand far outstrips supply and prices reflect that, yet many parts of the UK have depresses or stagnant housing markets where you can buy cheap property.  What seems to be lacking is the will, or even the know how, of how to regenerate the depressed areas, spread the jobs and wealth around the country, increase demand in the depressed areas so reducing the demand in the SE.  A lot has been talked about doing that but not much has really changed.

[SteamyTea]

7 minutes ago, ProDave said:

What seems to be lacking is the will, or even the know how, of how to regenerate the depressed areas, spread the jobs and wealth around the country

The governments and local authorities did a good job with Milton Keynes.  It took 50 years to get to where it is today, billions in investment, and really benefits from being on the M1.  It does show what can be achieved though.

I recently went to Wickford in Essex, as I drove though Basildon, where I lived in the 60's, it seemed a lot wealthier than where I am in Cornwall.  I am going into Penzance today, I may count the number of closed shops in the two main streets (they are regenerating Chapel Street, so not a good gauge).

I personally think that developing new towns and cities is a better way to go that trying to save old depressed places with all connected infrastructure problems and prejudices.

[SteamyTea]

1 hour ago, SteamyTea said:

Purely as an academic exercise, has anyone tried to work out house prices based on current income distribution.

If one makes some basic assumptions that young people generally buy smaller and cheaper places, families have larger places and retired people have smaller, but more expensive places in "nicer areas", and assuming that a standard income multiplier of 4 times earnings is 'sustainable' (at current interest rates), then a more realistic price for property should be calculable.

I suspect it will be below 50% of what we currently pay.

I have had a look, and if you take 2 times joint income (male + female) and multiply by 4, then you get this.  Not far off what the UK mean house price is.  Odd.

Though there is an economic argument that says if everything is sold, then it was too cheap.

 

[ProDave]

That graph is interesting, and really confirms what I have thought is houses are no less affordable than they were when I bought my first house. I remember to get a mortgage, to buy literally the cheapest house on the market in the county (a tiny 1 bedroom new build "starter home") I had to borrow 3.25 times my salary, and they even took into account a pay increment due in 2 months. That still left me nearly 20% short of the house cost which I had to fund by savings, and selling just about everything I owned, including selling a good car and buying a rust bucket old banger. Bear in mind I was relatively well paid then, so people on "ordinary" wages would have struggles even more, and remember this was interest rates of about 10% (which then rose to 15%)

 

And the older guys that bought their houses in the 70's for a few £000 could not believe how much I paid for such a small house in such a poor location.

 

It has NEVER been easy to buy a house.  The difference now is with less council rental property, more people who would have been council tenants are struggling to buy rather than private rental.

[SteamyTea]

4 hours ago, SteamyTea said:

I am going into Penzance today, I may count the number of closed shops in the two main streets (they are regenerating Chapel Street, so not a good gauge).

I went for a walk, and included Chapel Street, plus at the bottom of Market Jew Street (not sure what it is called).

Chapel Street has 71 businesses, 7 of which are closed, so about 10%.  It has 5 Estate Agents in it.

Causeway Head has 62 businesses, 7 of which are closed, so 11%.  It has 2 Estate Agents and 3 Charity Shops.

Market Jew Street has 125 business, 15 of which are closed, so 12%, it has no Estate Agents but 4 Charity Shops.

 

I have no idea if those figures are good or bad for an area, and it is just a straw poll.  It is interesting that Charity Shops come in for some stick down here by local traders (reduced rates, cheaper goods, adding nothing to the local economy, relying on volunteers etc), but with a total of 7 (3%), I don't think it is a problem.

Now Estate Agents, at 7 as well, definitely don't add any value to the shopping experience

17 minutes ago, ProDave said:

It has NEVER been easy to buy a house.

I think Kirsty Milksop said something about this on the radio a while back.

I had to get a lodger in when I bought my first house.

 

I have probably mentioned a work mate who complains that he cannot buy a house in the village he grew up in.  What he is actually saying is that he cannot afford to buy the ex council house his parents own (a 3 bed semi in what is now a 'posh village, even though I think it is nothing special).  Interesting that in 10 years his cash savings have not increased (and have now probably decreased as he overpaid for a second hand car, same as his Dad had as a company car, sums him up, no imagination).

[Ferdinand]

22 hours ago, SteamyTea said:

I have had a look, and if you take 2 times joint income (male + female) and multiply by 4, then you get this.  Not far off what the UK mean house price is.  Odd.

Though there is an economic argument that says if everything is sold, then it was too cheap.

 

 

That illustrates the change - it used to be 2.5x plus 1x for 95%.

 

My first mortgage in 1989 was at 3.5x Net salary.

 

F

Edited June 4, 2017 by Ferdinand

[Ferdinand]

23 hours ago, SteamyTea said:

The governments and local authorities did a good job with Milton Keynes.  It took 50 years to get to where it is today, billions in investment, and really benefits from being on the M1.  It does show what can be achieved though.

I recently went to Wickford in Essex, as I drove though Basildon, where I lived in the 60's, it seemed a lot wealthier than where I am in Cornwall.  I am going into Penzance today, I may count the number of closed shops in the two main streets (they are regenerating Chapel Street, so not a good gauge).

I personally think that developing new towns and cities is a better way to go that trying to save old depressed places with all connected infrastructure problems and prejudices.

 

Agree there. I see three lessons.

 

1 It took a generation. Fast gives Legoland and no chance for community. I actually think that Right to Buy has helped create mixed communities in Council Estates, which is excellent .. as are social homes in private developments.

2 It was arms length, with the Milton Keynes Dev Corp. The authorities set it up then broadly butted out. Contrast with our area, where the Council have just abolished their successful ALMO and taken social Housing back into political control.

3 It has not kept up with the times. The cycle path network is now 50 years out of date in multiple ways:

https://aseasyasridingabike.wordpress.com/2012/04/26/they-built-it-and-they-didnt-come-the-lesson-of-milton-keynes/

MK was designed as a car city with cycling addons, and the cycling share is down to 3%. That cannot be reversed easily.

Edited June 4, 2017 by Ferdinand

[SteamyTea]

The cycling is a tricky one.  50 years ago we were still recovering from WW2 and no one expected cycling to become the middle class leisure activity it has become.

More specific to MK is this:

http://tritalk.co.uk/forums/viewtopic.php?p=564097&sid=3d2e21849109dedcb5e3e6e2fc4e573a