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  • Property-a-holics

    Government policy > exacerbate housing crisis



    Dame Kate Barker, author of the highly influential "Barker Report" in 2004 while a member of the Bank of England’s Monetary Policy Committee, which has set the tone for house-building targets ever since, has issued a grave warning about Government housing policy.

    Dame Barker is claiming that current policies are more likely to exacerbate inequality and homelessness than solve the problem.

    In a damning assessment of policy, she has urged the Government to come up with new policies to help buyers and renters or there will never be enough houses built to keep prices down, she said.



    Full/source article  

    At the Property Investor Show this past weekend, Enfield Council were in attendance desperately seeking landlords!  I think this highlights just how "broken" the housing market is ....



    Apparently, the housing shortage in Bristol is so severe that people are now renting out vans, horseboxes, campers etc.

    Local media report that near the Greenbank Cemetery in the Easton area of Bristol there are around 35 vehicles - which are thought to be permanently occupied as homes.

    The ‘residents’ insist they are not gypsy travellers but at a public meeting have described themselves as ‘van dwellers’ having to live in vehicles because of the cost of mainstream renting in the city.

    Debate in the local Bristol media suggest most of the vehicles are parked legally, and may be used as dwellings, so long as they have MOTs and are taxed. 

    Full/source article

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    So she supports the tax changes.

    Will the growing list of councils,desperate for Private landlords support this too.?.I suspect not.

    If they want to shift the balance,then remove the retrospective nature of Section 24, its unfair.


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    As with most Politicians Dame Kate hasn't looked at the whole picture. 

    Simply taxing Private Landlords out of existence will simply make a bad situation worse.  The Politicians need to understand that the current Mortgage Lending Rules combined with low incomes are a major reason why buyers cannot get into the market. 

    Then there is the lack of new housing that is being built, successive Governments have failed to address this issue and that is largely because they are unwilling to tackle the greed in the construction sector.

    Lastly this Governments Flagship scheme of Help to Buy has done little to help those who cannot easily get mortgages but has been a real help to those who don't need it - look at the statistics in the press last Sunday.

    The Housing Policy of the UK is in complete disarray largely because different policies are competing against one another and no real creative thinking is taking place.  The one item that is definitely not the answer is going back to Council Houses. 

    There are other solutions but the Politicians simply cannot see them because they are too blinkered in their approach.

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    I agree with what you have written absolutely Nigel .

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    Agree 100% Nigel - but Government is also flailing about with headlines to try and win voters back to them.  They have clearly not thought anything through and the right hand does not know what the left hand is doing.

    ​Council waiting lists are rising, more money is being spent on hosting people in short term accommodation ... you really couldn't make it up if you tried!

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    Totally disagree with your contention that council housing isn't the answer.

    It is the only answer

    There is simply no way that private house builders left to their own devices will build sufficient  properties

    They have their profit motive to consider and building millions of homes for cheaper prices is simply not in their interests.

    Only state directed council house building can overcome this situation.

    Put lots of low income tenants in counciL housing and then there will be a supply of released private property to be bought by aspirant buyers.

    The only problem is there simply aren't the construction workers available  to build the council housing required.

    This as the lazy feckless welfare scroungers won't be forced to become vitally needed construction  workers so they would need to be imported.

    So even more immigrants who have to be housed!

    Such immigrants construction  workers would need to build their own properties to live in before they could start building for others.

    Meanwhile our welfare scroungers watch from the sidelines!

    You need to earn a net wage of £46000 to make it worthwhile coming off welfare and even at that wage all you are doing is now working what you received for not working.

    So the welfare scroungers won't be taking up these construction jobs anytime soon!!!

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    Paul, quality pre-fab housing created quickly and at reasonable cost that will never be eligible to be sold off is the only way any Govt. from now on can walk their way out of the talk they've all been guilty of over the last X decades.

    There are some great European companies producing low-cost high quality housing that once the base has been built with the utilities already installed can be completed in just days.


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    The problem with your admirable solution  is that lenders would be reluctant  to lend on such properties.

    Like it or not there is a latent natural conservatism with most property buyers

    You can see this evidenced by the  initial mortgage and insurance queries.

    Is the property of standard  construction?

    I myself admit to a natural traditional property construction prejudice.

    I accept that I may well be wrong in my prejudices

    But until lenders and insurers put the same value on pre-fab type properties as standard construction  type I will retain my prejudices

    I am one of the 3 little piggies

    I am the  one that built his house of brick  and the Wolf has never blown it down!

    However such housing construction  as you suggest for council housing is worth doing  as nobody will want to buy them making RTB pointless.

    RTB  should be banned irrespective unless at full market value.

     But for council house building your construction  solution makes eminent sense

    Something that Govt will never see!!

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    But as the houses will never be sold off because they will always be 'council owned' the lending criteria is a moot point Paul. The fact successive Govt's have sold off property that was not supposed to be sold off and have long since spent the meagre proceeds is again, another fault with 'the system'.

    It's not as if to this day if a council home is sold off under RTB there is another one waiting round the corner all ready to go! As you say, RTB should be banned and I agree with that. If you can afford to buy a home then you should be in the melting pot with the rest of Joe Public who have to save for deposit etc. etc.

    Then these new non-standard construction houses will be available for those that pass the tests. Where they will be is another matter entirely as I can't see many of these popping up in Knightsbridge!

    I don't blame any one Govt. other than the one who started it and those who continue to let it be a problem ;->

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    I largely disagree.

    1. Increased stamp duty and reduced ability to deduct mortgage interest - however illogical and unfair compared with limited companies and other businesses that have mortgage-related costs - doesn't tax landlords "out of existence": it just taxes them more. They may respond by reducing their number of properties, or try and increase their rents, or they may decide to sell and reduce their debt levels - which is the stated aim of the Treasury, though I'm sure it appreciates the extra tax as well. But I think it unlikely that more than a tiny number will decide to cease being a landlord - the extra tax isn't *that* onerous for most landlords, who only own a single property and are basic-rate taxpayers, and if someone does find the tax too heavy, perhaps they were over-indebted in the first place and needed a reality check.

    2. The MLR are there for a reason: the authorities don't want lenders to become over-exposed again to property, like they were in 2007-08. There's a very strong argument that the MLR should not be eased until there is clearer evidence that the economy and wages are growing healthily again, that we have survived Brexit, and that banks are well prepared for the next major downturn, which may occur as early as 2019.

    3. I really, really disagree with your caricature of the construction sector as "greedy". On what basis can you reach such a judgement, compared with other sectors of the economy? The large construction firms like Barratt or Taylor Wimpey are on low price/earnings multiples, which hardly suggests the stock market rates these cyclical companies highly (many investors can't forget how most of the Big 6 nearly went bankrupt in 2007-08), and other metrics like gross profitability and Return on Capital Employed are nothing special: gross profitability is little better than 20%, which is poor compared with many other sectors, and after-tax profits are barely 10%. And if builders were so "greedy" and the profit margins so high and easy to obtain, why are the numbers of small and medium-sized developers and builders at historic lows, ten years after the Great Recession?

    The real reasons so few houses are being built are:

     - nervousness amongst the Big 6 about over-expanding, when they have been stung so badly in the past. The immense amounts of paperwork needed to meet planning requirements also don't help, nor does the perpetual drag on cashflow created by social housing, so the average site now takes two years from approval to construction actually starting. There are also problems with recruiting labour when so few good British workers want to work in construction, despite the good wages, and now expect office-based graduate work; Brexit restrictions on immigration are unlikely to help here.

     - the difficulty faced by small builders and developers (and self-builders for that matter) in finding affordable land, finance, and the sheer difficulty of securing planning permission in locations where people actually want to live. Small builders and developers find it extremely difficult to expand from building large extensions and one or two individual houses to tackling larger plots, because planning rules are so restrictive and it's an incredibly expensive, long drawn-out process, often with the fate of your site already pre-determined because it falls foul of some Neighbourhood Plan or Local Plan that sets in stone what can or cannot be built on, often over decades. My nearest local authority, for example, has a Local Plan which determines where houses can be built from 2014 to 2030, so if another suitable site does become available during that period - someone dies, a business with land closes down, an office block becomes redundant - a small developer has no chance until 2030 of taking it on. It also makes allowance for only 100 "windfall" houses and property conversions a year across the entire borough for that 16 year period, which is utterly pathetic micro-management: 100 units, to be shared amongst every builder and self-builder in the borough - no wonder anyone wanting to build their own home feels like they haven't a hope in hell of finding a site and then getting planning permission.

     - local taxation. My local authority charges "Community Infrastructure Levy" at £360 per square metre. A very ordinary 100m2 three-bedroom house consequently costs £36,000 in CIL, which comes straight out off a builder's bottom line.  The house will probably cost £1350/m2 to build, so that's another £135,000, and the planning costs - drawings, surveys, reports - probably cost the best part of £20,000. So that's £191K already, plus land prices haven't adjusted to reflect the cost of CIL: people selling off part of their back gardens, all completely tax-free, still expect to get 40-50% of the final house's value for themselves. So we're looking at a 3-bed new house that's already going to have to be sold for more than £350K, and the builder hasn't even made a profit yet. Forget about including a garage: a 3.5m x 6m garage that might cost £18,000 to build will incur extra CIL of £7,560, and the land cost will be adding another £20K on top.

     - social housing. If by some miracle a small builder finds a site with space for more than four houses, at least one-third will have to be given away as "affordable homes". So for a site with space for six houses, two of them will have to be sold to a housing association, who barely reimburse the construction cost. As a result the builder is guaranteed to make a loss on those two houses: he earns £0 for himself, and the land, planning and finance costs, and the CIL for those two houses all have to fall on the remaining four houses for private sale, pushing up the prices that the builder has to charge private buyers if he or she is to avoid a loss. What other area of business says that for every 3 units you manufacture, one has to be given to the Government or its agents, on top of stamp duty, non-recoverable VAT, corporation tax and so on? Does Apple have to give the UK government one computer every time it makes two to sell? Does VW have to give Oxford City Council a car for every two cars it manufactures at its Cowley plant?

    The policy of forcing the private housebuilding industry to pay for both infrastructure and social housing, where previously roads, schools, libraries, council housing and so on were funded from general taxation, has an enormous amount to do with why housebuilding rates are so low, and why small developers and builders find it near-impossible to expand and grow and compete with the Big 6.


    I agree that Government policy is often incoherent: it claims to want to "level the playing field" between owner-occupiers and landlords, yet it maintains the biggest housing subsidy of all, namely capital gains tax relief for owner-occupiers, which could generate billions for investments in housing. It claims to want to increase rates of housebuilding, but burdens private housebuilders with S106 and CIL and social housing costs that take around 40% of every site's value (above 4 properties) and cripples the chances of small builders who want to expand. It claims to want to reduce the annual running costs of the welfare state, but it refuses to invest in new social housing and spends tens of billions on housing benefit instead.

    The people who make the most money from new housebuilding are not developers, but landowners, who are almost never mentioned, and government at multiple levels, with its CGT, SDLT, VAT, CIL, S106, social housing and corporation taxes. Owner-occupiers do extremely well too, with the massive long-term bung that is tax-free capital gains on their houses, but no-one wants to talk about that, because it's just part of the natural order of things, isn't it, whatever long-term damage it is doing to the UK economy?

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    Many portfolio landlords will face a tax burden that will be very hard to bare.This does not mean they were too highly leveraged in the first place it just means the Government are going to take away their busineses by changing the tax rules.

    If the Government want to stop or slow down BTL they can use higher rates of stamp duty,PRA rules and even S.24.However, applying S.24 retrospectively is going too far and will result in a lot of pain for alot of people.

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