Thursday, 24 July 2014

Housing - a vote winner?

Many buy-to-letters are drawn from what one could call the affluent working-class, or ordinary people with a bit of capital and enough security to borrow. Whilst the idea of a 'citizen-landlordery' is fine, and much preferable to most of the social housing shambles (instant slums; just as I predicted a couple of years ago, they turned an 18th century pub down the road into a block of slum flats for Nigerian young mothers, with tablecloths nailed up at the windows and bags of used nappies just flung out on the footway), the problem is that these entrepreneurial buy-to-letters are competing directly for the same houses as the people who want to live in them, thus inflating the market. The only gainers are the dreadful crooked banks.

We have a history in this country of working-class landlordism. I think it was Skullion, the Sharpe character, who owned a small terrace of cottages in Oxford, whose rents would provide his pension when he finished portering. And indeed in truth this was not uncommon; this was the class who were the bricklayers, carpenters, plumbers and roofers; well placed to throw-up themselves with their own resources a terrace of six or ten or a dozen 2-bed artisan's cottages, not large but neat, practical and attractive, each with a 10-foot front garden filled with hollyhocks and lupins. Today in Oxford I expect such things would fetch half a mill each, when the original building cost was, what, fifteen pounds?  

And surely this is exactly what our own buy-to-letters should be encouraged to do, on brownfield and infill sites here in London, too small to be of interest to the major housebuilders. Shaun Spiers in the Telegraph suggests we should divert housebuilding from large speculative building firms to smaller ones; I don't think this is the answer. Leave the volume firms alone, and allow the buy-to-letters to build for income rather than build for an instant sale profit, to become build-to-letters.  

And yes, there's a massive landbank here in London ideal for such investment; the old goods yards, wagon parks and disused land held by Network Rail under the fiction that it's 'operational' land and thus sacrosanct, on the basis of the fiction that our goods transport system may one day return from road to rail. Every suburban London station is gifted with such surplus land - sometimes already used as the station car-park, but often just overgrown with weeds and rubbish behind chain link fences, just waiting for a neat terrace of plain, simple homes designed and built by ordinary people. 


Anonymous said...

What you suggest may solve the problem, for a while. As you well know the predicted growth in population will continue to defy those who wish to address this problem properly: the overall requirement is 2 million new homes over the next decade.

There will never be enough homes with the birthrate we're experiencing. We're already building the smallest houses in Europe - homes "not fit for human habitation" was one comment from a builder in Germany. I'm sorry Raedwald but when you ignore the Elephant in the room don't be surprised when it steps on your toe.


Weekend Yachtsman said...

It's good idea but I think the regulatory nightmare that exists today would make it next to impossible.

And isn't there something called the community infrastructure charge or some such gobbledegook, which means small house-builders have to pay enormous sums to the local authority vultures?

G. Tingey said...

And yes, there's a massive landbank here in London ideal for such investment; the old goods yards, wagon parks and disused land held by Network Rail under the fiction that it's 'operational' land and thus sacrosanct, on the basis of the fiction that our goods transport system may one day return from road to rail.
Rubbish, not true.
Almost all of it has been sold off & redeveloped, long since.
Nice try, no banana.

If you don't believe me, try Bing Maps Aerial view or Google Earth satellite.

Yet, there is a massive landbank in London - the vast number of empty spaces/rooms/floors above many high-street & side-street shops.
Almost all in private hands & usually decaying, unfortunately.
Now what?

Mike Spilligan said...

Within the last decade (tho' I don't know if it still applies) several big businesses applied to have regular freight services on fixed routes to replace road transport. the general answer from Network Rail and predecessors was that they didn't have enough "storage capacity" (aka "sidings") for when the trains aren't in service. Is this another case of HS2 taking money away from where it's needed?
The housing problem is too complex for a rational comment, but I'd agree with Weekend Yachtsman about Local Authority vultures; confiscating huge amounts from us each month which they use as capital, in co-operation with builders great and small, using the excuse of regional plans to meet national government "targets". The accounts are so obscure that we can't know how our money is spent and whether we ever get a return (in any form)on what is really our investment.

Bloke In Italy said...

One important reform would be to have different levels of planning permission.

Small developments such as a single house being built by a family for its own use should be relatively quick and straightforward.

For large speculative developments it would seem appropriate to have a much more thorough examination of the case for and against and particularly its impact on its immediate environment.

In any case I would like to see much more use of free market mechanisms. At present we hear an awful lot of the government must do something.

An awful lot of the problem could be solved by government intervening less, especially in the planning process, hence my suggestion.

G. Tingey said...

Mike Spilligan
Entirely correct
There has just been given planning permission to hem in the W London line to two tracks through the Earl's Court re-development, making sure that increased freight along that increasingly busy route is going to be "difficult".
There are several places in Sarf Lunnon, where reto-fitting a flover would increase passenger-traffic flows, but can't be donbe (Or very difficult & expensive, because of "new" properties now too close to the tracks.

Demetrius said...

The working class landlord system unluckily required the rent to allow for their costs and to yield a profit. When rent control became a popular political slogan and introduced they were badly hit. On top of that after 1939 for some time "unearned incomes" were hammered on tax. By the 1950's most of them had given up. Also with inflation setting in there was no hope of any benefit.

Anonymous said...

I don't often agree with Tingey but I do this time. The 'offices' over some shops were originally built as dwellings, but their owners would rather keep them empty than run the risk of not being able to revert to offices if the economy demands/permits it.
Near where I live a space over a supermarket is in the process of being converted to 'studio apptmts' but at a huge cost to the potential buyer.

Sebastian Weetabix said...

A stiff tax on empty property? About time we gouged rich foreigners who take property out of circulation, imho.

Either they pony up ormore properties are shoved into the market. Win/win?

Anonymous said...

"About time we gouged rich foreigners who take property out of circulation, imho."

About time we cut back the size of the State including its pension obligations - then we could start thinking about tax reductions - to promote economic growth.