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New houses never lower prices within their local ‘market’ and the Persimmon CEO’s £110 Million Bonus gives our ‘housing crisis’ the lie

January 9, 2018 Leave a comment

Money HousesHousing has become one of the hot political issues of our time. To read and hear about it in the media, it has become easy to conclude that the Government, our Councils, Housing Associations and Builders alike all share the view that we are in a housing crisis. The picture they paint suggests that they are all doing everything that they possibly can. But should we all really believe?

Laid bare, the lack of housing really does look nothing like the story we are being presented. Immigration inflating real need exponentially has become as much an unspoken truth across the whole country, as it has that 2nd homeowners are leaving seaside and rural property empty for much of the year, whilst they add nothing financially to the communities in which they don’t have time to genuinely reside.

“We need to build more homes” has become the mantra of the many. Yet the real beneficiaries of this process will not be the people who will end up living in many of them. Nor will it be the Government which is operating on the premise that money is the only way to solve any problem, no matter what it might be.

The real beneficiaries of the push to create housing will be the builders and the bankers who finance them, whose real take from all the public money which is being fire-hosed at them is only too well illustrated by the bonus payment being made to the CEO of Persimmon Homes.

Under the auspices of self-serving government at all levels and the ineptitude of policy making and long term strategy which has been rolled out in real time within current planning policy, Builders and Developers of all kinds have found themselves within what can only be described as a smorgasbord of discount and profit and the epitome of the one-sided win-win.

Deals are and have been done, not on the basis of what is best for us all. For if that were the true intention, there would be little need for deals of this kind.

Deals are being done, because the focus of this housing crisis is little more than money and profit itself.

People young and old are being out priced in all parts of the housing market, not because prices reflect the true value of houses and the market, but because the system and government policy is facilitating house builders, mortgage lenders and private landlords to take us all on one massive, great big bubble-building ride.

The evidence is not difficult to find. Wherever we may live, new housing developments are never far away. Yet when homes are released, we never see prices being lowered nearby.

Lower house prices within the communities in which these additional homes are built would be the logical outcome within any localised market which was genuinely left to itself to determine and decide.

Instead this so-called ‘crisis’ continually goes on unsolved, whilst we are being sleepwalked into a national travesty in the shape of an unsustainable housing price bubble which is guaranteed to explode.

When it does, those profiteering and responsible now will be the first to run and hide.

image thanks to unknown

Homes are not commodities and treating them as if they are shows the level of contempt that investors have for the lives of the people who live within them…

November 20, 2014 Leave a comment

toilet-paper-money-1024x672

The obsession that the Nation has with property may be paying dividends for builders, mortgage companies and investors alike, but the cold hard reality is that we are on the road to making many people homeless.

With whole developments now being snapped up by private companies who are only interested in maximising the level of return, escalating prices will inevitably lead to increasing numbers of applicants for social housing, whilst pushing the next occupants ever closer to the circumstances which would have led to the last tenants having to leave in the first place.

Owners may not have anything to worry about now as they concentrate on the apparently lucrative areas of today such as London. But this problem will almost certainly fan-out across the country, and will become ever bigger for as long as house prices continue to grow and people cannot afford to buy the homes which we are continually told are being built to help them. When have you ever seen newly built houses sold at a lower price than other houses in the area with comparable value?

With local authorities potentially unable to afford to house people in the very near future, the idea that having a home is only a luxury could again soon become a reality for many people. Even the remotest prospect of the return of slums in Great Britain should be sending a shiver down the spines of us all, yet politicians have far from even acknowledged the true depth of the problem.

Like it or not, Government will soon have to accept that there must be controls over the way the property market operates.

This may at the very least require formal regulation to ensure that prices can no longer be inflated by the commission on sales for estate agents; an industry that almost certainly carries a high portion of the responsibility of pushing prices upwards at every opportunity since the time that Right to Buy arrived.

However, steps are also likely to be required to freeze prices and possibly even begin to reduce them so that owning or renting a home is affordable in all areas of the Country for those who are earning a basic wage.

The money men may not like it. But the irresponsible creation of the hollow money which is being used to effectively price people out of their own homes can no longer be countered by the continuing creation of money by Government. The National Debt of over £1 Trillion is accumulating at a rate of over £5000 per second in the interest payments alone – before we even begin to consider the Deficit.

The days when politicians could keep borrowing money today and by doing so defer problems for those who will be in power tomorrow are coming to an end.

The question is, how many more people have to experience their own personal hell before those in power realise that tomorrow was a when, not an if, and that it has already arrived?

image: source unknown 

Building on the Greenbelt could be avoided if Politicians were prepared to tackle the causes of Housing Crisis head on. Their failure to do so may leave many of these new homes empty and not just immigrants living in modern-day slums which are currently known as ‘beds in sheds’…

December 19, 2013 Leave a comment

On a day that the reality of modern day, back-garden ‘beds-in-sheds’ or rather the slums springing up across the UK to house immigrants hit the pages, we also see the news that more than half of Councils plan to build on our green belt.

You may be forgiven for thinking that there is an obvious link. But the only real relationship between these two issues, neither of which should arguably have ever have become fact, is that they provide a very telling story not only about the excessive cost of housing, but also the very painful reality that members of our communities from one end to the other are being overlooked by Government Policy.

In a recent blog, I discussed the issues that sit rather uncomfortably behind the incessant drive on the part of Politicians to build more and more houses as a method of stimulating the economy and solving the UK’s housing crisis, whilst actually doing anything but.

As they do so, they are overlooking the permanent damage that will be inflicted upon Towns and Villages up and down the Country, whilst failing to demonstrate either an understanding of the factors which are causing the problems for so many people, or indeed how many more issues that this form of recklessness sold to us as responsibility will cause.

why_do_we_behave_like_lemmings_4677351My own concerns about the foolishness which is leading the development of these Policies throughout the Local Authority Network and specifically at local level – where many Councillors behaviour can most politely be described as being very similar to that of Lemmings going off a cliff, is well known.

My inbox regularly has mail which has been written by local people from right across the area that Tewkesbury Borough Council covers who are rightly and quite simply horrified by the Plans which are now well on the way to being put in place. In many cases these very Plans are being very effectively picked apart by these impassioned members of the public who have very little experience of how the Planning System actually works. Will it make any difference? Probably not.

I recognise the value in the arguments they make. Somehow things really don’t add up when questions about the impact on such essential matters as future infrastructure, the merging of historically separate Towns and both fluvial AND pluvial flooding issues seem to go unanswered.

I also appreciate that I may be doing a disservice to the multitude of other very localised issues which face other communities across the Country which are just as important to the people that live there, but which I have overlooked just because I don’t have first-hand knowledge of them and most respectfully have no reason to do so.

The problem is that the Policy frameworks and guidance on which all local ‘Strategies’ are being set have been stewarded into being by Westminster-based Politicians who should not only know and understand these things, they seem oblivious to the fact that their own knowledge and outlook is actually so limited and are just as immune to hearing or seeing the very clear messages that are out there to tell them all about it.

With Politicians drunk and dependent upon the power and retention of their own positions, and whilst they bound around oblivious to the issues that are facing everyone else, there are sadly no forms of breathalyser out there which will demonstrate just how out of control the drivers of this vehicle may be for the unknown period it will take before it crashes and causes us all some significant damage.

The one thing that is certain is that concreting over the green belt to build houses that nobody can actually be sure we will need won’t solve the housing crisis on its own.

In fact, without dealing with the real issues that sit behind the housing problem and tackling them head on, many more people will find themselves unable to afford to live in them anyway and may have to face the unenviable horror of joining those who are living in what should by now have been consigned to long-term history in the form of anachronistic slums.

Image thanks to unknown source

People need new homes. But pumping houses into the economy isn’t the only answer and may be more destructive as an isolated solution than Quantitative Easing will surely prove to be…

September 28, 2013 Leave a comment
Picture thanks to www.dailymail.co.uk

Picture thanks to http://www.dailymail.co.uk

Has anyone noticed how politicians love to pick up an issue that plays on people’s minds and then they play with it, mutilate it and reshape it to suit their own ends?

Party Conference Season is of course a great time to see this approach to taking responsibility in its finest form and Nick Clegg’s sound-bites about the Lib Dem role as the moral anchor of future Coalition Government and Ed Milliband’s socialist branding on the Cost of Living Crisis and Energy Prices are themselves very fitting examples of cynical – and impractical views or policy, which in reality would demonstrate just how out of touch these people really are.

Policy bandwagons that appeal to public opinion, but lack the depth and thought for their real and long term implications are by far the worst, because in appearing to solve a problem, they actually create a whole lot more besides and usually in ways which are far more damaging to individuals, communities and businesses than the initial problem ever had been.

Perhaps the most notable of these policy faux pas that politicians keep lining themselves up to commit is with strategic planning for development and house building in particular. I know that I am far from alone in wondering just how practical, ‘real world’ and problem solving our leaders think this continuous drive to concrete across this Country actually is…

In terms of the day-to-day political scene, house building has become an almost obsessive issue for all of the Parties and one that they would happily have us all believe can only be addressed by significant development.

Generally speaking, the spin that politicians place on these plans is that building more houses will make them cheaper and therefore more available. But how many new developments have you seen being sold at less than the local like-for-like rate or at a rate which genuinely reflects the cost to build plus a realistic profit margin?

They say that building houses will create jobs. But other than within the industry that builds houses and the services that will then provide them, what jobs ever get created by the construction of a house?

They tell us that building houses is good for the economy. But how can that be so when prices keep going up, people have to borrow to afford them and the houses built are rarely located where people can benefit most from them without commuting and spending a whole lot more money on travel, from which they will rarely be left with very little afterwards to show?

They legislate that housing ‘supply’ should be determined up to 20 years in advance. But how can anyone in any location or Local Authority area truly know or understand what housing need there will be unless it actually exists already or they make a judgement on what may be needed within a year or two, based on what jobs may be coming to the area?

In Westminster derived terms, politicians are convinced and in turn try to convince us of the need to build, build, build. But the housing problem looks very different to those who are experiencing it firsthand. Where are the policies that consider that:

The entire housing market is overpriced. Commission-hungry estate agents, easy borrowing, speculation, buy-to-let ownership, investment, property developers and builders; all have contributed to the sometimes exponential house price rises. The value of property is vastly inflated and a major contributing factor to the vulnerability of the banks and financial system – as illustrated by the banking collapse in 2008. Devaluation of the entire UK property portfolio would be the answer, but would cause as much mayhem and fallout in isolation as devaluation of the Pound will, should the UK’s Debt, Deficit and economic situation go where it very well could.

Lower priced housing is rarely located where people would most like it. Rarely is development of any good size located where people most need it, and where it is, the prices are even more overinflated than they are elsewhere. People have to commute sometimes long distances to the homes that they can afford which itself is financially costly, but is also very expensive in terms of commuting time – and this is private time that can never be replaced.

Mortgage deposits are too high. The Chancellors Help to Buy Scheme is noted. But it doesn’t escape from the fact that one of the main reasons that people can’t afford mortgage deposits is that the housing market is overpriced and the value of an average house in the UK is currently £242,415.00 compared with the average wage of £26,500.00; over 9 times bigger. Insuring buyers is not a longer term solution and the Government has to get prices back within the reach of average-wage-earner ownership without using the easy promise of Taxpayers money to help.

The rental market is overpriced. Properties of all kinds and sizes are required for rental, but the houses most commonly sought are 2-3 bedroom properties which are typically the same as those sought by first time buyers and those in the buy-to-let market. This interest creates a false floor in pricing and Landlords who do not have mortgages have little to gain by undercutting those who do.

There isn’t enough Social Housing. There will always be a requirement for social housing but the deficit between what Local Authorities can access and what they require needs to be significantly smaller. Right to Buy hasn’t helped with availability when Councils haven’t replaced stock which has been sold through the scheme.

There isn’t enough of the right kinds of social housing. Probably the greatest number of housing related enquiries I ever have from residents within my own Council Ward is from those seeking social housing who cannot obtain a tenancy because there isn’t one that meets their needs or that of their families. Social housing development is very prescriptive and doesn’t currently reflect the normal diversity in family types and sizes that generally exist in most communities.

Second homes are leaving local people without having the option of just one. People now have the ability to travel distances like never before and this has made second home ownership much more practical for weekend use. It has however meant that property prices in rural and seaside locations have exploded as high earning city folk have found it easy to buy such property. The downside is that they have priced local traditionally-low-earners out of their own markets. With inadequate levels of social housing and responsive development which is ‘affordable’, people who want to leave home and remain in the communities in which they grew up are now finding that they simply no longer have that choice.

House ownership has become speculative beyond basic investment and security. People now buy property as an investment and typically seek the same properties as first time buyers, thereby eliminating many of the opportunities for owner-occupation, whilst forcing house prices and rental values up at the same time.

These are the real and for many, very painful aspects of the UK housing market as they stand today, and they will not be addressed simply by allowing development on a scale which is only certain to exacerbate the problems as they stand, potentially create a whole lot more problems beside and only truly benefit the developers whom the whole Planning system seems to have been created for.

Politicians must do much more to recognise and understand the issues facing people as they consider their next home. They then must develop genuine well-thought-out solutions that actually help and assist the people who need the help to avoid or remove themselves from misery and doesn’t reward those who deliberately or otherwise make profit from creating more of it.

There is so much more that our politicians could do. For instance, why don’t they:

  • Add additional stamp duty to buy-to-let mortgages on 2-3 bed homes – those typically bought by private property investors.
  • Add a tax or levy to the monthly repayments on buy-to-let mortgages on 2-3 bed homes
  • Restrict or halt new property transactions to foreign nationals who will not be UK Taxpayers.
  • Place an obligation on developers to provide a percentage of the properties on a new development for social housing use which is not dedicated or allocated at their choice OR alternatively provide an alternative or additional site within the same Local Authority area which reflects that same percentage and types and sizes of housing, relative to their own developments granted permission within that financial year.
  • Legislate that future or existing sales revenue from Council owned stock must either be used to build new properties or purchase existing ones with a priority given to property types most sought on the local Waiting List.
  • Penalise weekday or week-time non-occupation of homes through a tax or levy.
  • Legislate to require the deposit or equity value on second home mortgages to be 50% of value or even higher.
  • Require Estate Agents to work on a fixed-fee, non-commission basis.
  • Consider outlawing ‘gazumping’

Without more creative thinking and policy intervention, the role that housing development could play in contributing to the economic never-never fantasy land that has been under construction is quite frightening.

Just as Quantitative Easing (QE) is having a detrimental and savage effect on the savings of many people who have been responsible with the accumulation of their wealth, continuous building at the rates that Government would have us believe necessary, whilst failing to address all the other underlying issues facing those who need homes, will surely prove to be just as damaging for many more, if not worse.

You can’t address real problems without real solutions and its time that politicians thought about the real consequences of their actions rather than the power and electability they will achieve by playing with sound-bites and words.

What is in effect “quantitative building” might make good headlines, but it isn’t going to help those who need new homes most right now and the only long-term beneficiaries will be the money men who own the companies that build them.

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