Britain’s Got Talent, the TV hit of the last weeks of the Blair era, has
shown hitherto untapped talents in acrobatics, singing and ventriloquism.
The longest-running drama of the Brown epoch is likely to be Britain’s Not
Got Enough Homes, which will test the skills of politicians, planners and
construction companies to solve the housing shortage.
Anyone who already owns a home, or aspires to own a home, has an interest in
this contest to provide the 60,000 extra new properties needed each year.
The master of ceremonies will be the new Prime Minister himself, an
enthusiast for a “homeowning democracy” and a supporter of a much more
liberalised planning regime.
In A
new map for England , we have set out the locations where the Government
has ordained new homes will be built. But there are already concerns that
all the extra homes proposed may not be necessary in every one of these
locations: in the East Midlands, for example, supply could outpace demand,
leaving a glut of properties and depressing local markets. The first rule of
the Britain’s Not Got Enough Homes contest must be that government
statistics — not a byword for reliability — should not be the only proof
that more homes are required in an area.
A significant mismatch exists between the type of properties being produced
and the types of dwelling that people want. In 2006, 45 per cent of the new
homes built were flats, mostly in high-density developments. Evidence that
buyers far prefer houses to flats, however, can be seen in the much larger
price increases for houses. Construction companies proposing executive
apartment blocks must be forced to justify this type of development. That
rule must be strictly applied.
Many of those flats have been put up on plots on which just one house formerly
stood: as a result of the doubling of the incidence of garden-grabbing,
close to one third of the new homes in the South East now arise on existing
residential plots — which are categorised as brownfield land. Under another
rule, it must be possible to object to such developments that are so often
out of character with their surrounding areas without being dismissed as a
chronic Nimby.
At the same time, it must be acceptable to defend a development without being
denounced as a saboteur of our green and pleasant land. This week the
academic Germaine Greer argued that local industries in Cambridge could not
recruit sufficient manpower as a result of a lack of affordable homes. We
might all wish there was some conjuring trick to solve the problem, but,
sadly, there is not.
SPARE THE BUY-TO-LET INVESTORS . . .
The demonisation of buy-to-let investors continues: in some quarters, they are
now held almost solely responsible for driving up property prices beyond the
reach of first-time buyers. Aghast at this, the Association of Residential
Lettings Agents (Arla) has released survey findings that portray amateur
landlords as the sober-minded suppliers of flats to let — an essential
service.
According to Arla, the average buy-to-let investor is too dull to be a
villain. Instead, he or she is a mid-fortysomething likely to own just one
or two properties, bought as a form of long-term savings. When asked about
their buying and selling intentions, more than half said they were “marking
time”.
This will not still the voices calling for the abolition of the buy-to-let tax
breaks. But it will calm fears that these landlords will be spooked into
panic selling by the cooling of the market in most locations. They are
unlikely to be the bad guys that turn a slowdown into a slump.
. . . BUT NOT THE NONDOMS
Embattled buy-to-let investors can only hope that the spotlight will
increasingly turn towards the taxman’s lenient treatment of private equity
bosses and foreign individuals who are resident nondomicile, the now
notorious “nondoms”. Private equity bosses pay tax at just 10 per cent on
much of their income — the reason why they faced a grilling this week from
MPs. The even more fortunate nondoms are taxed only on the money they earn
or bring into the UK. Thanks to those concessions, both groups are able
fully to indulge their property porn fantasies.
There has been particular focus on the nondoms’ use of offshore trusts to snap
up London houses, a dodge that enables them to pay stamp duty at the rate of
just 0.5 per cent, rather than the 4 per cent payable on all homes above
£500,000. That means that a family who has struggled to afford a £625,000
home faces the same bill for stamp duty (£25,000) as the purchaser of a £5
million mansion.
This all helps to explain why, as County Homesearch, the buying agency,
reports, the capital’s choicest mansions and apartments are still often
selling before the estate agent has compiled the details and that some
people will buy even before viewing. The rich are different. To date, it
seems that Gordon Brown has liked it that way. He could change his mind.
I don't see why we have to sacrifice our green belts.
New York is squeezed into an area half the size of London.
A shiny farthing to anyone who can guess how they did it.
matt nuttall, salford,
If there was a 'real' shortage of housig, rentals would not be as low as they are. My rent sless thanhalf of the interest portion of the mortgage one would need to purchase the property I live in.
Furthermore, if you look at a long term average from the 1st quarter from1975, the trend has been an upward mvement of 2.4% per annum on the value of the average house. This is by no means a safe or intelligent pension. It does not even factor in maintenance, life insurance, property insurance or mortgage arrangement fees.
Chantel, UK,
I am currently working in the City, on an entry level job, i put up with a long commute and am still unable to get onto the property ladder easily. I understand that the developers need to make a living, and do not wish to see the countryside i grew up in dissappear. as a student of economics i can see why people invest in property for their retirement. all of these situations are reasonable from the point of view of those there, however the increasing number of individuals feeling dispossed by thier inablilty to get on the property ladder (i would be using 1/2 to 2/3 of my disposable income on rent or mortgage repayments) will lead to strife and we will blame someone, who should that be?
Ben, folkestone, uk
I'm that much-maligned species, a property developer, albeit small scale. I am currently replacing a horrible 1920s 3-bed chalet bungalow next to a small electricity pylon with four two-bedroom flats built to modern building regulations, with vastly improved insulation and sound and fire-proofing. My return, once I've battled through Planning, slow and monopolistic utility suppliers, loan interest charges, Section 106 "contributions" (local council taxes amounting to £40,000), stamp duty, bat, tree and noise surveys, legal, architect and estate agent fees, never mind looking after my builders, is at most 15%, less contigencies, company taxes, and any fall in the market. The flats will cost £75,000 to build; their current market value of £190,000, but most of the difference is eaten up by the cost of land, interest, fees and taxes. I don't see myself getting rich anytime soon!
A Atkins, Reading,
A beautiful house gets pulled down, 3 months later a block of 'executive flats' goes up, 2 weeks later 15 to let boards appear outside building. Place covenants on building permission to ensure majority of new builds are owner occupied and maybe prices will stabilise.
emma, warlingham, surrey
"in the East Midlands, for example, supply could outpace demand, leaving a glut of properties and depressing local markets."
Said this and I'll say it again.
Bring some high profile jobs to regions outside of London and the property market might level out.
The reason the SE is so expensive is because all the highest paid jobs are in London.
Bring some to the north, to the Midlands and these over-supplied houses will become sought after properties.
Its about time the government did something drastic to bring higher profile, international companies to places other than London which will:
a) Make other cities prospective targets for people who want to work for the best
b) Stop London being such a place of gravity meaning that house prices level out as other places become more attractive to the jobs market
c) Allow old sites of factories etc to be flattened and then built on again as high profile companies move into the area.
Is it that hard?
Jamie, Halifax, West Yorkshire
If there was a real housing shortage there would be a lot more people living in tents.
What there IS, is a shortage of affordable housing, and nothing but a crash is going to solve that because it's not the cost of building materials and labour which is at a historic high ... it is the cost of land:
http://www.ablemesh.co.uk/thoughtsboombust.html
A crash suits people with plenty of cash, because they will accumulate more in times of rock bottom prices but won't need to sell properties themselves in a falling market.
re: Buy to let. Guarantee pensions and people won't feel they need to buy second and third homes as a form of security.
gordong156 , MK, UK
when you have a market where the level of supply is basically fixed (ie very very unresponsive to changes in demand, as it is in the UK) then any extra source of demand, whether it is buy-to-letters or nondoms, is going to push up prices. But the nondoms are not the ones buying the average 3-bed semi or terrace that Joe Bloggs the first-time buyer would like to buy, so yes it is the buy-to-letters fault that FTBs are priced out.
Henry Jones, London, UK
As a property professional, I can only agree with Matt. Responsible high density development has to be the best option - people's selfish desire for gardens led to the creation of massive tracts of suburbia. We have to learn to share our resources, both urban and rural and to develop in an efficient and effective way which encourages and supports sustainability of resources and of community. Good design, and less overwhelming desire for massive profits must lead the way.
Rachel Windsor, Edinburgh, Scotland
Give me a break! mismatch? how about reality? England is one of the most densely populated regions on Earth and yet our cities and urban conurbations are largely low slung affairs. The only way to solve the problem without masses of urban sprawl is to build up, and I don't mean 60's/70's style tower blocks, developers have long since moved on. I am afraid what people want and what people can afford are two completely different things. Lets start to look at viable solutions such as well designed high density developments. The issue is not if we should build up but how! we need to ensure the standard of development is better than the glorified prison cells and excuses for apartment complexes we have been lazilly accepting. Lets call the developers to account and ask why they provide cheap mass-produced medocraty when we all know they can and should be giving us better. I fear it boils down to profit.
(concerned Rural/Urban Designer with a professional grasp of the problems we face)
Mark, London,
Anne,
Well informed, well written piece!
Thank you!!
Michele, Richmond, UK