Tuesday, July 31, 2007

Britain’s Bad Housing

If you missed it you can see it here Britain’s Bad Housing on Channel 4’s Dispatches programme last night painted a rather squalid picture of the state of the country’s housing market. Andrew Gilligan. Yes him! presented a picture of a market that was scrabbling around to wring the last few drops of profit out of the housing boom before it petered out.

“Buy-to-Leave” has become a metaphor for all that it is bad about the housing market at the moment. Greedy speculators apparently buying properties and leaving them empty to sell at a moment of their choosing. It has always seemed a little exaggerated to me. Surely a really greedy speculator would want the rental income as well?
Gilligan laid the blame not on the speculators but the builders. In Salford Quays a notorious “buy to leave” blackspot , flats were empty because too many high value flats had been built. The builders’ intention was to sell to the speculator market not to consider the housing needs of the area. Consequently the new flats were too small and too expensive for Salford’s population. Naive speculators who hadn’t researched the local rental market or had hoped to sell them on quickly found that they had been sold a pup. This sounds a more plausible explanation than deliberately leaving them empty. Whatever the reasons there can be little doubt that Gilligan is right, properties are being left empty because they are being built as tradable commodities and not liveable homes. No doubt many “buy-to –leave” landlords are sitting tight waiting for an upturn in the market to give them a painless way out. Unfortunately for them all the signs are the market is about to head in the opposite direction.

1 comment:

  1. This goes hand-in-hand with landbanking as a practice that should not really be feasible considering we have a supposed housing shortage that the government has promised to fix. We need some kind of disincentive to stop this kind of thing going on. I propose that:

    Any land which either A ) has planning permission to be built on or B ) has buildings on it that are unoccupied should face an additional land value tax set at an appropriate rate so that it pretty much doubles the standard costs of council tax which would be paid were it occupied. So for example:

    2 bedroom flat, value of 200k, normal council tax is 1000pa. Therefore land value tax should be set at 1% nationally so that the tax payable is 2000pa. Work it in the same way for land-bank, so a development of 100 similar flats attracts a 200,000pa tax. This can also be backdated if the developer later builds according to the planning permission and sells the flats for more than the assumed value at the time, adjusted for house price inflation and so on.

    Could this work? Could it be set up as a petition on the 10 downing street website? The government is banging on about a housing shortage at the moment, so I can't see what credible objection they could make to this (or another similar) scheme.