“If property is effectively being built to be acquired by wealthy speculators as assets and not residences, then housebuilding becomes a mocking pantomime, where property scarcity is perpetuated through the creation of more property.”
The UK’s housing market is ‘broken’.
And on Radio 4 earlier today, they looked at the ‘broken housing market’ in the West Country:
A home of Our Own
Lynsey Hanley explores Britain’s broken housing market through the stories of ten very different homes and their occupants. Today, the story of Hillside Cottage in St Mawes, Cornwall, owned by 79-year-old Phil Salter. Phil bought this 17th-century fisherman’s cottage in 1989 after selling his ex-council house. Hillside is now worth over a million pounds. Author and journalist Lynsey Hanley explores what Hillside Cottage tells us about the impact of council house sales and second homes in areas like Cornwall…
As Lynsay Hanley suggests in the programme, the main reason things are ‘broken’ is because houses are treated as assets to add value to and to sell on – speculation through extensions and new attic bedrooms:
There are all sorts of suggestions on how to ‘fix’ the broken market.
This is from Tom Chance, writing a paper for the Green Party in 2018:
Britain’s broken housing market: lessons we could learn from other EU Countries
In this report I have set out some European housing policies that could help the UK government if they finally decide to tackle the ‘broken housing market’. The Government could make tax and fiscal policy a solution to stabilise prices, learning from policies in Ireland and Sweden. It could give tenants more protection against rent increases and evictions, learning from experiences of rent control models in Spain, Italy and Germany. It could support community-led housing and planning approaches to build high quality homes and communities that meet local needs, learning from the Netherlands and Germany. It could fix the broken housing market – its stated ambition – by breaking free of the idea that housing must be treated as a market.
This is from Tristan Cross writing for Vice magazine earlier this year:
A Dummies’ Guide to Fixing the UK Housing Crisis
Those in charge could easily fix the housing crisis. We spoke to a bunch of experts about how this could feasibly be done…
MAKE PROPERTY A BAD INVESTMENT
“The challenge is that housing has proven the best investment that the majority of people can make since the early 70s,” says Neal Hudson, a housing market analyst at Residential Analysts. “The fact that you can take a leveraged punt on an asset that also works as your home at the same time, has a certain amount of enforced savings, and the tax benefits are massive, the alternatives are crap. While all of that remains in place, it’s what people are going to want to do.”
“Despite what developers have got the government to believe, it’s not always as simple as building as many new houses as possible,” says Youel at Positive Money. “We need to make sure that all of this new housing is genuinely affordable.”
If property is effectively being built to be acquired by wealthy speculators as assets and not residences (which many are, given how reliable an investment UK property has proven for the best part of four decades) then housebuilding becomes a mocking pantomime, where property scarcity is perpetuated through the creation of more property.
This could be discouraged by levying taxes on speculators – for instance, a currency-transactions tax on investors, an additional tax on landlord groups who avoid income tax by registering as limited companies and paying corporation tax on their rental income instead, and an end to the absurd tax discounts offered by some councils on second homes and empty properties and instead choosing to tax their emptiness.
As Dan Wilson Craw of Generation Rent, an advocacy group for private renters, tells me: “Homeownership does mean that you will reach retirement without housing costs to worry about, but more immediately you escape a housing situation where you’re at the whim of your landlord.” It begs the question: How much do people want to be homeowners, and how much do they just really hate their landlords?
The fact that a property can become a lucrative source of income through rent itself increases its value as an asset. Ergo, fewer people can become homeowners and more people are forced to rent. Ergo, rents can be increased, because the alternative is homelessness. Ergo, the value of the asset increases. Another hellish cycle, which could be quite simply ended by making landlordism illegal.
There are other ‘solutions’: