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To think that just building houses isn't going to solve any problems(126 Posts)
So there's a huge housing shortage in the country, and there are loads of plans for building that seem to be taking yonks to come through.
Eventually, a small development has been almost completed near me, of about 30 houses. I'm a delivery driver, so have witnessed people moving in, and have delivered a lot of their new house goods to them.
There's quite a mix of housing. I think there are only 2 social houses, but maybe some of the flats are too. I can never get an answer at the flats, so have to leave a card and liaise redelivery. I keep discovering that these people all seem to have children at the same school as my kids, despite it being 4 miles away, and so I meet them there with deliveries. They've not been able to get their children into their local school, because it is jammed full of kids from my village who's parents ship them there because it's smaller. I often have to give deliveries to childminders, by agreement because these people are working silly hours to get a mortgage.
I know quite well one of the ladies who's been given a social house. She can't drive due to epilepsy, so has been housed in this village so she can care for her elderly mother. She has 5 children, and again can't get them in the school so has to bus them to our village every day, which is costing a fortune.
The next area of housing that was finished was the large executive homes at the back, with 4/5 bedrooms. Apart from one family, I think they have all been moved into by elderly couples. Now of course, if they've worked for the money, they have every right to spend it on what they like. At least that's what I used to think. But is it really right that people can sit on resources when others desperately need them? Should children all be growing up in cramped accommodation even though their parents are working like dogs? They have no outside space at all, and while I'm sure the elderly people enjoy their gardens very much, is it really right at the expense of children playing? I've already seen a lone child on a bike shouted at for riding on their bit of road, and told to play near their house. He wasn't causing any bother.
The last bit that now seems to be ready, is a couple of terraces of decent sized houses with integral garages. I knocked at one yesterday, and met a bloke. I commented that someone was eventually moving in, and he told me he wasn't moving in he'd bought up all 6 to rent out. So yet more overpriced rentals for all the local people who can't afford to buy them.
I don't think this development has made even the slightest dent into our local housing problems.
As someone who can only dream of owning my own house I'd do something about the buy to lettings. Everytime we tried to buy they came in bought it painted it bland colours and put it on the rental market within the month. It's awful as the prices are being pushed up because of this. It's stealing someone's home. Estate agents have told me they tend to favour them over other buyers (as they bought before) so although they tell the vender every offer they weight it. I'm not the only one like this. We have the desposit and mortgage set up ready.
I think there should be some type of additional tax for people who own more than one home.
It's not just houses we need but the infrastructure to go with it
I think that if rents were capped then less people would be in the buy to let 'business' and more people would be able to afford to buy a home of their own.
Also there is no point building houses after houses and not building more schools.
The school thing is a huge problem. We're in a city and very few new developments are near schools, or near schools with places at least.
There's a huge development about a mile away, with some lovely houses, but 4/5 years after it opened there's now dozens of houses for sale, all blatantly housing young families at mo who have got to move for school.
Presumably the guy that has bought 6 houses will be renting them to people that need somewhere to live and who can't afford to buy, so while I'm not entirely comfortable with it because it just seems a bit greedy, I'm not sure it's a major problem.
I can't see a problem with older people buying homes they want to live in either, if they can pay for the property then they have obtained it fair and square.
There is a problem with there not being enough houses, but I think that problem is only equal to the other problem that there are too many people.
Totally agree that there need to me more schools to cope with the influx of new families moving into these developments.
So far as buying to let goes, perhaps there should be some sort of quota ie only 15% in any new development could be sold initially to buy-to-letters. However the reason B2L is so popular is because it's extremely hard to get any sort of return on savings. We're seriously thinking of buying one or two flats, giving a return of maybe 7%, as the interest we're earning on savings barely keeps up with inflation.
I don't really get your point about older people living in 4/5 bed houses though; if they've bought them privately, surely younger families have an equal right to buy them (if they can afford them). Saying that only younger people can buy decent-sized houses in an open market is never going to work. We've always had larger houses, and there's just DH and I now in our 6 bed house, except when ds comes back from Uni. If we sold it today there's no guarantee that a younger family would buy it (ours were tiny when we bought it), it's just as likely that a middle aged couple would buy it.
Mass house building would solve so many problems and invigorate the economy
Build enough and rents and prices will come down.
But of course too many people are too stupid and nimbyish to 'allow' it and whine on and on about the countryside - too narrow minded to look at the facts - that less than 2% of the uk is built on. Because it doesn't 'feel' like that
I live 25 minutes from London in the Chilterns and there's plenty of countryside, oodles of it - you could build a 10,000 houses on a few fields.
And of course politically for the Tories it wouldn't fly as they're all fucking landowners or property owners in London and the surrounding counties where they have a vested interest in keeping prices high
Laurie, I was with you with a large 'hooray' until the crap about the Tories. The current government are the ones who have lifted restrictions on local planning & development and are trying to push local councils to release both green and brown land.
The issue is with local councils of all party versions, who don't want extra housing because it puts demand on services that they don't want to spend money on. You can argue that they could just ask central government for cash, but that would only lead to more debt - what they should do is raise local taxes or charge /charge more for services-on-demand (e.g. allow businesses to use, for a charge, local rubbish tips). In reality, extra houses pay for themselves local services-wise after 1.5 years anyway, but most councils are short sighted.
Overall, though, if we built lots more houses then good old 'supply & demand' would stabilise the current property bubble, create employment and secondary employment, and would eventually create a natural level for rents.
* think there should be some type of additional tax for people who own more than one home*
There is....it is called income tax. Obviously rental is taxable. What other tax do you think there should be?
oh, and to add....
I think there should be some type of additional tax for people who own more than one home
Snort! there already is, it's called income tax - usually at 40% - or capital gains tax - usually 28%.
Last year I paid enough tax on my BTL properties to fund an NHS nurse. Presumably you don't want that money? Because otherwise the funds would be just sat in a savings account gathering dust, not working for me & generating tax revenue for everyone else.
Personally I don't know how anyone can afford to buy and I think that housing benefit is the reason for inflated rents as it creates a false economy and pushes the rent up. If rents were not being subsidised by hb then the rents would have to drop to a reasonable level (to an actually realistic and affordable level) and being a professional landlord would not be as lucrative. There would therefore be more homes available for the rest of us. But we've dug this hole now and as people now rely so much on hb I don't know what can be done about it.
DH and I are both hrt and we are battling to find something that we can actually afford. With new builds in the South East costing upwards of half a million.
ps ... In addition to landlords and People who own multiple homes. I also think that families who have two homes because they have split up are partly responsible (maybe not the right word ) for the housing crises. We now need way more homes because of the high divorce / separation rate.
don't want extra housing because it puts demand on services that they don't want to spend money on
I've never really understood this argument, maybe somebody can explain it to me. The way I see it it's people who use services, not houses. The people are already around using those services whether they live in B&Bs, crapped bedsits or living with parents, building new houses just provides better accommodation for people already here, new people don't magic up because new houses are built surely? I know it might change the location those services are delivered but does it really mean MORE services need creating?
There is NOT a shortage of houses.
What we have is a hosing stock that is very inefficiently used. We have old people living as a couple or even alone in 4 - 5 bed properties and families with children in flats. Just as the OP said.
The shortage is caused by older people not moving out and recycling their homes to younger people with children.
The older generation have a massive incentive to hide their wealth completely tax free inside a house. No young couple having to pay a mortgage out of taxed earnings can compete with older people just selling a big house and buying another one with the proceeds.
The tax system now plus the tax incentives years ago (i.e MIRAS) plus generous state pensions now have allowed older people to accumulate wealth in the form of a house with earnings that were augmented witha a MIRAS tax rebate and now have no need to liquidate that wealth in retirement to live off.
At worst they just borrow against their house with equity release. This would never have happened if housing wealth had been taxed properly with a capital gains tax just like every other form of capital asset.
Personally I don't know how anyone can afford to buy and I think that housing benefit is the reason for inflated rents
That's another argument I don't really get considering most landlords won't touch a tenant on benefits.
How would it level? The whole rental market is based not on what people can afford but on goevernment subsidised housing benefit. Therfore there is no natural level. The landlord can charge what they like because, in a lot of cases, the government pays. Not the tenant, therefore it is not dependant on earnings or affordability. There may be limits to what the government pays in each area (I'm not too clued up on that but I would assume that to be the case) but it is that limit that drives the prices up because landlords are business men who want to see profit. They will charge the most they can get away with and if the government is the one paying them at a profit they are not going to turn it down. So the prices of rent just skyrocket. Well that's how I see it..
The shortage is caused by older people not moving out and recycling their homes to younger people with children.
I agree, people should live somewhere appropriate to their needs. I don't want to see older people forced out of their houses though, so I don't know what should be done about this. I houses were taxed like other capital assets that creates even less incentive for people to move and disadvantages people trying to more up the ladder as their families grow.
The whole rental market is based not on what people can afford but on goevernment subsidised housing benefit
But a landlord will earn less because of the cap on HB, landlords don't want tenants on benefits, have a look and see how many say no HB when advertising.
Im not sure that is true. I think some landlord don't take people entirely reliant on DSS. But from what I understand quite lot of working people get help with hb? And I didn't think it was treated the same. Am I incorrect?
This has been caused by fifteen years of a housing bubble that has resulted in massive amounts of malinvestment and imbalance in our economy - sadly the effects are very extensive and will take a long time to undo. Older generations hoarding assets while younger ones struggle is one facet of that: unfortunately when these imbalances unwind they will cause all sorts of undesirable effects (not least a huge backlash against the older generation and the breakdown of collective social care for them when they need it).
And at some point there will be a big readjustment of asset values - most probably when the older generation start to try to sell to fund care and living costs. There are not enough people in the following generations and they don't have enough money to buy at current prices; so when the hoarded big properties start to be sold, a downward price spiral will also force landlords to start selling too. There isn't any alternative to this: we are not earning enough to eventually support current inflated housing values. Trying to prop them up for the sake of the banks (as has been policy for the last five years) is only postponing the inevitable: housing values are massively above economic fundamentals and will at some point fall. It will be a nasty business though. And totally unnecessary if the housing bubble had been adequately dealt with in the early 2000s or post 2008 - other countries like the US allowed their housing sector to fall and are much healthier now as a result, whereas we have just kicked the can down the road....
Anyone doubting that should ponder the following:
Near me, there is a pleasant district of mostly small 3-bed terraces which normally sold for between 200 and 220k around the year 2000. A mix of middle and older working class people lived there, doing jobs like teacher, hospital social worker, university lecturer etc. The terraced houses now sell for around 785-790k each. They are bought by either London city commuters, mostly working for city law firms or banks, and older retired couples without or post-children.
Now for those older couples presumably they can afford those house prices because they bought their houses a long time ago at normal salary multiples, paid off their mortgages, then their houses rose massively in value during the boom, so when they spend 780k on a house they are essentially just swapping one inflated value for another - they aren't taking out a mortgage, just using unearned price gains to buy at these inflated values. So they don't feel the prices - they are paying with free money as it were.
Those without a huge housing value windfall have to pay with "real" money, as it were - related to their earnings. To afford a near 800k house on a multiple of 3-3.5 times salary, you need a household salary of around 200k - give or take a bit of equity for a deposit. This is pretty consistent with those I know who have recently bought there - say a late-thirties couple of whom one is a city solicitor on 150k+ and the other a lecturer or manager on around 50k.
So if you don't earn 200k as a household - and that is vanishingly rare in the population - how do you afford one of those really quite normal terraced houses? (We are not talking luxurious here - just a normal 3-bed one bath terrace, yard garden at the back, no front garden, not particularly updated.) 780k is 30 times the local median wage of 26k. If you had two people in a household both in fairly paid graduate jobs, say earning 65-70k between them, which is a pretty hefty household income even in the SE, that house is still a massive 12 times joint household income. Three times that household's income is 210k. There's a huge gap of 570k missing between the mortgage two people on 35k each can afford and what the current "value" is (which is made up by the massive unearned price increase during the housing bubble). So where are today's graduates going to get that half a million pounds from? The can't earn it - no-one in a normal job will see a salary increase going from 35k to 150k even by the time they retire. They can't get into the property market at a less expensive level and expect to make a clear profit of 500k to fund purchasing their next house - that time has passed. The only way they might be able to stump up that extra 500-570k is inheritance - but very few people are going to inherit quite that much. So when the area runs out of downsizing older couples and city workers, who is going to be able to spend 780k on an ordinary house? Where is that gap of half a million between salaries and prices going to come from?
So far the housing market has been surviving on people swapping the money they made on one house on buying the next at an equally inflated value, or drawing on it to fund by to let purchases. However, once you run out of a slight majority of people who have made that kind of free capital gain during the boom (which we will within about 15 years), the majority of buyers will revert to only being able to buy at rates connected to their salaries - and the market will readjust. You don't need all buyers to be in a particular position for the market to move - only a slight majority of them. Once that tipping point back is reached, and the market doesn't have a majority of buyers relying on a cushion of equity gained during the boom - it will readjust and there isn't anything anyone can do about it. And at that point the voting bloc will have just tipped towards those under 45 rather than those over 45 as is currently the case.
Bear in mind that the inheritance factor is likely to start to drop out too - as most current retirees are likely to have to use some of their housing assets to purchase old age care of some sort.
The annoying thing is that so many people will have suffered the ill effects of the bubble for so long until it corrects. I mean, I don't want to be able to afford a decent family house when I'm 60 and the market has finally corrected. I'd like my daughter to live in a modest family home with a garden now! It won't be much use to me later. But since I wasn't born magically early enough to have bought into the market before the bubble, I'm punished by bringing up my family in a tiny 2-bed rental cottage with no garden, despite working in a 70-hour a week professional job. Sucks a bit TBH.
I agree about the old people to a certain extent. The road I live in (big houses, big gardens [disclaimer: I live in the worst house in the road!]) is populated mostly by pensioners. It is a shame that these lovely gardens are not used by children. One silly woman was telling me how disgusting it was that her children could not buy a house commensurate with their status and in the same breath trilling that they'd bought their house for tuppence ha'penny and it's now worth £1.5m. She didn't appear to have noticed any link.
Anyway, one problem is stamp duty. In order to downsize, and to buy a smaller property but still in an area you like, you are unlikely to emerge with much spare money. This puts people off moving. Also the current crop of 60-somethings+ often have large pensions which can support them in their properties.
I agree op
It's ridiculous and people like the guy in your op buying up several for renting out they aren't just part of the problem, they ARE the fucking problem
Every single house we have looked at said no benefits, usually no benefits means you have to earn 1.5 x rent a month. Round here for a 2 bed it means earning 23k a year. Its sickening.
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