to think high house prices are the problem?

[benefitcapclaptrap]

Just watched a news item about the benefit cap being introduced today in some areas. Not sure I totally agree with it but I understand that the reason for it is that the welfare bill is too high. What I don't understand is how reducing housing benefit payments will solve the problem in the long term.

As I see it, the reason housing benefit spending is high is because the rents charged are also high. Too high in fact for the (mostly working,but low paid) tenants to be able to afford to pay without assistance. The usual reason given for high rents is lack of available properties, but I can't see the evidence for this locally (south east) or in other towns I have visited.

Instead, I would suggest that, the reason for high rents and demand exceeding supply is actually due to the cost of buying a house being far too high. A large proportion of people who would like to buy a house (and in the past would have been able to afford to) have been priced out of the housing market. Therefore they have no choice but to rent those same houses from a landlord that could afford to buy it. This means the rent is at a rate that not only covers the mortgage the tenant couldn't afford plus extra for maintenance and I presume some amount of profit. So it would follow that the tenant quite likely will not be able to pay the whole rent their self and must apply for housing benefit.

Am I being unreasonable in thinking that if house prices were lower and affordable to most people on an average wage there would be a lower demand for rental properties. In turn this would mean lower rents for those who can't or don't want to buy and mean lower bills for housing benefit. Also if people didn't have to spend such a high proportion of their income on the basic necessity of a home to live in, there would be less need for top-up benefits (e.g. tax credits) and people would be able to spend more which would get the economy moving again.

So AIBU?

Good point Yoni about value of benefit/tax credit should be variable per region.

The only thing that will alleviate the North South divide is more jobs in the regions and fewer in London. This will reduce demand. Building a gazillion new homes isn't necessary.

It wasn't Tony, Gordon tried to regulate the banks when he was treasurer but the House voted against it. They did what they could but Margaret had done the damage years ago by setting things to sell the country to the highest bidder.

Yes, let's blame Margaret Thatcher. It's all her fault. FGS, she's not been PM for 20 years, plenty of time to start the reversal of her appalling policies (like building more social housing). So why hasn't it happened?

Actually I think the issue with London is not enough supply of housing in London and surrounding areas.

Here's 3 of the top 5 headlines from a typical local newspaper:

"THE Open Spaces Society has branded a decision to build 1,500 homes near one of the largest nature reserves in the south east as "outrageous".

Runnymede Borough Council has agreed to remove green belt status from the former DERA site at Longcross, on the boundary of Chobham Common."

Next:

"RESIDENTS are continuing to fight plans for 371 homes at Westfield Common in Woking, ahead of a crucial council meeting this week."

"A full planning application was submitted in February by Evolution, a partnership between developers Kier Property and Thames Valley Housing, to demolish buildings on Westfield Common and replace them with 371 homes.

A total of 651 parking spaces, plus outdoor play areas, landscaping and new access are also part of the application.

Opposition against the proposals has a long history, including victory in a public inquiry when the council was refused a common land swap in June."

Further:

"A PETITION to stop developments in the green belt around Byfleet has attracted nearly 900 signatures in one evening.

The Byfleet Petition, set up by the Byfleet Residents Action Group, was signed by 888 people in the village hall, High Road, on Tuesday"

Basically the South East has absorbed millions of new immigrants but essentially no new housing has been built.

In other countries you can just build. The green belt is essentially a means of enriching existing land owners by denying people the housing that they need.

The planning process, and the endless demands by councils for trinkets from developers (new roads, new schools, etc.) means that the rate of housing growth is far less than required.

If it was easier and cheaper to build houses, then prices would not have grown at the rate they have.

London is expensive, but so are commuter towns outside it -essentially demand far exceeds supply.

As for Tony + Gordon, they had massive majorities and could do what they liked. They chose to task the BofE with keeping retail inflation low, but not controlling house price inflation (or indeed immigration).

Everything still has to be passed by the House and in this instance the House voted against the motion (not sure of details but could find out if wasn't busy working hard to pay mortgage).

When I meant more jobs in the regions I don't mean in the commuter towns around London, I'm talking the North, the South West, Midlands, Wales etc. Many government departments have already moved out and now the BBC is in Manchester so hopefully that will reduce demand a little. It's going to be a lot easier to build around regional cities than it will be around London. London is already sprawling enough.

The green belt was designed to limit the growth of London and rightly so. And I'm Londoner born and bred!

however if we keep building houses we will have even greater food insecurity than we do already.

if we did not import food, we would have less than 70% of the food we need in the UK.

so if at some point in the future, we cannot import food, because other nations need it to feed their own population, or war, we wont have enough food.

suddenly high house prices don't seem like the right thing to be worrying about.

If people lived in regional areas the food miles would be less and distribution would be more manageable. Planning housing properly will have an impact on waste. It will also make communities more sustainable as people will settle longer rather than simply 'exist' in an uncomfortable environment with long hours and little to show for it.

Market forces do not consider stability or community.

there are thousands of brownfield sites crying out for conversion, but its considered to be too costly.

this is where it should be built, not destroying miles of country side.

If it's too costly, then it's not going to do much for house price affordability, is it?

Agricultural land costs something like £10k/hectare, the same land with planning permission is £1m/hectare.

There are brownfield sites in the regions too. The regions can do with a little less countryside, London can't cope with any more people.

The land on brownfield sites can be contaminated and need environmental remediation before any building work can start. That can push the cost up quite a bit.

But I agree that developing brownfield sites should be encouraged where it's possible and practical for the land to be reused.

My husband and I saved for years for a deposit and bought a house, the bank were willing to lend us about 4/5 times our salary (we haven't borrowed that much) We had a deposit of 15%. I think that we paid a fair price for a nice house (very small) house. I think that this is a typical story where two people are working full time and save hard (making sacrifices to be able to save).

If house prices of existing properties are reduced then the banking system will fail.

"If house prices of existing properties are reduced then the banking system will fail."

House prices fallen over 50% in Ireland, large falls in US also, no failure.

Google Japan, too.

Yes, housing is far too expensive in this country.
This:

• reduces standards of living,
• widens the wealth gap,
• makes our economy desperately vulnerable.

The govt needs to reduce planning restrictions and build a lot more houses. Millions more. Given that they can borrow at

great post mrsbethel

I see far more apartments in the continent than I do here in England even though England has a higher population density. I hardly ever see a purpose built small block apartment (2-4 storey) development outside big cities but that's mostly what I see in places like Germany where population density is actually lower than UK. Consumer habits will need to change too only then will we see terraced houses replaced by terraced apartment blocks.

I agree landlords do have a lot of stress aswell with owning a rental property.they need maintaining and if they dont get a tenant theyre footing bills until they do and also thry might get bad tenants!

I think that's a good point Mondrian.

People don't want to live in apartments or flats any more if they have a family, they think they should all have a house with a garden. But the government won't build apartment blocks because they will be unpopular and they will be accused of ghettoising.

'People don't want to live in apartments or flats any more if they have a family, they think they should all have a house with a garden.'

Can you blame them? If they can afford it, why not?

The rest of the Continent complies with minimum sizing standards. The UK does not. They don't build apartments/flats, they build glorified shoeboxes. It's understandable they're not popular.

dont a lot of people in the uk have pets (ie a cat or a dog)

Absolutely, I wouldn't want to live in a flat if I could afford a house, but if i couldn't afford my own housing I'd just be glad of somewhere safe and clean in a half decent area if it was provided for me at less than market rate.

Government provided housing does not need to be the same as private housing. It doesn't have to appeal to buyers, it just has to do the job. The government could do more to encourage private building, although they have made a start, but even those things would be criticised.

this is very rose spectacles, how many of you have lived in council flats lately? my MIl has some at the end of her road, used to own single elderly people, now they are full of drug addicts and a few elderly people, I wouldn't want my MIL in one that's for sure and I am not a snob by any stretch of the imagination

these flats have gardens btw
overgrown or neatly tended to and stolen out of regular

Urgh, some seriously misinformed people on this thread, but then again talk about houses always seems to bring out the ignorant..

as far as I know, house prices are massively lower than they used to be?!

House prices adjusted for inflation:

1982: £74,000
1992: £91,000
2002: £130,000
2012: £165,000

Admittedly 'real' house prices peaked at £215k in 2007, but in nominal terms have only fallen very slightly. Since wages have barely gone up since then the affordability hasn't improved an awful lot. And before anyone bleats on about 12% interest rates, I suggest you go and look up what MIRAS was, and also consider the relative effects of deposits in a low price/high interest rate vs high price/low interest rate environment.

I think land lords need more credit. They have saved up
A deposit to buy the house

Bollocks. The vast majority of the BTL brigade simply MEWed their deposits from houses they already owned that had rocketed in value, using the advantage of having been born at the right time to snatch first time buyer properties and force those coming after them to rent those same properties and line the landlords pockets instead of buying them for themselves.