To think that just building houses isn't going to solve any problems

[SEmyarse]

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.

[BackOnlyBriefly]

MoreBeta I don't get your argument that "There is NOT a shortage of houses"

You think old people should be forced from their homes so that there's enough room for younger people, but you don't think there should be enough homes for both?

And is this all old people or just working class old people? I only ask because when people in these threads talk about wasted space they hardly ever mention the queen or prime minister and how much space they have.

[AfricanExport]

There is a natural progression in life. You start small and build up. Moving old people out of huge homes they own is not going to free up two or three bedroom family homes for young people. Simply because the people currently in the market cannot afford to upgrade and buy these huge homes . I certainly can't and I am apparently 'wealthy' as my son goes to prep. I couldn't afford that mortgage even if I took him out of school . That's for a 4 bed house with about 3 sq foot of garden. This was a mid size house in the lower price range in a new development. who can afford it?

[Thisvehicleisreversing]

Traininthedistance for the second time this week I've read one of your posts whilst nodding vigorously.

[wink1970]

AfricanExport

I meant 'natural level' in relation to private rentals. I only have private tenants - not through choice, I don't really care, but the type/size of houses attract professional families. A glut of anything for sale (or in this case rent) drives the price down, whether it's an unseasonably large crop of peaches or lots of new houses.

I think the council cap on HB-funded rent is a good idea in principle, but for a while it would create overcrowding in smaller houses until the landlords with mid-size houses started having empty properties.

[HesterShaw]

Great post traininthedistance. I've never heard út put like that and it makes perfect sense actually.

[traininthedistance]

MoreBeta yes, exactly.

The housing bubble was caused by massive bank credit expansion, aided by a lax tax and monetary policy regime (incl. artificially low interest rates after 911 for political reasons - check out Eddie George's explicit admission before he died that he and Greenspan knew exactly what they were doing and that it would create a housing bubble, but they weren't going to be the ones picking up the pieces). It was aided and abetted by a general culture of greed and property speculation in the population and the rise of buy-to-let, along with other factors like globalisation (cheap commodities from Asia which kept commodity price inflation and general price and wage inflation low during the 1990-2007 period) and all sorts of other minor factors like planning restrictions - but essentially there is not a shortage of housing in the UK (or you'd see mass homelessness) but there is a misallocation of housing.

Think of how developers built loads of loft-style two bed luxury flats for rental in northern cities during the boom - but not many reasonably priced medium sized family houses. Or how buy to let landlords can claim interest as a business expense, and get lower mortgage rates than first time buyers as the banks considered them less risky (stupidly, as it turned out), thus allowing them to borrow more and squeeze first time buyers out of the market.

Housing benefit is a red herring - a symptom rather than a cause. We can see this because during the ten years of the first stage of the boom, prices were massively out of kilter with rents - landlords were essentially buying for capital appreciation not rental value. In the last five years since capital appreciation ran into the ground, rents have been pushed up by landlords and agents as a way of generating income. The housing benefit bill rose because the cost of housing (both prices and then rents) rose - not the other way around. This is augmented by the fact that access to social housing has been massively reduced since the 1990s, with responsibility transferred from councils to housing associations in many cases - and to the failure if wages to keep up with living costs. It also owes a lot to the BoE's insistence for many years that we were living in a "NICE" ("non- inflationary consistently expansionary") low-inflation economy, when actually we were living in an uneven, high-inflation economy, just that the high inflation bit was in assets (which the BoE explicitly rejected as part of its remit to control).

[wink1970]

Kendodd

People do move into areas based on housing stock, so creating more would bring more people. For example, where I live there is little rental stock, and the council approved a v. large housing estate, that's now half way built/sold. (Good for them, by the way, I'm not a NIMBY, that land was unused for farming or anything useful before).

As a result, the school has been expanded, with a new building added, there is a new recycling area, a large park/play area has been built, and the bin trucks are now here 2 days a week rather than 1 to cope with the extra demand. This all cost money; it's self-funding after a while, but the up-front costs were met by the council (Tory).

[Timetoask]

The sad thing is that all these new houses are so old fashioned, using old fashioned heating systems (the world doesn't use radiators any more!), tiny bedrooms, the arquitecture is so boring.
The developers are building on the cheap and trying to make as much money as possible instead of thinking forward.

[SATSmadness]

I agree with trainthedistance about suspecting there could be a market adjustment some time in the future although there are a couple of variables in the supposition so it will be a huge gamble as to if/when it happens.

A) How far/fast future governments will go to bring in legislation to slow down the expansion of the population in the U.K.

B) How soon we, as a nation, think the unthinkable in respect of house building. If we are going to accept the current level of population growth then we need to accept that some form of communal living with shared access to outdoor spaces will be necessary if we don't want the U.K. to become one vast housing estate development. We need to move work opportunities away from the South-East so that people follow the jobs to areas where there are already empty properties in need of upgrading/brownfield sites to be developed (still creates work for the construction industry) areas which are often already served by schools/hospitals/transport links etc. Such facilities should then be funded accordingly to match the population increase. There will naturally be major whinging from people born/brought up in London/South-East that they are forced to move away from their parents/grandparents etc to get work but have they never stopped to consider all the people who have had to move away from provincial areas in search of work, it's time to reverse the inexorable tide of increasing overpopulation/development in London and surrounding areas).

[traininthedistance]

Aw, thank you vehicle, hester and lainie I just get so exercised about the housing crisis, because it hurt so many people and is going to have a negative impact on our society for decades to come, and it would have been so easily prevented had so many people not had a interest in pretending it wasn't happening (and still do). The UK and Australia are the two main countries that haven't yet seen some kind of correction from the global housing bubble - out current govt seem to think this is fantastic, whereas actually it only means we're likely to suffer more in the end (especially if, as looks likely, there's a last gasp of silly price rises happening at the moment in the SE).

I think those who got into BTL a few years ago have been very lucky - but I wouldn't get into it now and expect not to be burned.

[SaucyJack]

I think private rents should be capped at no more than half of the average mortgage re-payments for a property of that size/value.

It's obscene and immoral that anybody should be in a position to basically leech a free house of off the back of somebody else hard work and/or taxpayer's money.

[stubbornstains]

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.

Completely agree, it's going to happen eventually (within about 15-20 years, I should imagine). And it's all going to be pretty destabilising when it happens. But that's not the current government's problem, so why should they care about a generation of children growing up in cramped, often insecure conditions?

Meanwhile, our local Transition Village group are asking for expressions of interest regarding the building of some community-owned low impact housing. I'm on it like a car bonnet!

[MorrisZapp]

Very interesting, especially train's theory about the market readjusting when the free money is eventually spent on care.

I don't think it's fair to say that older people are 'hoarding' assets though. Objectively they may be, but in reality what this means is that they are continuing to live in the modest house they brought their families up in. Many of the older generation shun credit, and have never wasted their money on unnecessary consumer goods.

Fwiw, my gran's beloved family home is now on the market. It was worth a few thousand when she and my grandpa first bought it, it remains old fashioned and cramped but is now worth ca 250k. I know that it will almost certainly be bought by a young family as that has been the pattern in her street.

The new family will improve and extend, and stay there long term, I predict.

Meanwhile, my grans care home costs 1k per week, so the money will be spent in a few years and will not be used to further inflate anybody else's house buying power. It will instead be paid to a private care home.

I suppose the unfairness is created by the fact that had my gran managed to stay at home until she died, the money would be a lump sum going to her two children. But as she is no longer able to live alone, the money will go.

There's not much we can do about it, my gran needs good quality care so there's no debate about spending the money. But people will continue to die at home, leaving lump sums to their children.

[sparechange]

SaucyJack, how on earth would you calculate those payment?
Based on a 10% deposit and an average credit score?
When interest rates go up, do rents automatically go up as well?

[traininthedistance]

SATS migration is also a bit of a red herring - increased population growth through immigration might keep rents slightly higher than they should be, but one thing low-waged migrants really won't bring with them is 500k of free cash per household to prop up current prices in the SE. So when current pensioners and boomers die or need to sell on in 10-15 years' time, where will all the buyers be? There will be lots of people wanting to buy family houses, but the vast majority of them will be on normal salaries which can't fund current inflated prices.

To sustain current asset prices one of two things needs to happen: the current (smaller) generation of 20-30 something's will all need to find massive capital sums from somewhere, or wages will need to dramatically inflate by more than 300%. It's unlikely that either of those two things will happen: even potentially earners in the upcoming generations will have massive student debts to pay back; and competition from Asia means wages are likely to stay low, or even reduce in real terms. At the moment it seems unlikely that younger generations are going to suddenly experience huge wealth growth. If anything, current short-term policies are absolutely ensuring that they won't. Barring millions of Rusdian oligarchs suddenly emigrating to Britain, it doesn't look likely that migrants will be supplying the shortfall. Logically, asset prices will eventually have to fall, or who will the current boomers and pensioners sell to?

[MorrisZapp]

Should also say that my gran had very close friendships with her neighbours, and there was strong mutual support there which otherwise would have to be paid for by social services. Eg my gran would always fetch shopping and do household tasks for elderly or ill neighbours, and they did so much for her as she became infirm.

That support network is irreplaceable.

[traininthedistance]

*potentially high earners - gah, too tired from DD waking me up all night!

[lainiekazan]

Same here, MorrisZapp. The pil are both in a nursing home costing £7K a month. Their house has been sold and the proceeds might as well have been directly paid into the care home owner's bank account.

Meanwhile two people I know have lost (elderly) parents recently and have scooped over £1m each.

There will be a lot of haves and have nots in the future depending on the circumstances and health of their parents. I can't help feeling a bit glum about this as there is no way we - or in the future my dcs - could earn with honest graft £1m.

[MorrisZapp]

I believe that currently, one in four of us will need residential care in our old age. That means 75% of us will die at home, leaving lump sums.

[LetZygonsbeZygons]

sooooo many empty buildings around, so wasted. why cant they be converted? be much cheaper and use the space properly.

[traininthedistance]

I don't think it's fair to say that older people are 'hoarding' assets though.

But wouldn't you agree that that is exactly what but to let landlords are doing? The majority of those are over 45 - though obviously someone somewhere will know some 20-something with a property empire, the majority of BTL is funded by people withdrawing some of the equity they gained during the long boom and using it "for their pension".

[Melonade]

I don't agree with the planning system and zoning, which basically only permits developers to build largish soilless housing estate developments.

But since when did it become essential to expect the world to just provide you with an affordable house to live in? What a privelege! Surely most people try to work and plan so as to provide somewhere nice for their children to grow up? So why the vitriol at the people who do?

people are now becoming so dependent that they will kick up merry hell if not housed in a perfect new build with brand new appliances. And if the planning system caused proper infrastructure eg cycle paths to be built, these parents could presumably teach their children to cycle the few miles to school, as in Denmark or similar countries. I'm pretty sure the average family in socialist Seeden, with the highest taxes in the world, lives in flats with no gardens.

[MorrisZapp]

Conversion is v expensive I believe. There's a huge development near me called Quartermile (in Edinburgh). It's the old hospital, now turned into trendy and expensive flats. The new flats were thrown up in no time, but the old stone built hospital buildings remain forlorn and unconverted, as the economy tanked shortly after development began.

Older buildings require much more effort to make houses from, whereas new flats can go up like Lego.

[SaucyJack]

SaucyJack, how on earth would you calculate those payment?
Based on a 10% deposit and an average credit score?
When interest rates go up, do rents automatically go up as well?