Vir Cantium

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Tag Archives: affordable housing

Some Swedes Are More Equal Than Others

One fundamental error that so many socialists / egalitarians / spirit-levellers seem to make is to try and address the symptoms of inequality rather than the genuine causes (as much as they could even solve the latter).

‘Egalitarian’ Stockholm rents feed black market

In the Swedish capital, an egalitarian-minded rental system put in place more than half a century ago to help erase social differences by permitting rich and poor to live side-by-side in the centre of the city has a very large flipside.

Hmm, let me guess – all those Swedes human beings aren’t playing by government rules?

The publicly regulated system has created a flourishing black market for aspiring tenants willing to dish out huge sums to skirt multi-year-long waiting lists for a rental contract.

What, you mean than artificially holding down the price has led to excess demand and/or inadequate supply? Surely not; don’t you know that all that market forces stuff is a conspiracy made up by swivel-eyed right-wingers.

Virtually the entire Stockholm rental market falls within various queue systems regulated by the municipality. More than 300,000 people are currently waiting in line for a rental contract in the capital, a city of around 2 million inhabitants.

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Report: House Prices Are Too High And Not High Enough

Council-type housing stock in Weaverham, now m...

Some housing, obviously

Looks like we’re all discussing house prices again:

Homeowners who bought at the peak of the market may face four more years of negative equity, a housing group has warned.

The organisation, which campaigns for affordable housing, also said prices are still too high for many buyers.

So are they complaining that house prices are too low … or that they are unaffordable?

“… the big problem that we have is that we’ve created a kind of perfect storm where there is negative equity for some people and they’re trapped and can’t move, but prices haven’t come down enough to make buying a home a realistic option for people in their 20s and 30s in ordinary jobs.
“We really are in danger of pricing people out of owner-occupation.”

Ah, both.

The National Housing Federation (NHF) have indulged in the modern and annoying use of “we” when the passive voice and the word “some” would be more appropriate. Many people have not overstretched themselves and thus aren’t “trapped” since the dip in prices won’t have wiped out their equity, others may have negative equity now, but aren’t planning to move any time soon, so it’s all academic to them.

That bit of pedantry aside, in some ways “we” could refer to the NHF, or at least their members. The basic factor in house prices is, of course, the cost of the land. Planning law plays its part in driving up land prices due to scarcity, but there is also demand. Here, the usual refrain is to blame all those nasty buy-to-let landlords who buy up properties thus driving up the prices, and at the same time leaving first-time buyers with little option but to rent, usually from the buy-to-let landlords.

So who are the biggest buy-to-let landlords? Yep, the members of the National Housing Federation. And what is the NHF’s solution to the problem? Given that they are complaining about the cuts to their members’ funding, it would seem to be to buy more land to build on, which will drive up prices, which will have the effect of forcing more people to turn to social landlords.

Not that I’m suggesting some conspiracy on the part of housing associations, of course. However, if they wanted to help tackle the so-called ‘housing crisis’ and enable more people to become owner-occupiers, then they could start lobbying, say, for easing the rules for the ‘right to acquire’ scheme, maybe the ability to give higher discounts, and perhaps the issuing a press release endorsing some or all of the Policy Exchange’s suggestions, also out today (trailed by Iain here).

Tackling the Affordable Housing Paradox

The National Housing Federation has said that the downturn in the housing market has allowed housing associations to buy up unsold properties. (Listen to the BBC piece here.)

However, don’t let that give you the idea that the associations have been struggling to acquire property up to now. One of my roles in the past was overseeing the sale of various sites from a large property portfolio. More often than not, at least in recent years, the housing associations (H.A.s) have been able to outbid private developers on many of the sites that go for housing. When an H.A. is the clear highest bidder then it is difficult to justify going for a lower private offer and still demonstrate that we are achieving best value.

Now this is not to criticise H.A.s, who are only doing their job, but one has to wonder to what extent the H.A.s, with their public (or publicly-backed) finance have themselves contributed to the boom in property prices until recently.

While there is undoubtedly unmet housing demand (a more accurate term than housing “need”, I think), it is wrong to assume that all those potential buyers and (often by necessity) renters want to be in social housing, for too often the terms “affordable” and “social” are wrongly used interchangeably in debates around housing. “Affordable” can include shared equity schemes, but also simply lower cost starter homes. It does seem a raw deal for those who are working hard and trying to save for a home that they can be effectively outbid by housing associations who benefit from the public finance that, certainly in the absence of MIRAS and any meaningful rolling back of stamp duty, they themselves cannot match.

It would also be an interesting “what-if” exercise to see how many currently empty sites being land-banked by developers (and in some cases now being off-loaded) would have been built on had requirements to include minimum levels of affordable/social housing not pushed those sites onto the wrong side of financial viability. How much further could the wider housing shortage have been eased, ironically, without the state intervention that was intended to achieve just that?

It’s hard to see how any of this can be helped by the HA’s shifting up a gear in expanding their portfolios by buying up not just sites but built properties, or how any boom in public house building is going to help ease inflation in construction prices.

So just as the right-to-buy has been (unfairly) criticised for reducing public housing stock, are the housing associations now denying future first-time buyers the opportunity, come the upturn in the economy, to own their own home? Of course, there is one way to ensure this doesn’t happen, and it’s an anathema to the left (so there must be something good in it) … introducing the right-to-buy for all housing association tenants.