The Housing Crisis and How to Solve It

The housing crisis in Britain is becoming so severe that radical measures are needed. There are three general issues which need to be addressed:



a. How to bring rents to a level which will allow those on a full-time wage in any occupation, no matter how menial that occupation be, to rent somewhere to live without state assistance.

b. How to produce a housing market where the price of flats or houses is at a level which permits someone on average full-time wages to buy a property.

c. How to house people until a. and b. have been accomplished.

To attain c. this should be done:

1. A massive programme of social housing building by the state. In an ideal world social housing would not be needed because there would be sufficient housing to keep rents low enough to be met from any wage paid for a full-time job, no matter how menial, while those who could not work would also be able to find private housing at a cost which did not impose hideously on the taxpayer. But we are where we are, which is in truly frightening circumstances with huge numbers of people in full-time work who are unable to meet the rapidly rising private housing rents. In addition, even those on incomes well above the average cannot get on the housing ladder and those wishing to trade up from an existing property cannot do so because of the difficulty of obtaining a mortgage, being in negative equity or simply not having the wherewithal to pay all the rapidly rising costs of moving such as stamp duty. Consequently, a massive building programme is urgently needed to house people now in the places where they are needed, both as workers and to maintain local communities.

2. An annual tax on land that is being hoarded and not built on by developers. This would both encourage developers to build houses and to sell land at a reasonable price to the state for social housing.

3. An end to buy-to-let mortgages. This would ensure there are more properties at the lower end of the price range to buy.

4. Levy capital gains tax on all homes including primary residences, the money being used to fund in part the increase in social housing expenditure. This would be fair because those owner-occupiers who have benefitted from the massive capital appreciation of their properties have done so not because the market has dictated the price, but as a result of government policies over the past 30 years which have resulted in greater competition for housing with a resulting ramping of the cost of both rents and purchase prices. These policies have been: i. too-tight planning controls; ii. a failure of governments to build anything like enough social housing; iii. the heavily discounted sales of social housing which has reduced the stock of social housing; iv. the removal of credit controls on mortgages to restrict what people can borrow in relation to their income and the absence of a minimum deposit; v. lax fiscal and monetary policies; and vi. mass immigration.

5. Substantially increase council tax on homes other than the primary residence. The tax should be a percentage of the value of the property not a multiple of the present CT bands. This would give multiple home owners a powerful incentive to sell and a disincentive to other people who wish to have second homes to buy. In principle this should make such properties not only cheaper but increase the probability of locals buying the properties.

6. Greater security of tenure for renters on the German model. At present most private tenants have minimal security of tenure – six month contracts are common – and no guard against huge rent rises.

7. A restriction on rent increases to the rate of inflation for at least a number of years. There is a potential problem here where the rentier has obtained the property to rent by taking out a mortgage, particularly a buy-to-let mortgage. While interests rates remain low – and the Bank of England governor Mark Carney has signalled that they will probably remain low for two or three years – the uprating of rents by inflation only should mean the mortgage can still be paid. When interest rates rise, it might be necessary to produce some form of taxpayer support, for example, by reducing tax on the rental earnings with this reduction offset by the state taking a stake in the rental property which would be realised when the rental property was sold.

8. An end to further mass immigration.

9. The removal to their own countries of immigrants who are here illegally, incapable of work or doing work which could be done by native Britons and for which native Britons are available.

10. Social housing to be denied to anyone not born British.

11. An end to Right to Buy.

12. The re-imposition of credit controls.

13. The restriction of any new purchase of residential property in the UK to British citizens by birth. This would also mean banning companies and suchlike buying residential property unless the properties purchased are rented out.

14. Where residential property is already owned by someone who is not a British citizen by birth, they may retain ownership but if they wish to sell it may be only to a British citizen by birth.

There will be those reading this who will recoil at the idea of ending mass immigration, sending some immigrants home, denying social housing to those not born British and restricting the purchase of residential property and its sale. Let me put this to those readers: would you be willing to stand in a public meeting or before TV cameras and oppose such rules or write in opposition to them for public consumption? I rather suspect you would not, because to take that position would be to say foreigners may have social housing before those born British citizens; that much of the existing social housing will continue to be occupied by foreigners while Britons are left bereft of decent housing, that rich foreigners may purchase property in places such as London and by doing so inflate prices beyond the reach of Britons on salaries which are multiples of the average British wage.

Had immigration been kept within reasonable limits and adequate levels of house building, both social and private, been maintained since the mid 1980s, such radical measures might not be needed, but the position is what it is and the problem requires such policies.

People need to understand exactly how serious things are. We have reached the state where millions of people, both employed and unemployed, lack decent accommodation or indeed any accommodation at all. So dire is the housing shortage that we have reached the point where the ordinary person is struggling to live a normal life, because without a secure home how can anyone plan for the future, to have children, raise a family? The government’s policies are truly nihilistic.

 

Robert Henderson blogs at England calling and Living In A Madhouse. To see more of his articles, search for Robert Henderson using the search box at top-right of the page.

 

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