[Ben Reeve Lewis our intrepid reporter, looks in vain for the middle ground … ]
I thought I would run a theme this week, the current housing bubble and my concerns for it.
This has been prompted by my signing up to Google Reader, which keeps me abreast of all the major newspapers, housing websites and other sources gathering information about the world of housing on a minute by minute basis.
Multiple viewpoints provides a more holistic interpretation of the situation as a whole and it makes for disturbing reading.
Are prices rising or falling?
As reported last week there seems to be a difference of opinion about whether or not house prices are rising and falling and whether or not the current high level of rent is sustainable beyond the autumn.
Basically, if you believe the things written by people whose vested interest lay in the increase of property prices then we are living in a golden age of expansion and opportunity. A sort of 21st century version of the American 19th century ‘Land-grab’ period. Jump in while you still can!
But if you read the work written by people championing the rights of the various people left out of the golden age, i.e., tenants and those who cant get onto the home ownership ladder, you could be forgiven for imagining the authors to be sporting huge, grey, Moses-style beards warning of apocalyptic visions of doom and destruction, while lightening flashes behind them.
Now what sort of practising Buddhist would I be if I didn’t search for the middle ground here?……the thing is, I couldn’t find it.
Don’t get me wrong, when it comes to turning a profit I am all in favour. I don’t spread myself around the interest for the good of my health you know. Also I rent a flat myself and I hate it, for it’s lack of security and ridiculous rent levels that are twice what I would pay on a mortgage. If I could buy at the moment, I would
But housing shouldn’t be solely about self interest, it should be about the sustainability of things.
It seems that we are at the moment living in a housing culture of irresponsible scramble for profit and investment similar to poor old Mr Creosote, the character in Monty Python’s ‘The Meaning of Life’ who simply cant stop eating until he bursts.
To hold a flag up for a more cautious and considered approach to what is currently going on isn’t to become the party pooping, Moses on the mount figure. It doesn’t make sense to roll on without thinking about where this is all going. It just isn’t good business.
Intelligent writing in the Guardian
Andrew Rawnsley wrote a brilliant piece in The Guardian last weekend about the possible future fallout of the current bubble. It is a superb example of responsibly sending up a distress flare
One idea he points to for our long term future is what might happen 25 years from now when the generation who cant buy have no assets to liquidate in order to pay for health care in old age.
Keep the rich out of council houses?
I also read this week of plans to evict council tenants who earn more than £100,000 a year. I wonder how many houses that daft scheme will release. Perhaps the only light at the end of the tunnel on that one is that the awful RMT boss, Bob Crowe may well be turning up at the doors of our homelessness unit looking for help…..lets hope he doesn’t get me!
Seriously though, a sticking plaster on a bullet wound? hmmm
Short term social tenancies mooted
Those with their ear to the ground will be aware that the government is backing short term tenancies for social tenants of say 2 years. The idea being they consider a tenant’s income regularly to see if they can afford to move into the private sector and release their home for someone more in need.
Now this hasn’t arisen from nowhere. The idea has been piloted in New South Wales , Australia for some time, but as the recent article in ‘Inside Housing’ reveals that only a tiny amount of tenants were ineligible for social housing after a designated period and it had the added bonus that people were disincentivised from gaining work or otherwise bettering themselves for fear of losing their home.
It should be evident to anyone that housing doesn’t exist in a limbo that has no effect on any other arm of society. Far from it. In fact it is in an essential, pivotal position on which so much hangs. The same position that education, crime and healthcare also occupy.
So why do the government step back from it, letting market forces dictate the state of play? It’s like watching a toddler playing with a .45 automatic.
A British obsession
Part of the problem is the British obsession with homeownership over all other alternatives. As Andrew Rawnsley points out, the roots of the push to homeownership came not from Maggie Thatcher, but originated in the 1920s where it was thought a good idea would be to promote low cost homeownership to encourage the nation to claim a stake in where it lived. Thatcher’s government merely upped the ante on that idea.
Assured Shorthold Tenancies were introduced in 1989 as an answer to a problem of the time where landlords felt that there were too many laws safeguarding the tenants and getting in the way of turning a profit on rental investments by creating tenancies with an automatic right of eviction built in.
However as Linton Chiswick’s excellent article on City Wire illuminates since AST’s came in, the rental market has been entirely fluid, with only 21% of tenants occupying a home for more than 5 years. Most of those renewing tenancies on a 12 monthly basis and just hoping that their landlord doesn’t want to sell or let to someone with more cash.
To add to the instability of the rental market the past few years has seen an explosion of Buy to Let landlords who don’t have the financial clout of portfolio landlords who can move money around, and if they get into financial difficulty then the tenant loses their home, so the situation is made even more tenuous.
How can you build communities based on a system with no stability in it?
ASTs were brought in as a response to the situation of that particular time, namely the disincentivisation to invest in the rental market thrown up by too many tenant friendly laws. Now we are facing what the recent Halifax report terms ‘Generation rent’, a whole generation of people who wont be able to afford to buy their own home.
The question is, does the insecurity that comes with AST’s now work as a response to an entire generation of millions of people who constantly have to move every few months?
The rental market needs to provide more stability for tenants. That stability in turn provides more sensible long term investment opportunities for landlords.
Nurse???? The screens.
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