Social Housing

[DaveR]

A report from the Policy Exchange argues that expensive properties owned by local authorities should be sold as and when they fall vacant and the proceeds used to build more housing. The net effect should be an increase in the social housing stock at no additional cost to taxpayers.

See report here:

http://www.policyexchange.org.uk/images/publications/ending%20expensive%20social%20tenancies.pdf

If the sums add up, this seems to me to be a no-brainer. There is a lot of stuff in the report about fairness, but if the proceeds have to be reinvested in the same local authority area I can't see how it could possibly be unfair to anybody - surely no prospective social tenant has a right/expectation to be housed in a particular council ward?

[Jeremy]

Seems like a no-brainer to me too. As long as the new properties are distributed throughout London, and not just clustered together in the poorer, run down areas.

[StraferJack]

Bottom line:

that new housing? Won't get built

"but but but but but!!.. "ad infinitum

doesn't matter. It won't get built. Of COURSE lip service has to be paid to the idea of building from the proceeds. No Policy would get off the ground otherwise... But anything that does get built will be a shadow of what's lost

But that once-scary-but-now attractive property bought to specifically look after poor people? Gone to them forever

[StraferJack]

I should also add that I'm not against change, or even these proposals, by default. If implemented properly then happy days.

But given the source and the record of governments past? You'd have to be naive to believe the end result will match the proposals

[DJKillaQueen]

Local authorities already do sell off buildings, for a variety of reasons, including cost of maintenance otherwise.

If we consider the opening line about the author of the above report,

''Alex Morton was Secretary to the Conservative Party?s...''

The recent conservative Party have always favoured and promoted the sell off of LA property, would privatise social housing if they could etc etc (right to buy was a form of privatisation via the back door) and it was the same conservative party that forbid allowing LAs to use the money from the sale via right to buy to build more housing in the 80s (hence very little social housing stock was replaced).

SJ is right...the money would not be spent on new housing.

How about instead, the right to buy scheme is abolished and the government stop taking a percentage of rents from LAs. Those two moves alone would do more to protect the social housing that remains and give LAs more ability to maintain it properly, whilst new house building can (as it already is) remain a seperate issue with seperate structure and financing streams.

Unfotunately, until something meaningful is done to slow the inflation of house prices (so that the growing gap between that and salaries can stabilise), we'll never build enough affordable housing quickly enough to cater for the growing number of people and families who can not afford to pay rent without some form of help from benefit.

[Marmora Man]

StraferJack Wrote:

-------------------------------------------------------

> Bottom line:

>

> that new housing? Won't get built

>

> "but but but but but!!.. "ad infinitum

>

> doesn't matter. It won't get built. Of COURSE lip

> service has to be paid to the idea of building

> from the proceeds. No Policy would get off the

> ground otherwise... But anything that does get

> built will be a shadow of what's lost

>

> But that once-scary-but-now attractive property

> bought to specifically look after poor people?

> Gone to them forever

Too cynical - there are many people in the Conservative Party that espouse the older liberal conservative ethos and, along with many of Iain Duncan Smith's team would fight hard to ensure the money does get spent.

As a "for instance" there are many LA tenants in ED in older, often Victorian, properties that have considerable value but which have been poorly maintained by Southwark Counci. The tenant suffers from an inadequate home, the council suffers from high (and apparently unaffordable) maintenance costs when, if this plan were implemented, the Council could get "the rich" to fund the provision of improved accommodation that is still with Southwark.

Sounds like a winner to me.

[StraferJack]

"there are many people in the Conservative Party that espouse the older liberal conservative ethos "

I don't doubt that for a second. They will fight the fight. And they will lose

Wasn't there similar plans when The Big Council Home sell off happened in the eighties? Does anyone think the money was used to replcae that housing stock adequately? Has something changed?

The money which the proposals will bring in will be lost to various departments and there won't be enough left behind

I'm not trying to suggest the proposals are "a front" - just that they are aspirational and won't be implemented with robust enough controls, and will have an all too predictable outcome

[Huguenot]

I still believe that legislation to resolve the housing crisis lies in the abolition of perks for multiple buy-to-let owners who now control around 10% of the housing stock and is the single biggest creator of the current problem.

The redistribution of the economy regionally is the second critical factor, driving commercial growth our of London.

I also believe that the mass provision of social housing is a completely ridiculous proposition in a modern tax bearing democratic society. The welfare state should be a safety net, not a lifestyle.

Welfare payments should only be made in productivity enhancing activities - in other words workfare.

However, I don't believe that the wholesale sell off of existing property is a workable solution, and I share SJ and DJKQ's view that the odds of the proceeds going back into social housing is near as dammit none.

[DaveR]

So the arguments against are not of substance, but rather "it won't be done" or "the author is a Tory". I'll take that as an agreement that this is a very sensible proposal.

[Huguenot]

Politics is full of idealistic proposals that wouldn't work in practice, it's not a unique badge of honour for this one.

It also appears to make the classic mistake of judging assets at 'current market value' - this isn't a real figure when the release of large swathes of inventory would see an instant collapse in value.

What ever the merits of a reduction in housing value, the huge negative equity created would catalyse an instant economic collapse and a guarantee of terminal long term depression that would cripple the nation.

So in that sense it's neither desirable , practical, nor likely to be executed transparently. So 'sensible' isn't the word I'd use, no.

[DaveR]

So individual properties across a range of London boroughs trickle on to the market as sitting tenants depart and that precipitates economic collapse.....that seems likely.

H, you probably wouldn't use the word 'sensible' because the concept is entirely alien to you.

[Huguenot]

I'm not sure why you started insulting me personally DaveR, I'll take it as a reflection of some personal issues and let you sort it out in your own time.

It's also self-defeating, since I'm the only person on this thread who supports part of your argument. It would be a foolish man who attacks his potential allies first.

In the meantime, let's try and sort out your figures.

According to the land registry only around 100,000 of the houses sales in the UK each year actually take place against London property. That's disproportionately small, and reflects the strong rental demand and premiums that means people moving away may choose to rent rather than sell.

It's that tiny sales figure alone that has driven the London house price boom. It's 'latent' value in a stifled market that makes London property appear to be so valuable.

What the paper proposes (according to their own figures) is selling the 3.5% of London's 300,000 expensive social properties that come available every year through tenant turnover - that's around 10,000

That means a sudden increase in market availability in the London market of 10,000 over 100,000 current annual sales = 10%.

An increase in the housing availability of 10% a year over a 25 year period is going to have a spectacular downward impact on house prices. Whilst year 1 may be met by latent demand, the's no way that's going to be sustained, so the medium term forecast would have to be a crash.

[Jeremy]

Huguenot, you are assuming that all of the housing would be released into the market in the first year. This is surely not that case - the report is clearly suggsting selling properties when they become vacant, not booting people out before then.

[DaveR]

H, if you persist in posting such appalling tosh you can hardly get shirty when someone points that out. Indeed, your latest post includes this gem:

"According to the land registry only around 100,000 of the houses sales in the UK each year actually take place against London property. That's disproportionately small, and reflects the strong rental demand and premiums that means people moving away may choose to rent rather than sell.

It's that tiny sales figure alone that has driven the London house price boom. It's 'latent' value in a stifled market that makes London property appear to be so valuable."

Now, it's well written, I'll give you that. Seductively written even - it's selling itself to me, it wants to be true. Obviously it's not, it's rubbish - London house prices are driven far more by demand than by supply, and the current strong rental demand is the mirror image of weaker demand for purchases (most particularly because of the tightening in availability of mortgage finance). Sale prices and rents in a particular area tend to trend in opposition to each other because the underlying goods are essentially the same.

How do we know that London prices are demand driven? Anecdotally, we might examine the plausibility of these scenarios:

A Russian oligarch decides to drop ?20 million on a UK pad, convenient for Harvey Nicks for the wife, Harrow School for the kids, and West end casinos and hookers for the man of the house. Where to buy? It has to be Bradford.

A City trader with a nice six figure bonus just has to move (the current place doesn't have enough garage space for the Carrera and the Cayenne) - how about Norwich?

A shiny new graduate with a media studies degree and the world as their oyster is determined to shine amongst the bright lights of....Paignton.

A somewhat sad 40ish Dad is determined not to get old and boring (like his Dad before him) so resolves to live somewhere just a litle bit funky - Wolverhampton should fit the bill.

Maybe a poor attempt at humour, but a reasonable stab, I hope, at characterising some of the demographic pressures that have driven London house prices almost remorselessly up during the last 30 years or so.

Then we could try and 'sort out' the figures. If your argument were correct, we would be able to observe an inverse correlation between sales and price, and one that differs when comparing London with other regions. Fortunately, the date to test this is available, here:

http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/housingmarket/livetables/

and even a cursory glance confirms that your argument is utter pants. Sales largely rise and fall in line with prices, because 'market availability' is driven by price, rather than the other way round.

To finish, we might actually look at the basic premise behind the report (which you obviously didn't deign to read before laying your wisdom out for us) i.e. a local authority can sell a large desirable property in a comparatively expensive neighbourhood for more than the cost of acquiring or building the same housing capacity elsewhere. To put it more bluntly, LB Islington can sell a large period house in Islington proper (delis, Guardian readers and media specs) and build sufficient cheap but adequate modern flats in Holloway to increase their overall stock. You increase it even more if you build the flats in Dartford, and if you did that you would be making the provision of social housing at least in some ways similar to the rest of the housing market i.e. lots of people would love to live in Islington but end up living in Dartford. This premise would clearly be true even if prices of top-end London properties were affected by an increase in supply (although demand in this sector appears to be more robust than any other, if you believe all the analysts).

BTW, can I say that I am a particular fan of the grandiosity of your nonsense:

"What ever the merits of a reduction in housing value, the huge negative equity created would catalyse an instant economic collapse and a guarantee of terminal long term depression that would cripple the nation."

If you're going to sell it, sell it big.

[El Pibe]

This reminds me of the Caledonian road episode of secrety history.

Camden (or was it islington?) basically booted out tenants from run down slum housing for relocation in the ill advised social housing of the nasty tenement variety they were replaced by.

These days houses on the sister street which managed to stave off compulsory purchase orders of derisory sums (these were privately owned) go in the region of 2 million whilst many of the tenements are having to be destroyed.

I guess if a council can get a substantial sum for some of the more desirable properties they own (like 'the farm' in the camberwell grove episode) and build some decent social housing, with all those lessons learnt from the 60s 70s, from the proceeds, then I can't really see anything wrong with it, SJ's cynicism notwithsatnding.

[uncleglen]

?People should not be offered council houses that are worth more than the average house in their local authority?

Allvoters Con LibDem Lab

Agree 73% 86% 75% 63%

and ?People should not be offered council housing in expensive areas?

All voters Con LibDem Lab

Agree 60% 84% 58% 48%

(taken from the beginnining of the report in the OP)

my suggestion for the next poll

"People should not be allowed to live in areas where they might aspire to own property and take steps to improve themselves"

[Huguenot]

Ahem Jeremy...

The report is clear that there are around 300,000 social properties in London considered to be in the 'expensive' bracket and would be sold under this scheme.

The report is clear that the turnover on these houses is 3.5% a year (as opposed to 7% nationally), and that the properties should be disposed of as they become vacant - in other words 10,000 a year.

DaveR, don't be a witless knob all your life - how would I get the figures from the report if I hadn't read it?

Your own analysis is notable by it's anecdotal hypothecating. When you've got some numbers your opinion will demonstrate some value. I look forward to it.

[Jeremy]

OK, with you now. Sorry. So yeah, we're looking at a 10% increase of houses on the market.

Impact in market price? Probably. Spectacular crash? No way.

[DaveR]

"When you've got some numbers your opinion will demonstrate some value. I look forward to it."

Just click on the link. I'll even post it again;

http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/housingmarket/livetables/

You could start with "Property sales based on Land Registry data, by district, from 1996 (quarterly)"

And then look at "Mix-adjusted house prices index and inflation, by new/other dwellings, type of buyer and region, from 1969"

And then you will know who is the knob here (if there were really any doubt)

[Jeremy]

DaveR Wrote:

-------------------------------------------------------

> LB Islington can sell a

> large period house in Islington proper (delis,

> Guardian readers and media specs) and build

> sufficient cheap but adequate modern flats in

> Holloway to increase their overall stock. You

> increase it even more if you build the flats in

> Dartford

We need to be careful here. It is not in the country's best interests to push all social tenants into poorer areas. I'm not saying that we should start building council houses in Bloomsbury or Knightsbridge, but there needs to be a sensible distribution. The creation of very poor enclaves is a much greater danger than all this talk of property supply/demand.

[Huguenot]

I've already looked at the first chart DaveR, that was where I got my London house sales from.

What figure do you want me to look at?

Regarding the second house prices index and inflation chart, what's your point?

None of these have experienced a sudden introduction of 10% more inventory to the market overnight?

Quite happy to consider your analysis.

[DaveR]

"We need to be careful here. It is not in the country's best interests to push all social tenants into poorer areas. I'm not saying that we should start building council houses in Bloomsbury or Knightsbridge, but there needs to be a sensible distribution. The creation of very poor enclaves is a much greater danger than all this talk of property supply/demand."

This is the nub of it, it seems to me. There already are council houses in comparable areas to Bloomsbury and Knightsbridge (in fact there are council houses specifically in Bloomsbury) and the report sugests that selling them would be beneficial, and has a reasonable stab at quantifying the benefit, both in financial terms and in terms of reducing waiting lists. How do you balance that against the detriment that arises (or may arise) from having enclaves reserved for the rich and others for the rest (not really the poorest, I suspect, if they are simply areas where housing cost is below the median)? What is a 'sensible distribution' of publicly subsidised residents in expensive neighbourhoods in one of the most expensive cities in the world, and is it purely numerical or something else? I can see a strong case for maintaining levels of key worker housing right across London and I suspect that would have public support, but otherwise the argument seems to be that some potential tenants should stay on the waiting list, in shitty B&B accommodation, to ensure that a minimum number of poor people live in some of the best streets in town.

[Jeremy]

I know there already council properties in Bloomsbury, Kensington, Chelsea, Notting Hill, and all sorts of expensive areas. I just meant that while it's not realistic to build new council accomodation in prime central London locations, neither should they all be stuck in places like East Ham or Thamesmead. There's a balance to be struck.

I guess the "sensible distribution" would be primarily numerical, but would also depend on things like available land, current density of population, infrastructure, green space, etc.

[david_carnell]

Jeremy Wrote:

-------------------------------------------------------

> I know there already council properties in

> Bloomsbury, Kensington, Chelsea, Notting Hill, and

> all sorts of expensive areas. I just meant that

> while it's not realistic to build new council

> accomodation in prime central London locations,

> neither should they all be stuck in places like

> East Ham or Thamesmead. There's a balance to be

> struck.

>

> I guess the "sensible distribution" would be

> primarily numerical, but would also depend on

> things like available land, current density of

> population, infrastructure, green space, etc.

I agree entirely with Jeremy on this one.

London is often cited as a brilliant example of how different social strata live alongside each other and, generally, get along.

The dangers of "ghetto-isation" where, essentially, the inner city becomes for the rich only whilst the poor are restricted to a sort of donut-ring outer can be seen clearly across the Channel where Paris has this exact model. It causes social unrest and an "out-of-sight, out-of-mind" tendency.

Whilst the need for affordable housing is important I'm not sure it should be at the expense of social cohesion.

[Huguenot]

Golly - when I were growin up, I was taught exactly the opposite in geography.

Even JG Ballard has the walled suburbs of London as social Nirvana.

Plus ca change...