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Archive for the ‘Comment’ Category
Thursday, September 1st, 2011
Homelessness up. Housing benefit claims up. Housing waiting lists up. What happened to the Tory dream of home-ownership transforming the nation?
It would be funny if it were not so terrible. Britain is 30 years into the grand Conservative project that was to transform the nation into a ”property-owning democracy”. To mark this great anniversary, a government-sponsored organisation, UK Asset Resolution, is about to embark on the highly patronising and paternalistic task of telephoning 30,000 mortgage-holders and telling them to spend less on nights out, Sky television, gym membership and mobile phones, and more on servicing their mortgages. It’s safe to say that this is not what Margaret Thatcher had in mind when she promised that her privatisation policies would remove the state from people’s personal lives. It hardly chimes with David Cameron’s rhetoric either.
UK Asset Resolution. What a name. It sounds like a highly dodgy private company that buys debt, then intimidates people into paying it off at extortionate rates. But it isn’t. UK Asset Resolution is the Treasury-owned holding company that was established last October to “support around 800,000 customers with £77bn of loans”, customers who initially took out their mortgages with Northern Rock and Bradford & Bingley. Both of those companies, of course, are now “taxpayer owned”, after receiving more than £48.7bn in government loans.
Essentially, all these 800,000 people live in houses that are owned by the government, and have to pay the government every month if they wish to carry on living in them. Some of them – the riskier propositions – will also have to put up with presumptive lectures from strangers about their frivolous failure to understand their financial priorities. And they are not the only vulnerable “home owners” by any means. It is Lloyds TSB and Royal Bank of Scotland, for example, not Northern Rock and B&B, that have the greatest exposure to customers whose mortgages are already larger than the value of their homes.
You’d imagine that the implosion of the “property-owning democracy” project was obvious to all. You’d have imagined that it had become obvious back in 1997, when highly visible homelessness was one of the factors that delivered a landslide election victory to Tony Blair. But no.
Just to underline this historic failure, the National Housing Federation this week predicted that the proportion of the population who own or live with the owner of their home will fall to 63.8% by 2021, about the level it stood at in the 1980s. Of more immediate concern are the observations from homelessness charity Crisis that rough sleeping is up 8% on last year, while the number of people accepted as homeless by local councils and placed in social housing is up by 10%. Since the coalition came to power, the number of families claiming housing benefit has risen by 150,000. There are now five million names on waiting lists for social housing. Many more don’t bother to make an application, because they understand that they have absolutely no chance of becoming a council or housing association tenant.
The most astounding thing about this mess is that there is still a widespread failure to understand that a flagship ideological experiment in self-regulation by the market is in tatters. The deregulation of banks and building societies, combined with draconian restrictions on the provision of new council housing, which could have replaced stock diminished by the right to buy, was supposed to transform “sink estates” into privately owned and lovingly cared-for communities. Instead, the social demographic of people living in council flats has narrowed massively. The people with the greatest problems are herded together, sometimes seeking a dark kind of identity in their blighted postcode, to the point at which the threat of eviction from council housing is seriously touted as a way of encouraging people to think twice before they take part in riots. God help us.
Yet even though the property-owning democracy idea has achieved neither its social nor its financial goals (the housing market has manifestly not developed in an orderly fashion that seamlessly matches supply and demand), there remains a truculent insistence from the right that somehow it is still interference from the state that is the problem, rather than the lack of it. That is at the heart of Cameron’s wish to delay the enactment of recommendations whereby banks separate their retail operations from their investment arms. Not for the first time in recent decades, we see a British prime minister who is very keen on “liberal democracy” when he is “exporting” it, but much more keen on oligarchy when he is dealing with matters at home.
Capitalism is pretty simple. Those with the capital get the profits because they are the ones who have money to invest. The very fact that 30 years of financial deregulation has resulted in greater division between rich and poor is prima facie evidence that capitalism has been working extremely dynamically, unhindered by the state’s supposedly crushing interference, until the bursting of the asset bubbles that it created. Chief among these, of course, was the property bubble, which in turn fuelled the febrile consumer boom that continues to worry the 2,400 employees of UK Asset Resolution so greatly.
Yet, still there remains in place an obstinate refusal to see that, without a determinedly redistributive infrastructure, liberal democracy simply cannot exist.
Britain has now been an oligarchy, not a democracy, for quite some time. It is utterly absurd that Cameron and his chancellor George Osborne are at odds with their coalition partners over this question of reorganising the banks, and instead are minded to give greater weight to the desires of the banks themselves, who are resisting the plan.
Basically, the reform calls for the ordinary money of ordinary people, who earn it, to be looked after with more caution and respect than the extraordinary money of people looking for speculative returns that will provide unearned income. After the hammering that ordinary people have been asked to take, in consequence of the financial crash, it is perverse and repulsive that this pair can even imagine that they have a mandate to shield the banks from a restructuring prompted by their own cavalier and foolhardy negligence. It’s an appalling affront to democracy, property-owning or not.
Posted in Comment, Comment is free, Communities, House News, Housing, Money, Property, Society, The Guardian | Comments Closed
Tuesday, August 30th, 2011
Our housing problem hits the economy hard, yet politicians seem to lack the will to take any action
One thing that’s struck me frequently during the last month’s social tumult has been the abject failure of our property-owning democracy to concern itself with those who don’t own property. A twisted consequence was the staggering lack of empathy shown by looters and destroyers towards small-business owners, regarded as “rich” in the face of all evidence. Another is the fact that we seem to be the only country in Europe to have decided that your degree of enfranchisement is dependent on owning your own home.
This week’s report from Oxford Economics, conducted by the National Housing Federation, predicts that home ownership will fall to just under two-thirds of households, from 2001′s high-point of nearly three-quarters, taking us back to levels last seen in the mid-80s, when the right-to-buy was in its early days and interest rates were in double figures.
We’ll still have a property-owning majority in 10 years, then, but the social and economic health of the nation in that time could be decided on governments’ treatment of the growing population of long-term renters. For that reason I dream of waking up one day soon to find an incumbent housing minister doing the job that the whole country is screaming out for them to do.
What does that involve? First, making sure enough suitable housing is available to meet demand, through a combination of sensitive yet decisive measures to build new homes and keep old ones in useful circulation. Second, detaching the task of housing people healthily and equitably from the task of making people feel as if they’re rich. Third, preventing this essential part of our infrastructure from being subject to endless poking by new ministerial brooms.
Housing shouldn’t just be a ministerial post; it ought to have full cabinet status: it’s a determining aspect of public health, a litmus paper for the underlying health or sickness of the economy, and therefore important enough to need a degree of protection from partisan faffing.
If the aim of a “property-owning democracy” is inherently a conservative one, it’s not one that you can automatically argue with from a social-democratic standpoint. Spain has 80% home ownership and, for now at least, a socialist-party government. Levels of home ownership in Germany, which has a centre-right government, range from around a third of households overall to under 20% in Berlin.
In some ways a renting culture encourages transience, but not in others: the very affordability of rented housing in Berlin goes some way towards explaining why it has the highest birth rate in Germany, in spite of the city’s relative dearth of decent jobs. Low rents mean low deposits and the absence of that British paranoia about “throwing money down the drain”.
British renters, on the other hand, suffer from a combination of insecurity – assured shorthold tenancies only run from between six months to three years – and inaffordability, which cements the relationship between the quality and availability of jobs and that of decent housing.
Similarly, it’s in the same areas that housing is cheapest to buy that higher numbers of homeowners are struggling with their mortgages. To buy a house for £60,000 requires a deposit of between £3,000 and £15,000 – a laughably distant figure for someone earning the minimum wage, who, for their part, is less likely to have property-owning (and therefore inheritance-leaving) parents and grandparents.
Indeed, the Oxford Economics report reveals that the average income of a first-time buyer now needs to be £44,464 in order both to raise a deposit and to raise a big-enough mortgage. In the report’s words, that’s “close to the top 10% of earners”. At which point a lightbulb goes off in my head: that’s the only segment of the population that the coalition is actually bothered about. The rest can scrabble for what’s left.
There’s no question in my mind that housing demand needs to be tackled at the level of central government: only it has the power to legislate for fairer tenancy agreements, the money to pump into stalled housebuilding schemes, and the political will at once to create jobs and fulfil demand by instigating a fully funded programme of multi-tenure building.
That would mean acknowledging that free markets need tethering if inequality and disenfranchisement aren’t to remain rigid features of British society. Only those without imaginations could possibly see this job as dull, yet its takers seem paralysed, if not by boredom, then by a conviction that there are some problems you can’t do anything about.
Posted in Business, Comment, Comment is free, Communities, House News, Housing, Housing market, Money, Property, Society, The Guardian, UK news | Comments Closed
Sunday, July 17th, 2011
JG Ballard’s house is on the market – and it has been suggested that fans club together to turn it into a museum
With all the fuss over the prospective sale of JK Rowling’s childhood home (Look – a cupboard under the stairs! It must have inspired Harry Potter!), not enough attention is being paid to what seems to me a far more important literary property story.
JG Ballard‘s house in Shepperton, London, is up for sale. This is where the writer lived and wrote from 1960 until his death in 2009. You don’t need to blether about cupboards under stairs to make the case for its importance. Shepperton held a vital place in Ballard’s imagination: he was drawn to its commercial nullity, its suburban Englishness crossed by shabby concrete carriageways, its proximity to those in-between places, such as airports and orbital roads, in which he thrived.
It was around Shepperton that the protagonist of Crash, his novel about people being sexually aroused by car crashes, drove. In another novel, he wrote: “The town centre consisted of little more than a supermarket and shopping mall, a multi-storey car-park and filling station. Shepperton, known to me only for its film studios, seemed to be the everywhere of suburbia, the paradigm of nowhere.”
It’s strange that this strangest of writers should have been so devoted to so ordinary a patch of ground. But it’s also a clue to how his life shaped his gift. The amazing thing about Miracles of Life, his 2008 autobiography, was that what seemed to be outlandish dream images in his early work – empty swimming pools and abandoned airstrips, the juxtaposition of good manners with outright psychosis, the strange conjunctions of the brutal and the decorative – were actually the fruit of his wartime childhood in China.
When he came to Shepperton, Ballard was fascinated by the apparent perversity of civilisation pretending to be civilised. Here was his subject. Ballard went to where the weird was and stayed there. But what he saw as weird, we see as normal.
The subtitle of his autobiography characterises the arc of his life as being “from Shanghai to Shepperton”. He liked to play himself. A friend of mine, who interviewed him a few years back, found herself inside his house “staring warily at a length of yellowing net curtain in the window of the most dilapidated house in the row. The garden is overgrown and weeds threaten to bind the tyres of a silver Ford Granada to the driveway. ‘I’ll be looking out for you at 2.30, peering through my curtains,’ Ballard had said earlier that day.”
Simon Sellars, who runs the Ballardian website, has suggested fans club together to turn the house into a museum. The asking price is £320,000, and the house is described as “in need of refurbishment”. Wouldn’t it be wonderful to ensure that this “refurbishment” never takes place? When I looked at the estate agent’s website, I could find no mention of the house’s literary connection – but there was a button you could click for a slideshow. I imagined it would nip briskly through some bright photographs of the different rooms inside the house. But it was actually more like an installation-art tribute to the great man.
A pop-up window appears. There’s a photograph of the front of the house, a red-brick semi with a shabby yellow door and uneven nets in the curved window. It hangs there for a few seconds, then vanishes, to be replaced by a photograph of a completely overgrown garden. The image zooms towards the foliage. Then the original image reappears and we zoom in again. Then we have the front of the house again, zooming in. House, garden, house, house, house, garden. It’s mechanical, random, impersonal, and rather sinister. What’s lurking in that foliage? What’s this anxious zoom trying to show us behind the net curtains?
It is brilliantly Ballardian. His editor once told me that Ballard saw his role, as a writer, to be the man standing on the hard shoulder of a particularly hairy curve on the motorway of modernity, holding up a bent cardboard sign on which were scrawled words to the effect of “TROUBLE AHEAD!” or “BRIDGE OUT!” If we can’t buy the house, we could at least have a whipround for a statue of the man holding just such a placard. He could be hanging over the side of Laleham Road, just where it passes over the M3.
Posted in Books, Comment, Culture, Fiction, House News, JG Ballard, Literary fiction, Property, Science fiction, The Guardian | Comments Closed
Saturday, July 16th, 2011
Unwanted Updown Court is a symbol of everything that is wrong with today’s property market
This can’t be an easy time for homeowners struggling with a sluggish property market. So let’s spare a thought for their pain. Real people are suffering. Now we’ve done that, go find a wall – or an estate agent or a financial adviser – to punch as you take in the details of one house currently unable to find a buyer.
This £70m mansion provides the backdrop to the greatest tale of our times. It was once the UK’s most expensive house, bought by a British-born property mogul for £20m in 2001. Last week came reports that the Irish government is on the verge of seizing it. One visitor describes it as “an abandoned Dubai hotel crossed with a cruise ship”. Forget the house that Jack built. This is the house that Midas built. He was wearing the emperor’s new clothes at the time. And a big gold crown that made his brain stop working.
One analysis says it all: “A luxury home designed by British architects, using Italian builders, financed by overstretched Irish bankers – all in the vain hope of snaring Arab, Russian and Far East buyers.” Vain indeed. It’s been on the market for seven years. Seven years! It couldn’t even sell itself at the height of the property madness when a Russian would spend millions on a shoebox in Knightsbridge. What hope for it in these globally reduced circumstances?
The scale of folly here is as mind-blowing as the proportions of the house are unimaginable. It’s like Southfork in Dallas by way of Mr Creosote. It can barely be contained by a wide-angle aerial view. It’s a comedy vision of a comedy rich person’s home. At ground level, you will find 250 tons of Italian marble and 58 acres of landscaped gardens. In the basement, you will find a panic room with its own air-conditioning system. The panic room is at least useful. After seven years on the market, the owner must hang out in it quite a lot, if not literally then metaphorically. (He said last week: “With the benefit of hindsight, I would have run a million miles.”)
There’s an underground squash court and two indoor swimming pools. There’s a quarter of a mile of under-driveway heating. Under-driveway! There are 103 rooms, including – best of all – 27 bathrooms. I love the 27 bathrooms. They make me feel very clean. Surely no one is so dirty that they need 27 bathrooms? Of course, I can’t answer that question as I’ve never met anyone from the Chipping Norton set. But maybe there is some kind of bathroom-related mathematical differential only wealthy people know about. Like, the bigger the risk you take on your mortgage, the more “wet rooms” you have to build in order to appease your conscience.
We haven’t even got to the best thing about this house. It’s called Updown Court. Priceless. First it went up. Now the owner’s a bit down. As such, it stands for everything that went wrong in the last 20 years: a big, fat, vulgar dream of ambition and delusion, built on promises, false hope and loans from the Irish Nationwide Building Society.
Poor old Updown, a metaphor for unbridled greed. A lesson. Or is it? As Updown experiences its comeuppance, let’s look at what’s happening elsewhere. A sober stock-take of property values, an analysis of the ethics of the banking system and a debate about the redistribution of wealth, perhaps? No, that would be silly. Instead, the NHS is being dismantled, the public sector is being squeezed and in many areas house prices are still going up, up, up. Hurrah!
Updown is no longer even one of the most expensive houses in the land. Oh, no. You have to top £100m to get into that bracket now. A flat recently sold in London for £135.4m. In “Recession Britain”, there are 5,922 streets around the country where the average house costs £1m. (“House”? “Average”? I am hanging out with the wrong crowd.) The comedown of Updown is a parable for our times. But on millionaire’s row(s), they’re still singing the same old song. Altogether now for the Updown theme tune. It’s specially commissioned and comes complete with vocal cord heating system. Just cover your ears and sing along: “La la la la la la.”
The opposite of denial is going on in Eric Fischer’s geo-location maps of Twitter and Flickr activity around the world. In fact, perhaps they are the ultimate definition of “too much information”. But who cares, they’re fascinating. Fischer, a self-confessed “geek of maps”, has found a way to generate visual representations of who is tweeting and taking photographs anywhere in the world.
Tweeting shows up most in Britain, North America, the Netherlands and Japan. The places where people are most likely to take pictures and post them on Flickr? Iceland, Scotland, New Zealand and game reserves in Africa.
The maps don’t tell us anything we couldn’t have guessed. City centres are bright with frenzied social networking and photo-sharing. But Fischer’s babies are unexpectedly heart-warming. They remind you of a moment that never becomes boring: when you land late at night in a city airport, take in the lights below you and feel glad to be alive.
While the usual fleshpots are lit up with tweets and shared snapshots – New York, London, Tokyo, Beijing – 95% of the globe is shrouded in blissful, internet-free darkness. Take note, anyone planning a proper holiday.
Posted in Comment, Comment is free, House News, House prices, Property, The Observer, UK news | Comments Closed
Friday, July 15th, 2011
A mystery shopping exercise found that as many solicitors produced poor-quality wills as unregulated will-writers
You’re better off going to a solicitor to do your will than to some bloke who collars you in a shopping centre and offers to do it for £49, right? That is the view, of course, of the Law Society’s chief executive, Des Hudson, who extolled the “excellent advice” solicitors provide in his response to Thursday’s Legal Services Consumer Panel report on the will-writing market.
Unfortunately, the panel’s research does not bear this out. A mystery shopping exercise involving 101 consumers seeking wills from a variety of providers found that as many solicitors produced poor-quality wills as unregulated will-writers, concern over whose practices, prompted by Panorama among others, sparked the whole investigation. One in four wills produced by each group failed to pass muster from a panel of experts. On the basis of the findings, you’re better off going to a bank to get your will done.
Though not a big enough sample to be anything more than indicative, it still makes embarrassing reading for the Law Society, which has long campaigned against unregulated will-writers. And it is arguably of greater concern given that, according to the panel, solicitors produce two-thirds of the 1.8m wills written every year, compared to will-writers’ 10% market share.
The panel told the Solicitors Regulation Authority that it needs to look at the training of solicitors in will drafting and, more broadly, the question of ensuring their ongoing competence, which is not checked once they have qualified.
The report identified problems with the unregulated sector, such as sharp sales practices and lost wills where companies disappear without trace, but equally the panel found that will-writers “provide a valuable alternative to solicitors as they tend to be cheaper and the key element of their business model – providing wills and related services in the home – appeals to consumers due to the flexibility of service”.
It added: “The best will-writing companies at least match the service provided by solicitors.”
A survey conducted by the panel found that 90% of people would recommend their will-writing company to others.
But then none of those happy consumers would know if their will was actually defective. The big difference is that if something goes wrong with a will drafted by a solicitor, there is a raft of consumer protections – including a complaints procedure, indemnity insurance and a compensation fund – to fall back on. With many will-writers, there is nothing.
While the panel said more could be done by trading standards officers and the Office of Fair Trading to improve current standards, it called on the supervisory regulator, the Legal Services Board, to make will-writing a so-called reserved activity. This means will-writers would need proper training and regulation to continue in the field.
As a result, the board has launched its first statutory investigation into whether to extend the scope of regulation, although this will actually go further by looking at what measures are required to protect consumers in the linked probate and estate administration markets as well. There’s not much point in making sure a will is properly written if it is easy for a rogue administering the estate it distributes to run off with all the money.
A danger of regulation is that it drives up costs, which could discourage people from making wills – which not enough people do anyway – and could drive providers out of the market, reducing choice. However, the panel thinks the case to regulate is sufficiently strong and these risks can be mitigated. Research shows that people are not that price sensitive when it comes to wills, recognising the importance of getting it right.
Will-writing, a big market with many services that can be cross-sold, is likely to be a key battleground when new providers enter the law later this year with the advent of alternative business structures (ABSs). Already the Co-op, which has built a £25m legal services business in less than five years largely on the back of probate and personal injury work, has signalled its intention to expand its operation by becoming an ABS at the earliest opportunity. Combining its funeral and probate services would be, dare one say, a classic example of horizontal integration.
Neil Rose is the editor of legalfutures.co.uk
Posted in Comment, Consumer affairs, guardian.co.uk, House News, Inheritance tax, Law, Money, Property, Solicitors, Writing a will | Comments Closed
Wednesday, July 6th, 2011
Status has come before preference for too long: those who’d prefer to live solo or communally are pushed into pairing off
Living alone costs an extra £3,500 a year. And what do you get for your money? More time to read and stare out of the window; the ability to make a reasonable inventory of what’s in your fridge, knowing that no bugger has been at your picnic eggs; the freedom to walk about naked. You could probably find a housemate who would accept all these things for much less than £3.5k. If only we could import a few honest values of the marketplace into the hearth, things would be so much more efficient.
This news story falls into a category with “Childlessness causes breast cancer” and “Children of divorce more likely to suffer mental health problems“. There’s a faux-innocent tone, “don’t yell at me, I’m only passing on the facts”, which is hard to argue: these are merely facts. But just as you would never have a child in order to avoid cancer, and just as a desire for one’s children to enjoy sound mental health would probably not be enough to avert marital breakdown, so the causal link here – between living alone and spending more – might be sound, but its proportions are off. And nobody thinks you could use a calculator to decide who to live with: a story like this isn’t for the purposes of information; its purpose is to concatenate behaviour that runs against the norm with negative consequence.
Solitary living has fluctuating status, according to how old you are and, to a lesser degree, your sex. If you’re young, it’s taken to be a sign of success, since materially it is. As we can see it’s very expensive, so if you can undertake it under 30, you must be on a fast track to somewhere. A quotation often attributed to (though never said by) Thatcher – “a man who, beyond the age of 26, finds himself on a bus, can count himself a failure” – distills this belief, which might be why it’s stuck in the national psyche. The ambitious young person wants a private space in which to determine his or her direction of travel – collectivisation is for losers.
But communal living among the young is acceptable as well. So many people do it, after all, and seem to enjoy it and remember it fondly afterwards; it would be a myopic culture that sought to portray university halls as temples of failure. Even rich people live on top of one another until they’re 25.
By the time you’re in your 30s, your living arrangements are much more proscribed. Communal living in mature adulthood is incredibly eccentric, somewhere between keeping llamas and being polyamorous. Single living is suddenly frowned on, especially for women. Unfairly, pets also suffer the taint of failure here: the primetime comedy trope, endlessly recycled, of the spinster living alone with her cats is often needlessly insulting to the cat, as if a better class of feline would find a family to live with. Men can get away for longer in their bachelor pads, but again, age tarnishes the image – at 40 you’re living the dream, at 50 you’re just a lonely guy with incredibly long toenails.
If we accept that having a family is the desired norm, a lot of these preconceptions are based round the trajectory that culminates in procreation: you become financially secure, and prove it by having your own place; you attract a mate, and prove that by making them live with you; you have kids, and then live in a nuclear three- or foursome.
But there is so much that is arguable, here, which is never argued. Even leaving aside that central structure – the primacy of childbearing, which may be hardwired but surely a sophisticated mind should be able to unwire it – why is living alone considered lonely when a) a lot of people like it, and b) the loneliest way to live in the recorded history of mankind is with one other person who you don’t get on with?
And why is living communally never considered, outside education, nursing homes and sitcoms? I don’t think one’s domestic identity changes that much over time – if you are temperamentally suited to an eight-strong house when you’re 20, I bet you are at 40.
It’s because a respectable household has to do more than just propagate the species; the other footfall of cultural expectation concerns money. What would your domestic arrangement look like, at each phase of your life, if money were no object? Since living like sardines is cheaper, status attaches to small households – the fewer of you there are, the more successful you must be.
I find myself in the irksome position of agreeing with a member of government, housing minister Grant Shapps, who said this week that so-called mates mortgages could be the solution to the insurmountable costs facing first-time buyers. Why not buy a house with friends? Why haven’t we been doing this for years?
For too long, status has come before preference. Those of us who’d prefer to live in gangs have instead paired off into twos, lemming-like in our conformity, but in the outcome, in our small, traditional households, un-lemminged. People who prefer to live alone at least have the independence of spirit to do so; £3,500 is a small price to pay for a mind of your own.
Posted in Cohabitation, Comment, Comment is free, House News, Life and style, Money, Property, The Guardian, UK news | Comments Closed
Thursday, June 30th, 2011
Our bloated banking sector grew from dodgy selling and lending on overvalued properties – their profits were a tax on us all
Redundancies at Lloyds Banking Group are an inevitable consequence of Britain’s over-banked high street. This is not about the credit crunch or the recession, though they have precipitated the board’s decision to make cuts. It was obvious 10 years ago that our banking sector was bloated. A high street of 50 or 60 shops would have anywhere between four and eight banks and building societies jostling for customers’ attention.
In 2006 Barclays, for example, made profits of £1.2bn from UK retail banking, while Lloyds racked up £1.53bn. A large slug of these profits were made from selling dodgy products, like the now-discredited payment protection policies, with the rest from crazy lending on overvalued properties, their business banking units and credit cards.
Bank profits were like a tax on all of us and that was before the bailouts.
The same is true in Spain, where a decade-long lending frenzy led to an explosion of branches and a small clique of banks making extraordinary profits.
It is obviously terrible news for every family affected by the Lloyds redundances and cuts by other banks, including HSBC, which is to shed 1,000 to Lloyds’ 15,000. And unions are right to point out that banks claim all redundancies are necessary while paying inflated salaries and bonuses to traders and managers, many of whom double up as marketeers for socially useless financial products. Nevertheless, the industry always needed to shrink.
The next target should be the estate agent. Too many independent shop owners are elbowed out by estate agents prepared to pay ridiculous rents. They can only do it because they have convinced homeowners that percentage-based commissions are an acceptable, if not necessary, practice.
Property price rises of 300% or more in the last 20 years mean they earn exceptional profits, especially in the south-east, where land and property prices remain at pre-recession levels. In some parts of London they only need to sell one house a year to keep themselves in Armani suits and Gucci loafers.
Just as the financial regulator is about to outlaw commission-based sales practices by financial advisers, commission should be banned in estate agency. Failing that, a tax on land – the much-discussed land value tax – should be brought in.
A switch to LVT, essentially a tax on the wealth of the over-55s, has many and varied positive effects on the economy, including driving down the price of land, which in turn becomes less a subject of speculation and more about long-term ownership.
Our obsession with property is behind the boom in bank branches and estate agents. Both need to be put back in their place, which should be as cogs in the property selling machine, not snake-oil sales organisations for over-inflated assets.
Posted in Business, Comment, Comment is free, guardian.co.uk, House News, House prices, Job losses, Lloyds Banking Group, Money, Property | Comments Closed
Monday, June 27th, 2011
Rising interest rates could lead to ‘tsunami’ of home repossessions, warns man running Northern Rock’s bad bank
The man running the bad banks of Northern Rock and Bradford & Bingley has warned that rising interest rates could result in a “tsunami” of repossessions that could revive memories of the 1990s when the courts were clogged with repossession orders forcing families out of their homes.
Richard Banks says the policy of forbearance might be “nice” for homeowners who are behind with the mortgage but it is not “fair” to let them fall further into debt.
The director of UK Asset Resolution (UKAR) has a point but it is not going to be nice or fair for those families who are likely to lose their homes if the cost of borrowing rises next year, as is widely expected.
Some 40,000 homebuyers are expected to forfeit their homes this year. Northern Rock alone offered forbearance to 44,000 last year. Officials reckon one in eight homebuyers has been offered special terms to fend off foreclosure.
Debate over whether these families are victims of reckless lending will continue.
What is sure is that the Labour government’s policy of encouraging forbearance did nothing but kick the can down the road.
Posted in Borrowing & debt, Bradford & Bingley, Business, Comment, guardian.co.uk, House News, Money, Northern Rock, Property, Repossessions | Comments Closed
Wednesday, June 8th, 2011
Investing publicly-owned land in the development of new rental properties could help solve the affordable housing gap
Karen and Darren are much like other parents in their mid-30s; juggling work and the needs of four children. With two decent salaries from full-time, skilled jobs and help from tax credits and child benefit, they should be comfortably off. But at the end of each month, there is nothing left. Despite their best efforts to rein in spending, their aspiration to move from a rented house to their own home remains just that.
According to last week’s report from the Halifax, Karen and Darren’s story is familiar to many young people in Britain today, who cannot rely on the “bank of Mum and Dad” to get on the housing ladder. While their parents owned their own homes, half of the 25- to 40-year-old tenants surveyed have given up any hope of ever owning a home. This fits with Resolution Foundation analysis showing that the proportion of under-35s on low to middle incomes who were renting trebled between 1988 and 2008.
Generation Rent, as the Halifax study dubs them, will raise their children in rented accommodation. But by continuing to focus on support for first-time buyers, the government’s housing policy has failed to keep up with reality for many young families in Britain.
The private rented sector in Britain is dominated by buy-to-let landlords who own a handful of properties. While the flexibility of renting suits some people, the sector is insecure and the quality of homes is variable. But it doesn’t have to be this way. In the Netherlands, for example, about 60% of private rented dwellings are owned by institutional investors. They are managed by professional landlords and provide long-term security for families.
Institutional investment in the private rented sector has failed to take off in Britain. But with significant cuts to public funding for social housing, it is needed more than ever. Investing publicly-owned land in the development of new rental properties could make all the difference. Land accounts for a third of the cost of development. Investing it as a stake in a public-private venture makes private investment more viable, allows the public landowner, be it a council or the NHS, to make a return on its investment over time, and results in rented homes that are affordable for families on modest incomes. The mayor of London’s housing taskforce is leading the way, having identified enough publicly-owned land in London to accommodate 50,000 new homes. Overall, it has set a target of 67,000 new family-sized, affordable rented homes to be built in the capital in the next four years.
East London’s Barking and Dagenham council has invested its land to secure private equity funding for the development of 500 rented homes for families on low to middle incomes, as well as more traditional social housing tenants. Birmingham city council is investing its land in a joint venture with private sector partners for the construction of some 1,000 private rented homes. Manchester council is pursuing a similar approach.
With a national housing strategy due out this summer, the government should take a lead from innovative councils and incentivise the expansion of a private rented sector fit for families through the investment of publicly-owned land.
• Vidhya Alakeson is director of research and strategy at the Resolution Foundation www.resolutionfoundation.org
Posted in Comment, Communities, House News, Housing, Money, Property, Renting property, Society, The Guardian | Comments Closed
Wednesday, June 8th, 2011
Investing publicly-owned land in the development of new rental properties could help solve the affordable housing gap
Karen and Darren are much like other parents in their mid-30s; juggling work and the needs of four children. With two decent salaries from full-time, skilled jobs and help from tax credits and child benefit, they should be comfortably off. But at the end of each month, there is nothing left. Despite their best efforts to rein in spending, their aspiration to move from a rented house to their own home remains just that.
According to last week’s report from the Halifax, Karen and Darren’s story is familiar to many young people in Britain today, who cannot rely on the “bank of Mum and Dad” to get on the housing ladder. While their parents owned their own homes, half of the 25- to 40-year-old tenants surveyed have given up any hope of ever owning a home. This fits with Resolution Foundation analysis showing that the proportion of under-35s on low to middle incomes who were renting trebled between 1988 and 2008.
Generation Rent, as the Halifax study dubs them, will raise their children in rented accommodation. But by continuing to focus on support for first-time buyers, the government’s housing policy has failed to keep up with reality for many young families in Britain.
The private rented sector in Britain is dominated by buy-to-let landlords who own a handful of properties. While the flexibility of renting suits some people, the sector is insecure and the quality of homes is variable. But it doesn’t have to be this way. In the Netherlands, for example, about 60% of private rented dwellings are owned by institutional investors. They are managed by professional landlords and provide long-term security for families.
Institutional investment in the private rented sector has failed to take off in Britain. But with significant cuts to public funding for social housing, it is needed more than ever. Investing publicly-owned land in the development of new rental properties could make all the difference. Land accounts for a third of the cost of development. Investing it as a stake in a public-private venture makes private investment more viable, allows the public landowner, be it a council or the NHS, to make a return on its investment over time, and results in rented homes that are affordable for families on modest incomes. The mayor of London’s housing taskforce is leading the way, having identified enough publicly-owned land in London to accommodate 50,000 new homes. Overall, it has set a target of 67,000 new family-sized, affordable rented homes to be built in the capital in the next four years.
East London’s Barking and Dagenham council has invested its land to secure private equity funding for the development of 500 rented homes for families on low to middle incomes, as well as more traditional social housing tenants. Birmingham city council is investing its land in a joint venture with private sector partners for the construction of some 1,000 private rented homes. Manchester council is pursuing a similar approach.
With a national housing strategy due out this summer, the government should take a lead from innovative councils and incentivise the expansion of a private rented sector fit for families through the investment of publicly-owned land.
• Vidhya Alakeson is director of research and strategy at the Resolution Foundation www.resolutionfoundation.org
Posted in Comment, Communities, House News, Housing, Money, Property, Renting property, Society, The Guardian | Comments Closed
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The notion of Britain as a property-owning democracy is in tatters | Deborah Orr
Thursday, September 1st, 2011Homelessness up. Housing benefit claims up. Housing waiting lists up. What happened to the Tory dream of home-ownership transforming the nation?
It would be funny if it were not so terrible. Britain is 30 years into the grand Conservative project that was to transform the nation into a ”property-owning democracy”. To mark this great anniversary, a government-sponsored organisation, UK Asset Resolution, is about to embark on the highly patronising and paternalistic task of telephoning 30,000 mortgage-holders and telling them to spend less on nights out, Sky television, gym membership and mobile phones, and more on servicing their mortgages. It’s safe to say that this is not what Margaret Thatcher had in mind when she promised that her privatisation policies would remove the state from people’s personal lives. It hardly chimes with David Cameron’s rhetoric either.
UK Asset Resolution. What a name. It sounds like a highly dodgy private company that buys debt, then intimidates people into paying it off at extortionate rates. But it isn’t. UK Asset Resolution is the Treasury-owned holding company that was established last October to “support around 800,000 customers with £77bn of loans”, customers who initially took out their mortgages with Northern Rock and Bradford & Bingley. Both of those companies, of course, are now “taxpayer owned”, after receiving more than £48.7bn in government loans.
Essentially, all these 800,000 people live in houses that are owned by the government, and have to pay the government every month if they wish to carry on living in them. Some of them – the riskier propositions – will also have to put up with presumptive lectures from strangers about their frivolous failure to understand their financial priorities. And they are not the only vulnerable “home owners” by any means. It is Lloyds TSB and Royal Bank of Scotland, for example, not Northern Rock and B&B, that have the greatest exposure to customers whose mortgages are already larger than the value of their homes.
You’d imagine that the implosion of the “property-owning democracy” project was obvious to all. You’d have imagined that it had become obvious back in 1997, when highly visible homelessness was one of the factors that delivered a landslide election victory to Tony Blair. But no.
Just to underline this historic failure, the National Housing Federation this week predicted that the proportion of the population who own or live with the owner of their home will fall to 63.8% by 2021, about the level it stood at in the 1980s. Of more immediate concern are the observations from homelessness charity Crisis that rough sleeping is up 8% on last year, while the number of people accepted as homeless by local councils and placed in social housing is up by 10%. Since the coalition came to power, the number of families claiming housing benefit has risen by 150,000. There are now five million names on waiting lists for social housing. Many more don’t bother to make an application, because they understand that they have absolutely no chance of becoming a council or housing association tenant.
The most astounding thing about this mess is that there is still a widespread failure to understand that a flagship ideological experiment in self-regulation by the market is in tatters. The deregulation of banks and building societies, combined with draconian restrictions on the provision of new council housing, which could have replaced stock diminished by the right to buy, was supposed to transform “sink estates” into privately owned and lovingly cared-for communities. Instead, the social demographic of people living in council flats has narrowed massively. The people with the greatest problems are herded together, sometimes seeking a dark kind of identity in their blighted postcode, to the point at which the threat of eviction from council housing is seriously touted as a way of encouraging people to think twice before they take part in riots. God help us.
Yet even though the property-owning democracy idea has achieved neither its social nor its financial goals (the housing market has manifestly not developed in an orderly fashion that seamlessly matches supply and demand), there remains a truculent insistence from the right that somehow it is still interference from the state that is the problem, rather than the lack of it. That is at the heart of Cameron’s wish to delay the enactment of recommendations whereby banks separate their retail operations from their investment arms. Not for the first time in recent decades, we see a British prime minister who is very keen on “liberal democracy” when he is “exporting” it, but much more keen on oligarchy when he is dealing with matters at home.
Capitalism is pretty simple. Those with the capital get the profits because they are the ones who have money to invest. The very fact that 30 years of financial deregulation has resulted in greater division between rich and poor is prima facie evidence that capitalism has been working extremely dynamically, unhindered by the state’s supposedly crushing interference, until the bursting of the asset bubbles that it created. Chief among these, of course, was the property bubble, which in turn fuelled the febrile consumer boom that continues to worry the 2,400 employees of UK Asset Resolution so greatly.
Yet, still there remains in place an obstinate refusal to see that, without a determinedly redistributive infrastructure, liberal democracy simply cannot exist.
Britain has now been an oligarchy, not a democracy, for quite some time. It is utterly absurd that Cameron and his chancellor George Osborne are at odds with their coalition partners over this question of reorganising the banks, and instead are minded to give greater weight to the desires of the banks themselves, who are resisting the plan.
Basically, the reform calls for the ordinary money of ordinary people, who earn it, to be looked after with more caution and respect than the extraordinary money of people looking for speculative returns that will provide unearned income. After the hammering that ordinary people have been asked to take, in consequence of the financial crash, it is perverse and repulsive that this pair can even imagine that they have a mandate to shield the banks from a restructuring prompted by their own cavalier and foolhardy negligence. It’s an appalling affront to democracy, property-owning or not.
Posted in Comment, Comment is free, Communities, House News, Housing, Money, Property, Society, The Guardian | Comments Closed