Massive developments proposed but don’t worry it won’t happen

building site

building site (credit: ictsan)

You could be mistaken for thinking that the government is finally about to get to grips with the massive housing shortage in the UK but don’t worry all those desperately needed houses will not happen. It’s just headline grabbing to start off the new session of Parliament and give it a few days and David Cameron will be off chasing another bandwagon headline and leave this one to die a quiet death.

Sadly with David Cameron and Nick Clegg the UK is being run by a couple of mice – more interested in the status of the posts they hold than the responsibilities of the posts. Unfortunately the proposed reshuffle will not get rid of the two biggest lame-ducks in government since …. well I guess Blair and Brown.

In Kenneth Clarke the conservatives have one of the most successful and effective modern era Chancellors and he’s over in the Justice Department – a waste of great talent. In Vince Cable the Liberal Democrats have one of the few – if not the only – politicians who actually knows how international finance and banking works. There are people who are experienced and effective who could take the UK through this period of crisis but unfortunately leaders are not part of the reshuffle needed to get Britain working again.

All those Daily Telegraph and Daily Mail readers who this morning were throwing a tantrum over their house prices being at risk if their local bit of greenbelt were moved elsewhere and some new homes were built locally can stop now and be safe in the knowledge that neither Cameron or Clegg have the balls to do the job and make it happen.

£10 billion committed to building news homes may sound good but that money will not be taken up by the house builders – it’s not in their interest to build more houses. Last year despite the fact that the major house-builders built less new homes in generations they all declared increasing profits. The shortage of houses means that the house builders can sell their products at a higher price and greater margins. There’s no incentive for the house developers to build any extra houses. There’s certainly no financial incentive for them to boost new house builds from the current 100,000 a year to the needed 400,000 a year to start to reduce the shortage in Britain.

Currently the UK is short of about 1.5 million homes. Demand is growing at about 250,000 homes per year thanks to increasing population levels. Building 400,000 new homes a year will reduce the backlog by 150,000 a year and will take a decade to bring demand and supply into balance. The problem is the UK has never built 400,000 houses a year. Even during the 1930’s great housebuilding boom the country was only building 330,000 houses a year.

Bringing down the price of housing – both purchase and rental – has to occur for the benefit of the wider economy. If people are spending all their money of putting a roof over their heads then there’s no spare money for the wider economy to flourish. Putting cash back in people’s pockets and not loading them up with additional loans taken out against ever-increasing property values is what will produce the sustainable economy we all want.

Bringing down the cost of housing will also bring down the public sector debt. As rents spiral ever upwards because of the housing shortage more and more working people become eligible for housing benefit adding to the spiralling welfare costs of the country.

When you employ people on between £25,000 and £30,000 a year and they need state help to keep a roof over their heads in the form of housing benefit then you don’t have just a housing crisis you have the beginnings of a failed state. The  cost of housing is the reason for Wildlife News moving overseas.

People are waking up to the fact the Britain is not a good place for small businesses and entrepreneurs. Despite what some on the right of the conservative Party say, it’s not regulations or employment law that is driving small business out of the country but the cost of housing. When you work hard you want something to show for the hours that you put in. In the UK most small businesses make net profits of £75,000 or less. This does not buy you a lot in the UK – especially as mortgages are not particularly generous for the self-employed –  but overseas you can have a really nice house at that level of profit without having to take out a mortgage until you’re in your 80’s.

The latest figures of immigration figures for the UK has shown that there was a drop in number by about 30,000 last year which on the face of it seems pretty good but look closer and you’ll see that the majority of that fall was produced by a big increase in emigration. People are waking up to the better life and housing standards that can be found overseas.

The UK is on the verge of a new ‘brain drain’ as the best and most motivated people leave the country for a better quality of life elsewhere. The very people the UK needs to drive its economy out of recession are packing their bags and going. One of the big reasons is housing quality and housing cost.

But it’s not just the numbers of houses in the UK that needs to be boosted. The quality and type of homes also need to be tackled.

Over the last 15 years over 40% of homes built and sold have been leasehold. They are mainly flats or apartments and this is the next big property scam as the freeholders start to charge their tenants for expensive and unnecessary repairs and maintenance.  This has already started to occur as international property speculators sees the lack of regulations and protection for UK leaseholders. Bills running into the £1,000’s and £10,0000’s  are now beginning to drop onto the doormat of leaseholder properties. The developers control the companies through which the repairs and maintenance is undertaken so boosting their profits.

Then there’s the inflation busting annual rises of fees that leaseholders are being presented with. The services that those fees pay for are inevitably for services provided by companies owned by the freeholders. There is very little protection for leaseholders and any appeals are expensive to undertake.

The UK needs to boost leaseholder protection and also start building much more housing to be sold on a freehold basis. I would never buy a leasehold property unless there’s a very good reason because it’s just setting you up to be scammed in the future. That said the house I’ve just bought is a leasehold but that is because I’m moving to a country that does not allow immigrants to own land or the freehold on a property. It’s one of the reasons why housing is still so affordable there, the country is effectively closed to international land and property speculators, and long may it remain so. Houses are for living in and not for being a cash cow. Earned wealth from making things and providing services is a much more sustainable and secure way to grow an economy than one based on housing shortages and increasing homelessness.

There is also the issue of the ever decreasing sizes of homes in the UK including the almost disappearance of gardens in modern new build. Over the last 15 years privately built new homes have become some of the smallest houses in the western world and this is setting in place some major social issues for the near future.

Couple who purchased these minute starter homes – many on part rent part buy basis now want to move on to larger properties in order to start a family but on-one wants to buy these shoebox size properties. This means over the next few years were are going to see families of 4 or 5 living in property that is barely big enough for 2. These property only have one small living room and bedrooms barely big enough for a bed let alone any other furniture.

As the children of these families grow older and start school we will have a generation of schoolchildren unable to effectively do their homework because their homes have no quite space to do the work. The UK’s lack of building sufficient traditional family sized homes will lead to major social and educational issues over the next 10 years and more.

Despite the pressing and urgent need for a massive housebuilding programme in Britain it will not happen. The private housing developers don’t want a major building programme as it will impact on their profit margins. The government is ideologically opposed to affordable social housing programmes so only a small amount of that £10 billion will go to housing associations and council for new housebuilding.

Then of course there’s the NIMBY’s who want to protect their house values. They don’t want to see a massive house building programme reducing the value of their homes. THe NIMBY’s will win the day because we have people at the top of this coalition government who don’t have the leadership skills or desire to drive through these proposals into action.

So don’t worry these proposals are nothing more than a bit of chest-beating by a couple of party leaders who are out of their depths – it will never happen.


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