The Mansion Tax as a symptom

Ed Miliband’s speech to the Labour Party conference earlier this week proposed an increase in spending on the NHS to be funded in part by a Mansion Tax.  This has sparked the debate about the whys and wherefores of property taxes back into life. Taxing property a topic guaranteed to send the commentariat into a frenzy. It is a topic I’ve touched on before. Property taxes can be seen as a potential solution to a range of different problems, while others seem to see them as the start of a slippery slope to the demise of capitalism.

I sent a letter on the topic to the Evening Standard yesterday. This is what I wrote: [Read more...]

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Developments in the ongoing Bedroom Tax saga

8610361700_dea8d85350_zYou have to admire Andrew George. Or at least I do. Commentators are busying themselves accusing the Liberal Democrats of inconstancy or hypocrisy in supporting his Private Members’ Bill to reform the Bedroom Tax. But we should remember that George has ploughed a rather lonely furrow in consistent opposition to the policy from the start, even as the bulk of the Liberal Democrat Parliamentary party repeatedly lined up behind the Tories to support it.

And it shouldn’t be forgotten that the George’s Affordable Homes Bill, if it were to be successful, would bring housing benefit policy closer to current Liberal Democrat party policy. In that respect the Liberal Democrats can’t be accused of hypocrisy. The more problematic issue is why the Libdem leadership supported a policy of such obvious boneheadedness in the first place.

Nor is it hypocritical to change position on a policy as new evidence comes to light. That is entirely reasonable and sensible. The more problematic issue is that the evidence that is said to have triggered the Liberal Democrat leadership change of position is not, really, very new. It largely confirms what people who understand the housing sector have been saying about the policy’s likely consequences since before the policy was implemented.

But there is some very clear hypocrisy and obfuscation in the Liberal Democrat messaging around yesterday’s events. [Read more...]

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The value of planning

Earlier this month there was a small flurry of comment in the media about the impact of planning on house prices (for example, here). The question was why house prices in Britain have grown faster than most other countries over the last forty years. A big chunk of the answer was “planning”, in the form of development planning and development control. If only the planning regime had been more lax more houses would have been built and the escalation in house prices would have been attenuated. The commentary was triggered by the imminent publication of a paper in the Economic Journal by Hilber and Vermeulen, which in turn is – I presume – a version of a paper that has been available as a SERC working paper for a couple of years.

This is the latest in an intermittent series of papers, largely generated by economists based at LSE/Reading, making similar sorts of points. The headline message is that the planning system is at the heart of the British housing supply problem. It is the primary cause of our sluggish housing supply response.

The “planning is the problem” position is making most of the running in this debate, and seemingly is never far from the heart of policy thinking.

If you have been reading this blog for a while you will know that it is a position that I don’t have a huge amount of sympathy for. It is too simplistic. It leaves out consideration of the influence and divergent interests of the range of stakeholders in the housing supply process.

Back in June, partially as a counter to this dominant strand of thinking, a report entitled The Value of Planning was published by the Royal Town Planning Institute. I’ve only just had a chance to read the report properly.

Publication through the RTPI might elicit a sceptical response – after all they would say that wouldn’t they? But that would be unfair. [Read more...]

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Attitudes towards new development soften

There is a broad consensus among politicians, analysts and commentators that Britain needs to build more housing. You can encounter dissent from that view, but it tends to be on the fringes – in deep UKIP anti-migrant territory or the paramilitary wing of the rural lobby.

The debate opens up when we start to examine why Britain is plagued with a relatively unresponsive housing supply system. On the political right and among many economists the problem is seen to lie with the planning system. Full stop. Economists with a more subtle understanding of the issues will argue it is the mismatch between the underlying spatial dynamics of economic growth and the planning system. For the more institutionally inclined, the analysis has to be broadened to encompass not just the planning system but also industrial structure of housebuilding and the concentrated nature of the market for land. Weakening the planning system without attending to the other components of the housing supply system won’t get you very far. It is very likely to lead to anger in local communities as their areas are trampled over by insensitive volume housebuilders throwing up unsympathetic developments which place additional strain on under-resourced local infrastructure.

The attitudes of local communities towards new development in their area is an important part of the equation in encouraging new supply. Because when we refer to “the planning system” it should be seen as a short hand for the way local political preferences are embedded in the systems for controlling spatial development. NIMBYism isn’t such a huge problem unless it has an institutional outlet and can affect what happens on the ground.

The publication today of the results of the 2013 British Social Attitudes survey evidence on attitudes towards new development suggest that things may be changing. [Read more...]

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Liberal Democrat travails over the bedroom tax

Well, well, well. It turns out that the bedroom tax isn’t such a good idea after all.

Nick Clegg and Danny Alexander have U-turned on the policy, ostensibly in the light of the (delayed) publication of interim report of the DWP evaluation. The report indicates that the policy largely isn’t achieving the objectives set for it.

Early tabloid headlines announcing that the Liberal Democrats were calling for abolition were misleading. Instead, what Clegg and Alexander would appear to have done is withdraw support for the policy in its current form and adopt a position broadly in line with the motion critical of the bedroom tax passed by Liberal Democrat conference last autumn in Glasgow. To be fair to NC he did state at the time of the Glasgow conference that the independent evaluation would be important in shaping support for the policy. And so, it would appear, it has proved to be. [Read more...]

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Making the case for the right to housing

There’s plenty happening in the housing world at the moment, and I’m not just Modern Housingtalking about last week’s parallel Manchester gatherings at the CIH annual conference and the HACT House Party.

We’ve seen IPPR launch a fuller version of its proposals for shifting housing subsidy away from housing benefit and back towards bricks and mortar. It attempts to tackle the thorny issue of how to find the money to subsidize new building while still paying housing benefit to those who need it, given that a future government isn’t likely to put a lot more money into housing.

We’ve also seen some high profile housing-related programmes on the television, particular in relation to the less wholesome aspects of private landlordism.

And, perhaps more significant in the short term, Mark Carney has turned talk of macroprudential regulation into some concrete proposals for capping loan-to-value ratios. Quite how that will affect the way the market evolves over the coming months is a tricky question to answer. The industry view would appear to be “not much“. Answering the question is made trickier by the emergence from the red corner of a much stronger set of proposals for a mansion tax. It has been argued that these proposals, coming on top of the well-established support for a mansion tax from the Liberal Democrats, bring such a tax a step nearer and, consequently, are having a chilling effect on the top end of the market in London.

Although the picture is murky, there is a quite a bit of talk at the moment about the market starting to soften. And that is even before interest rates rise. So we could be entering a new phase in the evolution of the market.

For me one of the most interesting developments over the last week or so is the appearance online of a paper by Suzanne Fitzpatrick, Bo Bengtsson and Beth Watts entitled Rights to housing: Reviewing the terrain and exploring the way forward (paywalled, unfortunately).

[Read more...]

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Home, security and locatedness

Bishop_James-003There seems to be an awful lot of housing news and comment circulating just at the moment. And it isn’t just more of the same. The arguments for a change of gear on housing policy seem to be growing louder and more frequent. The housing sector, it’s argued, needs to come out fighting. Some of this is no doubt about manoeuvring for position in the run up to the next election. But I don’t think it is only that.

Concerns about the consequences of current policy directions are growing. There’s a lively debate going on about the significance and consequences of the Government’s Affordable Rent programme, and whether or not participation in it means housing associations are complicit in the demise of social housing. There are suggestions that a change of government might herald a reorientation of housing policy. And there are growing concerns about the levels of gearing in the owner occupied sector and the impact that increased interest rates, as and when they arrive, are going to have on household budgets.

But perhaps the most interesting and important element of the debate is the discussion over housing supply. [Read more...]

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The government is solving the housing crisis, apparently

frameOn Thursday Kris Hopkins, the Housing Minister, published a post at the Spectator entitled This government is solving Britain’s homes crisis. The post was designed to coincide with the publication of statistics about the unlovely, and largely unloved, Help to Buy scheme. When I saw the post I was intrigued. It seemed, superficially, to be making a rather implausible claim. I anticipated an orgy of spin and statistical chicanery.

As it turns out I wasn’t too far off the mark. [Read more...]

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Housing pathology and paralysis

A few weeks ago Janan Ganesh in the FT described the UK housing market as an ‘institutionalised pathology’. The problems that the housing market is causing for the British economic and political system seemingly become ever more apparent by the day.

There is an increasingly strong coalition of opinion uniting behind the sort of radical action that is needed on housing supply to deal with the problems. The recent intervention by KPMG/Shelter, or the RSA, or today at the BBC website all set out prescriptions that bear more than a family resemblance.

And as a similar message emerges from different quarters it throws into sharper relief the timidity and short-term self-interest of the political class. The political economy of housing may have led politicians to a predictable level of inactivity. It may be that it is only if and when the private renter vote is effectively mobilised that change will occur. Perhaps only then will a government be brave enough to take on the countryside preservation lobby. But the problems intensify in the meantime. [Read more...]

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