House price inflation
Two very illuminating headlines, side by side, on the Mail web site.
In 1970 the Idiot Ted Heath and his Chancellor Tony Barber introduced a 70% government grant payable to owners of old (and not so old) houses to allow them to modernise their kitchens and bathrooms.
The inevitable result of this policy was a sharp increase in the cost of building materials followed by a rapid rise in the cost of said modernisation works.
This created a subsequent explosion in house price inflation – the early seventies was when the word gazumping entered our language.
Not long afterwards another university graduate, educated way beyond her intelligence, decided to sell off the Council houses, at substantial discounts, to the sitting tenants at the same time as ending any further Council house building.
This scheme was not extended to tenants of privately rented accommodation. I wonder why?
In time most of these ex-Council houses were sold for a very tidy profit to the growing numbers of ‘buy to let’ landlords who then took advantage of Maggie’s newly introduced Government wheeze known as Housing Benefit whereby people who could not afford to get on the ‘housing ladder’ had their rents paid for them directly to the aforementioned ‘buy to let’ landlords. (There were no more Council houses, remember)
Guess what that did to rents? And to property values?
(Among those forced permanently into the rental market were the people who were already renting but left at a disadvantage because they were not renting from the Council. See above.)
And still the Government comes up with even more daft ideas to give money to house owners and landlords to ‘get the economy moving.’
It is clear to me that politicians become politicians because they are too stupid to get a proper job; susidising non productive home ownership at the same time as taxing wealth production (work, in other words) is one of the main reasons this country is in a state of discumbuggeration!
If you still need to have it explained to you, in words of one syllable ask Mark Wadsworth or Robin Smith.
Filed under: JD, Politics & economics, Society & human issues
Absolutely, JD and then comes non-affordability. Anything the govt touches, for whatever altruistic reason, turns to ashes and skews the society.
About the only two areas I can see where they must be allowed is in defence of the realm and care for the disabled [the genuine cases].
As far as children go, this will not be agreed by many, I think there can be an incentive to families with one father, one mother and children, payable on the first child only.
The hardest thing to explain to anyone is that they don’t own anything. Effectively they are renting their house until the last mortgage payment is made. At any time during the ‘ownership’ the mortgage company can take the home off you if you are unable to pay the rent for a couple of months. It can be sold from under you regardless of how much ‘money’ you’ve supposedly got invested in it. They decide how much to sell if for, usually at auction, and any shortfall you’re liable for.
There was an item on local television where a man had his house bought under compulsory purchase. It was demolished and the price paid in compensation was significantly less than the mortgage. Leaving him with a debt and no asset to show for it.
Even if you have no mortgage the State can confiscate your ‘asset’ in lieu of other monies owing. Just don’t pay your Council Tax and see exactly what’s yours and what belongs to Them.
Cars are the same. The finance company owns it or even if you paid for it outright you are only the registered keeper as far as the Government is concerned. All assets can be confiscated by the banks and the PTB.
Which tells us what? That state interference causes chaos? Von Mises was telling us that almost a hundred years ago to no avail. The truth is if you vote for fascists/socialists you get
fascism with all the corruption, instability, asset bubbles etc. that that involves. The people to blame are the voters.
” This scheme was not extended to tenants of privately rented accommodation. I wonder why?”
Well, maybe for two reasons. Council houses were owned by the public. Their elected representatives may dispose of them as they wish. Private property is private property and taking it away by force is immoral.
Secondly to implement such a policy would end the private rented sector overnight, as no longer economically viable. Housing stock would be left to rot for the same reason. There would consequently be an enormous increase in the number of homeless. Can they come and stay at your house?
Well it hasn’t quite had the effect they thought it would if this article is anything to go by. Fewer people own their own home now than they did 25 years ago when the population was also a lot less. And probably more people have since moved abroad. Immigrants are unlikely to have taken up the slack either. More people now renting all those buy to lets.
http://www.dailymail.co.uk/news/article-2275386/Fewer-home-owners-25-years-ago-Millions-frozen-property-market-cost-buying-home-soars.html#axzz2JfD9Mdtd
There are supposed to be over 700,000 empty homes in the UK so clearly there’s not as much of a housing shortage as we might presume. Though that may well include second homes which are only occupied for a few weeks or months of the year.
Even so called low energy housing that is supposed to make living costs cheaper isn’t affordable. One estate in Bradford has made the headlines this week. Supposed to be a flagship project for the best of eco-friendly building with solar panels and a community biomass unit for heating. All supported by grants from taxpayers. Now the homeowners that were conned by the idea of lower energy costs are finding that their electricity bills are more than double what they were told. Between £500-950 a quarter!
There was rampant inflation at the time anyway. So it is not logical to blame that on Heath’s scheme and it went on much longer. If you want a single trigger you are probably out of luck, but try Wilson’s 67 devaluation. Heath’s| scheme may have had increased the cost of the jobs carried out under the scheme in the same way as a car insurance repair often seems higher than expected. Extending the “right to buy” to private landlords would essentially mass forced compulsory purchase. If you wonder why not.
Most of my generation have been completely priced out. I visit senior executives in houses built for farm laborers. This is progress?
Close to the top of the list of priorities, this one.