FAO Big Hitters: How are you solving the housing crisis?

PCA – if you want to use immigration in your calculations you also need to factor in the low UK birthrates – ie some of that immigration goes to stop the population shinking which it would do due to falling birthrates

Depends really. Do you want fairness or people in houses? Fairness doesn’t screw landlords, jealousy does that.

I would enforce a low value house building scheme. No one needs two bathrooms. 2 kids means a room for parents and another for two kids. Why are three bedrooms needed? About the time they leave primary school things should mean that they move up to a bigger house freeing up the lower value one.

I would stop house extensions  as well . They turn a perfectly good 2 bedroom house like mine into a 4 bedroom, 2 bathroom place like next doors now is.

I would also stop relocation to the countryside which pushes up rural housing prices.

Of course an element of STW won’t like this but how about encouraging/forcing saving? I know two newly qualified teachers. Good wages really. One is buying a house, one can’t afford to. The former spends nowt, has a cheap old car and no mobile. The latter has a two year old car and new top spec I phone and  goes abroad at every opportunity. Won’t completely solve the problem but one person is doing their best and the other moans and blames society.

Fairness doesn’t screw landlords, jealousy does that.

there is a good few landlords that make a fortune out of screwing tenants.  Insecurity is IMO the worst aspect but gouging rentals is a real thing.  Our housing market serves to transfer money from the poor to the rich

Rent controls, taxation on profits and high enforced standards for rental property are needed and would make it less lucrative

“Every one of them is 3 and 4 bedroom detatched ‘Executive’ houses with starting prices that are absolutely out of the reach of all but a tiny minority of very comfortably off people. ‘Affordable’ doesn’t even enter into it.
So houses are being built that will do absolutely nothing to alieviate the housing crisis. This needs to stop”

Actually, it does help the housing crisis. The people buying into 4/5 bed houses are coming from smaller houses (or possibly similar, cheaper 4/5 bed houses), the people who buy their old houses are coming from 2/3 bed houses, the 2/3 bed are bought by those who had 1/2/flats/houses, so the flats/1 or 2 bed houses are now on the market for first time buyers or those who want a small house.
That there are not enough small houses, or new affordable houses, is a separate thing. Encouragment is needed to build smaller houses, but the big house builders make so much from the sale of 10x 4/5 bed houses compared to 20x 2 bed houses that there is no incentive for them to build the smaller houses. For forcing them, the Planners have to insist that only 2 bed houses are built, but then the House Builders wont bother, and just leave that land vacant while they build their 4/5 beds in another County. That will do nothing for the housing crisis.
Tax breaks for builders to build 1/2 beds would be good, but quite open to abuse I’d think. No idea how to achieve it, thats why we elect Governments, but their past record isnt good, and I’m not convinced it’ll change with this Government, though I hope it will. (loads more work for me! Yes!)

PCA – if you want to use immigration in your calculations you also need to factor in the low UK birthrates – ie some of that immigration goes to stop the population shinking which it would do due to falling birthrates

That is an entirely fair point, true. However, net immigration is far, far higher than merely offsetting the slow decline in population as a result of reduced fertility.

The UK’s population would grow from 67 million in 2021 to 77 million in 2046, and that net migration would account for 92% of this growth.

https://migrationobservatory.ox.ac.uk/resources/briefings/the-impact-of-migration-on-uk-population-growth/

I have no idea how to solve the issues but they do concern me. I earn what I think is a very good wage at just below £50k per year. However, Mrs F has a zero hour contract and is bank staff. We live in a 2 bed house in Macclesfield. Funk Jr will be 12 in a couple of years and will no longer be able to share a room with Funkette. There’s no way of us affording a 3 bed house. The jump in price combined with my age makes it insurmountable. **** knows what we’re going to do other than me and Mrs F using the living room as a bedroom.

People always say “move somewhere cheaper” the problems are the kids are settled at school, Mrs F is a family person and hers live locally, anywhere cheaper is further from my work. Just means spending more on travel. Makes me wonder why I bother working myself in to an early grave!

The problem with “getting rid” of holiday homes is that they are in tourist locations which is not where 95% of the working population want to live as the jobs they want are not there

Yes – sadly the simple answers are usually the wrong answers: when solving a deep seated problem like housing it is important to consider the unintended consequences.

Numpty question How does the CGT work on properties now and would we envisage it being the same for main residences? I don’t know, not a circle i move in, beyond the odd episode of Homes under the fookin’ Hammer

What about the developers, buy a shitheap for x, invest y, sell for z. Profit = z-(x+y); do they pay tax on that or tax on the z-x? I assume the latter, otherwise no-one develops houses.

On primary residences, particularly long term ones. Would we envisage a discount for LT residences, down to CGT free at some point? My dad bought his house in 1964 for £6,000, it’s now worth several hundred thousand (about 450 fwiw, albeit he has extended twice and of course invested in it over the years, plus remortgaged to finance a business so he is a long way from 444k in profit) I’m assuming if he was to sell he wouldn’t pay tax on 444k?

(Reality is that like my Mum he’ll either leave it in an ambulance never to return or in a box – but would we want IHT on it instead of CGT)

Re affordable homes, what I’ve seen in our city is older larger family homes get turned into crappy bedsits and student lets (though it has got better as the uni has started building dedicated blocks to cash in on student rent)

Any flats that are purpose built seem to be super deluxe apartments with matching price tags, massive example of yet more swanky apartments being built by the council in the city centre as part of a brownfield development beset with loads of problems as developers pull out, presumabely as they simply aren’t making enough money

I know the 1960s style blocks of flats are eyesores, but that is the sort of thing thats needed.  Stacked high, simple affordable starter homes.  Keep the 3-4 bed family homes as family homes so there are more available and stop them being converted.

I honestly think essential things in life need to be provided for people not for profit.  Want more ?  sure pay more.  The current system is shocking.

I don’t think the fixation on being a landlord being a bad thing is a useful one or correct viewpoint. When our last government introduced rules to make being a private landlord more difficult it lead to a sell off of rental properties, the then inevitable shortage of rental properties coupled with supply and demand lead to the increase in rents. At the moment it’s a landlords market.

People in the UK seem to think you have to own your own house, but that requires saving up for a deposit and meeting the banks criteria for lending. Neither of which are easy for a considerable percentage of the population or requires a length of time to save for where lower rents would greatly help.

If government were to make it easier to be a (long term) landlord then this would result in more available rental properties and help swing the supply and demand curve towards lower rents and a renters market. That in turn would assist with saving a deposit should people wish to aim to purchase.

More properties still need to be built to accommodate the growing population but to achieve control of the housing market (both buying/selling and rental) there need to be competitive options so if one runs haywire then there is choice of the other which will let the market better self regulate

I think for cgt to work you’d have to value every house in the country on a given date (tricky, but not impossible) and count it as gains as of x date. There’s not necessarily a need to trend it to zero – in doing this if your house went from (say) £200k now to £300k in 20 years, there’s tax due on £100k of it – typically you can deduct costs from improving it, but not from maintenance (ie extension counts, new roof/kitchen doesn’t).

the idea behind the approach is that if you (and all your competition) only have £280k of equity to play with (if you whacked a 20% tax on the £100k profit) the next house you buy would simply only be worth £280k – so instead of the extra £20k being pushed up the ladder with house prices into some OAPs hand-me-downs its taxed out and re-invested in the economy.

if you were sensible you’d take a higher percentage of gains compared to base inflation – so say 60% of profit after RPI? This means if everythings going up the house doesn’t get suckered

I don’t think anyone actually does this on primary residences, so no idea if it would actually work. There’s probably some unintended consiquence we’re missing that’d trip us all up

I don’t think the fixation on being a landlord being a bad thing is a useful one or correct viewpoint. When our last government introduced rules to make being a private landlord more difficult it lead to a sell off of rental properties, the then inevitable shortage of rental properties coupled with supply and demand lead to the increase in rents. At the moment it’s a landlords market.

I don’t think that’s true. When the landlord sells up some FTB buys the property, thus reducing both the supply (landlord houses) and demand (tenants) by 1. The same is also true the other way around – if more landlords buy houses it doesn’t shrink the overall housing stock, it just reduces the stock available to purchase.

The problem is not with who owns the stock, its with how much stock there is

I’m assuming if he was to sell he wouldn’t pay tax on 444k?

A great example of how a simple solution “CGT on main residences” becomes complex and can have unintended consequences.

In principle your dad will have made about £400k capital gains on his house (allowing for purchase cost and cost of improvements) so should pay 20% tax on it. (Or even 40% tax.)

But should there be an annual untaxed CGT exemption on primary residences? If so should it be the same in places where prices rise faster vs places with a stagnant market?   How do you allow for costs of improvements, especially if they were a long time ago, or a lot of the labour was you as a DIY house extender rather than paying a builder to do the same thing?

And of course if the tax is seen as at all punitive, a Tory promise to abolish it would pretty much guarantee them a return to power at the next election.

Problems like this may not be insoluble, but they make an apparently simple solution very complex in practice.

Yes but purchasing has more significant barriers to entry than renting. Where/how are these first time buyers going to achieve a deposit (edit: without first renting while they save)? Deposit free mortgages are likely to drive up the lower end of the market

I know the 1960s style blocks of flats are eyesores, but that is the sort of thing thats needed. Stacked high, simple affordable starter homes. Keep the 3-4 bed family homes as family homes so there are more available and stop them being converted.

People generally want houses not flats and its perfectly possible to build affordabilish houses.  Again Edinburgh has done a lot of this in the last few years with both Niddrie and the worst bits of Granton having the towers knocked down and small houses built instead.  Mixed developments and housing associations IIRC

People generally want houses not flats and its perfectly possible to build affordabilish houses. 

not without concreting over the green belt.

Maybe, maybe not.  But to get affordable housing you need to force developers to build decent, future proofed starter homes in large numbers, with decent quality, energy efficiengy and yes vehicel charging etc…

You’re also going to need to make property less attractive as an investment via taxation of multiple home ownership , and to try to limit price growth, again via taxation.  Neither of these are going to be popular with a certain group of the population, but without you’ve no hope.

Out of curiosity what’s the logic of refusing large bank loans to people to fix this, bar starving the market of buyers?

• Use it or lose it planning permission to stop land banking
• Encourage medium density building eg. 3-4 bed apartments in mansion blocks near transport hubs
• End automatic right to buy and resource councils to build social housing
• Encourage eg. empty space above shops to be repurposed – if people are living in town centres they will at least in theory be more attractive places.

nope – the issue with houses is geometry. For the numbers needed to catch up with a century of underbuilding, at a typical suburban density you are going to need a looooooooot of space.

so build at urban levels of space.  Hundreds of houses replaced the Hulme crescents in Manchester. Hundreds built in Edinburgh.  Yes they are small houses with handkerchief gardens but its perfectly possible.  Homes for 160 000 IIRC built on brownfield sites in Edinburgh with a lot of  houses not flats.  I don’t think ( but someone here might know) that they didn’t lose many dwellings in either case

Edinburgh also has suburban sprawl on greenfield sites – they are a much larger footprint per house as they are bigger houses with garages and gardens

People generally want houses not flats and its perfectly possible to build affordabilish houses.

Houses will always be more expensive than flats, and there’s really no reason for most people in cities to have a house instead of a flat.

If you look at many european cities they have many residential blocks with much higher density than housing, even tiny ones can achieve.

Sure many want a house later in life, especially as they settle with partners / pets / kids etc… but those in the early careers a relative nice one bed flat in the city centre is perfect.  Its what I wanted as a grad in my first decent paying job, but no chance i could afford it, so I was stuck renting rooms from landlords in shared houses, paying their mortgages until I met my now wife and we clubbed together to afford our first house after years of saving.  We missed out on the free money equity boom many of our friends surfed to financial security

In my experience so far rent in my area has always been at, or more than the mortgage would cost to buy the place.  Potentially with higher interest rates that may change as mortgages make a big jump, however I think it will stay larger the same as the landlord will just pass on the cost to the renter and rents will jump in line with increasing mortgages.

Every one of them is 3 and 4 bedroom detatched ‘Executive’ houses with starting prices that are absolutely out of the reach of all but a tiny minority

Don’t forget developers when providing a small percentage of so called affordable housing did so with tiny units, bedsits and the like, which were still unaffordable. Not suitable for anything other then single occupants/couples and just went into rental portfolios of the over 50’s who could afford them.

Rebuild the government housing stock.

It really is this. Everything else is just pen pushing (mostly).

Oh, and Reeves the private sector are not gong to do it. And you’re sending mixed signals about who is going to do it.

Jesus, it really shouldn’t be hard to learn from ideological Thatcherite mistakes or shouldn’t be.

I’m curious what interest rates do to people – very soon as they come off medium term fixes.

In my experience so far rent in my area has always been at, or more than the mortgage would cost to buy the place.

thats the norm for sure

Fairness doesn’t screw landlords, jealousy does that.

there is a good few landlords that make a fortune out of screwing tenants.

As someone who’s a landlord I’d personally be in favour of rent caps. The post Truss behaviour of Landlords has been disgusting. I haven’t increased the rent since before Lockdown (in fact as lockdown started – faced with the uncertainty of what that was going to mean I gave the tenants a free month to help them face that). I’ve not increased the rent and I’ve been clear that the rent won’t increase. Its a house to me, its a home to them to enjoy in peace and privacy.

A rent cap would do everyone a favour, not just tenants. If landlords can’t charge fair rents they either can’t afford to be, or don’t deserve to e landlords. Landlords that are borrowing to rent and have to pass the cost of their borrowing to the tenants (or just choose to) are just arseholes.  Landlords rent houses they own, not houses they are buying, interest rates are an irrelavance to the situation because tenants aren’t borrowing money.  The landlords should just ell up and **** off, they won’t be missed.

Last month we had to reorganise the tenancy agreement following a relationship breakdown. The tenant was a bit slow responding to some of the paperwork so the agent told me that they could give them two weeks to quit the tenancy and they’d find me a tenant who would pay more.

I told them I’d keep the, tenant, keep the rent as it is, and employ a cheaper agent and gave them 2 weeks notice to quit the management contact.

Make a percentage of all newbuilds not allowed to be rented out.

Maybe, if you have enough capital (pro footballer, etc), you can only rent properties. The money from the rent could be ploughed back into the local community.

Brownfield sites require decontamination. Cultivating the hemp plant on brownfield sites may be the most effective way to decontaminate them..

Instead of the UK’s universities investing in the arms industry, invest it in land, and run some studies.

Theres still a north/ south divide in the uk, and taking some heat out of the south is a matter of priority.

Id have a limit to population density.

Too overcrowded? Move north.

But where?

Loads of empty moorland. Realistically, we need to build on areas that won’t flood easily, and that won’t impinge on agriculture.

Cut/gate. Pop. 40,000?

As long as you’re not trying to plan an equivalent number of cars in to the equation, anything’s possible.

Most of the agricultural fields in the uk, look utterly shagged, tbh.

Too much emphasis on meat and dairy production. Quantity over quality.

Incentivise farmers to grow hemp (most nutritious food?), and the other parts of the plant can go into building and insulation materials.

Henry viii had no qualms, selling off  the monasteries.

Most of the highland estates could be transferred back into public ownership, to accommodate the cities less fortunate and encourage them to cultivate hemp.

Seeing that most of these estates are part of someone’s hedge fund, how do you redistribute them, without the markets going berserk?

It has to be done globally, in the name of child welfare.

rent in my area has always been at, or more than the mortgage would cost to buy the place.

If rent were less than the mortgage then it probably wouldn’t be worth the landlord renting it out.

depends how long you have owned it.  Bought it 20 years ago your mortgage on it now is probably a lot less that it would be if you bought it now.

Political decisions have delivered the private sector effectively providing public housing (terraced house and flats for rent) in a similar fashion to how it was pre-war/Victorian era. You’d have thought we had learnt from the resultant widespread poverty, ill-health and exploitation, which working class people of the time objected to and demanded change! It was begrudgingly adjusted post-war up until the 70’s, winding down in the 80’s and into reverse from the 90’s to date.

If rent were less than the mortgage then it probably wouldn’t be worth the landlord renting it out.

Why is the landlord paying a mortgage?

You’d have thought we had learnt from the resultant widespread poverty, ill-health and exploitation, which working class people of the time objected to and demanded change!

Something that has changed since the time when public housing and a national health service were introduced is that at the time of that introduction health and housing were the same government department and the issues were seen as two sides of the the same coin. At the time poor housing was a leading cause of ill health so the NHS was there to cure those illnesses  but housing was a tool for  preventing them

We’ve since disconnected those two government departments. One of the major strains on the NHS isn’t so much ill and injured people arriving at hospitals and people being unable to leave again because their housing isn’t suitable for them to be able to return.

When I was admitted to hospital a few years ago half the questions when I was being admitted weren’t about me – my health and history – but my house. Are the stairs to get to the front door, is there a downstairs bathroom and so on – they were assessing my needs on on admission and the criteria required for me to be able to get back out again.

So theres something more than just the number of houses – the houses have to be planned and designed for whole life of the people who are going to live in them, the ups and the downs. One of the reasons you may have to wait longer for an ambulance, or at A&E or wait longer for a surgical appointment is because not only have we not built enough houses, but we haven’t built enough houses with downstairs loos and accessible front doors.

BTL mortgages have affordability checks that mean your (interest only) payments can’t be more than something like 70% of the rental income. With current interest rates that limits a landlord from borrowing more than around 60% of the value of the property anyway.

On the continent there are plenty of large, family apartments. For them location beats a garden. It’s only us who have the obsession with 4 walls and a roof that are all yours. A 2 or 3 bed flat is fine to make up affordable housing stock

so creating ghettos?  T^hat worked really well with the post war tower blocks of council housing.

In Canada* they’ve introduced an empty homes tax, which is 3% of the property value, per annum.  To avoid paying it, you have to have long term renters (short term is banned).

that’s had no effect on house pricing though. Its still staggeringly unaffordable.
Mostly of the foreign speculation money in these empty BC lower mainland homes doesn’t event register on their balance sheet

Override town planners and nimby crap

So you’ll be fine with developers bulldozing your favourite riding spots, or environmentally sensitive areas to build a bunch of flimsy, cheaply built boxes, just to satisfy government numbers, then?

There are loads of houses being built along the A350 in Chippenham at the moment – the land they’re using is productive farmland; in one place, the farmer is still working the field. :scratch:

Oh, and town planners are far more familiar with the local needs, and where the land is that’s most suitable, than some twonk in an office in a city 100 miles away. Which is the actual distance from here to London. B-)

T^hat worked really well with the post war tower blocks of council housing

The majority of the council housing was decent and to at the time unprecedented standards of size and provision of outdoor space. As is usual in this country, it was later interpreted differently, intentionally undermined, subjected to endless budget cuts and in some areas there was an element of ****-em it’s for poor scumbags so any old shit will do!

So you’ll be fine with developers bulldozing your favourite riding spots, or environmentally sensitive areas to build a bunch of flimsy, cheaply built boxes, just to satisfy government numbers, then?

Bit of a leap from what I said there but whatever floats your boat.  Of course not environmentally sensitive areas and why add flimsy, cheaply built boxes as I haven’t suggested that at all?

Yes town planners know the local needs but that doesn’t stop planning offices being deliberately resistant to things and nimby people can be resistant to stuff just because.

You give the town planners the instruction that n,000 houses are required in their area and leave them come up with the best place(s) and most suitable houses to meet the needs of the people in the area.  If they fail to deliver on that then override them.

Why is the landlord paying a mortgage?

1) because not many investors are paying 100% cash for rental properties

2) because even if they’re not paying mortgages, if rent is below the amount the mortgage would be, it’s probably a bad investment.

An BTL mortgage is about 5% atm and savings pays about 5% too. If the rent isn’t producing a 5% return, then I’d be better off selling the property (or not buying the property) and just sticking the money in a savings account. Actually considering the fact the landlord needs to pay tax and there are some costs associated with being a landlord and they want a profit, it needs to be a chunk above the amount required just to pay the mortgage.

Yes, there are exceptions (there’s a certain stickiness, you can get people that don’t consider the cost of capital esp if they inherited the property or have an emotional attachment to it, or if property prices are rising so quickly that it’s worth suffering a short term loss) but for the market as a whole, rents should always be higher than mortgage payments, otherwise why would the landlord bother?

I’m not sure I have anything useful to add but I have been wondering lately if this kind of conundrum isn’t something that AI will be good for. Us humans don’t seem very good at ‘gaming out’ the plus’s/minus’s of decisions and those ripples in the pond keep catching us out. If AI decisions are less influenced by politics it might be good.

And it would be the ultimate Big Hitter…

As an aside, I am 53 with 2 BTL’s (was 3). It was never the plan but we rolled with opportunities. We are the opposite to slum landlords, like TJ we charge way too little and are just happy to have nice tenants. We also chose not to buy a holiday home so as not to be part of the problem. Instead we visit these places in our tatty old campervan.

We will roll with whatever comes next, if that means more CGT then so be it, we will have had plenty of rent over the years.