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BankruptcyNews
Junior Member
358 Posts |
 Posted - 11 May 2007 : 13:49:11
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The real rate rise victims
Our grossly distorted housing market is creating an increasingly detatched underclass
Today's expected interest rate rise will cause considerable pain among the mortgage holders of middle England. But with growing numbers being seduced into unsustainable levels of borrowing, repossessions - now at levels last seen in 1992 - have for some time been swelling the ranks of those unable to buy their own home. This increasingly detached underclass are the real victims of our dysfunctional housing market.
Today, a million children live in overcrowded, rundown, damp or dangerous housing. The number of homeless people in Britain has risen to 391,000; and across the UK 93,000 families are living in temporary accommodation, twice the number when Labour came to power. The average price paid by first-time buyers has doubled in five years. House prices are now beyond the reach of first-time buyers in 93% of towns, up from 37% in 2001. A decent and secure home is crucial to having a reasonable chance in life. The chronic shortage of affordable housing is a moral issue: if the market can't address it then the state must.
With more households being created than ever before, 220,000 homes must be built every year just to contain the crisis. Noises from Whitehall suggest Gordon Brown plans to prioritise housing, but there is little sign the Treasury is prepared to address the underlying economic causes of polarisation in the housing market, or take the steps necessary to get those houses built.
As communities secretary Ruth Kelly argued recently, social housing must work better as a platform for social and economic mobility, but there is no coherent strategy to match that vision. Current initiatives, such as shared equity schemes, may increase the numbers with a nominal stake in their own home, but they offer no long-term solution. And proposals for a planning gain supplement to be levied on private developers seem more likely to act as a disincentive to building.
Policymaking should acknowledge the underlying causes of land-value-driven increases in house prices. These are inevitable in a successful economy but exacerbated by the shortage of housing supply, by planning restrictions that limit the quantity of building land, by the disproportionate concentration of investment in the southeast, and by the excessive incomes of top earners.
Punitive taxes should be imposed on the unearned gains of private landlords who keep properties empty, more than 500,000 in the UK. This would oblige them to release those homes back into the market, increasing supply and thereby cutting buying and renting costs. Similar taxes should be imposed on the owners of second homes who leave them empty much of the year.
Changes to planning regulations should also be fast-tracked. There's no need to concrete over our entire rural heritage, but more land must be made available for housebuilding, and development is crucial to the survival of rural communities. Planning law must also have a regional bias - the emphasis on the Thames Gateway (Tower Bridge in London to Tilbury) will put local infrastructure under strain and further deepen the north-south divide.
Finally, measures need to be taken to curb excessive City bonuses: 4,000 individuals received bonuses in excess of £1m last year, with one report suggesting two-thirds of the £8.8bn paid out is likely to be spent on housing, with its related social and economic impact.
These measures need have no negative impact on the growth and stability of the economy, but they would address the calamitous failure to ensure everyone has the chance to secure for themselves a permanent, decent home in a desirable location.
SOURCE: Mark Braund
Thursday May 10, 2007
The Guardian
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The real rate rise victims
