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Monday, 22 July, 2002, 09:49 GMT 10:49 UK
How can housing be made affordable?
Deputy Prime Minister John Prescott has revealed detailed plans for a £1.4bn house-building programme in the south-east of England.
The plans could lead to 200,000 new homes being built in the region over the next five to 10 years, including thousands of subsidised properties for nurses, teachers and other key workers. The housing and planning budget is due to be increased from £3.3bn to £4.7bn over the next three years. Continued rises in house prices is hampering efforts to recruit public service staff in some areas, especially London and south-east England. Will the extra money make a difference? What can be done to provide more affordable housing?
This Talking Point was suggested by Liz, UK:
"Although welcome news for nurses and teachers etc, what can be done to help all the rest of the young workforce who are vastly outpriced of the housing market? Do they deserve a helping hand as well?"
Mark Schofield, France
What about encouraging the regeneration of the North? It's at least as pleasant as the South, has more room etc. Universities such as UMIST and Leeds have good reputations, and there's a wealth of talent north of Watford - so why not encourage companies to move there?
The government should put
aside a couple of billion pounds
into a special fund. From that
fund, those in essential jobs, e.g.
firemen, should be allowed to
take a mortgage. Interest on the
loan should be set at just
slightly ahead of inflation. That
way the lower paid worker would
save a fortune and the taxpayer makes a profit. The only
ones to lose would be the banks,
who are making obscene profits
anyway.
Jane, Wales, UK
A good start Mr Prescott would be for government ministers to not have grace and favour apartments AND also be renting another property from their union paymasters!
Take a walk down any high street and look up above the shops. What do you see? Empty flats or flats being used by shopkeepers for storage. There must be at least 30 in the small town where I live. The owners of such flats should have a huge "antisocial usage" tax put on them unless they rent them out.
Making housing "more affordable" simply means that you are getting someone else to pay the costs of creating the new housing rather than those who are buying / living in it. Someone has to pay for it. It's not making it more affordable in the big scheme of things. Its just another method of redistributing taxpayers money which this government seems all too adept at doing.
The more subsistence you provide, the more you will fuel the prices. London weighting has only helped increase the price of property, the prices increase proportionately to income. Prices will only fall when companies can no longer get or afford staff and are forced to move further north where there are more potential employees. Prescott's plan to build housing until there is nobody living north of Birmingham is as half-baked as all the rest of his ideas. The real problems he should be looking at is why business wants to locate in London and how to persuade (or maybe drive) it to more deprived areas.
Matthew, USA
We are first-time buyers but property prices make our search for our own home impossible. Anything coming on the market within our price range is considered a bargain to some rich investor who snaps it up and is willing to outbid over the asking price to get what they want.
The main problem is not the lack of
housing in the south east, the root
cause is due to the fact that most
jobs have migrated down there from
other areas of the UK. In these days
of practical teleworking and virtual
meetings there is no reason why
jobs, especially government jobs
can be devolved to the rest of the UK.
Then you could help with the problems
of over supply in housing we are seeing
in parts of the North.
Dare I mention the 'great unmentionable'? Immigration. According to Home Office statistics net migration is running at record levels, with the additional problem of finding houses for asylum seeker. Inevitably this will put pressure on new housing irrespective of one's views on this sensitive issue.
Cliff Whalley, UK
Please convince me that low-cost housing is not just more spin. It is not just an excuse to start building on the green belt. We have not been given much detail on these plans and I don't even know how these developments are going to be made 'more affordable', nor how they are going to be kept exclusively for key workers.
The property chain is already crumbling. I already know of 4 people that have had to pull out of deals because they cannot sell their house quickly enough or the next people in the chain cannot move quick enough. It would be interesting to see a graph of average number of times it takes to sell a property to see how the market is really performing
D Williams, UK
Demand exceeding supply has caused property prices to rise. Too many people, not enough houses. The answer is not to build more houses, that only creates a greater need for public services and associated workers. What we need to do is limit the total population, and prevent gravitation to one area.
Why not pull down all the bungalows that were built in the 60's, and replace them with proper houses. This would create more capacity and rid the country of these architectural monstrosities.
I'm in the process of emigrating to Australia, which means me having to research property in Sydney, my chosen destination. Funnily, 1 or 2 bed flats are about $350,000, about £150,000, even in the suburbs. High property prices are not just a London thing - when will people realise that it's location that makes the difference, and millions of people wanting to be crammed into a city will inevitably push up demand and therefore prices.
Thirty years ago governments not only saw it as their responsibility to build affordable housing where it was needed but also made it their business to interfere with the market by relocating civil servants and subsidising regional development outside London. This took pressure off the south east and helped to stimulate local economies where they had stalled because of the decline of traditional industries. The abandonment of this policy by Thatcher and ALL her successors has led to a situation where whole estates of perfectly good housing lie empty in some parts of the UK because there are no jobs while employers in the south east cannot fill vacancies because there is insufficient housing. A ridiculous situation!
Having seen houses and flats in London stayed empty for months and even a year or two, the high price of housing in London is no surprise. No one has mentioned the vast number of corporate houses and flats in London. No homeowner is going to sell their flat at a reasonable price as long as a corporate buyer offers twice as much or more. Of course when the corporate buyer no longer needs the flat, the price doesn't come down to 'market' levels. While it's nice to talk about decentralising jobs, no other city in the UK has the infrastructure that London has.
Why not follow the ideas of other European countries? Building cheap apartment blocks (but not high rises - just 4 or 5 floors high) with a communal garden spot on the roof. It's what they do in places like Italy. Why not here? Buying houses, although a preferred option by many is simply getting out of the reach of low to mid earners. Apartment building may only be the answer to create more available and cheap housing alternative.
I am 25 and only now am I able to move out - that's due to an inheritance I have received. If I didn't have that, I couldn't afford a mortgage. It is not that I choose to live in a very high priced area - I have lived in the area since I was 6, and I want to stay near my family, friends and job. The reason I don't rent is that it is cheaper to have a mortgage than some of the rents around here. When I see where my taxes go I wonder why I didn't get pregnant at 17 - at least I'd have my own house and lots of money from the state.
Graham, Sheffield, UK
Many people on this site are condoning people who have done well and are able to buy multiple houses.
Already if you own a second house you pay more tax on it, you do not get the financial advantages of buying a home to live in, you do not get the best mortgage rates.
What should be done is improved links into cities. Living outside cities gives you the space you cannot afford in cities.
We are tackling this completely the wrong way. To take pressure off house prices and green field sites in the South East there should be a massive programme to encourage employers to re-locate out of London. With IT and Video links there is really no need to be there so why have an overheating south east and unemployment blackspots elsewhere. What is more incredible is that no one in Government (most of whom have constituencies in the North or Midlands) has suggested it. Probably frightened of a back lash from the London based media, I guess.
Stamp duty/any tax should be raised on second properties. No-one needs 2 homes especially when ordinary people cannot afford one.
Christine, UK
Housing is expensive only in areas where it is in high demand, this is due mainly to the fact that people are living alone more than ever before, I imagine a huge number of houses and flats that were deigned to hold a family of four or more are actually owned by a single person, The craze for living alone has also increased the buy to let market, which has pushed prices even higher.
Firstly you have to realise that the housing crisis is based on greed and greed alone. People by their nature will try and get as much as they can from someone else. You will not hear sellers complaining about the housing rip-off that is currently happening. The solution is simple, we already have "Bands" for council tax. We should have house price "bands". These bands should be based on what the person paid to buy the house and simply adding inflation to the price. This would stop greedy developers buying up property for profit, It would stop those annoying "weekenders" from decimating villages and it would ensure that the people who really needed to live there did.
It's surprising that it took the government such a long time to act. They should have been devising initiatives and exploring the housing situation as soon as they got into office. Only now, when their 'key workers' and 'key voters' are taking ever increasing mortgage debts, are we presented with this increase.
NK, UK
Decentralise the government power structure from London and offer incentives to corporations to locate their headquarters away from the South East.
Us British have become victims of our aspirations and our own particular snobberies. The vast majority of British people associate stature with property ownership and have for decades, scorned council housing as something for people of a lower class or status. This is what lies beneath our current housing issues and this is why it will prove to be an insoluble problem for Britain.
Eileen, UK
Simple, move most of the civil service out of London. This would free up not only a large number of houses in the South East but the government could sell a lot of very expensive buildings for other purposes such as flats.
If the government is to build affordable homes at around £60,000 then those buyers must not be allowed to sell within a certain period of time at a profit that exceeds the current levels of inflation. This would then hopefully maintain a certain number of houses at an affordable level and deter the "get rich quick" speculators that have contributed to the spiralling house prices in the first place.
The UK has one of the best telecoms infrastructures in Western Europe. We should utilise this more by teleworking. My company is encouraging employees to work from home by installing ADSL or ISDN in their homes, along with the computing equipment. I currently work in London, commuting in from Surrey every day. I'm in the process of selling my small 2 bed flat and buying a 4 bed detached house in Cumbria, and will have about twenty grand spare after I've paid for my new home. If more of the slightly higher earners in London telecommuted from other parts of the country, then house prices in the South East would start to fall and those who NEED to be located in London/SE could afford to live there.
Bob, UK
Expensive, out of reach housing is not exclusive to the south east. Where I live houses are being bought by parents of students attending the university and when their children leave the area they keep them on to rent to the next batch of students. Local first time buyers have no chance as the average wage must be around £13,000! Ironically only public sector workers can afford a mortgage around here!
Why don't we go back to the basic idea of mortgages being based on one salary? House prices only grew exponentially after the introduction of more than one income for mortgages - it may even help with our social problems with one half of a couple being able to stay at home with children rather than "have" to work to pay the mortgage.
Adam, UK
If family values and marriage were more encouraged, there would be less people choosing to live alone, a major factor in house shortages and price increases. Simply increasing house building when the population is decreasing means that eventually we will have more property than there are people, meaning the value of houses will decrease with time! It may well be best renting rather than struggling to pay off a mortgage for 30 years on a house that is worth a lot less than what you borrowed to pay for it.
The housing market is exploding because with a falling stock market and low interest rates, buying property is the only sensible thing people can do with their money. Change that and a lot of the inflationary pressures on house prices will be lifted. Schemes to assist 'key workers' will ultimately fail as the market will quickly respond to their ability to pay, thus pricing the 'non-key workers' even further out, putting pressures on salaries and the businesses supplying them. I suspect though that banks and building societies will come up with inventive products to allow people to buy as we're already seeing 50 year terms, part ownership and long fixed rate deals being released.
Rebecca, Great Britain
Rebecca,
With current interest-rates, mortgages are at their most affordable for something like 30 years! I just wish the public-servants would stop whinging - most of them have got far better job-security than those of us who are self-employed, and they get a non-contributory, guaranteed index-linked pension when they retire, which I won't get! Why should yet more of my hard-earned money go to subsidise
public-sector workers' housing costs?
There is one way to make housing more affordable and that's to build more of it. There are too many people chasing too few houses, especially in the south east. Alternatively if we don't want to give up our greenbelt land, which is what we'll end up having to do if we want to build more homes in the south east, then we need to do something about decentralising the job market. Homes in the south east are scarce but that's where the jobs are. If more jobs could be shifted to other areas of the country then the scramble that represents getting on the housing ladder in and around London would be eased. Tragically this is a problem that this and previous governments have just hoped would work itself out.
Relaxing planning laws will not help. A development company will simply buy even more land, keep it until it has gone up in value, and then build properties that return the highest profits, usually large, expensive detached housing. All that will happen is the increased consumption of our countryside into stock-broker suburbs. London has an ample supply of brownfield land to serve its housing needs, but, as long as there are more buyers than sellers, then the prices will keep going up.
Paul De St Paer, UK
In the UK, 95% to 100% mortgage lending is usually available to first time house buyers.
In many other countries a home buyer must find at least 30% of the cost of their purchase before they are allowed a mortgage for the remainder. This helps to keep house prices realistic in order for people to save up the deposit.
Sensible as these foreign lending rules are, it is probably too late to introduce them into the UK without severe objections from those who are making a fortune from the present regime.
Rather than subsidise homes, subsidise and vastly improve public transport. If it were more reliable, faster, and ludicrously cheap, then people could live further out of the main centres and travel to work.
It's a joke, To purchase a one bed flat in the area I live you need to pay £120,000, by the time I've saved for the deposit it will have gone up even more - I'm a first time buyer and without people like me buying, the chains wont start.
Guy Chapman, UK
I am a 37 year old single man and I am still unable to afford a house of my own in my home area of Milton Keynes. I work hard and have gone up the pay scale considerably in the last four years but still house prices rise way above my affordable level, rendering my pay rises ineffective in my pursuit of my own property. Once again we see this government favour some groups over others who are left behind. Yet still the government want me to pay more tax, thus reducing my spending power, placing me in a position where I have to pay extortionate rents, which in turn reduce me to a level of near poverty, while those around me are handed state benefits to pay for them to buy their council houses. I do not and never have asked for much, but I do think I deserve the same opportunities to buy my own property as others. This is surely most undemocratic.
We need to remove the idea from people's minds that they have a 'Right' to buy a house. What's wrong with renting? Most of mainland Europe view renting as a sensible option. If people can afford to buy a house - buy it - otherwise stop moaning and become more realistic!
Legislation which limits the rate of price increase is required. One possible solution is to tax away all profit in excess of 3% per annum. I can't see the point of raising interest rates - that only penalises the people who have already borrowed. If "too many people" are borrowing then all the government has to do is legislate for restrictions on how much the money men can lend. Building on the Green Belt isn't the answer either: there needs to be more incentive to redevelop brownfield sites.
Phillip Hallmark, UK
People in many areas of the Public Sector earn more money than myself, my partner and my friends. Giving them handouts to help them buy homes doesn't help anything - we aren't being offered these handouts so how are we supposed to get on the property ladder? It would make much more sense to deal with the root of the problem and force house prices down so everyone can stand a chance of owning their own home. Between my partner and I we bring home £35k a year, how are we supposed to get a mortgage for £120k (which is what small houses cost in Hampshire) without financially crippling ourselves and risking our future security. Sort it out.
Easy. Ban multiple home ownership. Then all the buy-to-lets come onto the market leaving cheap houses that people who will actually live in them can use and afford. A bit socialist I know but I reckon it should be a giggle.
GB, UK
Not every public servant in London needs to be there to do their job. Reducing the amount of centralised Government administration that takes place in the South East and relocating to other areas of the country would make far more sense than subsidising housing and effectively lining the pockets of private landlords with public money. The Inland Revenue set up London Provincial Tax Offices long ago. The tax was administered in areas like the Tyneside or Scotland while a few local offices stayed in the capital to deal with personal enquiries. In these days of telephone and computer communications there is no reason why other departments could not follow suit with no detrimental effect to services.
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See also:
15 Jul 02 | Politics
15 Jul 02 | Education
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