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Solving Britain’s housing “crisis” – why lefty cheerleader Owen Jones is 100% wrong

Tom Winnifrith Sunday 12 January 2014

 

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Self-appointed leader of the angry young left Owen Jones reckons that we need to build a million new homes in the next few years to solve a housing crisis. By “we” Owen – as ever means The Money Tree/the ever grateful taxpayer. Heck you pay for your own house so why not pay to build one for someone on Benefits Street as well? Bargain. Except that Owen is 100% wrong on this. To be fair so are most of the political classes – there is no need to build a single new home. 

My starting point is the Empty homes statistics for 2012 (the most recent currently available). These showed 920,000 empty homes across the UK. This excludes those unfit for habitation, due for demolition and – critically – an estimated 300,000 empty homes above shops. So the real number is c1.2 million homes.

But how, I can hear Owen whining, do you propose getting those homes back into use? Actually it is very simple. Even a deluded lefty with a tenuous grasp of economics should be able to understand the solutions.

1. All residential property above shops would automatically be reclassified for domestic rather than commercial rates.

2. Several hundred thousand empty homes are currently owned by housing associations or (more significantly) by local councils.  They are not motivated to get these rented out and some are in poor repair. Auction the lot off at once and sell any new property becoming vacant. This will put a dampener on overall house prices which is good.  Bankers will not wish to live on “Estates” so these homes will immediately be snapped up by investors seeking to generate a rental income from low income tenants. This will also provide an opportunity for first time buyers to get on the housing ladder without State subsidy.

Incidentally the sales proceeds should go to Central not local Government – there is no reason why the most incompetent local authorities should get the biggest windfalls.

3. Remove all VAT from work on renovating a property classified as empty. That will encourage with the carrot property owners to renovate. And all this building work will create jobs, help the economy, etc. And now for the stick.

4. Owen will like this – introduce a new Council tax band of 5 times the stated band for any property without am occupier. This will create a rush of folks desperate to let out properties so pushing down rental rates. Again this is helpful.   And this will include all those flats above shops. Those who want to dodge this empty home tax and who cannot afford to renovate will sell (so pushing down house prices) to someone who can afford to renovate.

5. Reform housing benefit. As a worker I have to live where my job is. That is to say the person who provides the money for my housing dictates where I live. Utterly unfairly, those on housing benefit get to choose where they live even though it is not them but the grateful taxpayer who pays. This means that a family who could be housed for £150 per week in Barnsley or £250 a week in East Ham can opt to live in Islington with the taxpayer coughing up as much as £500 a week. Of course low paid workers pay tax (to foot this bill) and then cannot afford to live in Islington but have to live in East Ham or Barnsley. This is patently unfair at all levels.

So benefits should be capped at 20% below the national average rent for a property of a requisite size. That will force those on welfare to leave Islington (so pushing down rent levels in that area) to move to East Ham, Barnsley or wherever there is surplus cheap rentable stock.  Thanks to the carrot and stick of measures 3 & 4, there will be plenty of such stock available. For the owners of run down and empty accommodation in Northern mill towns there will be an economic imperative to renovate and thanks to housing benefit reforms there will be a ready supply of tenants.

The savings from reducing the housing benefit bill should be partly redeployed in increasing the threshold at which one pays tax from £10,000 to £20,000 to provide an even greater welfare to work incentive and to reward those who opt for ( low paid) work. It is likely that those tax savings will largely be spent in the UK so boosting the economy.

6. Any income generated under the rent a room scheme should be tax free. This will provide yet more accommodation in excess of the 1.2 million homes already freed up.

The hope is that there should in many areas be a glut of liveable homes (and no national shortage) which will serve to reduce house prices (and assuming a constant yield) also rent levels at the bottom end of the market. This makes housing more affordable for low earners, reduces the housing benefit bill still further.

As an added benefit of my proposals there would be no need to engage in any more green belt housing developments. 

I doubt Owen will like my suggestions of reforming housing benefit or of privatising local authority stock. But at a stroke, if implemented, there would be no housing “crisis”, the deficit would be reduced, our system would be fairer on low earners and critically the real winners would be the lower earning workers.  

C’mon Owen I thought you wanted to stand shoulder to shoulder with the workers. How about you support my ideas.



 

About Tom Winnifrith
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Tom Winnifrith is the editor of TomWinnifrith.com. When he is not harvesting olives in Greece, he is (planning to) raise goats in Wales.
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