There Is No Affordable Housing

In the USA there has been a catastrophe in the housing markets of most parts of the Union. This has been attracted little attention in either the UK or in Europe because of the various embarrassments entailed. One is the role of many major British and European financial organisations in the debacle.

The massive bungling of the US agencies and authorities may have needed little help to bring about the disaster but our own leading financial bodies did everything they could to make it worse.

The fall in price levels coupled with unemployment and other loss of income has meant millions of foreclosures. Those still in their homes are looking at serious equity loss and may be trapped. Communities have been wrecked and whole areas demolished. The trading in mortgages and titles to property mean that many do not know who owns either their mortgage or the freeholds, many have been lost.

There are an increasing number of American homes now where Grandma is in the loft and the young adult children have returned to wrangle over the title to the remote controls. Their parents who once hoped for an early and prosperous retirement may now never retire or be able to sell their house.

In the UK some of the frantic financial operations have been designed to keep the property market afloat to avoid the same happening here. This has been helped by the inflow of dodgy money with dodgy people buying into London and area as a way of either keeping some assets or laundering money.

Consequently property prices and rentals seem to defy the realities of the gathering problems. On the BBC News was an item about a small terraced house in London where the rental was £2000 a week for a family on below average income. This was funded by Housing Benefit and was said to be typical of London pricing.

If the housing benefit scheme is not just supporting but enriching many of those whose untaxed funds come from the Illegal Economy it is a fair question for ordinary taxpayers to ask quite how this has come about and why.

Also, in the news is discussion about how “Care in the Community” had meant large numbers of the very elderly with little care and stuck in homes they cannot afford to run and with nowhere to go. John Redwood has asked the awkward question of whether such care is designed to protect the inheritances of the relatively better off rather than be paid for by drawing on the capital value of the homes.

Channel Four recently had a feature on the million unoccupied homes and who they might be brought into use. They did not mention the difficult issue of how it has come about that the titles and freeholds of many of these homes seem to have gone off shore and cannot be identified. This brings us back to the financial companies and the industrial scale of tax avoidance in which they are engaged.

As for the leasehold and rental sectors there is developing chaos in both these fields. It is becoming increasingly expensive and difficult for those needing homes who are in the middle and lower incomes. There is a real squeeze here that means that few who have to rent will ever be able to afford to buy.

Again because so much “investment” has been urged on in these fields in the recent past the money flows into this market on the assumption of easy capital gains have pushed the figures too high for comfort. There have been a lot of people badly caught out and there may well be a lot more to come.

Trying to keep a full account of the scale of the mess is impossible in a short post of this kind. Because the UK property market has become so badly overblown then the scale of any collapse could be very nasty. We only have to look across the Atlantic and at Ireland to see what could happen.

In the meantime there is ranting on about the government embarking on a huge programme of building “affordable” social housing. This is music to the ears of the developers and their financial backers. The trouble is that “affordable” probably means a major increase in subsidised housing supported by housing benefit or tax breaks of one kind or another.

This is the sort of thing that got us into the mess in the first place.

Digging For Gold In The Streets

In this weeks “Private Eye”, the “In The City” section on page 31 under the heading of “Digging For Gold” the article begins “Tax. Offshore jurisdictions. Tory party donations. That is a heady mix at a time of drastic cuts in public spending when supposedly “we are all in this together”.” It goes on to deal with the foreign affairs of the allegedly True Brit company JCB.

Meanwhile, many of our government ministers, notably the Prime Minister, are rushing around talking to groups here and there about their concerns and trying to make it clear that the cuts are not really cuts and spending is still going up. What it means is that all the expectations of many people will have to be restrained, some more than others.

Many are the photo opportunities being created to give a vision of a caring talking sharing administration who want to listen and to learn. However all this is very selective and with an eye on the main chance in terms of popular interest. There are parts that the brew does not reach.

One is Eric Pickles domain as Secretary of State of Communities and Local Government. His underling, Grant Shapps, Minister of State for Housing and Planning and his sidekick Parliamentary Under Secretary of State Baroness Joan Hanham formerly Tenant In Chief aka Leader of Kensington and Chelsea either have chosen to ignore the message or have developed severe hearing problems when it comes to communities, housing and related matters.

They are determined not to talk, engage with or listen to the concerns of Carlex, the Campaign Against Leasehold Exploitation who represent thousands of concerned leaseholders in a sector where there are three million units of housing stock with the relevant incomes streams and opportunities (words are easy). There are now serious issues arising from the way a number of companies providing management and related services conduct their business.

However, if like some people already identified in this sector, I were to chip in many tens of thousands or more to the Conservative Party funds there would be times when I could go along for canapés and middling wines and the chance to talk to whichever minister I chose about whatever concerned me. So those who own and run those companies can earwig the ministers as and when they like.

It is not much good going to my local MP. Too many of them are already embroiled in complex property arrangements related to the companies themselves or if they do take up the interests of their constituents will be told firmly by Grant and Joan that all is well and to go away and stop being a nuisance.

In their performance to date, Eric, Grant and Joan are looking more and more like the old music hall turn, Wilson, Keppel and Betty, good for a laugh but not a lot else. What they do not understand is the scale and nature of the gathering crisis in the leasehold sector as a whole and that it is already going critical in some parts.

On 17th March, I posted on “Cameron’s Marconi Scandal” which touches on some of it. This is a large and complex field and there is a lot to go wrong and it is going wrong. The way things are working out is that there are many people not only shut out from property purchase for reasons of mortgages etc. but increasing numbers who cannot afford to rent or the conditions.

What they are being faced with can be guessed from a look at the Charter Quay Residents Association, cqra dot org. This is far from being a typical development being very much top market but it does have some heavy hitters and professionals who know what they are doing. What will apply to them will apply to many more at the far poorer end of the scale.

One has been tracking the nature and scale of the property giant structure that has been controlling a great deal of the sector. So the old lady in the retirement flat up the road who is very short of money and living a marginal existence now has her flat and development managed under several layers of complex organisation and financial management which are interwoven, shape changing, speculative and controlled from off shore.

It is crazy to the point of lunacy. Even crazier is a politician who can somehow imagine that this is the way bog standard properties at the cheap end should be managed and controlled. What is disgusting is the way that legal rights can be avoided by these organisations and the treatment of their clients.

Perhaps, Cameron, Eric, Grant and Joan should first try talking to each other and then to representative samples of people at the wrong end of what is happening. They could do a lot worse than talking to Carlex, a genuinely voluntary body and to Tax Justice Network.

Slumming It In Belgravia

It is a long time since I was getting by in Central London on less than £400 a year. The accommodation was limited but clean and warm. I ate (and drank) as well as most and was out and about enjoying myself. Later when a family man in the labour market the idea of paying about £5,000 for a modest family house in one of the outer suburbs seemed a large amount of money.

So to see a rental of £400 a week quoted, amounting to £20,800 a year seems an immense figure to pay. Yet this is the “cap” and it is clear that much larger amounts are being paid to many people to allow them to live in Central London whether or not they work or indeed make any contribution to the economy.

Why and how has this come about? To those outside London it is astonishing. It is clear, if nothing else, that there has been rampant inflation in housing costs. But this is not counted as “inflation” by the Government, because they have decreed that such costs are not included in the calculations.

More to the point the funding for all this in terms of “Housing Benefit” is being paid by the taxpayer. These are now increasingly the middling and poorer classes and decreasingly the upper and richer as their tax liability is exported by them to tax havens or defrayed by their political associates because of their supreme importance to whatever it is they are supposed to be important at.

Just as Quis Custodiet Ipsos Custodies who benefits from the Housing Benefit other than the people to whom it is paid out to? They benefit from having living space but do not retain the money because it is paid out to someone else. In the case of local councils or social housing associations at least we have some idea of who and what.

In the case of the private sector of one sort or another it is far from clear. What is clear is the howls of rage in certain political quarters and crossing political boundaries about the application of a “cap”. Dare I suggest that only a minority of these, if any, do not have some kind of direct or indirect interest in property holdings, valuations and rentals?

Dare I suggest that some of the rental markets in London and other urban areas are closely associated with various forms of criminal activity, money laundering and other dodgy and tax avoiding/evading rackets that prey on the taxpayer and those in need of accommodation?

Dare I suggest that some of those who howl the most and the loudest are also most aware of all these and in some cases much more closely connected than they really ought to be? Dare I suggest that a loud howler who also howls loudly about the poor underprivileged banks and bankers may have more to their personal finances that meets the eye or for that matter a keen tax accountant?

Why should the rest of the UK be funding the huge amounts of ramped up profits engendered by the mindless application of a fault ridden and fraud liable scheme that has gone badly wrong in so many places? Why should the lawful population also be subsidising some of the most criminal elements in society?

On the Left is it possible to wonder about the gerrymandering of votes recently as well. This was an accusation once made of the Right. The trouble is that the Left and Right seemed to have merged. So who is Napoleon and who is Squealer?

The poor old taxpayer hasn’t a Snowball’s chance in hell. See Orwell’s “Animal Farm”.

Social Housing Ins and Outs

Evicting people from council houses is a fraught and difficult business. If those involved richly deserve it there can still be an undertow of sympathy for them. For any who have done little or nothing to warrant it other than to grow old or see their families depart then it seems harsh and intolerant.

So councils have a serious shortage of housing for families. The costs and time lags in new building mean it could be decades before the problem is met, even if the financial difficulties allow it to happen. Deportation or transportation as in the past is out of the question. So for that matter is 1940’s style billeting where an official turns up at the door to announce the arrival of strangers tomorrow.

A couple of decades ago in the town where I lived there was a debate about the same problem, not enough houses for families. It was a compact town, small enough to walk around and with a predictable population balance.

Then I calculated that there were around 3000 surplus bedrooms in a town of 30,000. In earlier times most, if not all, would have been occupied by sundry wider family or lodgers.

I suspect that now the number of spare rooms has increased because of the ageing of the population, the number of separated couples and more single people living in larger premises. The majority of these will be private properties which leaves only a minority as social housing. In some parts of the country now this will be a relatively small minority at that.

When councils look at its housing stock it will see a complicated picture. A lot of OAP couples and quite a few widows and widowers now alone. Additionally, some singletons in lower age groups will be occupying multi bedroom properties for a number of reasons. In the meantime the effect of New Labour policies has seen a large number of developments of private small flats in towns many of which have a high turnover or are currently vacant.

As the property market and tax and benefits system has been so distorted there is no effective market to ensure that the old and single have to move out and down size to smaller properties. It does happen but often as a lifestyle choice and not the way the market works. Moreover some have more than one property, the result of inflating prices and easy mortgages of the past.

The press have recently had stories about old people having lived with family in a council house for almost all their life whose tenancy has had some sort of glitch being served with eviction notices and this has aroused wide anger, if only because of the question “could it happen to us.”

The anger has been amongst families as well. The prospect of parents, grandparents or other relations suddenly arriving with a couple of suitcases with nowhere else to go has concentrated their minds.

There was one lovely story about two ladies who had been neighbours for six decades and had always been friends especially during their long years of widowhood. They both lived in three bed roomed houses.

The notion that they might have shared one to allow a family to take the other does not seem to have been on the radar of anyone including the local council. It has a lot of OAP voters still in its council houses.

The profligate policies of the last two decades have left us with housing issues that are now very serious and mounting in difficulty.

Whatever policy or action you care to consider has a package of nasty down sides. Whereas for the last decade governments have simply tried to spend their way out of trouble either directly or by gross inflation of the property market, the options now are becoming more limited and have neither easy answers nor popular solutions.

Soon many will be triple locking the house and garage to avoid the squatters coming in. Others will be twitching the curtains looking out for the officials walking the pavements checking their information systems with a coach load of homeless parked at the end of the street.

More will be dreading the call from granny to tell them that the men from the council have been and she will be coming to stay.

And if you Google “euthanasia” or stock up on pain killers at Tesco the rozzers will soon be round.