Feu for all not free for all

[james armstrong]

>
>In light of the govt's recent annoucement on new housing and other 
>announcements about greater regulation of housing related to sustainability 
>standards (with Prescott's "Delivering Sustainable Communities Summit" now 
>running - finishing tomorrow), here is a timely few words on the real 
>issues behind the housing crisis, taking issue with the source of the 
>government's go-ahead with their half-hearted housing policy - the Barker 
>Report on Housing - written earlier last year.
>
>
>
>Feu for all  not free for all
>by James Armstrong
>
>The Corporate building contractors are no white knights in whose hands can 
>be placed the solving of the housing crisis.  They are the robber barons 
>who exploit the house needy.
>
>A step towards substituting land usership for land ownership as the 
>principle which governs development of sites for housing .
>
>
>Houses are built on plots of land
>Houses require land just as much as they require labour and materials to 
>build.
>A breakdown of costs exposes that  in uk the land cost is the determining 
>factor in the cost of a house
>Analysis shows that there has been an explosion in the price of land
>This is fueled and exploited by speculators
>The land cost inflated by the speculator is the major element in the price 
>at which new houses are offered.
>This causes a housing price crisis (and also a housing shortage crisis) and 
>the shortage magnifies the  price cirisis.
>HMG are aware of this but fail to tackle the speculators and  the 
>landowners. Instead they divert attention to lowering the material cost of 
>homes by increasing build densities, reducing specification and increasing 
>quantities built and re-using hospital land for house building. - all short 
>term avoidance tactics when they should be exposing and prosecuting  
>illegal monoply operators.
>The house needy are stressed by this.
>The economy and even social cohesion are threatened by this
>
>So HMG appointed Barker to  solve the problem
>Barker is a government employee   and one whose full time job is to advise 
>and direct control of the economy via the bank rate.
>An important element of theis control is the effect the bank rate has on 
>mortgage rates and all borrowing rates and all consumer spending
>Consumeer spending is in turn affected by the mortgage rate.
>Primarily because housing is the biggest single item in the weekly shopping 
>basket.
>Secondarily because the funding of the consumer spending boom is largely 
>via second mortgages
>House buyers are affected by the mortgage rate.
>Consumers are affected by the second mortgage rate
>A third constituency of Barkers are big business . At the heart of all 
>businesses are banks and accountanbts
>A fourth constituent of Barker are the banks and lending institutions 
>themselves who adjust their lending  policies to the lender of last resort- 
>the Bank of England.  The B of E base rate determins ultimately and 
>directly the secondary interest rates set by the lending banks , 'The City' 
>  which finance much of business
>
>All this suggests Barker is a suitable person to analyse the housing 
>crisis.
>But it also ties her hands in the solutions she can put forward without 
>rocking the boat.
>Her solution is to couch her language in Whitehall speak , to seek big 
>player solutions not people friendly solutions.
>Barker is not only  part of the establishment , Barker  IS the 
>Establishment. When her analysis points to a basically flawed 'market'  she 
>avoids the obvious and radical solution.
>
>A translation of  Barker's findings from Whitehallese into English.
>
>Land is at the heart of housing and the crisis
>There is a monoply of development  land suitable for housing held by only 
>seven giant house building Corportions.
>These named seven make more profit from speculating on land than they do 
>from building houses
>They restrict the number of new houses they build so as not to swamp the 
>market and allow  the price of new houses to fall but conversely to rise 
>out of all proportion.
>No- one else can meet the shortfall because the seven hold enough land for 
>all needs for the next four and a half years.
>Barker missed, because she is nota  builder and deals with businesses not 
>people, that there is a potentila for people or communities or agencies 
>other than the big players, to solve the housing shortage

>Barker missed the significance (an illegal monopoly) of these individuals  
>being excluded from the market by corporations .
>Barker sees that there is no  'market' as a fair exchange of suppliers and 
>users   because the suppliers hold  all the 'cards' i.e.  all the land, 
>long term acquisition planning and access to capital on the grand scale.
>Barker recognises that windfall gains accrue to the speculators when land 
>receives planning permission for houses and jumps in value from £7,500 per 
>acre to £1.75million per acre.   That this is at the heart of the house 
>price rise when the builders set  house prices based on the high land value 
>and also on their monopoly position.
>
>Here Barker  shies away from the radical solution.
>
>Instead she suggests taxing these windfall gains,
>She suggests also relying on the suppliers to self regulate themselves to 
>achieve better consumer satisfaction with their new houses
>She maintains    prices cannot be got down but only the increasee regulated 
>to 1.1% growth each year
>She suggests also that the way to reduce the level of the price rise is to 
>increase thenumber of houses built annually
>
>Barker overlooks the illogicality of the  present system
>First  that land owners benefit from an increase in land value which is 
>caused by the need of those people who don’t own the land - for houses
>Second that the key   which unlocks this treasure chest is the granting of 
>planning permission by the local authority , i.e. by  HMG so that HMG have 
>the remedy in their hands.
>Third that instead of  the planning permission  helping the homeless it is 
>punishing them by delivering  house building over to the speculator 
>monopolists.   Who use their monopoly of land and the consequent supply of 
>houses to increase prices and restrict the supply of houses.
>
>- How to end this madness.
>- Make planning permission for building a house specific to the would be 
>occupier not to the land owner.
>- What will be the consequences of this
>(Primary effects)
>- The increase in value of the land for the house will accrue to the 
>occupier not the landowner be he hereditary owner or speculating building 
>contractor or individual.
>- The cost of a house will drop as the site element in the cost ( for many 
>the biggest element in the cost) will reduce to £hundereds not £thousands
>
>(Secondary)
>- land owners will be disinclined to release land  onto the market for 
>housing since such land no longer attracts windfall gains.
>- A significant proportion of the house needy will opt for self build as 
>the initial cost ,that of the site, comes within range of average or below 
>average monthly income,  and no longer an impossible initial  hurdle (at 
>present plots can fetch of the order of £100,000 in SE England )    With 
>determined governement support self build  can become  the preferred way of 
>solving housing needs.
>- For another group,  community self-build will solve their housing needs.
>- For those in housing need who wish to employ a builder ( a diminishing 
>sector) the consumer not the supplier will be empowered.  Competitive 
>quotes will be on offer from contractors now without land banks and anxious 
>to get commissions from would be occupiers who have permission to build and 
>a site to be developed.
>- The  boost to the economy in motivation to work,   self employment, 
>removal of housing stress and regeneration of the countryside and better 
>social  cohesion cannot be overestimated.
>(Terciary)
>- HMG will requisition the land as land for housing is  a national 
>existential need .
>- They will buy it at agricultural land values, since it cannot by 
>definition have any development land premium.
>- A House occupier  will buy the detailed plans for a new house together 
>with the plot on which to build for
>- A sum    payable out of income.
>(At present building densities of 20  and agricultural land prices £7,500 
>per acre a plan with site would cost £375 plus the cost of architects, 
>building inspector and planning office fees bringing the total to 
>approximately £3,000.)
>- HMG would    recompense the landowner for land requisitioned out of the 
>house occupiers payment .
>
>
>Additional
>- Towards a land system based on reason and equity
>- This revolution in housing will expose the inequity of the current system 
>of land ownership.
>- The  question will be raised about the inequity of the CAP
>- And the inadequacy of landownership, especially in its present form in UK 
>,  meeting the requirements of a Modern democratic society .
>
>A significant proportion of land having been requisitioned for national 
>use, and democratic control, will pose the question of  state control or 
>ownership  of all UK land.
>
>Removing the speculation element in the price of land will make it less 
>expensive should recompensing all present owners be necessary.
>
>- Building in the countryside
>Contrary to the organised myths put about -  To build  individuals' 
>requirement of new houses would  need between  15,000 and 50,000 acres 
>annually. Anyone seriously maintaining there is a danger of concreting over 
>the countryside lives south of Watford, is ignorant of geography and 
>demographics and is "artistically challenged" and prepared to ignore the 
>evidence of Constable's art.  One  million set-aside acres are surplus for  
>agriculture and   farmers have been   paid £millions   annually for  many 
>years to keep them  out of production.
>
>The UK population lives in conurbations which skews development to the 
>South East, whilst  north of M25 the countryside is depopulated.   The 
>Rowntree Foundation say that housing is the principle element of rural 
>social change and  estimate the need to build 1.5 million houses in the 
>countryside within ten years.  Coastal flooding may suggest increasing this 
>figure.
>
>One million live in the countryside today where 7 million lived in 1850
>
>- The cost of a self built house
>Because they are high wide and handsome you might think that houses are 
>expensive to build.  This is deceptive.  The standard index of costing used 
>by builders * gives the  cost of a brand spanking new four bedroom detached 
>house of 120 square metres conforming to the latest  building regulations 
>as £162,000. . The cost of   materials, and connections to mains services 
>at £60,000  might suggest  the  D.I.Y.alternative! Three, two or one 
>bedroomed homes,  custom designed  to  your needs, might come in  at nearer 
>£40,000 for materials. . Cost can be reduced further by creative community 
>builders taking advantage of huge saving on  kitchen and sanitary ware 
>offers.  In contrast, contractors are interested in increasing the price. 
>At  these sums, on an average wage you could pay for and build a  house of 
>your chosen design incrementally as income comes in. Half an acre of good 
>land to grow your vegetables has an agricultural value of £3,500.
>
>
>james36armstrong at hotmail.com          31st January 2005
>
>
>
>
>
>Communities Summit
>G-MEX, Manchester
>Hosted by the Deputy Prime Minister
>
>The Delivering Sustainable Communities Summit will be unlike any other 
>event on the
>calendar. 2,000 delegates, including senior Cabinet Ministers, and UK and 
>international
>experts, will come together in the vibrant Summit exhibition and networking 
>area to share
>information and best practice and meet new contacts.
>
>The exhibition features exciting displays from a wide range of 
>organisations in the public,
>private and voluntary and community sectors – all involved in creating 
>sustainable communities.
>Join them and take part in this important and unique event.
>
>A limited number of one day Exhibition Passes have now been released, for
>Tuesday 1 February and Wednesday 2 February 2005
>At £50 inclusive of VAT a pass gives you access to all the exhibits, the 
>fringe events taking
>place in the exhibition area, and information on other events in the fringe 
>programme and other
>activities scheduled in the central feature space; and it includes lunch 
>and light refreshments.
>A limited number of full delegate tickets giving access to all events at 
>the Summit are still
>available priced £650 plus VAT.
>Discounted tickets are also available priced £250 plus VAT
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