[project2012] Re: Housing / LVT Article in today's Observer

[Mark Barrett]

Well done Paul :-)

2009/6/14 Paul Brandon <paulbrandon73 at hotmail.com>

> Quotes from this article are taken from this press release...
>
> http://www.labourland.org/in_the_news/press_releases.php
>
> WE NEED A TAX REVOLUTION PEOPLE’S BUDGET 2009 20 April 2009The Labour Land
> Campaign is urging Labour Chancellor Alastair Darling to start a tax
> revolution by backing its tax shifting vision.
> The Campaign wants the income tax threshold raised from £6,475 to £20,000
> and the resulting shortfall met by a new annual land value tax.
> The Campaign has joined with other like-minded bodies in the Coalition for
> Economic Justice and there is a growing and impressive list of supporters of
> land value taxation including Financial Times journalist Sir Samuel Brittan,
> Prof Iain McLean, Professor of Politics– Oxford University and Ashley Seager
> of The Guardian
> The tax shifting vision would release billions into the pockets of millions
> of working people and their families to spend and make the economy work for
> them and not landowners, speculators and bankers.
> Annual land value taxation is a proven environmental success story
> elsewhere in the world. Officials in Harrisburg, Pennsylvania, USA described
> land value taxation as crucial to the revitalization of their city as it
> encouraged empty sites and buildings back into use.
> Labour Land Campaign Chair Louanne Tranchell says "With the financial
> crisis, the time is ripe to introduce a system to collect the unearned
> income from the value of the land, which arises from community activity and
> services and through investment in transport and infrastructure funded by
> the public purse."
> ENDS.
> For more details contact Press Officer Paul Brandon on 07749 481600 or
> visit www.labourland.org
> *Note to Editors: *
>
>    1. It is exactly 100 years since the Liberal Government put land value
>    tax in the forefront of their 1909 'People’s Budget' supported by political
>    giants like Lloyd George, Asquith and Winston Churchill.
>    2. Report of the recent Coalition for Economic Justice at the House of
>    Commons seminar on land value taxation is available from www.c4ej.com/
>
>
>
> ------------------------------
> Date: Sun, 14 Jun 2009 16:14:44 +0100
> Subject: [project2012] Housing / LVT Article in today's Observer
> From: marknbarrett at googlemail.com
> To: londonhousingactionnow at googlegroups.com; diggers350 at yahoogroups.com;
> project2012 at googlegroups.com
>
>
> *UK's housing needs new foundations*
>
> http://www.guardian.co.uk/business/2009/jun/14/uk-housing-market-property-prices
>
> However house prices may be moving, a new generation is signalling an end
> to Britain's passion for property. Talk that the housing market may be
> bottoming out after 18 months of falling prices may cheer the chattering
> classes of existing homeowners, but for young people it is no cause for
> celebration.
>
> Jonny Scott, aged 24, from Winchester, says that one day he would like to
> buy a house or a flat but, despite a 20% drop in prices across the country,
> that still "seems millions of years away. I don't even see it as a
> possibility at the moment".
>
> He adds that he cannot see himself getting on to the property ladder for at
> least another 10 to 15 years: "I kind of hope by 35 there will be a child or
> two in the equation, but that might have to come before I'm able to buy a
> house."
>
> Jack Mitchell, 24, doing temporary work in Surrey after graduating from
> Birmingham University, is not even considering buying at the moment because
> it is just not "viable", adding : "I don't know anyone my age who owns a
> house."
>
> Bianca Gill, 22, from London has moved back in with her father because she
> believes having fewer outgoings will allow her to find a job with fewer
> hours, so she has more time to look for jobs in her chosen field. "It's
> difficult because I've lived by myself for a few years, but the prospect of
> buying a house is so far away."
>
> These are by no means isolated cases and may reveal that Britain's love
> affair with property is gradually fading. Research from the Chartered
> Institute of Housing out tomorrow will show that only a third of young
> people (18-to-24s) now aspire to own their own home. There has also been a
> big change in attitudes among the 25-to-34 age group; only 69% think home
> ownership is a good thing, down from 83% before the credit crunch struck.
>
> CIH chief executive Sarah Webb says: "We've driven too many people into
> unsustainable owner-occupation and need to do a far better job of putting
> renting and owning on a level playing field. We need to get serious about
> the number of houses we are prepared to build and have to look at renting as
> a more attractive alternative to owning."
>
> Evidence from the front line is that the stabilisation in the housing
> market is not driven by young people: the fall in prices so far has done
> little to help them gain a foothold on the housing ladder.
>
> Julia Lodge, sales manager at estate agents Barnard Marcus in Hammersmith,
> west London, says first-time buyers are still struggling to get mortgages:
> "Most of our buyers are either cash or European buyers. There are first-time
> buyers looking, but the vast majority of them are getting help from their
> parents. There are hardly any that can do it on their own any more."
>
> For buyers wielding sacks of euros, the UK market must now seem really
> cheap given the 20% fall in prices from the peak and the fact that the pound
> is down so far against the euro over the past year. The British raids on the
> French and Spanish property market of recent years, fuelled by the strong
> pound, seem to have gone into reverse.
>
> Lodge says the London market, which often leads the rest of the country,
> has really turned around and she is run off her feet. "Last year was
> terrible, but now it's very exciting. I wouldn't say prices are heading up
> yet, but activity has really improved."
>
> Her experience is mirrored across Britain, although often less strongly
> than in London, according the recent monthly survey from the Royal
> Institution of Chartered Surveyors. It showed buyer inquiries at their
> highest for 10 years.
>
> Property website Rightmove enjoyed its busiest day ever recently and said
> that asking prices in May showed the largest rise since records began in
> 2003, and, after many months of sharp declines, both the Nationwide and
> Halifax monthly surveys suggested prices rose strongly last month.
>
> Given that the Bank of England cut interest rates to an all-time low of
> just 0.5% over the winter, perhaps a levelling out of the housing market
> should not be a surprise. So does that mean the end of the slump is upon us?
> Can the "good" times of rising prices be about to return? The picture is
> somewhat confusing, but experts advise caution on assuming the slump is
> over.
>
> "We are certainly not talking the market up," says Simon Rubinsohn, RICS
> chief economist, who thinks prices may still have further to fall. "There
> are still plenty of headwinds against it, such as the fact that first-time
> buyers still find it difficult to get a mortgage and job losses are still
> rising rapidly."
>
> The problem most agents report is that there is too little property on
> offer. The RICS survey shows that the number of houses and flats has shrunk
> by a third over the past year, probably as sellers unable to find buyers in
> the depths of last year's market meltdown have let their property instead.
> Lettings surveys show there has been a big increase in supply of rentals,
> with a resultant downward pressure on rents.
>
> Rightmove's survey also recorded the lowest number of new properties coming
> on to the market during May. Professor Steve Nickell, a former member of the
> Bank of England's monetary policy committee and now chairman of the National
> Housing Planning and Advice Unit, is puzzled that house prices seem to be
> bottoming out given that first-time buyer access to mortgages on reasonable
> terms is restricted by a still dysfunctional banking system.
>
> "The market does look to be bottoming out, and if the mortgage market
> loosens up then prices will go up again. If it doesn't loosen up, then
> prices will just be flat for a long time," he says.
>
> It is true that new mortgage approvals - a good indicator of where prices
> will be in a few months - have been picking up in the recent months. But
> figures from the Council of Mortgage Lenders last week showed approvals in
> April rose 16% from March to 35,600. That sounds impressive, but the figure
> was 28% below last April's already depressed level and 60% below the 88,000
> April average over the previous seven years.
>
> "Despite the recent pick-up, mortgage activity is still down at a level
> that is normally associated with falling house prices," says Howard Archer,
> an economist at IHS Global Insight.
>
> And last week several lenders started to raise their fixed-rate mortgage
> offers, for the first time in a year, in line with movements in money market
> interest rates.
>
> Ray Boulger, of mortgage brokers John Charcol, says: "If interest rates
> continue to rise, then the current recovery in the housing market, which is
> based primarily on much-improved affordability as a result of a combination
> of lower house prices and lower interest rates, may well wobble."
>
> Professor David Blanchflower, who recently left the Bank of England's
> monetary policy committee, wrote last week that we should not get carried
> away. "House prices still have a long way to fall. It should be remembered
> that during the period of declining house prices of the early 1990s,
> approximately one month in three house prices actually increased."
>
> The underlying long-term picture is that there is a shortage of supply: and
> that means the pattern of high house prices and market booms and slumps will
> be hard to break.
>
> Nickell says that the long-running shortage of housing that the British
> property market suffers has not gone away just because prices have slumped.
> "There is a shortage in the sense that not enough houses have been built to
> keep pace with the number of new households being formed," he adds. "And
> that has been the case since about 1998."
>
> Britain's birth rate has been relatively strong, people are living longer
> and there is a steady flow of immigration, all of which puts upward pressure
> on demand. Britain is estimated to need nearly a quarter of a million new
> homes a year just to keep up. This year, though, experts expect fewer than
> 100,000 to be built - the smallest number since the second world war - as a
> result of the market slump.
>
> Nickell is worried that social housing waiting lists have risen to 700,000
> households since the turn of the century: "And it is continuing to rise very
> strongly. This is putting pressure on the private rented sector."
>
> Britain, along with Spain, has the highest levels of owner occupancy in
> Europe, at something over 70%. In Germany, by contrast, only about 40% of
> people own their homes, although prices there have not risen in real terms
> for decades because of a declining population. This lack of house price
> inflation reduces the attraction of buying and explains why the majority of
> Germans rent.
>
> But many other European countries, such as Ireland, Spain and France, as
> well as the United States, have seen very similar property booms this
> decade, driven by cheap and plentiful credit. Those markets have also bust
> spectacularly. But in the spring the International Monetary Fund warned that
> house prices were still overvalued in many countries and that the correction
> probably had "a considerable distance left to run".
>
> Lack of housebuilding means Britain looks destined to live with relatively
> high house prices lurching from boom to bust as they have done for decades.
>
> There are campaigners who argue that Britain should deal once and for all
> with its damaging boom-bust cycle in house prices by reaching for a radical
> policy known as annual land value tax (LVT), which would be levied on the
> value of land up to its maximum permitted development value.
>
> The tax would be levied on property owners at, say, 1%, of the land's value
> every year, with the proceeds used to replace council tax and reduce income
> tax, thus rewarding work rather than property speculation. LVT would also
> encourage, for example, an elderly person living in a large family house to
> move to a flat and free the house for a family in a country where space is
> limited. It would also discourage developers from sitting on empty sites and
> buildings.
>
> "This tax-shifting vision would release billions into the pockets of
> millions of working people and their families to spend and make the economy
> work for them and not landowners, speculators and bankers," says Louanne
> Tranchell, chair of the Labour Land Campaign.
>
> LVTs are used elsewhere in the world and the idea goes back at least two
> centuries. "With the financial crisis, the time is ripe to introduce a
> system to collect the unearned income from the value of the land, which
> arises from community activity and services, and through investment in
> transport and infrastructure funded by the public purse," Tranchell adds.
>
> http://www.labourland.org
>
>
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-- 
"We hear men speaking for us of new laws strong and sweet /Yet is there no
man speaketh as we speak in the street.”
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