Lewin MP Report on Building Houses criticised

[james armstrong]

    U.M.U.L.A.P.I.  Unlawful Monopoly Use of Land is Against the Public Interest ABSORPTION RATES EXPLAINED .  THE PRACTICE IS UNLAWFUL but significantly, not mentioned in Letwin M.P’s Report, “Review of Build out Rates”)

Using a monopoly against the public interest is unlawful and subject to fines “….
                                                                                      …Office of Fair Trading
“many house-builders trickle out houses especially from large individual developments controlling rates of production to protect themselves against price volatility”   Barker (ODPM) Review 2003

Under chapter 4 of the Report -   “FUNDAMENTAL EXPLANATIONS”
Oliver Letwin M.P.in answer to the question “Why does it take so long to build out these sites? says :
 “The fundamental driver of build out rates once detailed planning permission has been granted for large sites appears to be the absorption rate –the rate at which newly constructed homes can be sold into (or are believed by the housebuilder to be successfully sold into) the local market without disturbing the local market price.”
 Oliver Letwin, M.P. here deliberately misleads the reader.  ‘market price’ assumes the free working of market forces, and using ‘absorption rates’ (a r ), – the number of houses released by the builder so as not to “disturb’ the market price,-   itself assumes   deliberate disturbance of the working of the free market so “market price’ does not then prevail.
This is how ‘a r ‘ works. Major housebuilders under pressure of mounting costs as land is sourced and bought, money borrowed, materials purchased, people employed, infrastructure built and subcontactors paid, housebuilders are faced with months long major outgoings  and market forces would suggest  they complete building and selling all the houses just as quickly ever possible in order to get costs returned and make a profit on the enterprise.   One downside is that as a growing number of completed houses become available  the wider choice offered to a relatively fixed number of local consumers, will suggest to the builder the tactic, ‘set prices low enough to attract more potential new purchasers.’

‘Absorption rate’ driven measures however, reduce the necessity to limit  or cut prices. At Poundbury where permission was granted in 1994 for many  thousands of houses, in 2018 many  hundreds are yet to be built  because of ‘a. r.’  tactics.  Under this ploy completions are severely limited so that potential customers in need of houses are faced with a limited choice and more severe competition for the few on offer. Prices are driven up, not down as in the previous scenario. Monopoly conditions apply locally as a major developer  controls all locally available housing land and builds out slowly. Raising house  prices is against the public interest, especially at times of already high house prices. Building out slowly is against  the public interest as major builders –landbankers trickle out supply (Barker’s words) when the need, as expressed by constantly re-iterated government targets and their failure and by reports, by rising prices and by peoples’ general experience, the need  is for more houses to be built and available to-day.

Thus at a time of chronic shortage of new houses and a backlog of insufficient houses built enduring over  some thirty years,  numbers built are deliberately further restricted.  This is extreme market destroying behaviour on a £billion scale, anti-social and unlawful.  Against a background of rising house prices absorption rate policy is doubly effective for the builder and doubly damaging to consumers.

Regulatory authorities were set up tasked with ending unlawful monopoly behaviour but have been emasculated by systematic dismantling (at whose behest?)  - Monopoly Commission was closed. The replacement,  Competition Commission was closed . Their governing body,  Office of Fair Trading was closed. Now the Competition and Markets Autfthority is limited by statute in the areas in which it operates.

In this Report signed off by a government Minister with City interests, market destructive  policies are identified and recorded as standard practice without comment on their potentially unlawful nature and without revealing the author’s interest through Rothschild as a housing developer.   The larger more  serious issue is the decades long failure of the  housebuilding industry to meet demand.

It is unlawful to use a monopoly (here  of scarce building land and on ‘large sites’ , exclusively  corporate supply of houses ) against the public interest. The huge land banks (Persimmons explicitly value theirs at an incredible £40 billion, with Taylor Wimpey not far behind ) enable housebuilders and insurance giants and banks , to keep out local competition and gather the increase in land value as local  demand for houses (deliberately slowly  built out) increases the need.     We read in Barker ….
          “Land is the critical factor in explaining competitive pressure …………
 once land acquisition is complete….housebuilders have little incentive to compete for consumers ….
Housebuilders are primarily rewarded for obtaining valuable land  rather than responding to consumer needs.
       There is also a backlog of some one million much needed houses unbuilt.  There is also an engineered rise in house prices.  These actions caused by market destroying policies, are against the public interest and therefore unlawful and subject to potential fines appropriate to the £ billion scale of unlawfully hoarded land value (and subject to compulsory purchase /confiscation of  unlawfully hoarded land?)   In addition banking land on a grossly excessive scale, keeps out competition from building in the vicinity of  the  owners of large sites, facilitates slow output  and so enables house prices  to be raised further.

The operation of the free market  is destroyed.  Market  destruction by corporate builders  and collusion by Government, Bank of England and actively by mortgage lenders/mortgage investors, with crucial City support is the fundamental cause of the  housing shortage and of house prices and rents rising to gan unreachable level  for millions of those in greatest housing need and of land prices rising out of reach of potential self builders ‘the largest single supplier of new houses’…OFT.    Not only practical measures cause the crisis.  At source the causes are ideological, institutional and constitutional and the unlawful monopoly of housing-land ownership is the central issue.

 Letwin M.P. in his report identifying ‘absorption rate’ activity without explaining it’s unlawfulness  and it’s baleful influence on the supply and price of houses in  U.K  (harmful to people but hugely rewarding to corporate builders mortgage lenders/investors ) represents not voters  in West Dorset but corporations who control Britain’s largest manufacturing industry and their City backers as financiers of landbanks and investors  of  rising mortgage incomes Thus this report seeks to justify corporations’ universal detriment to family life in U.K.

We can thank Letwin M.P.  for indirectly revealing the malicious cause of the housing crisis.  We may now direct action to end its baleful effects. Taking the corporate landbankers to court for breach of anti-competition law addresses the central issue causing the housing crisis, helps solve succeeding governments’ problem and brings hope of access to  housing at accessible  prices and rents to millions of house needy families to-day and in the future.

The further paper ,
‘Letwin M.P.’s Houses of Cards’, criticises the details of Letwin’s paper “Review of Build out Rates”        James Armstrong        james36armtrong at hotmail.com<mailto:james36armtrong at hotmail.com>



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