Adam Nicholson, writing in the Daily Telegraph, tells what presumably are its predominantly middle class readers that it is entirely fit and proper for Britain’s finance minister, Gordon Brown, to take a big grab at the wealth locked up in our homes through a new tax .
I suppose Nicholson is one of those writers the Telegraph occasionally hires to annoy its usual readers. I was inclined to dismiss the piece as usual class-warfare nonsense until, after various paragraphs of tortuous logic and barely disguised dislike of Middle England, our scribe hit on a fair point. That point being that the construction of new housing in the south of England, the most prosperous bit of it, has fallen off dramatically in recent years.
I agree. Nicholson may be a jackass in his support for a swingeing tax assault on millions of people, who have already seen their pensions looted by the government, but he is right on the money in his understanding that unless supply of housing comes close to matching demand, the only way folks like me will be able to afford anything decent will be by winning the National Lottery.
Such a rise in supply will, of course, annoy a lot of people, particular those who’s homes have been made artificially expensive due to our planning and zoning laws. But Nicholson deserves some praise for grasping this point.
Of course, there is always the option of emigration. I have been thinking rather a lot about it lately.
You’re quite correct in noting that the only thing which will lower housing prices to “affordable” levels is an increase in supply, and this means more liberalised planning permission, but surely you aren’t concurring with Nicholson’s bizarre belief that extra property taxes will help to increase supply?
Extra property taxes, no matter who they “hurt” most, will only serve to restrict supply and increase housing prices further.
Maybe there’s something in the water over at the Telegraph. This article:
School fees ‘fly in the face of market rules’
Had me in stitches. How about this for an opening paragraph:
“New evidence that independent schools collude – formally or otherwise – to fix their fees at whatever level the market will bear was published yesterday.”
Can you believe it? They are pricing their product at the level the market will bear! Horror of horrors!
More on the article here.
*sigh* How is it possible to “collude” to “fix” prices at the market level? Collusion and price-fixing are what you do to artificially maintain prices above the market level. By definition, market prices are not the result of collusion.
And the Telegraph is supposed to be the Tory rag?
Nicolson [sic] is a Tory, but a sort of A. N. Wilsonian Young Fogeyish sort. He’s a ‘gentleman farmer’ and so probably thinks himself a cut above the rest. Tom Utley’s much better value. Nicolson is Vita Sackville-West’s grandson. I get a sort of Sebastian Flyte image when I think of that association. The guy grew up at Sissinghurst Castle, for Pete’s sake. He seems to be basically a decent sort, but very One-Nation Gilmourish in his outlook (i.e not exactly what one might call in-tune with the majority of Samizdata readers).
As for the dour son of the manse that never saw a tax he didn’t like, Brown’s gone entirely too far with this Capital Gains Tax on house sales idea. I think he was just kite-flying, but it must surely cause him to wince every time he thinks of the scads of lovely cash out there fructifying in the pockets of his chattels instead of being gloriously spent on legions of Lesbian Hang-gliding Outreach Workers. Problem is, I can all too readily see him being the next PM.
Capital Gains Tax should be abolished anyway, along with tax on dividends and Corporation Tax. As for stamp duty – it’s bad enough that ruddy Bolshevik in No. 11 has bumped it up on house sales, but share dealings? That is one of the most short-sighted taxes I can think of.
Call me naive if you like, but how come people here are with John Prescott in calling for (in his case, mandating) a huge increase in the number of new homes built in S.England? I dislike planning laws as much as – maybe more than – many libertarians, but it’s difficult to reconcile a no-planning regime with protection of what is, undeniably, a finite supply of land. Or does no-one else care about the prospect of a sea of concrete and ticky-tacky Baratt wendy houses covering everywhere from Poole to Potters Bar…
I ask because I want to know.
Perhaps people here have little faith that the government mandated housing will be any better than what you describe. In the US, I know, the government has a very bad track record when it comes to building housing that is either livable or aestheticly pleasing.
I read Nicholson’s column regularly and I see little that distinguishes his views from those of the average Guardian “editor.” He is profoundly anti-American, with a bizarre penchant for repeatedly creating metaphors for the “dark side” of American politics and culture out of outlandishly random events, such as the accidental death of the Atkins diet doctor and a homeowners’ dispute between Carly Simon and her neighbors. In fact the subject doesn’t even have to relate to America in any way for Nicholson to do his thing; he’s also turned a column about poor decorating choices at a Russian golf resort into a rumination about the dark side of American politics and cutlure, and done the same for a recent column about Rugby football, a sport that is virtually unknown in the US.
I was seriously thinking of emailing the Torygraph with the suggestion that they replace Nicholson with an “Adambot” that will automatically generate a column about the dark side of American politics and culture whenever a junior editorial assistant types in some random phrase, such as “bad orange marmalade” or “dog walkers in the park who refuse to use pooper scoopers.”
They could probably save a lot of money that way.
Tony H:
There’s no reason to believe that a liberalisation of planning controls would necessarily lead to paving the SE with concrete. This commonly held but fallacious view omits to consider market forces. As land becomes scarcer, it becomes more valuable.
Another fallacy is that residents of a particular area have “rights” not to suffer “overdevelopment”. Not so. Landowners’ property rights must take precedence. There’s nothing to stop residents purchasing the land to guarantee their own “green belt”
Oh wonderful. New Hampshire and the FSP is starting to look more appealing by the day. Seriously.
Ann – The British government isn’t contemplating building homes. The issue is whether they should give developers planning permission to build yet more housing in an already overcrowded corner of an already overbuilt small island.
Susan, The presence of Adam Nicholson at The Torygraph has long puzzled me. Andrew Marr I can just about understand, although I’m not a fan. But Adam Nicholson’s a nutcase. What’s more, he’s a plodding writer. I usually read the first paragraph of his column (the dark side of American culture), then, failling to care one way or the other, my eye slips down to around about paragraph three, where I may read a sentence or two and then skip to the next para. He is incapable of keeping the reader with him.
Another reason why house and land prices are so high, is because much land is owned by the State or quasi-State entities. If it were released onto the market, prices would fall (in some cases significantly).
This is particularly so in urban areas, where there is the absurd sight of very high value land being used for “council” (i.e. public) housing. Where we live in London, almost 40% of the housing stock is owned by the State or its local arm. If that we freed up, prices would fall significantly.
Cydonia,
It’s amazing isn’t it! Where I live in Battersea is some of the most in demand housing areas but filled to bursting with benefit parasites who don’t do a days work.
Could not a political party ask them to Not-work somewhere less expensive?
Rob.
Yeah, generalise generalise. For every non-working person you see, there are probably 20 working people, who’re doing things like making sure your streets are clean, your post is delivered, driving you home in a black cab when you’re out late etc. You don’t see them because, guess what… they’re usually at work, & not hanging about for you to disapprove of. The argument for keeping them there is that it makes it easier to get these essential jobs done. Admittedly, you could condemn them all to long & expensive commutes from distant areas, & get out-of-town ghettos like Paris or Edinburgh, but i fear the “sponge off the state” option might become more appealing once transport costs started biting into the minimum wages.
feel free to disagree… but i’m bored of the amount of middle class “oo… look at the dirty yobs in our midst… expel them!” chatter that surfaces here from time to time.
Further, the ideal solution to this whole lack of space thing would be for the government to relax restrictions on tall buildings, mortgage lenders to get over the couple of collapses there have been, & be willing to lend on flats over the 7th floor without demanding ridiculous deposit levels, & developers to start building decent quality high-rise acommodation, hopefully breaking the “it’ll be elephant & castle” stigma that surrounds living in high-rise flats at the moment. Travel to Switzerland, for instance, & you’ll find very pleasant flats, where the majority of people live, surrounded by grassy spaces, & decently built throughout.
Thinking about it, relaxing building rules might improve the quality of houses built in this country too, as people might not be so desperate they’ll accept pretty much anything. At the moment, the quality of most new builds, even ‘executive’ type flats is atrocious. My 1930’s council building is far better built than most ‘exclusive’ modern developments i’ve visited.
Frank – there’s another big factor which inflates prices: the spare investment capital seeking returns in the Buy-to-let market will flow back to the stock market once the productive economy has got off its butt. In other words, demand is inflated at the moment.
Tony – aesthetics are important, but perhaps your libertarian compass comes adrift in this field. How can acres of CAP-funded, set-aside, bramble-infested wilderness, condemned to uselessness by byzantine bureacratic dictat, be more pleasing to your sensitive eye than land being freely employed for human self-realisation?
It’s no use sacking Nanny if you rely on her to defend your enjoyment of bare landscapes from the encroachment of the masses.
adhib
Perry and Johnathan:
I think you’ll both fit the “yearning to be free” part of the welcome wagon over here.
And New Hampshire needs as many non-liberals as it can get, to counterbalance the “huddled masses” of Massachusetts who are fleeing their little island of oppression, only to re-create it in New Hampshire.
I’d suggest Texas (no state tax here either), but the summers will kill you.
Frank,
Fresh development in the South East is made unappealing to those of us who live here because of the quality of past development. We cannot trust planning authorities and developers not to repeat the same sins.
Furthermore, Prescott is talking very big build numbers plus, it seems, major expansion at Gatwick. There is a point at which the freedom to build and the freedom to enjoy the character of one’s region come into conflict. When south-eastern folk are willing to forego the prosperity and opportunity that accompany development – and very many of them are – we’re getting pretty close to that point.
There is a complex balance of costs and benefits in all this. But libertarian principle alone is not a mechanism for understanding it.
Guessworker, I will accept straight off that enabling a lot more homes to be built could be ugly in the eyes of some and of course upset those who benefit from the present scarcity via inflated profit values. I also agree with A_T that we ought to tolerate more decent high-rise accomodation.
These issues are not easy to resolve. I don’t think, however, that the current imbalances can endure without generating some pretty unpleasant consequences for society. It is almost impossible for anyone earning less than about 30 grand a year to afford a flat in the southeast. No wonder that folk like teachers and nurses cannot afford to work in London, which is surely not good for our minds or our health.
Some of the upsurge in housing demand is driven by the increasing numbers of singles demanding a home, some of which comes from higher divorce rates, etc. some of this is being fuelled by immigration, and so forth. Of course, over time, if the cost of living in the southeast becomes intolerable, then many businesses will find it economically smart to go back oop north and elsewhere. That is already starting to happen, particularly with some financial and software firms.
The current planning system, though, cannot endure.
What puzzles me is how they would propose to do it.
Most people do not realize the increase in value until they sell their house. Very few have the cash to pay the tax before they sell.
Mo, I don’t know about my “libertarian compass” coming “adrift”, just being honest about my reservations concerning others’ bold statements on junking the planning laws… Open land in S.England especially is too scarce and too precious – and I say again, of finite quantity – to gamble its survival in a libertarian free-for-all. And I don’t necessarily buy Frank’s suggestion that market prices would prevent wholesale paving-over: the market hasn’t so far appeared to limit people’s willingness to pay, in London, what seem to non-metropolitans to be grotesquely large sums for houses.
It’s a puzzler. And I don’t buy this stuff about increased demand for homes, in a country whose population is increasing by only very small percentages, especially when it’s cited by government as an excuse to order the construction of huge numbers of new dwellings – even here in Devon.
If you want to talk about relaxing the planning laws in urban areas, well, that’s another matter…
A_T
“Yeah, generalise generalise. For every non-working person you see, there are probably 20 working people, who’re doing things like making sure your streets are clean, your post is delivered, driving you home in a black cab when you’re out late etc. You don’t see them because, guess what… they’re usually at work, & not hanging about for you to disapprove of. The argument for keeping them there is that it makes it easier to get these essential jobs done. Admittedly, you could condemn them all to long & expensive commutes from distant areas, & get out-of-town ghettos like Paris or Edinburgh, but i fear the “sponge off the state” option might become more appealing once transport costs started biting into the minimum wages.”
A_T, I’m not quite sure what you’re trying to say, here. Is this paragraph supposed to be a justification for the State acting as a landlord? Or what?
oh, i was just objecting to Rob’s
“Where I live in Battersea is some of the most in demand housing areas but filled to bursting with benefit parasites who don’t do a days work.”
assertion.
The implication is that most council tenants are basically spongers. I strongly doubt this applies to the vast majority of Battersea’s council tenants.
I also wonder if affordable acommodation would be available locally for that majority who *do* work, should all council property be privatised, or how far they’d have to travel otherwise, & whether their wages could support the travel expenses. I suppose you’d argue the market would sort all that out, & you could well be right…
A_T
Your last sentence has it about right!
In defence of Rob’s point, I cannot see how even the most fervent leftist could defend a system in which some of the most valuable land in the country is used to provide subsidised housing.
A rought back-of-the-envelope calculation suggests that in prime Battersea, the average family of council tenants in a street property is receiving a subsidy of perhaps £25,000 (Property value, say £300,000, cost to council in debt interest, maintenance and admin, say 10% = £30,000 p.a., less “rent” of £5,000).
This is more than many earn in the private sector and far more than council tenants in other areas receive by way of housing subsidy. By any standard, a system which produces such results is insane.
I have a question: will the state give a rebate to homeowners whose houses may lose value, say in a real estate bubble burst? Like, a rebate of 40 percent of the lost value?
If not, what gives them a right to a 40 percent cut when the value goes the other way?