Martin Joyce is a Conservative supporter from Surrey.
The terms ‘Social Housing’ or ‘Affordable Housing’ are just euphemisms for State subsidised housing (SSH). SSH is socially divisive, traps people in poverty, reduces mobility, kills aspiration, leads to dependency and creates a massive bureaucracy of Housing Associations, Government and Council Departments.
In addition SSH cripples housing supply as developers have to gift 25% – 40% of all their output to the State. Hardly surprising that even pre-crash, house building was at an all time low. Indeed, what industry would not collapse if supplying 25% – 40% of all its output at cost?
Astonishingly, all politicians still love SSH and want yet more. Labour because it creates a voting base and Tories because it makes them look caring. The fact the true cost to the State is totally hidden from the taxpayer is an extra bonus.
As a society we recognise soup kitchens are a degrading and inefficient way to help the needy so instead we give needy people the subsidy they need to buy food. That is precisely the way we should do with housing. Except for special needs housing, Government should entirely withdraw from subsiding property and switch to subsidising people.
Objectors may say this already happens via Social Security payments and point to the burgeoning bill (up to £21bn from £14bn). Social Security works, the high bill is due in part to poor administration but mainly to the disconnect between incomes and house prices/rents.
Therefore, reforming housing policy first needs focus and reform. The object should be, over time, to make the average house affordable on the average wage. Although counter-intuitive, house prices are not a response to a demand and supply, they are instead almost entirely a response to the cost and availability of finance.
Members of the grandly self-titled ‘Council of Mortgage Lenders’ are like any other money lenders; lots of fine words but their sole interest is to lend more money. Thus, being unregulated, it was they, not borrowers, who drove the reckless price boom.
Proper regulation would forbid lenders from increasing the average loan (total lending /number) by more than, say 60% of the previous year’s inflation rate. Prices would then continue to rise but, over say 20 years, fall by maybe 40% (20 x 2%?) in real terms and become affordable on the average wage. Under this corset lenders could only expand by making more not bigger loans, which would be good for all.
Meanwhile the proposed new SSH system, call it Social Households, could be introduced on an entirely voluntary basis. Existing or future SSH recipients would be offered a Direct Transferable Housing Subsidy (DTHS) equal to their existing or proposed property subsidy (paid to landlords or mortgagees to avoid DTHS falling into disrepute).
People would volunteer if they knew the subsidy could never be withdrawn just as with existing SSH subsidies. Five year reviews could be made but DTHS never cut by more than one third of any improvement in a recipient’s income from new relationships or increased earnings. Recipients would be free to rent or buy where they like within the means afforded without being ‘badged’ as welfare recipients. If buying they would keep all capital gains. Recipients would then have a real stake in society and their outlook and behaviour transformed.
Example: Suppose an SSH tenant or shared ownership buyer pays 50% of the market rent/mortgage. The property value also halves. DTHS would raise the income to 100% of market value. The property could thus be sold at about full market value. Sales to occupants or investors might yield say £150,000 on average x 4m SSH homes across the land, around £600bn over say 20-30 years.
Developers could sell (lenders obliged to treat DTHS as State guaranteed income) or rent at full values to anyone including at least 25% to DTHS recipients, increasing profits and the tax yield and, by dramatically increasing site viability, exponentially increase the number of new homes built, possibly by 50% per annum.
With no capital costs to find, the annual SSH subsidy cost would be about 10% of present levels to help the same number of people. After 10 years it would grow to the same level as now but subsidies would also reduce, including Social Security subsidies, over time and be offset by a huge income from sales to investors or occupiers.
From this truly virtuous circle the most important benefit would be the re-unification of society – no more ‘them and us’, no ‘estates’, no underclass – as the whole ghastly socialist apparatus of SSH swept away and buried forever. Yes, there would be unfairness in who gets what but, unfortunately, that unfairness is unavoidable in any subsidy system.
So let's stop ruining lives and society with unthinking demands for yet more SSH and move to rational progressive reforms that will transform lives and society.