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A A
Small developer
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What were the equivalent figures in, say, 1978, 1988, 1998 and 2008, all of which, interestingly were within a couple of years of a heavy recession? It's always been hard to buy a first property or move up the ladder: when I started out in the early 1990s, my Mum and Dad weren't in any kind of position to make me a loan: I had to raise my whole deposit on my own. And there was no such thing as Help to Buy. Unemployment for much of the 1980s was also much higher than young people have any experience of today, and the entire country was much poorer in real terms than today, with matching wage levels. My generation in its youth also had to cope with wild swings in interest rates, hitting 15% for a period in the early 1990s, and it was much, much harder to get a buy-to-let loan or find anywhere decent to rent: there simply wasn't the volume or quality of private property to rent as there is now. I was a student in London in the mid-1980s and although I had a small grant, there was no space for second- and third-years in the halls of residence, and it was an absolute nightmare trying to find anywhere affordable to live: I remember spending three weeks cycling round the city in the summer of 1984, with all telephone calls having to be made from call-boxes (no mobile phones). What is to be done about the lack of supply of housing for sale or rent? Governments seem unwilling to invest tens of billions in social housing, and will only tinker around the edges of the tax system. Perhaps we need to look at abolishing the exemption of primary residences from capital gains tax, thereby reducing the demand-side attractiveness of the "property ladder", which was largely created in 1963 by the removal of Schedule A taxation on the implied rental value of property. Measures to improve supply include abolishing VAT and NICs on labour for property renovations and conversions; abolishing the 25% exemption on council tax for single people (it encourages under-occupation); and introducing a Land Value Tax (a tax on the planning status of all pieces of land, but not on the buildings that stand on them), which would encourage the release of under-utilised land for development and could permit a reduction in SDLT to encourage people to downsize and release under-occupied property. LVT, provided it were charged at a high-enough rate and updated on an annual basis, should also help reduce boom and bust cycles in housing, as it is a counter-cyclical tax (it increases as land values increase). Of course I'm not saying that all of these measures would be popular with all of the electorate!

From: A A 05 February 2018 16:48 PM

A A
Er, no: institutional providers of rental property will be even worse for rents. They have much higher cost bases than private individuals who pay themselves nothing for the labour involved in marketing, managing and maintaining their properties. Of course those who are instinctively hostile to small landlords will sneer and say they've got no right to pay themselves anything, profiting off the backs of the workers, blah blah blah, yet somehow these objections fall away when the landlord and property manager is a private company that pays itself salaries and usually much more than the going rate to its approved subcontractors. The evidence that rents are higher under institutional ownership? Just look at the incredible cost of the many blocks of private student accommodation that have been run up in recent years. They are largely occupied by overseas students, as local ones either can't afford the prices or know better and have the confidence and desire to seek out and live in much-more-affordable houseshares run by small private landlords. And if small investors are squeezed out, will any institutional investors runs HMOs? I think not, just as housing associations and council housing department don't offer them: their business models don't allow it and they are scared of the potential costs. N HMOs means higher rents again as people are forced to live in one and two in tiny studios and one-bedroom flats with far higher council taxes than a house split between three or four people.

From: A A 25 November 2016 19:18 PM

A A
The HBF also found that a large proportion of the uncompleted permission belonged to owner-occupiers who appeared to have a multitude of reasons for not proceeding: perhaps they just wanted to establish the principle of development, sit on it for three years, then re-apply for a new application and wait until the tax situation or their personal finances improved; perhaps they didn't have the money, confidence or experience to follow through, and couldn't find a small builder or developer prepared to take the project on because it was unviable financially; and so on. Most professional developers, large or small, want to get building, provided they can get finance, find a builder, and provided the S106 and/or CIL and social housing demands don't make the site unviable. On medium to large sites there can also be years of paperwork to get through, in-between securing outline permission and starting construction, so there's understandably a long lag between a permission being issued and the houses actually being built. Large builders and their financiers also have acute memories of 2007-09, when they nearly went bust, so they are only going to build at a rate that is sustainable and doesn't overstretch. What the construction industry lacks is capacity: there are too few small developers able to bring in new capital, labour and ideas, in order to expand the rate of construction. They can't find the sites and they can't find anyone prepared to lend them development finance. What we need is a mechanism for people who have small planning permissions to be forced to explain what they are doing with their sites, and if they haven't started construction within two years, they should be required to auction off the sites to other people who do have the requisite enthusiasm and financing to finish the job. This could create a boom for small developers and custom-build construction, as people with sites and those willing to build and those wishing to buy are enabled to contact each other.

From: A A 25 November 2016 19:00 PM

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