TL:DR version of this piece; the housing system in the UK is fucked.
Of course, the problem is rampant capitalism. That is, the pursuit of money above all else, whereby the acquisition of money and wealth is the be all, and end all. Of course, all businesses want to make money, as if they don't they will soon go out of business. But there is a difference between a business that exists to make a reasonable amount of money to cover its costs, improve its services, and to make a reasonable profit, and those businesses where everything is geared towards squeezing the absolute maximum they can get away with.
I know the counter arguments here, in that the markets will self regulate and that if a business charges too much for its good and services it will go out of business. But the big companies are not daft. They have teams of people who work analysing data to report to them exactly what they should be charging in order to maximise every single penny of profit.
And its this that's at the heart of why our housing system is in such a perilous state.
It used to be the case that mortgages were based on multiples of three or three and a half times the salary of supplicants. Then, house prices started to rise, and rather than the market correcting itself (as capitalist theory suggests they should), with prices correcting to that level of multiples, things went different.
The banks and building societies started to increase the multiples of salary they would lend on. Four times, five times, six times salary, etc. This was intended to help people to have a greater chance of affording these increasing property prices.
Of course, estate agents aren't daft. They soon twigged what was going on, and knowing that there were these increasing multiples available to those seeking to buy, they advised their clients that they could get more than they might initially have thought for their homes.
(It is a point to remember here that an estate agent's client is the seller, not the buyer, as it is they who pay the commission on the sale, and the greater the price of the sale, the greater the value of their commission, whch is based on a percentage of the sale of the house.)
So, house prices continued to increase, and this increasing value became a real political issue. More and more people were being excluded from being able to buy a house, as prices had gone even beyond the multiples of their salary they could afford. Deposit amounts increased, and formed higher percentages of the price of the house.
All of this meant that people were having to attempt to save many thousands of pounds - tens of thousands - whilst managing the day to day costs of living, including the rental of their current homes (I'll come back to renting later).
Politicians on both sides of the house have long since struggled with this thorny dilemma, as on the one hand you have people who can't afford to get on to the housing ladder, and on the other you have those who do own their homes who want to protect the value of their houses.
Any action taken to lower house prices would be a great benefit to those trying to get on the housing ladder. However, for those who already own it will mean their house becomes a depreciating asset, they'll have a mortgage with negative equity, and owe more to their mortgage provider than they could get if they sell it.
Shared ownership, and “help to buy” schemes are no more than a sticking plaster over the problem, and don't actually address the issue. They are trailed as being there to help people get on to the housing ladder, but really all they are doing is maintaining the excessively high prices of properties by offering subsidies to buyers.
The property ownership boom of the 1980s was fuelled by Thatcher's decision to sell off council housing stocks at a cut price; whilst this increased the number of property owners, it shrunk by a significant amount the stock of housing that councils could offer to its residents, which in turn increased the amount of private renting in the country, and by extension eventually the amount of people buying houses only to rent them out, vis the “buy to let” concept.
There's a lot of talk about what constitutes a "fair" rent, or an "affordable". The problem is these levels are based on that horrible thing called "market rates", which ties in with the comments at the start about capitalism; the "market rates" for rent are, essentially, as much as landlords can get away with charging. So, these "market rates" are as high as they can be.
A much fairer way of setting "fair" or "affordable" rents would be to base them on the national average wage; that way they would actually be based on the ability to pay. You'd have a scale of rents, based on the type of property - you'd expect a three bedroom house to cost more to rent than a one bedroom flat, for example - with some regional variations. This would be a much fairer way of setting rents.
And whilst I'm complaining about renting, there's another bugbear of mine; clauses in rental agreements that prevent you from doing things that really should be considered "normal" living. For example, many private rental agreement prohibit the tenant from having pets; to my mind this is unnecessarily restrictive. The counter argument is that sometime pets can cause damage to the house or furniture, so the landlord doesn't want them in the house for that reason. However, there is a counter to the counter in that it would be a simple matter to put in a clause in respect of pets that if the tenant has a pet they are responsible for the cost of any damage caused by them. There are other examples I could cite.
Moving on to one final issue; the overwhelming amount of developments of “luxury apartments” that seem to be springing up. Ever time I see a sign advertising them I read the word “luxury” as “over-priced”. There's enough of these already. In London there are apartment buildings where vast numbers of the apartments are unoccupied. They are bought up by investors who see them only as assets to be bought at one price, and sold at a higher price a few years later. They are not bought to be lived in, just as boxes to be bought and sold.
I think there are few (barring those doing the buying and selling of such properties) who wouldn't see this as a problem. Every empty property is a property that could be being lived in. But how to solve this problem? Well, if we return to the cause of the problem in the first place – capitalism – the solution is surely to make it unprofitable to leave the properties empty. Perhaps if a property is left unoccupied for more than a certain amount of time, say six months, without good reason then it could attract an additional tax based on the value of the property. Don't want to pay the tax; rent the property out. This may not go down very well, but it would be a way to reduce this kind of property speculation. Personally, I'd also apply it to second/holiday homes as well, but that might be a step too far.
Thank you for taking the time to read these ramblings. I may return to some specifics, in more detail, at some point; but this is a reasonable, albeit lengthy, overview of some of my initial thoughts on the topic.
