All 3 entries tagged Housing

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July 31, 2007

Housing or railways – which is worse?

I can’t decide which is in a bigger state of crisis: Britain’s railways or its housing?

Ruth Kelly must have been stifling her laughter last week as she announced exciting plans to essentially cut the number of train seats in Britain. Oh yes, she’s going to increase the actual numbers by about 2-3%, but compare that with the 10% rise in passengers and you can see what sort of mess we’re in. We either need double-decker trains or a new high-speed line up and down the country. But that would put us in danger of getting something right, and we can’t have that.

But then there’s Andrew Gilligan’s documentary on housing which was broadcast on Channel 4 last night. The first section didn’t quite work (it was new homeowners whinging about the quality of new-build homes, and naturally wasn’t very surprising), but the levels of corruption between the government and the construction industry in the latter two-thirds of the programme was incredible, and ultimately depressing.

Remember John Prescott’s miracle £60,000 house that was wildly trumpeted in the heady days of New Labour? He showed us all a prototype and said it would solve all our problems.

Well, it will if you’re willing to pay £255,000 instead. Because that’s what it sells for in reality.

Regular readers of this blog won’t be surprised to hear that I have a solution (albeit pilfered). Will Hutton has the right idea, as usual. Debt-financed railway building, as proven by the wonderful world of private equity. But more surprisingly, Germaine Greer has the right idea on housing: we need to build upwards. Not only that, but we need to make high-rise attractive. There’s not enough land, we all seem to want to work in cities, and it’s the only answer.

If I was in a sarcastic mood, I’d suggest letting Guardian columnists just launch a coup and be done with it. The Polly Toynbee-loving Tories might not complain any more.

June 24, 2007

What happens to students when landlords disappear?

Students are probably more interested in the size of their overdraft than interest rates. Obviously when they leave university, they’ll have to repay their student loan, maybe take out a loan for a car, perhaps get a mortgage in a few years.

But could interest rates become a more pressing concern?

As the Bank of England interest rate pushes 5.5% – and looks like continuing northwards – people who’ve bought properties to rent to students might be thinking their mortgage is too expensive and their investment is less attractive.

Analysis by HSBC seems to recommend that landlords take their cash out of housing, and put it in normal savings accounts or ISAs, where the returns are more favourable.

Their buy-to-let property isn’t likely to be making them much money month-to-month, and they’re hoping house prices continue to rise. But this is unlikely to happen for much longer.

This is leading in one direction: fewer, more expensive, student properties to let. Some landlords will sell up while others will get a better return on their mortgage by putting up rents. Either way, students lose out.

With more campus accommodation not high on the agenda of many universities – including Warwick’s – where are the students going to live when landlords get out quick?

July 23, 2006

Soon Money Will Buy You Happiness

The National Housing Federation reported this week that the average house will cost £300,000 in five years' time.

With few houses set to be built in that timeframe and there being no lack of demand which would bring about a fall in prices, we are pretty much buggered.

This generation of students – and seemingly the next one too – will find it impossible to own a house of their own, and only the very rich will be able to prosper by buying–to–let. The gap between the rich and poor will inevitably grow, with the poor becoming a bigger group.

So the adage that "money can't buy you happiness" is set to become false. Maybe it's a bit extreme to say that without a mortgage you can't be happy, but until you own something as fundamental as a house, many people will feel unfulfilled. Moreover, those who want to build their dream home (and they need not be loaded to do so), will in the future find their dreams evaporate.

This causes other problems. Younger homeowners are more likely to desire an environmentally–friendly home, are more likely to put solar panels on their roof and wind turbines in their garden. But if the vast majority of young people are renting until well into their 30s (as looks probable) then the move towards more sustainable housing will slow.

There's been much talk about the 'politics of happiness' recently, helped by a TV series on BBC Two and mention of it from David Cameron. The former was a bit drawn out while the latter sounded like opportunism, but the 'happiness formula' will become far more important as a whole generation finds it can't afford somewhere permanent to live.

Money might not be the be–all–and–end–all, but the gap between the haves and have–nots is becoming ever–larger as affordable housing becomes more and more invisible.

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