John Healey’s critics on the right and left accused him of dodging the big questions in his first budget. The chancellor failed to announce reforms that might tackle some of Britain’s chronic problems, they say. Healey’s scatter-gun budget, as the Resolution Foundation called it, was more about politics than economics, and unapologetically so.
Housing was one area of policy that took up a considerable chunk of his speech. And yet the measures amounted to very little, if a test of his policy changes was to ask how different will the UK be at the next election. Or, as that date is only two and a half years away, 10 years from now.
Housing is more than a single element of a complex economy. It is both its driving force and a disease eating its way through the body, from the inside out. More than 80% of global investment is in property and the vast majority of that is in residential.
Countries that once had a more communitarian approach, such as France and Germany, with a highly regulated mix of social, private rented and home ownership, have succumbed to building wealth through property. It doesn’t seem to matter that Japan was ruined in the 1990s by a vicious property price crash. And China is still suffering domestically after Beijing allowed a property Ponzi scheme to develop that enriched the already super-wealthy and left tens of millions of middle-income earners in negative equity.
Nowhere is the situation worse than in the UK, where property prices have cooled somewhat, but remain at levels that deny younger generations the chance to find a home at a reasonable price and some financial security. UK property has also become the method by which Gen Xers pay for social care for their parents and release housing deposits for their offspring. Then there is the debilitating leasehold/freehold split that is both a source of angry disputes and stymies investment in solar panels and insulation (who should pay?).
The lack of regulation and ill-thought-out subsidies affecting new private housing means developers are incentivised to enter an arm-twisting contest with local authorities. Without robust planning guidelines, developers champion building on flood plains or erecting tower blocks that are later dubbed ovens for their lack of ventilation in hot summers. And all the while the tax system is working to make the situation worse.
Extract — continue reading at the source.
