New models for housing

Just a quick note, to draw your attention to a thought-provoking piece on councils and their role in funding housing delivery (and/or ownership).

I’ve always been honest enough to acknowledge that I don’t understand how the housing market works. Just can’t get my head round even the basics. Supply ? Demand ? Value ? This didn’t really matter, and still might not apart from the zeitgeist building around housing delivery – particularly affordable housing delivery.

One idea is that councils find blue chip development partners and play their part in bankrolling a very long-term lease arrangement. Another is that councils become more active in funding people (‘owners’) to fund the building process itself. After reading this blog, I think I understand some of these ideas even less.  Fantastic stuff.

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3 thoughts on “New models for housing

  1. Thanks. I don’t claim to be an expert either – but I think we’re not seeing that very few people are, and that even (or, especially) those who claimed to be experts know a lot less than they made out. Therefore caution in the face of ‘easy answers’ is necessarily the order of the day.

  2. I’m not sure that this qualifies as an ‘easy answer’…

    Darling’s recent rescue plan for the housing market was announced earlier this week. See the Guardian’s 21 April story for details:

    http://www.guardian.co.uk/uk/2009/apr/21/budget-housing-mortgages

    I think the three main points to note for this conversation are

    1) £100m (2009-10 and 2010-11) has been allocated for councils to build (£50m grant, £50m borrowing permission). There will be an emphasis on building to higher environmental standards but the details of this are not yet defined.

    2) £400m (2009-10 only) has been allocated to unblock development on stalled sites. None of this will go directly to councils, but it could help to pay for infrastructure which was agreed in s106 but the developer can’t afford to deliver anymore, for example.

    and

    3) There is a planned expansion of the existing mortgage rescue scheme including £20m for councils to help people out with multiple debts.

    I’d be interested to hear if readers have any thoughts about how the funding in point (1) would enable councils to show their ability to deliver on housing targets. Will councils build to get the most bang for their buck (with environmental standards taking a backseat perhaps) or build homes that reflect evidence from housing market assessments?

    And what would ‘thelocalgovernmentofficer’ think of a rescue plan which includes an expansion of the existing mortgage rescue scheme?

  3. Hi Helen.

    Belatedly, I’d think it was a bit crackers – keeping people in houses they own, but can’t afford, at taxpayers’ expense, doesn’t solve anyone’s underlying problem.

    Building more houses is a better use of money, means they are likely to find alternative housing if they are repossessed, and generates revenue in the long-term, but the amount at (1) and (2) is tiny in the context of what needs to be done. How many houses does £100m build at, say, £100k each? A couple in each Parliamentary Constituency, I imagine.

    The more the Government goes into debt on short-term measures to help the housing market, the more medium and long-term interest rates will be forced up – therefore making it harder for people at, or close to, negative equity to remortgage when base rates (and therefore SVRs) start to rise again.

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