Changing the housing market

References to the ‘broken housing market’ focus on the myth that not enough houses are being built, that is not the issue. More houses are built than we need.

So what do we need?

1) Changing the planning system

    Planning Class uses

Currently dwellings whether they are used as principal residences, secondary residences or holiday lets fall within the same planning use class – C3.
This should be changed so that each use falls within a separate category. Existing houses not used as primary residences should be given limited permission for other uses and gradually transferred to primary residence use only.

    Type of house

Developers are keen to build houses/flats where they make the most money. Nothing odd in that you might say but it’s not good for society as a whole. Planning permission should not be given for housing which is clearly not intended for local residents.

2) Limiting the use of housing as an investment

    Limit the use of housing to create money

It is possible to use housing as collateral for borrowing (remortgaging) and then using the funds to provide expenditure for holidays etc. Money can also be raised through equity release. Again this should be limited.
Houses should be regarded as somewhere to live not a means of making money.

3) Changing the way houses are advertised
Estate agents purposefully target potential house buyers outside the area of the property. This should be curtailed. The aim should be to provide houses for those in the local market.

4) Restrict ownership
The purchase of housing should be limited to those who will live in the properties on a permanent basis.
The purchase of property by foreign residents for investment purposes should not be allowed.
Buy-to-let should be ended.
Rented property should in the main be provided by local community housing providers funded out of taxation.

5) Limit capital gains when people move from one housing zone to another
At the moment people in high house price areas can make a capital gain when moving to a lower price area. At the same time the extra purchasing power they have can bid up local prices thus raising prices for local residents. When moving from one area to another, the majority of the potential gain should be taxed. In this way people could move within the local area (where houses are of similar value), without incurring any tax but moving to another area with lower house prices would not provide any benefit in terms of capital gains.

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Why building more houses in Cornwall helps the rich!

According to an article in the Financial Times, buyers from London are pushing up house prices in Penwith, buying houses in St. Ives and Penzance and the rural areas. This is not surprising news, it has been noted for many years.

What is annoying though is that policy makers refuse to contemplate policies to change the situation. Instead, all that happens is that there are calls for building more houses, usually on the basis of the need for affordable housing.

What is required are policies that deal with the causes of the problem! Current policies enable and assist people to move to Cornwall for mythical lifestyle reasons or to buy property for second homes or holiday lets.

Some comments from the FT article below.

Eighty per cent of prime buyers in West Cornwall come from out of county, says Standen [of Jackson-Stops Truro], — and the vast majority are from the south east.

Prices in the popular resort towns of St Ives and Mousehole have increased by 15 per cent since 2015, says Ben Davies of Savills Truro.

While 80 per cent of buyers in St Ives are after second homes, estimates Ian Lillicrap, of Lillicrap Chilcott, 80 per cent of buyers in Penzance are seeking primary residences.

https://www.ft.com/content/085e9694-ac46-11e8-8253-48106866cd8a

Out of town development at Roseworthy

Many towns in Cornwall have seen their town centres suffer, partly because of the rise of out of town retail parks. Another development at Roseworthy could have a further impact on Camborne town centre.

A good reason for this proposal to be rejected.

[Area = 2.2ha or 5.5 acres].

4.1 The development proposal aims to provide a retail park. The development includes the following: • 1no. A1 Food retail to be occupied by Lidl (1982sqm GIA); • 2no. A1 Non-food retail (1no. 465sqm GIA; 1no. 1394sqm GIA); • 1no. A5 Coffee Drive Thru (170sqm GIA); • 1no. PFS (6 pumps) including Fast Food Drive Thru (305sqm GIA).

4.2 The development proposal would be supported by 230 car parking spaces in total, including 13 disabled spaces, 12 parent and child spaces and 2 waiting bays. The site would also provide 15 cycle hoops which provides 30 cycle spaces.

Exiting new idea – Camborne residents walk to out of town retail facility!

Thats right, if you live in Camborne, which has a fair number of retail outlets in the town centre (and Tescos on the edge), with the new proposed Lidl store at Roseworthy hill, you could walk or cycle to the new shop instead!

Lets face it the developers are having a bit of a joke (at our expense). They know full well that people will not be walking or cycling to do their weekly shop. But it sounds good, ticks the boxes, uses the right terminology.

It’s a bit of speculative development and the developers want that location as it is ideal for access by car! [Not that we need more cars travelling around Cornwall!]

Area = 2.2ha or 5.5 acres.

4.1 The development proposal aims to provide a retail park. The development includes the following: • 1no. A1 Food retail to be occupied by Lidl (1982sqm GIA); • 2no. A1 Non-food retail (1no. 465sqm GIA; 1no. 1394sqm GIA); • 1no. A5 Coffee Drive Thru (170sqm GIA); • 1no. PFS (6 pumps) including Fast Food Drive Thru (305sqm GIA).

4.2 The development proposal would be supported by 230 car parking spaces in total, including 13 disabled spaces, 12 parent and child spaces and 2 waiting bays. The site would also provide 15 cycle hoops which provides 30 cycle spaces.

Cycling to get a coffee in Camborne – are the developers having a joke?

As opposition mounts to the proposal for a retail park at Roseworthy, outside Camborne, we noticed that there is a travel plan –

2.15. The following objectives of this Travel Plan are; • To reduce the impact and frequency of car travel, • To deliver mode shift from single occupancy car journeys to alternative sustainable travel modes, • To achieve an inclusive society, • To reduce vehicle emissions through taking up alternative transport modes, • To improve the health and well-being of employees and customers.

Now if you place a development, especially with a drive through coffee facility, next to the A30, who in their right mind is going to cycle or walk there?

[Area = 2.2ha or 5.5 acres].

4.1 The development proposal aims to provide a retail park. The development includes the following: • 1no. A1 Food retail to be occupied by Lidl (1982sqm GIA); • 2no. A1 Non-food retail (1no. 465sqm GIA; 1no. 1394sqm GIA); • 1no. A5 Coffee Drive Thru (170sqm GIA); • 1no. PFS (6 pumps) including Fast Food Drive Thru (305sqm GIA).

4.2 The development proposal would be supported by 230 car parking spaces in total, including 13 disabled spaces, 12 parent and child spaces and 2 waiting bays. The site would also provide 15 cycle hoops which provides 30 cycle spaces.

Land,housing and taxes – a summary

What lessons can we learn from an analysis of the IPPR proposals?

There are several significant points.

Not one simple issue
It is inappropriate to devise policies to cover a range of issues, namely:
Disparities in ownership of wealth
Housing provision
Development controls
Raising revenue

These issues by themselves are complex, there is no simple policy that can resolve them all.

House prices – not just the land
House price changes reflect a number of factors on the general level: interest rates, income levels, demand for housing from different groups.

Its important to reflect on the fact that land and house prices will be higher in areas where there are more population and/or high income levels.

The paradox of land and house value taxes
A major problem with the taxes proposed by the IPPR is that they rely on land and house values increasing. There is every incentive to push property prices up so as to increase revenue.

Another paradox is that as these taxes do not take income (or other wealth) into account the really wealthy and affluent would not be affected. In fact poorer households would find themselves squeezed out of high house price areas.

A perverse incentive to develop land
Land value taxes (LVT) operate on the premise that land should be, in the jargon, be used more ‘efficiently’ which is a euphemism for developed. So called ‘unused’ or ‘underused’ land should be used, in other words developed.

As the ability to pay LVT depends on income, there would be an incentive to go for developments that would increase income – more homes for holiday lets!

What is required is a framework for each area of policy, which recognises that there is not one simple solution and its important to actually know what the problem is rather that make simplistic assertions!

Land tax and property taxes – impact on low income households

The IPPR report ignores the crucial issue of income. Whether an individual or business has the ability to pay a property or land tax depends on the income of that individual or business. It does not depend on the income or changed value of land or property.

Any tax based on the value of land or property can be afforded by high income households but less so by low income households.

If we return to the example of St. Ives where average house prices are £352,000 what do we find? Latest data from the Office for National Statistics states that those in the richest fifth of households had an income of £92,000 in 2015-15, compared to a figure of £15,300 for those in the poorest fifth.

We have two households in St. Ives – one who have always lived in the town and a second home owner.

If we assume that the property charge is 0.5%, that is equal to £1,760 per annum.

For a household in the richest fifth that would represent 1.9% of income, for a household in the bottom fifth, it would be 11.5% of income.

So who would have to sell up and move? Not the high income household obviously!

Presumably in the world of the IPPR, removing poorer households to cheaper accommodation would be a more ‘efficient’ use of housing!