Tenant's finances to be checked after two years!

Apparently tenant's finances are to be checked after two years, and if they don't need or rather qualify for social housing they will be asked to move on.

Great plan, should free up lots of social housing. In fact Labour came up with a similar very stupid idea before the election. They also ditched it, because whilst on the face of it, it is attractive, it is also very very barking mad.

If you are going to check someone's finances and on the result of that check make them move, then they will never breach what arbitrary number you have set. We already have this problem with the rest of the welfare state where people can't afford to take jobs because they would lose money doing so. The net result will be a very anti Conservative squashing of aspiration which is one of the driving forces of the party.

It does however get worse. If, as intended people who succeed move on, and those who don't stay, then estates and housing stock will fill with a homogeneous lack of achievement and ambition further stifling aspiration and ambition and directly counteracting the effect of allowing council house tenants the right to buy which broke up estates of despair.

The government wants to help the 1.8 million households on the waiting list. That is easy, we no longer have a dismal Labour government which utterly failed to build as many houses as any other government so anything will be an improvement.

The BBC has this.

Local homes for local people?

Well, it is kind of what people expected from local housing policy, at least for the most part. That is, that housing provided out of local funding would be primarily for people who had a connection with the local area.

As an example, a house in say Mid Sussex would be prioritised for a family with a good local link, not a family from say, Arbroath. The reverse is also the case.

Of course, if a family in Arbroath want to swap with a family in Mid Sussex, then there are (and always have been) exchange schemes available.

So now this is what this government is proposing.

What is interesting is how they, and the ridiculous left wing media treated this issue 10 years ago when Conservative councillors in Hammersmith and Fulham were proposing exactly the same thing. Now of course Donal Blaney would like an apology. He will not get one though, as he is dealing with mendacity at its best.

Government dithering smashes housing market

Government dithering over stamp duty is set to cause an even worse crash than we were headed for.

The problem is this: Some journalists got the idea that Alistair Darling was going to introduce a stamp duty holiday in a similar way to that introduced by the Conservative government in the last housing crash.

The problem is that now we have uncertainty. Buyers who have to pay the tax may wait until they know because there could be a few thousand pounds in it.

This could all be a story cooked up by the media but the problem with that thesis is that we know that this Labour government (including the Tony Blair years) likes to manage news. Whereas in years gone by if a budget measure was in the press before it was announced to parliament, the chancellor resigned New Labour's news management has gone to such levels that we know about most of the budget from well briefed journalists long before hand. In other words this government has form for this sort of thing.

However no actual announcement has been made so the housing market is in limbo. The Conservative party have rightly asked for an end to the uncertainty and rightly so. We can stymie the housing market until October's pre budget report.

This is of course the problem with Labour and indeed its news management. It has no idea why things are as they are so sees no reason not to change. It sees no boundaries in common conventions. Frankly they have not got a clue and never had one either.

The BBC has this and the Daily Mail has this.

Record house Price drop reported by Nationwide.

The Nationwide building society has released their latest price survey indicating the largest drop in house prices in a single year since their records began in 1991, during the last housing collapse. Prices fell by 8.1% back to levels last seen in mid 2006.

Grim news indeed. So what happened to no more boom and bust?

The BBC has this.

New house Building hits 70 year low!

According to this article in the Evening Standard new house building in London is at its lowest level since the great depression 70 years ago.

New building targets are flying out of the window, redundancies in house building are on the way.

Grim news indeed.

A Perfect Economic Storm?

Well, no economic storm is perfect, certainly not for those who suffer from it.

Economic times are looking bleak, though the hysteria of the press does not help. We have a very slow and collapsing housing market, the slowest since records began in 1978, high factory gate inflation and horrific factory input inflation.

In short we are boxed in. The slowdown in the housing market will impact on the construction and retail sectors, causing an economic slowdown, but inflationary pressures are so high that we are far more likely to get interest rate rises than cuts.

The New Statesman has this, The Telegraph this and the Guardian has this.

Are house prices collapsing?

There is more doom and gloom about with the latest survey from the Nationwide about house prices. Apparently they have fallen for the 7th month in a row. (The BBC has this)

There is an interesting if gloomy article in the Guardian here which not only points out (as the BBC article does) that the rate of fall since this time last year is 4.4% the worst since 1992, but that over the last 3 months it has been falling at an annualised rated of 16%, worse than since the Nationwide started to collect this information.

Is this a good thing? Well, house prices are ridiculous, so in the long term a correction is good. In the short term however it is dire. It is going to cause people untold pain and will cause pain in the wider economy as well.

It has been obvious to me that housing had become and asset bubble for some years now, and we all know that these bubbles burst. We also know that causes pain, which is not good. The question is what can be done about it in advance? It is a hard one, but have to wonder what interest rates would have done to the housing market if they were tied to RPI not CPI. The former includes for housing costs the latter does not. Would that have curbed the excesses of the housing market, defusing the bubble before it burst?

Housing market worst for 30 years!

In fact, the worst it has been since the last time we had a Labour government in 1978, and this particular set of records began, according to the Independent.

The assertion comes from a regular survey of what members of the Royal Institute of Chartered Surveyors are saying about rising or falling house prices. They have not seen a market as bad as this since Sunny Jim Callaghan was Prime ministers and we were the sick man of Europe.

If you were hoping for cheery news in your news papers this morning you will be disappointed.

On a more serious note, I do hope they are wrong. We do not need a major house price collapse, as that will cause major problems for many. What we could do with is a market that is flat.

House Price Slump Shocker! Cut interest rates now! Don't panic!

There has been a 2.5% drop in house prices, according to the Halifax since last month. This is not good new for people who bought houses last month. However it is better news for first time buyers.

Thing is times are tough. For years people, like me, have been saying that house prices are out of control and that will cause a problem, for first time buyers if no one else. We have also been saying that there is a problem with the way the economy has grown on debt alone.

The banks (or rather the mortgage lenders) are saying "cut interest rates now!".

I would love to think that would help, it would if the money that the banks needed to borrow was lent by British savers. The problem is that with the lowest savings ratio for nearly 50 years, the banks are borrowing money from overseas, sovereign wealth funds, and the like. They see no need to pay attention to our central bank rates and will demand, and incidentally get, what ever interest rate they like. After all they could invest their money somewhere where property prices are on the up.

Gordon Brown says "Don't panic!"

He is right in that, after all there will be a Conservative government along in a while, who will sort out the massive mess an ignorant Labour government has created.

Black Friday as Financial market chaos continues

Shares are still tumbling on the worldwide stock markets, the FTSE 100 having dropped 200 points in so far today, 10% down from July.

The reason for the current crisis seems to be that BNP Paribas bank in France suspended trading in 3 investment funds linked to sub prime lending in the USA housing market.

The knock on from this is general concern that there may be some kind of tightening of world wide credit reducing the amount of money available to fund takeovers.

It seems to follow from this that what is going on is the bursting of a speculative asset bubble, where traders had valued share stock on the basis that there may be a takeover bid rather than the intrinsic value of the company itself. Now the market thinks that takeovers are less likely they are readjusting their positions accordingly. However clearly the central banks are very concerned. The European Central bank has pumped in €156 billion in the last two days to prop up banks. The sums are vast.

Seems fair enough, and nothing to panic about. But there is another lurking concern that a credit crunch will reduce spending in other areas causing a recession. This sort of thing irritates me. What is happening is the heard mind of the financial markets running around like headless chickens either overvaluing certain types of assets or over correcting when they get their fingers burnt a bit.

One area which may be affected is the will of banks to lend money in mortgages at the sort of silly multipliers that they have been. That would cause a slow down in the housing market, which would be no bad thing if it is gentle.

Still, the fundamentals are still reasonably good, and if we can persuade the markets to calm down we will be alright. Given government and consumer debt and borrowing, we could be in real trouble if there is a hard crunch.

The BBC has this, whilst the FT has this.

HIP's in chaos

This has been making the news somewhat yesterday and is carried throughout the papers today.

In short the home information pack is to be delayed by two months and then to be applied to houses with 4 bedrooms or more.

No matter what anyone says this is a cop out. How many bedrooms does a house have? Does it have 4 bedrooms, 1 living room, 1 dining room, or does it have 3 bedrooms, 1 living room 1 dining room and a study? You can do this sort of exercise for houses of all sizes to re adjust the number bedrooms a house has to suit the circumstances.

That cop out aside, we need to look at the root of what the Home Information Pack is for.

There is, or at least there was a real problem or at least a perception of a problem with the way the housing market worked. Gazumping was, and still is a problem but sales falling through is the major problem.

We now live in a property owning democracy and so anyone who could solve this problem would be popular.

To be fair what new Labour promised when it came to power in 1997 was a simplified system that would get around the problems. To that end they trialled a system that cut some of the paperwork out of the system in the sense that some of the paperwork was already done before the process started.

It has to be said that sounds good, and that is what HIPs is about.

The question is, and always has been, does that solve the problems?

Why do house sales fail? Why does Scotland seem to do so much better?

Well the first problem is that the house as seen may have faults with it that were not obvious to the eye. In theory a prearranged house survey would deal with that, if it was accepted as a decent survey. For reasons I am unclear about it seems they are not. Mortgage companies are not happy unless they instruct their own despite the fact that professional negligence law is clear that a duty of care is owed to all who may reasonable rely on a report.

Then there is the problem of people not getting a mortgage whilst a deal is going through. Again this can be dealt with by people pre arranging a mortgage. Some do some don't.

Then there is the problem of gazumping. If people had mortgages in place and a useful survey was done you could exchange contracts. Part of the problem here is that whilst you may have found the perfect house to move to, or you may have had a very good offer to buy your house you may not have the other. As in you either have found your dream house and have not sod yours or vice versa.

HIPS only really ever addressed one problem. That is why they are a disaster. Of course the author of the disaster, Yvette Cooper, (aka Mrs Balls) won't get the sack, and Ruth Kelly will.

The BBC has this.

Margaret Hodge under fire over immigration

It appears that Margaret Hodge is under attack from romantic trots in the Labour and Liberal Democrat party over her remarks on social housing and immigrants.

Firstly when Margaret (and indeed I) are talking about immigrants we are talking about recent arrivals not people who have either been here for years or generations.

Now we have these comments from an article in the Guardian (bastion of romantic Trotskyism) today.

But the Labour MP for Hayes and Harlington, John McDonnell, who tried to challenge Gordon Brown for the Labour leadership last week, said: "This is a deeply reactionary and dangerous statement to make. The issue, however, is not the allocation of housing, but the chancellor's failure to allow affordable house building over the last 10 years - resulting in the present housing crisis."

Well, John does rightly identify the fact that this government has built less social housing than the Conservative government before it. However there are many causes of the current housing crisis and one of those is the increase in number of households, a situation exacerbated by immigration.

Jon Cruddas, MP for Mrs Hodge's neighbour seat of Dagenham, and a deputy leadership candidate, said: "We're in danger of racialising arguments over housing allocation rather than concentrating on the need for greater social housing provision."

The problem here is Jon Cruddas can't see the wood for the trees. This is not a question of race. Poor Jewish families who have been here for generations along with black, Pakistani as well as white are facing similar problems. They can't get housing yet someone who has just arrived in the country can. Race does not play a part in this debate unless someone is trying to close it down.

The Liberal Democrat local government spokesman, Andrew Stunell, said: "There are one-and-a-half million families on the council housing waiting list and the Labour government keeps selling houses off. The first thing to do is start building social housing again, not to blame immigrants for the catastrophic government failure to tackle the issue."

I see. Blame it all on the right to buy. One of the policies which many in Labour including Roy Hattersley now regret ever opposing because they can see the very positive benefits on the ground. The right to buy has transformed many council housing estates and brought hope to them as well as aspiration. It makes me laugh that it is the romantic trots in the Liberal Democrats
have not caught up with the reality that Labour for the most part has.

They do also blame the lack of building social housing under this government which is lower than under the previous Conservative one.

On the bright side from this BBC report, it is clear that Simon Hughes listens to his constituents and despite being a Liberal Democrat is not so much of a romantic old trot that he can't see what is going on. He says:

Lib Dem president, Simon Hughes, whose south-east London constituency recognised that housing allocation was among the biggest causes of racism.

"The worst cause of racial strife and antagonism is when new property is built, social property, and when people who appear to have no link with the community move into it, when other people who may be desperately needing to move, can't get a move",

I have to say I agree. His comments echo mine, and apply equally to some one coming from another part of the country as well as another part of the world. Local people do expect to be higher up the pecking order.

Incedently Hazel Blears also recognises the problem, as you will see from this article in the Times today.

Margaret Hodge on immigration

Margaret Hodge MP for Barking and Industry Minister has a problem, and that is the BNP.

The problem is that people in a community have needs for things like housing. They feel, rightly or wrongly that they end up on the bottom of the list in favour of either asylum seekers or immigrants. This feeling is not without some justification either. For example the housing office in Slough is dealing with Eastern European migrants who are both children and pregnant.

Margaret Hodge's intervention in today's Observer calls for local people to be given priority. I could not agree more.

Firstly if a person wishes to immigrate here it must be on the basis that they will contribute before getting the benefits of living here. That means they must factor in the cost of private housing and schooling if they intend to bring a family. (Where there are reciprocal inter EU arrangements that should not apply). They should not be able to arrive and work on the basis that they can have subsidised housing that allows them to undercut the wages of people already here.

However what I find a little odd about this intervention is that in many places that is how it works already. You can't get on my local authorities housing list unless you have a local connection, as in family. It seems to work differently in Barking which is a gift to the BNP.

Without going off the deep end we do need to take a careful and critical look at immigration. It is not good just looking at the upsides of it, there are downsides as well and those need to be considered when making policy. It is not a completely win win deal.

The great Council House debate

This seems to have some to the fore recently since a minister who seems to have profiteered by buying not one but two social housing units for herself now wants to debate who should and should not have council housing.

I was listening to Jeremy Vine's phone in on BBC radio 2, and had to stop as it was making me a tad angry. So I thought I would add my tuppence worth.

Firstly why do we need council housing or social housing at all?

In short, regulations. Or rather planning regulations and laws. In the 1930's if you could get a plot of land you could build on it. People did. They frequently started with things like railway carriages and small buses. In some parts of the country you can see odd houses with many windows so close together that it looks like a railway carriage with a house built around it. That is because it is.

These days you can't do that, so the planning system rations land. That makes it very expensive for people to get their own houses, in some jobs and in some locations.

People witter on about council houses being subsidised. That is rubbish, or at least it is in part. The "subsidy" that there is is related to the cost of the land. Try ringing up a land agent and tell them you have an acre of prime building land, for residential use in a town in the South East. They will price it at between £1 and £3 million. Tell them it is designated for social housing, and they will tell you to go away. So that is where the reduction in price comes from, the government gets the land cheap because it has planning blight. If you will, they are saying that only "poor" people can live there, and the land price falls.

People go on about passing the "house" on in a will, to a son or daughter. In fact that is not quite right. Firstly less council house tenants have wills than the average, secondly the succession happens as a matter of law* at the previous tenants death. In the case of a council house, covered by the 1985 Housing act (as amended) the right of succession extends to any family member, from grandfather to grandson, uncle to cousin who lived at the property as their primary or sole residence for a period of at least 12 months before the death of the tenant. However this only applies if tenant was not themselves a successor to a previous tenant. (For example if a wife inherits by death even if she is a joint tenant, then no one else can, though if a wife is assigned the tenancy under the 1073 matrimonial causes act, that is not a succession). If it is an assured tenancy, under the Housing act 1988, as is the case with most housing associations the right to succeed only extends to the spouse.

Then some people would like to see people move on when their circumstances are better. This seems to be a desire to have some on going means testing to see if people are allowed to live in council houses. There are some legal difficulties with this. Firstly will the new legislation be retrospective? If not it won't make a lot of difference. Secondly is it desirable? People can and do move on in any case. If you live in an area where your rent would double moving from the social sector to the private sector then saying if you earn more than X a year you have to move to less secure accommodation is an extension of the benefits trap. I also heard people say that people in council houses should be made to look for work. Well I have some news for that sort of person. Many people in council houses do already work. It tends to be in lower paid or semi seasonal work, but as I say, depending on the area quite a lot do work.

Also, if social housing is to be means tested then all social housing estates will become ghettos of the unemployed or low wage earners as opposed to the more mixed areas they became after the Right To Buy was introduced. That would be a retrograde step.

If you want to see an and to social housing then either unskilled wages have to go up, or house prices need to collapse. Either you pay more for your burgers and fries, or to have your grassed mowed, or you accept social housing.

Any way, here endeth the rant for now.

(* there is an exception. tenancies transferred from councils to housings associations on Large Scale Voluntary transfers ended up with a protected right of succession, but this is not automatic and is buried in procedure and in some case well hidden in the tenancy so that the RSL can point to the last clause which is discretionary rather than a right)