Tuesday 14 April 2015

Right To Buy 2: not quite a work of genius ...

...  but it is passably interesting.  

Everyone knows (or thinks they know) how popular RTB1 was.  Lots of people who won't remotely benefit from it, see it as an (accepted) token of True Blu-ism, an appropriately deferential and umistakable piety towards Mrs T and the hallowed Property-Owning Democracy.  It fits with all known marketing wisdom, as practised by Hollywood, West End Theatreland, chocolate manufacturers, automobile brands etc etc: stick with what you know they like ("pre-sold", in the jargon) and serve it up again.   "Brand extension" - there you go, that's another one.

Oh, and it could represent an actual, realistically-available, once-in-a-lifetime, 'life-changing' windfall for several hundreds of thousands, who may remember (or others in the family certainly will) how Uncle Bert really did make out like a gangster with RTB1 twenty years ago.   And no-one but the Tories will offer it, so ...

Did I mention it's actually, and everyone knows it, real?

So it looks like Good Politics.  "It's not funded" is a pretty lame response in the circumstances.

I'm guessing Miliballs and Clegg (a) kinda saw this one coming, and (b) rather hoped it wouldn't.    Forewarned isn't always quite forearmed: knowing that when someone kicks you in the shins it hurts, doesn't stop it hurting when they do actually kick you.



DJK said...

I think right to buy should be extended to people renting buy to let. Surely better than yet another policy to pump up house prices (after removing inheritance tax on houses).

Anonymous said...

At the last RTB, it was estimated that 40% had sold their houses within 15 months for a huge profit and moved out, many to 'buy to rent' purchasers. In the meantime, local councils did not use the capital gained from the sales towards building new council properties. This left a deficit of affordable rental properties and a propensity of expensive private rentals. This means that taxpayers were subsidising profits of RTB owners. A new proposal should involve those buying under the RTB scheme should have to live in the property for at least 5 years and any capital raised go in entirety towards new council or housing association properties. But then, politicians are involved, so goodness knows how it will work out.

Blue Eyes said...

The best part is, the Lefties *hate* it.

Blue Eyes said...

Anon, RTB always had a three-year period during which if you sold your discounted house a proportion of the discount was owed back to the council.

A former colleague of mine bought her council flat in Shoreditch and sold it off quite quickly, and regretted it ever after.

DJK said...

I believe that last time round, councils were prevented from using the money raised to build new houses. The point of the policy was to destroy council housing. It may have seemed right at the time but we've surely reached the point where more social housing is needed, not less.

Malcolm Tucker said...

Where did those selling move to anon ?

Into a nicer house in a better area.
They didn't go back into social housing.

It was always one house sold, one family off the social.

Nick Drew said...

DJK - correct, it could only be used to repay debt

(I know, I was Chair of Housing in a LB in the '80s)

there were a few creative tricks you could play as a council, e.g. sell your council houses to a Housing Assoc for £1 each, in return for highly-geared nomination rights on the new-build that THEY were allowed to do by raising £££ on the back of the totally unencumbered (financally speaking) stock they had just very cheaply acquired

you could get 1.5 nom-rights for 1 unit sold, on that basis, a win-win I reckon

structured deals? moi? well they shouldn't have put me in charge then, should they?

formertory said...

Important detail difference: at the time of RTB1 mortgage rates were much higher and credit underwriting standards much tougher.

In current conditions, with interest rates on the floor and enormous mortgages (based on monthly payment) available to those who can heave themselves vertical for long enough to breathe their name, the problems start when rates rise. Maybe, or maybe not, this year. Next year? But rise they will and then a new generation of debt slaves will all wail together that "it's so unfair", "no one told me this might happen", "it's wrong I have to sell my house because the lenders have made the payments too expensive".

I still believe that in the wider context of all borrowers who've used low rates to increase, rather than decrease, personal debt, we have the seeds of Bank Liquidity Crisis 2 when banks have to start making provisions for mortgages in arrears almost as soon as rates rise. RTB2 simply makes the potential problem slightly worse.

Since no political party wants to be "the one that crashed the housing market" - it'd be out of office for generations - rescue packages for debt slaves of all backgrounds and levels of income will be coming, in due course, to a taxpayer near you.

The real and only proper answer is to make housing radically cheaper and remove from the entire concept of home ownership the idea about "investment".

Blue Eyes said...

Formertory, now voting Green?

formertory said...

G'morning,BE - wondered how long it'd take you :-)

And no! In moments of deeper despair I imagine fondly a "None of the above" box on the voting papers; that might send a message when the votes were tallied. Pointless, though.

Which is the best of an appallingly bad bunch? I suspect I may have to go back on my "formertory" tag after all, but it doesn't mean I have to think desperate efforts to keep house prices high and interest rates low are a great idea.

Steven_L said...

It's good politics, but given the polls, is that all it is? You'd be a brave punter to bet on a tory majority this late in the game.

Pledging to sell the 'most expensive' council houses off as they fall vacant is all well and good too, but aren't they all full of 3 or 4 generations of Bangladeshis?

I placed my first short on June gilt futures yesterday, ready for the chaos.

rwendland said...

Aren't Housing Assocs private bodies? I wonder if any Housing Assoc will go to the European courts to see if their "right to protection of property" in ECHR Article 1 of Protocol I is being violated?

ie to test if this deprivation of property is a proportional use of the "the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest".

Could be fun time for the lawyers. Or maybe the govt would pay them very, very well so they'd rather take the money than a court case that could go either way?

Nick Drew said...

Mr W - an interesting point: lawyers tell me the ECHR property rights are amongst the strongest legal principles around

they often try to couch commercial / contractual cases in terms of pseudo property rights in order to give the the best chance of success

Anonymous said...

Its a good example of creating nothing out of nothing. Yes there will be debt and a few movements of large capital sums (at a margin) between banks and councils - one desperate for new debt and the other for cash - but where are the new houses.

Is the HoC full of the best we have in our country - or just some media tarts looking for column inches.

I'm voting UKIP as it can't be any worse, I hope

Blue Eyes said...

RW/ND, I hope that the Tories have thought that issue through. Perhaps the taxpayer subsidies come with strings attached?

MyRuminatingName said...

And now we see the reason for Labours unwillingness to build new council homes - its a bung to used by the Tories come election time!

God save England from the English!

Electro-Kevin said...

Affordable housing can only be brought to market cheaply once.

Thereafter it is no longer affordable.

What happens next ?

The 'profit' from the undersold homes goes into building new ones - which are then undersold.

Diminishing profits - until it becomes entirely uneconomical.

Ergo a short term (electioneering) solution.

Also - what of hard working people who are forced to rent in the private sectore because they earn too much to be eligible for social housing - the same people whose kids are exempted from free school meals but can't afford to pay for them either.

How is that conservative ?

Electro-Kevin said...

I am watching the leaders' debate and people just don't understand Farage's supply/demand argument.

It beggars belief.