Housing is suddenly back on the news agenda with George Osborne trying to reinflate the housing bubble with his dubious ‘Help to Buy’ scheme. Meanwhile the bedroom tax looms large on the horizon, primed to wreak financial havoc on those least prepared for it. So for all the coalition Government’s huffing and puffing, the imbalance between haves and have nots looks set to continue, as does the widening inequality between rich and poor.
The house that George built will be one where the well off hoover up second homes on cheap Government-backed credit while people are evicted from their homes because they have a ‘spare’ bedroom and nowhere else to live. It is utterly depressing and a change to how we view property is surely required, both for our selves and across the country, be it Scotland or (much less likely) the UK.
Conflating a roof over our heads with a commodity to be bought and sold for profit has gotten us into a terrible mess, and it’s time we all faced up to it.
It seems clear that a major problem across the country right now is that there aren’t enough homes for people to live in. Housebuilders are desperate to get on with building while families sit on waiting lists to get into council housing. The Bedroom Tax is therefore understandable, if unforgivable in its current form. For one thing, it is too narrow in focus. The housing shortage is across the UK as a whole. The Government shouldn’t ringfence and punish the poor simply for being poor, they should be looking to free up capacity by looking at where most spare homes exist. The unavoidable truth is that most spare homes are already held as second, third and fourth properties by individuals trying to make an easy gain in the rentals and long term bricks and mortar markets.
What would happen if second properties were banned overnight? Supply would explode, prices would plummet, everyone would be able to move up a rung or two on the ladder and, crucially, space would be vacated within the lower one-bed and two-bed markets. This would allow new homeowners to move out of the rented space, or even out of social housing altogether. This would surely free up capacity more efficiently and more equitably than the Bedroom Tax will. The main difference is that the pain would be spread across the country and not just those on housing allowance. Isn’t that what ‘we’re all in this together’ is all about though?
After all, who loses? Not many people other than amateur real estate magnates and overseas property speculators. Do such people deserve sympathy in these straitened times? Not for me, a one house per individual/couple rule makes perfect sense to me if we are to assuage the greed and selfishness that is causing so many unnecessary problems. Put simply, why should anyone own two or three houses when there are so many people who can’t afford to live in one, owned or otherwise? It’s just wrong on the most basic level.
There is, admittedly, an issue regarding individuals who are investing their savings in property in order to safeguard their pensions, but if this is detrimental to society then those savings will just have to go elsewhere. Needless to say, more properties on the market, lower house prices and more homeowners should in theory pull the housing allowance bill down and allow the pension entitlement to go up.
I don’t for one second believe that the UK Government will adopt this idea, but there is an opportunity here for Yes Scotland if they want to sell a vision of a truly different way of life. After all, if Scots don’t want to make these kinds of radical shifts in the way we run things then what is independence for?
And hey, it passes the social democratic litmus test for lefty Scots…. Sweden already does it.
#1 by Kane Almsivi (@KAlmsivi) on March 26, 2013 - 12:01 pm
Wouldn’t this extend to holiday homes abroad though? Are Spain & Greece not in a similar mire with ex-pats buying up properties as retirement homes or weekend escapes. How would Scotland handle the prohibition process of passing such legislation? Would any emulation by continental european nations be more or less congenial to foreign owned property? Lets be careful what we wish for, as the ramifications of such an arguably protectionist move may be felt both far and wide.
#2 by Gordon on March 26, 2013 - 12:20 pm
The problem is that having created a housing-as-investment bubble it’s very difficult to unwind it without causing significant pain to large parts of the population, including many who don’t own houses.
I’m completely sympathetic to the motiviation behind your suggestion but wouldn’t the result of a significant and sudden fall in house prices leave huge numbers of people in negative equity?
#3 by BM on March 26, 2013 - 12:27 pm
Sweden already does this, and yet there is a severe problem with availability of affordable housing in her major cities.
#4 by Angus McLellan on March 28, 2013 - 2:03 am
Like they say on Wikipedia, {{citation needed}}.
I know that some Swiss communes have restrictions on the construction of second homes, and that some prevent foreigners purchasing property at all.
As far as Sweden goes, I find people claiming things like “Sweden has one the highest rates of second-home ownership in the world”. And in the context of the Carbeth hutters and their campaign Lesley Riddoch wrote stuff like this: http://www.lesleyriddoch.co.uk/2011/08/huts-in-scotland-and-norway.html – contrary to the title in mentions Sweden too.
Now perhaps you have in mind a definition of second home which excludes summer houses, but that’s far from obvious from what you wrote.
#5 by Topher Dawson on March 26, 2013 - 9:48 pm
I’d be interested to know what the rules are in Sweden because it’s a country I admire.
But lots of people can’t or don’t want to buy, and so they rent. Some of the rented houses belong to housing associations but many belong to private landlords. Is the idea to ban these people from having two or more houses? All the student flats I ever knew were private landlords.
Also lots of people round here in the Highlands make part of their living from letting holiday accommodation. Is this banned also in Sweden?
#6 by Stewart Milne on March 26, 2013 - 10:57 pm
When did Sweden ban second home ownership?
It seems to be a problem in some areas with Norwegians, Danes and Germans buying up holiday homes, but they don’t seem to have tried to solve it through legislation.
(And I can’t see politicians voting for a ban here when so many have second homes).
#7 by Gryff on March 27, 2013 - 7:39 am
A good start would be to reform the tax on land and property to stop it from subsidising over ownership.
A bigger problem than second ownership, especially in our cities is underoccupation, parents whose children have flown the nest keeping three spare bedrooms open, great for them, not so good for the couple who want to start a family, or the person renting who wants to buy a starter house currently occupied by a small family that can’t move up the ladder.
I would be inclined to move to a georgist approach, but a good start would be making the council tax on second homes higher, rather than lower, and use tax to make holding land idle economically unrewarding.