10 Terrible Policies on Housing Market - And What Should Change

The housing market faces problems, but it is not helped by poorly designed and implemented housing policies. This is a look at 10 policies and how they could be better
Content
00:00 Introduction
00:45 99% mortgage - help to buy
2:15 Selling off Council Houses
4:11 Planning Regulations
5:27 Incentives for Councils
6:19 Role of Monetary Policy
7:11 Immigration
8:33 Empty Homes
9:02 Stamp Duty
10:08 Maximum Rents
10:43 Freezing Benefits
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[@economicshelp1]

Text version of the video is here. www.economicshelp.org/blog/215054/economics/housing-market-policy-failures/

[@cobbler40]

Keeping prices high is a deliberate government policy to help developer donors

[@apeter86]

Also their electorate(NIMBYS) who are obsessed about the paper value of their houses.

[@CosmosChill7649]

Keeping people poor makes them more manipulatable

[@narcissusecho7469]

UK house building tech is 50 years behind German methods. Factory built modules must be a future tech used. It's mind boggling why this method is not used in the UK

[@CosmosChill7649]

For more or less the same reason, they killed Hitler. Allergy to socialism

[@gazunkafonegazunkafone3492]

It is used in the UK. There are loads of UK module builders The issue is the civil service (as per usual) not allowing it as its not in keeping with most places in the UK.

[@ksimk1979]

People are too conservative

[@penderyn8794]

Most UK homes look the same. Cheap corporate crap that does not respect local architectural styles

[@getreal7964]

They're not failures, they're doing it on purpose so the rich (donors) can buy up all the assets

[@Finderskeepers.]

Its simple, more supply is needed and not have demand stimulated further which only makes affordability worse.

[@patdbean]

8:18 but why do we have a shortage of skilled workers ? Is it because of depressed wages? We have 5 million nonwork adults in the UK? It is not lack of people it is more lack of pay.

[@Mysterkoma]

Polish guy here and mg example. Until recently I was on 26k in warehouse as an forklift driver, but for the past 4 years ( lockdowns lenghtent it) I was doing courses and finally last year I became electrician. My 1st job offer was 32k which I was going to acctept but then 2nd company came out with 50k ( nights thou) Why to blame state and everything else but no ourselfs? What I found in reading all these comments is mass depending on the state in this country. State should give cheap houses, state should help with bills and so on. That's all wrong mentality. State shouldn't be here to support milions of people, but only those disadvantaged. Rest should take responsibility of their lifes

[@patdbean]

@@Mysterkoma you can always pick one example. But the average full-time wage of 18k in 2000. Would need to be 40k today to have kept up with inflation. But it is infact 35k. So the spending power of the "average" wage IS going BACKWARDS. That is ok if you ARE on the average wage fine. But by definition 50% are on less than that. Remember most benifits are paid to people who ARE IN WORK.

[@Vroomfondle1066]

Very good - and you know who else should take responsibility and stop accepting state handouts in the form of subsidies? The mega rich. Corporate welfare. Every heard the term Capitalism for the poor and Socialism for the rich? That means the legal apparatus of the state is bought by the rich to pass legislation to their advantage - public money goes towards making the rich even richer. So why is everybody always complaining about the poor and never dares criticise the rich who plunder, cheat and steal using legal mechanisms? @@Mysterkoma

[@albertodejuan6104]

This.

[@Finderskeepers.]

The UK is at what is known as the natural unemployment rate making the country in full employment. The natural unemployment rate is unavoidable, people coming back to the workforce, changing career, just made redundant etc etc. The labour shortage is due to economic growth and a failure to train skilled workers for roles that have shortages. Now employers will compete with wages and so feed inflation. Its either more immigrants or stagnate the economy.

[@edwardscrase6136]

I know it sounds terrible, but it wouldn't be a negative for the economy long term if house prices crashed. They are so over valued and if the local councils could build new council housing in the low could really assist in the housing crisis. If we could link a help to buy for social housing tenants into the mix we can move them on and out to private ownership. You keep the council house stock, you assist private sales. Seems like a way forward.

[@2penry2]

Nimby's will be the death of this country

[@penderyn8794]

Looking for a simple Scape goat I see 😂😂😂 FFS ..... NIMBYs have very little power over planners. Corporations have huge amounts of land and planning permission and have still refused to build

[@neilmckay8649]

Well rounded summary and discussion. Bankrupt councils today lost revenue potential when they sold council houses 😢 no discussion on office buildings being repurposed.

[@roryoneill9444]

Smaller houses, one/two bed, aren't built as there generally not economical for a construction firm as they customer can't get long-term mortgages. This is where the council could get involved with "pensioner villages" with the correct amenities shops/doctors/public transport but the Covid Pandemic in Belgium showed how susceptible these are to viral spread if not handled correctly in an emergency so could become a problem during Cold, Covid & Flu season.

[@ThomasBoyd-tx1yt]

Awesome Brilliant content. Thanks.

[@___Q-bot]

5:35 I can argue that Councils can also earn revenue from council of newly built houses. And it is not fair for new houses to responsible for all the expenses for new services. The tax band of new houses can go up to support those new services.

[@lh4394]

Brilliant video great job. Yeah here in Wales i think we have a 50% exstra concil tax on 2nd homes think they are talking about making it 100%

[@penderyn8794]

Areas of low biodiversity happened to be where most food is made however

[@matthewhunty]

Where do you base your comments about the requirements for builders to build houses. As far as I know all the house builders are letting off their builders at the moment.

[@cobbler40]

Buying a house is going to be unaffordable to the average person

[@shabbos-goy9407]

it is now

[@slothsarecool]

If they increase capital gains, people just won’t bring gains here at all. Stamp duty is weird though, in Canada it’s just a small annual tax, which makes way more sense and doesn’t lock you into one place.

[@___Q-bot]

The interesting point is: .....the 99% mortgage is absolutely a trash for young buyers. u know that, we know that, and Westminster knows that. But why do they still back this policy? Can we brainstorm any legitimate intensions?

[@salkoharper2908]

The government want the future young of Britain to be in debt to the banks for the rest of their lives. The Tory politicians and bankers in the city are all chums. Just doing what's best for their millionaire shareholders. The Govt don't care about the youth at all, they want them to be enslaved to the banks in debt for life.

[@paguliukas]

Help to buy same uselles scheme i buy house for 340 outside london and my house vas Outside the 300k price wich scheme works so technicaly uselles scheme

[@JeremyParsons]

A 10% universal unavoidable inheritance tax is a good idea but the current policy is 40% and deliberately excludes housing so almost any other tax would work better in practice but the UK overall tax burden is higher than ever and it is amusing hearing this government and BoE asking innocently why bank shares are so low when everything that the UK government does discourages investing in bank shares and incidentally Lloyds Bank which is the UK's largest mortgage lender. Follow the money: a bank makes a profit but it is immediately taxed 25% as a business, then another 3% as a bank and 0.5% duty to buy the share, then paid as a dividend which can be taxed at 40% (depending on a person's income/ISA accounts etc.) and then also taxed at 20% if they buy anything with VAT or at 40% if they die leaving almost nothing to be inherited by a child or actually buy goods and services! Housing as a public need used to attract property rates and is still significant in the USA but property taxes were reduced to make the Community Charge more acceptable initially. Why would one only allow councils to build homes ? Everything about the UK housing crisis is a deliberate government choice: expanding green belts, tightening building regulations, insane lockdowns for outside house builders, immigration to help fund universities and the NHS instead of following simple safe, uncontroversial policies like in Singapore for guest workers whom earn a good salary and are then returned home to their own culture, country and families ? The UK government has been picking the worst combination of the most painful parts of immigration and housing for years - it is deliberate UK government stupidity like lockdowns and a form of Brexit that destroyed the common market !

[@JeremyParsons]

UK inheritance tax also deliberately excludes land used for farming and the primary home residence - duh!

[@jontalbot1]

Some clarification. The government did not own council houses- as the name implies, they were owned by Councils. The system pooled rents to fund new builds . The Green Belt is not ‘ever expanding’. They are long established. I agree they are far too restrictive but it’s probably only planners and economists who think that. Green Belt is the only planning policy the public have heard of and support. Agricultural land is graded 1 to 5: you do not build on good land because then it’s lost forever and we are already a large importer of food. Afraid Inheritance Tax and increasing CGT is a political non starter.

[@mattj905]

These taxes are perhaps a non starter…for now

[@akhusal]

There are too nany people living in mansions but the council tax is capped. Council tax should be 1% of the value homes, so those who take up excess land oay more. When there is a shortage of water they ban excessive use. There is a shortage of affordable houses, so they should ban unaffordable mansions.

[@cobbler40]

Where I live 4 bedroom detached houses for a £1 million are being built and snapped up. These are the houses the developers invest in.

[@ridethelakes]

Far more profit in higher value properties than affordable housing.

[@davejohnston5158]

If the government wishes to reduce social housing costs in the future and increase it's availability they must enable and encourage new social housing construction. They should raise finance for this through 5-10 year bonds issued at competitive rates.

[@vvwalker7261]

I don't think your idea re zero stamp duty and increase IHT is workable unless IHT becomes a water tight tax. IHT is essentially an optional tax and for that reason it is hated. I mean, why should i pay it if the Duke of Westminster doesn't have to? Stamp duty tax take would go up if they lowered the % and improved transaction volume. 99% mortgages would be fine for first time buyers IMO. 2008 was caused by crazy US loan products, the UK held up well relayively. Help to buy has been a disaster, as has split ownership

[@VLC8792]

Developers build the bare minimum they can get away with. They do this to keep house prices high. If they built more houses, which they clearly can, it would dilute house prices. Why do they do this because they have no insensitive to do other wise. Meanwhile the house buying public are stuck astronomical mortgages.

[@AdamWebb1982]

Who knew that increasing demand by allowing 10million people to settle here would increase the prices?

[@AdamWebb1982]

we are also one of the most densely populated places in the world... why do we want to keep allowing more and more people here?

[@tropics8407]

Government Deficit spending, government borrowing, government stimulus, government QE money printing….all just pumps up the prices. I wish government would just stop ‘helping’ 😢

[@someinteresting1]

Im a skilled construction worker being idle for more than 4 months.

[@JeremyParsons]

The UK government has special lockdowns for you dangerous outside workers, special taxes for all your supplies and fuels, special duties for your imports, special taxes for your pollution, special limits for development and general taxes and inflation for everyone to keep you at home

[@johnholkham2420]

Let house prices drift down till they are affordable, 99% mortgages are not a fix, reduce the borrowing loan to wage ratio to 4 x and allow prices to drop gradually. Trying to maintain a ratio of 8 x wage to loan will not work with the new 5% rates.

[@injest1928]

I think new building methods are also important. Often planners want builds that fit in, but they are normally labour heavy designs that cost a lot. If people were more open to new designs and used things like structural insulated panels instead of brick, stone and timber framing the prices could come down while making the house far more eco friendly.

[@speedonz]

The only issue we need to fix is the amount of people we import. Fix that and it makes these issues go away!

[@gazunkafonegazunkafone3492]

Why does no one ever state owning multiple homes is an issue? AND do the same as other countries STOP allowing foreigners to buy in the UK who dont live in them. Bit too obvious really.

[@HShango]

So this mortgage isn't new?

[@erongi233]

Who actually owns most of the land in the UK and England? There is no central register in connection with that. Prince William " owns" the Duchy of Cornwall.Then there is the Duke of Westminster and other Dukes,Earls and Marquises. The Duchy of Cornwall is 0.2% of UK. Also where is the land they own,or have control over? The Duke of Westminster owns a lot ,as we know, in London. The Crown estates give around 25 % of their profits to the Monarch. The Church of England owns a lot of land. Why is there not a central registry so we can know who owns what and get an indication of the power and influence they might project?

[@UltraMegaSandwich]

The Land Registry does

[@dananskidolf]

@@UltraMegaSandwich Yup, you can look up who owns a given bit of land. But to see maps of what the main owners own, you'd need a reverse lookup. I'm not sure they provide that service, but I'd be interested to see these huge swathes of land owned by a few individuals and organisations.

[@erongi233]

@@UltraMegaSandwich The old owners of the land before 1993 are not required to register as owners with the UK Land Registry in England and Wales. This is because the mandatory land registration system only came into effect on October 13, 2003. Therefore, ownership information for land prior to that date is not automatically captured in the Land Registry. Also the owners do not have to register in Scotland.

[@erongi233]

Also to educate you further .Trusts registered with the UK Trust Registration Service (TRS): For trusts acquiring UK land after October 2020, the trustees must register the trust with the TRS, including details of the beneficial owners. This information is NOT publicly available but accessible to law enforcement and government agencies. Non-TRS registered trusts: For trusts not registered with the TRS, the land registry generally doesn't require knowledge of the beneficial owners. However, this may change in the future for specific types of trusts.

[@tiborsipos1174]

About the immigration: On short term it actually reduces house prices, because many immigrants starts on a "lower" standard: multiple household under the same roof. So while not a miracle touch, but big mansions were split up to smaller apartments, and house prices are even going down since it needs to be affordable. When their visa expires they are gone. This is why immigrant doesn't matter in unemployment statistics. Yes, they are filling jobs, but when the demand for sector lowers, the gov can decide not to renew the VISA, so there wont be shortage of the jobs that was filled by immigrants. So their needs for housing is gone but in exchange they paid taxes, generated profit due to various reasons (made products, fulfilled services) Those who decided to settle if I recall the statistics it takes 8-10 years when they buy their own houses and THAT point they join the supply and demand when they compete for houses,. That article didn't mentioned the rental part. Yes... when you arrive to a country you "gladly" live together with other to save money, but eventually you want your own space.

[@MakinMovies7]

Fucked up.

[@yellowgreen5229]

No green belt, no sprawl. RailTransitNow #StopSuburbiaMediumDensityHousing

[@aisians435]

Build more housing, cap immigration. Decrease demand, increase supply. The UK is projected to have 6 million more residents in the next 12 years, 5.5million of them from immigration. The uk's (and England's specifically) population density is already incredibly high for a first world country that isn't a tiny island state or city state, and perhaps the highest in Europe. The UK's average population density is around 276 people per square kilometre. England's is 429 people per square kilometre. That is the same as India's. Land is finite and farm land is required for the country to not be as dependent on import for food, affecting food prices. Green belt land is needed unless people are okay with the country becoming even more densely populated and being resigned to an endless sprawl of industrial and residential land.

[@kiljaeden7663]

Whenever someone says "perhaps" I just see red flags. It didn't take me too long to find that both Belgium and the Netherlands have higher density than the UK. And trying to carve off England and saying "look at that" is just an attempt at cherry-picking your data.

[@aisians435]

@@kiljaeden7663 Belgium and The Netherlands are 1/4 and 1/3rd the size of England . England has a higher population density than both of them, despite being 3x and 4x their size. So you're wrong, if you want to be completely accurate ENGLAND has the highest population density in Europe. If we are counting those then why can we not single England out? Is it not where the majority of us live? Are Scotland, wales and Ireland not separate countries? It feels to me that doing the opposite and just showing data for the UK is obfuscating the truth. The truth being that despite people saying "well actually the UK is only 9% built up land" we are full. Our population density is through the roof, our housing market is broken, our national services are stretched beyond limit, our wages are depressed. Its easy to spread out population data if you're including Ireland, scotland, wales because they of course are much more sparse than England but that isnt painting an accurate picture of the immediate surroundings I myself live in nor do most of the population. England is overcrowded. England is the country with the true housing crisis. If you're going to use the whole UK then an apple to apple comparison would be a country of a similar size like Italy.

[@JeremyParsons]

Learn from Singapore which allows guest workers, pays them an attractive salary and then they go home after 5 years so there are no cultural integration issues, no housing crisis issues, no race issues and families are always reunited.

[@giansideros]

​@@JeremyParsons a more interesting idea from Singapore is that 78% of their population lives in public/social housing and consequently, their economy hasn't become de-industrialised like the UK due to speculators and landlords/rentseekers causing unaffordable wage inflation for manufacturing employers.

[@JeremyParsons]

@@giansideros Social housing was essential for internal investment and social harmony in Singapore with a fraught beginning due to Muslim-first policies in Malaysia. Singapore property prices make London look cheap so I think that you are mistaken about landlords control in Singapore. I watched office buildings grow one floor every two days in Singapore and all the labourers were foreign arriving in the back of a truck from dormitories each day. Singapore is efficient and sensible to avoid integration problems. The UK is full of idiots who put ideals before survival or happiness.

[@ATA12354]

Why are we not charging home building companies council tax for unbuilt homes? Surely that’s an incentive to hurry up with building?

[@markbaldwin5455]

Because the Housebuilding Companies are the Government`s friends/tories.

[@JeremyParsons]

That is brilliant and then the planners can add more regulations and destroy all the evil house building companies making evil profits that pay for everyone's jobs and taxes ?

[@CD-pm9kc]

I just can't get my head around the idea of building homes and destroying the environment to house foreign people. We need to preserve what we have for future generations.

[@Makalon102]

The birth rate issue of more old people increasing tax burden on younger generations like Italy rears it's head

[@Makalon102]

And as he touched upon skilled workers are needed

[@JeremyParsons]

Singapore guest workers go home after they finish their paid employment like 457 visa workers in Australia and other normal countries. It is just the UK government ignoring the promises of controlling immigration and subsidising universities and the NHS with foreigners who never go home.

[@ratttttyyy]

Some common sense on the "immigrants are causing the housing crisis" trope.

[@drifty_grifty]

Look at Morrisons report on food sales, its clear the population of Britain is much nearer 80 million than 70 million.

[@ratttttyyy]

@@drifty_grifty well, I've not reviewed their report on food sales but how does it compute that sales in one supermarket chain mean the country has a higher population than estimated? Anyway, the UK will need another 30-40m in immigration to maintain its current position.

[@hosephanerothe1440]

Not helping though Is it, NHS can't handle the growth in demand either

[@jmiller7209]

We aren't going to be able to solve the existing housing shortage if we are increasing demand by 700k people each year

[@nothereandthereanywhere]

@@hosephanerothe1440 The biggest drag on the NHS are older people. Young people usually don't use that service. The young people usually contribute towards the running of the service and even if the nurse uses the service once a year, it definitely is not something to worry about as many older people do take the bed for days. Yes, immigration uses the service, but in no way in the capacity as the older generation. This isn't about blaming older people, it is just a fact, natural process.

[@stephenpickering5968]

Normally I think that your posts are very good but only this occasion I thought that there were some real holes. That "unremarkable farmland" grows the food that we eat. We currently only produce 55% of our food needs which is a real food supply risk. This will only become worse as our population continues to grow through immigration (which every political party seems to think is a good idea). I totally agree with you about vocation training. We should not be importing more people when we have 800,000 young people not in education, employment or training.

[@RoniiNN]

Also immigrants suppress wages

[@seanphurley]

Just an additional comment on rent caps. It always incentives landlords to always raise the rent by a set price at same time or else risk losing the right to. It turns into legalised collusion. Perhaps there is a more mathematical way of showing this but it is simple game theory. Bad idea ! Find another solution !

[@jamesmc1272]

It the 80s and 90s houses were 3 times income, I wonder what changed in 1997. England ran well with 57 million people, now with near 70 million its very stretched.

[@giansideros]

1/3 of outstanding mortgages as of now are for Buy To Let, meaning that only 2/3 of mortgages are taken out by people who want to live in the purchased property. Imagine if that 1/3 wasn't outbidding first time buyers.

[@patdbean]

7:23 you don't mention population density. The uk has a population density of 280 per s/km against about 100 in France, Spain , Italy. It is all very well to just say build here build there, you can not go on building on farm land while simultaneously complaining about high food prices.

[@Hession0Drasha]

Italy is a physically larger country than the uk. It's not a good metric. Compare amount of arable land per person. Not total land. Some countries are full of scrubland and mountains. Japan, netherlands, italy, have less farmland perperson than we do in the uk. Compare cost of food in those places. Much higher pop density. Uk climate's not great for producing food anyway. We already import over half of it already, it's not like we're self sufficient.

[@patdbean]

@@Hession0Drasha I know Italy is a larger country so is France , that is why I gave the figures as per s/km not just absolute numbers. And yes I know Japan has a population density of 336 per s/km. But they are not importing 500-700k immigrants net and thus have a falling population. The uk population on the other hand has increased by 10 million since 2000

[@Hession0Drasha]

@@patdbean still a bad metric, italy is almost one third mountainous. Has less population by 10 million than the uk. But where people do live, it has a higher density than in the uk. A lot more people live in apartments as a percentage of the population, but they can often be quite large, like 60-100m². Larger than the average uk house in volume. Ireland, has a housing crisis, despite 5 million people living on an island that's almost the size of england, which has 60 million people. They have the same debates as here. More people = more people to work and pay taxes and build more houses. The capacity to build isn't limited by space, or money in the economy. It's limited by policy and tiny economies of scale. It's something that could of been kept on top of by the government, but hasn't been.

[@patdbean]

@@Hession0Drasha so we have to return to the slum high-rised living of the 50s and 60s. So we can go on increasing our population By 500k a year and go on driving the spending power of the average wage down for the next 20+ years? If more people gives you more tax income. why do we have 40% of uk households getting over half their income from benifits?

[@Hession0Drasha]

@@patdbean wages in the netherlands are higher. Food prices are similar. Pop density is significantly higher. It's not a + b = c. It wholey depends on how it is managed. Would decreasing the rate of immigration for a few years, help the government catch up faster? Yes, most likely. Have we hit some magical max limit, that any more people decreases quality of life? No, not even close. More land in the uk is used for golf courses than housing currently. You can make an argument for, how fast the population can increase, having an impact on quality of life. But not the numbers themselves, we are nowhere near a spacial limit. Did you know that the netherlands produces more food than the uk, because of more efficient farming practices? Yields are being improved through gmo's, ai serveilance, hydroponics, all the time. In medieval times, the uk could only support a population of 3 million, based on the best technology and agricultural practices of the time. Time and time agai n, i see people using population as an excuse, to hide that they just don't like people from other places, usually out of insecurity/cowardice. Not saying that's you, but it's depressing how often I see it.

[@DeepakDograx323045]

your Leders are Failed for bring Economy back on Line what suppose you do

[@jezlawrence720]

Fully typical that a UK govt would decide to prop up bigger debt on individuals rather than imposing longer term fixed rates on banks.

[@peterteagleteagle9958]

When they built St Pancras, there were 10,000 bricklayers working on it ,wear would you find that many bricklayers now,we need the population to go, down, that means stopping immigration

[@eddieharris6004]

Is the housing problem not "shortage of supply", but excessive demand? The uncontrolled immigration is fueling the ridiculous rocketing of prices....all very well for the Conservative party donors the big national house builders but makes house buying difficult for our youngsters. Stretched hospitals, schools, loss of green space etc etc.

[@Biskawow]

How can a country that has 1.56 births per woman (2020) have a shortage of housing. You are dying out anyways dude.

[@muratdagdelen8163]

The government should match FTB deposit upto 5%

[@BigHenFor]

You really need to watch the video before you comment.

[@yellowgreen5229]

No. EatTheRich

[@paulbo9033]

1. Declare a War on unaffordable homes 2. Use emergency War powers to over-ride planning regs in Tory nimby hoods. 3. Set up State Owned construction company that specialises in building & bringing down the cost of council houses. 4. Build more supply than meets demand. 5. Sit back smoke cigar.

[@garyb455]

If taxes were not the highest in 70 years and soon to go much higher under a Labour Government, people would have more of their own money and a better chance to save up

[@edc1569]

You miss the fundamentals if everyone had more money then the prices would just go up by that much. The supply is constrained

[@buy.to.let.britain]