According to some important new research today from Oxford academics, the housing situation in the UK, especially in London, has become grotesque. Families have little security of tenure and rents are the biggest factor in the cost of living crisis. The solution suggested is to make tenure longer and safer. This will make life tougher for rich landlords, but they can afford it.
People have short memories. When I was a kid, many decades ago, I grew up in a private rented house. The rent was affordable, maybe thirty pounds a week in todays money. The problem was that on such low returns, the landlord – the grandson of a man who had bought a whole row of our terraced houses when they were built in Victorian times – had no incentive to maintain or improve it. So we lived with a hole in the roof. That is what happens when you get such controls. By 1980 private rented accommodation outside of student bedsits had virtually disappeared.
There are better solutions, and ones that are more efficiently redistributive. Making primary residencies liable for some capital gains tax is one obvious one that would remove this massive distortion in capital returns and calm the market. And if we don't like rich landlords then we can raise taxes on the rich generally; we don't need to attack them as a modern day kulak class. We could also relax planning rules further, provided we don't build on flood plains. Most of all we could use all the technology we have to let people work from home, in which case fewer workers would need to commute to some office in London and they can go and live in lovely Yorkshire, say.
The truth is that property has become a huge Ponzi scheme and despite all the problems, too many voters like it that way. It will take a brave politician who suggests we wend it before it collapses again, as it surely will.
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