John Clark writes…
First published: February 2005
Ryedale people live in houses. They are our homes – they are not an investment.
The property market is viewed as part of the British Economy. When house prices fall by a few percent this is national news. Is this approach the way to run the British Economy? Is it good for Ryedale? I would venture to suggest not. The average house price in Ryedale is in excess of £180,000. An average male wage in Ryedale is £19,000: the average Female wage is £13,000. Whatever the salary multiple taken by the mortgage company this combination of numbers means the wages do not support the buying of a house. It’s not a case of a missing bottom rung – the whole bottom half of the ladder has been sawn off and thrown away.
The so-called ‘Free Market’ tells us that this is a question of supply and demand. People with one perfectly good large home think it would be nice to buy a second home in Ryedale. These purchasers have a large income, they can afford a second ‘house’ and they have a large cheque book. This increases the demand for houses and thus up goes the price. The value of both their houses increases. Their ‘greed’ has helped to pay for their second house.
The government tells Ryedale we must build more houses. RDC is forced to give planning permission for more building. Most of these houses are bought by commuters and for retirement. Local people, youngsters and those on average Ryedale incomes have no chance.
The population of the UK is aging: people in Ryedale even more so. There is no need for more destruction of our countryside, crowding of our villages and more traffic on our roads. How have we got into this mess? Why have we abandoned the idea that a house is where we live – it is our home? How has it become an investment? The whole process is a treadmill. Is there the will to get off?
Mrs. Thatcher was elected on a ticket of ‘Right to Buy’. A good idea but I believed that discounts should be small and that before any house could be sold another council house should be being built. This would give the benefits of house ownership without depriving the lower paid, the poor, the needy and the homeless of a roof over their heads. Needless to say none of this was done. Even worse, local authorities were only allowed to spend a small percentage of their house sales receipts on building more council houses.
Now the Tories are saying that tenants should have the right to buy their Housing Association homes. Selling Council Houses and reducing the social housing for the poorer members of our society was wrong. This latest Tory news makes a bad situation even worse.
The ‘old’ Labour Party opposed the sell off. Now the government is proposing that all Housing Association tenants will have the right to buy up to a 50% stake in their homes. The sweetener to this pill is that they must offer their house back to the Housing Association when they sell. The Housing Association will have to find a way of ensuring that its half-house money keeps up with the housing market. Otherwise the social housing stock will decrease even further. Meanwhile those moving up the housing escalator can use the money for pensions, student fees, holidays, setting up a business. All these at the expense of those who cannot afford to take part in the property market.
Rather than going on about the problems, what are the solutions? The Dales National Park is looking into the possibility of building low cost housing ‘earmarked’ for local people and essential workers. I wish this well but it only offers a few a very small solution as the mass of the housing stock will still be out of reach. The planning function could insist that planning permission is required for any residence to be used as a holiday home or a second house. Clearly such permission would rarely be given in Ryedale or the North York Moors National Park. Building more houses is not a solution. Wealthy people just snap them up so as to own two or three.
- Government should help first time buyers by interest free loans, tax relief on mortgages. This of course must not be for buying Housing Association housing.
- The government could take money out of the property bubble before it bursts, e.g.;
- Money could be taken out by capital gains tax
- Money could be taken out by charging a higher rate of inheritance tax on domestic property
- Probably the best way would be to charge five or six times council tax on all non-main residences.
This taxation would remove the ‘profit’ out of house property ownership. At present this is reducing the value of working people’s wages. Some of the income from this could be used to support first time buyers or for building more social housing for rent.
The result of all this would reduce the size of the property market in relation to the economy. The houses we build would be for those who needed homes. A second house would be taxed heavily in the same way as other harmful luxuries. Social Housing would be available for those who needed or wanted to rent. They would have the ‘right to rent’.