#56: - Re: 54
Increased housing supply, if provided, will push down prices locally and make housing more affordable for the young and old alike locally.
The median wage of an employed young person in their late twenties in Barnsley is some £15k (and a third are not economicaly active). At a generous ratio of three times earnings an employed young person wanting to buy an average house in an average area and subsequently raise a family could perhaps afford to pay £45k for a home in Barnsley, if willing to go into great debt to purchase one.
Tax credits would be required for the person to raise a family in said home, as their meagre wages would barely cover the mortgage on said home, let alone the cost of bringing up a child. Taxes will have to rise elsewhere in the economy to subsidise a young person willing to take on such a large debt for a home if they choose to start a family down the line (by subsidising the cost of having a child, our society allows people to spend more on housing, so were it not for such subsidy, housing would have to fall in price and become even cheaper). Young people face additional income taxes (NEST pension payments to make up the previous generations shortfall) over the coming years, above and beyond that paid by people over the previous decade, and many now have to pay monies towards debts accrued in the course of their education as well.
Thus a young person wishing to buy a home in the deprived and low paid region we know as Barnsley and the villages surrounding it, would be wise to pay well under £45k. Especially when we consider that interest rates can't really go any lower and are most certain to increase in due course, pushing up mortgage costs and pushing down the cost of housing in due course.
When we consider that an increasing proportion of local taxes are being diverted to pensions of previous workers for BMBC, before we even provide statutory services locally, we also have to wonder how services will be provided in the coming years/decades. New houses at least increase income for the council in the form of council tax, and help to sustain local services, which are facing a triple whammy of poverty among the working young (and inability to pay), reduced grants from central government, and legally protected discounts and subsidy for pensioners.
That said, these houses need not be purchased by young people, and it is quite likely they will not be purchased by young people. Most people entering the rigged housing market today are forced into the PRS. Their rent is artificially inflated by various rental subsidies and planning restrictions, that restrict the supply of housing whilst increasing the amount of money chasing said housing. People renting privately get no tax breaks and must pay rent out of earned income taxed at source.
The artificially high rents however, can be used as a income stream for buy to let landlords, who do receive tax breaks when it comes to mortgage interest, and landlords can leverage themselves against this income stream, thus using the income stream of people forced to pay over the odds to rent privately, to their benefit.
In effect, young people are forced to pay money to a class of people who can leverage themselves against said money the young people are forced to pay. Thus young people are forced to compete in a highly unequal system, whereby they are effectively pricing themselves out, by being forced to provide landlords an income stream, that landlords can leverage themsleves against, to outbid young people. To add insult to injury, the landlord is able to receive tax breaks upon the mortgage interest, and deduct various other expenses. Property need not be held in this country and can be owned via shell companies in offshore tax havens, allowing large landlords to extract money from the local area indeifnitely and without paying much, if any tax on their profits.
We essentially have a system of feudalism in operation.
Whilst I am not against house building per se, it seems pointless building homes, if (figuratively speaking) they are to be the noose used to hang our up and coming (or should that be down and out?) generations, due to the highly inequitable system of property ownership, planning restrictions, rental + mortgage subsidies and the resultant speculation in place in the UK at this current moment in time.
That said. By the time these houses have been built, interest rates may have begun to rise, triggering a property price crash, and house prices could easily be falling towards an affordable level for our children, siblings etc.
Oh how I wish to be in the enviable position of being able to oppose shelter for others, as it might depress the value of my own property.
You have to wonder if food would taste better, if you were to eat it in front of a homeless person, that you were able to deny access to a foodbank and prohibit from growing his own food, to ensure he was starving. Peace and love and dreams of a better future where I could have a slum to call me own.
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