We need homes not bubbles

by Daphne Liddle

THE AVERAGE price of a home in Britain has just reached a new record according to the Office for National Statistics. The average price of a house or flat in Britain is now £247,000, the highest figure since the index was first calculated in 1968.

But there are huge regional variations and in Scotland house prices are falling.

As usual house prices are rising fastest in London, with a rise of 8.7 per cent in the year to August compared to the next biggest increase of 3.8 per cent in the East Midlands.

House prices in London are driven up by wealthy overseas buying London properties as an investment, knowing the resale values will rise — and giving them a home address in the capital where they can enjoy very low business tax rates compared to other capitalist countries.

This means that many of these luxury homes stand permanently empty while low income Londoners are facing eviction and homelessness due to cuts in housing benefit, the bedroom tax and soaring rents in the private sector.

But this is the way the Con-Dem Coalition like it and why Chancellor George Osborne is using taxpayers’ money to make it easier for first-time home buyers to get a mortgage.

He is asking banks to take more risks by granting 95 per cent mortgages and giving them a guarantee that the Government will cover 15 per cent of the costs if buyers default.

This of course benefits the banks more than the buyers and is precisely the same policy as the American sub-prime mortgages that triggered the 2008 banking crash, when critical numbers of low-income home buyers defaulted as interest rates rose steeply.

Osborne thinks this will boost the economy in the short term by creating some demand that will improve his figures up to the next election. After that the deliberately-induced housing bubble is likely to burst and all hell may break loose — but that may happen anyway as the mighty dollar is losing its creditworthiness.

The housing charity Shelter warns that the coming month will see the removal of a vital protection measure designed to help people get back on their feet after losing their jobs. Under the coming changes, financial help available to renters during the first three months after they lose their job will be dramatically reduced.

A Shelter and YouGov poll shows that over half of working families are already struggling or falling behind with their rent or mortgage, Shelter is warning that this could lead to an increase in homelessness.

The research identifies national hotspots where the risk is especially high: Manchester, Bristol, East London, Norwich and Newcastle have been identified as areas of serious concern.

A much better way to boost the economy and create new homes and jobs would be a massive council house building programme. This would put money in the hands of the working classes, who would spend it immediately on tangible commodities and boost demand — instead of hoarding it like the bankers to speculate on hedge funds, futures, wind, water and fairy dust as they are still doing in spite of the lessons of 2008.

A cap on rents would also see hundreds of thousands of workers more secure in their homes and with more spending money in their pockets and at the same time reduce the need for housing benefit.

It would also reduce the burden on councils of having to find emergency expensive bed-and-breakfast accommodation for evicted families — and the costs of social services and mental health services needed for those, including children, who are currently suffering the trauma of homelessness.

The only people who would suffer from a cap on rents are greedy landlords — but they are among the best friends and relations of our Government’s front benchers — along with the greedy bankers.

The campaigning group Defend Council Housing (DCH) says: “Government policies are turning a housing crisis into a disaster. With new build at a post-1920 low, and homeless numbers soaring, subsidies are stoking up buy to let and another financial bubble.

“Ministers have gone to war on tenants, with divisive lies and abuse. Cuts to housing capital investment are combined with a major attack on tenancy rights, rents and benefits.”

DCH is calling on tenants, trade unions, councillors and MPs need to organise together to campaign against plans to transfer even more council homes to the private sector and to build more council homes and bring down rents.

“We need a new generation of first class, energy efficient council homes with secure tenancies and low rents,” says DCH.