It’s considered impolite to use the phrase “speaking through their arse” in headlines these days but this is what we should be saying about this research from University College London. Apparently building more houses doesn’t solve the problem of house prices. These people need to go talk to the economics department of that university to get a little more up to speed on the role of supply in markets and the influence upon prices.
Housing worth £123 billion is barely used in Britain, researchers have calculated, and have called for a one per cent tax on second homes to dissuade people from keeping hold of mothballed property. A new study by University College London (UCL) concluded that building new homes is not the answer to Britain’s housing crisis as they are likely to be bought up as second homes or investments in the most popular areas. Researchers collected information from around one third of local authorities in Britain covering 40 per cent of the population and found nearly 340,000 homes that were rarely used.
There are some 25 million dwellings in the UK – given that there are some 25 million households. So, 1.3% are un- or under- used. We can run the same numbers a little differently, there’s that £123 billion of underused property, total property wealth – net of mortgages please note as this is how we calculate it – of £4.5 trillion. That’s 2.7% and given mortgages that’s an overestimate.
This is not something that requires action for three rather different reasons:
Researcher Jonathan Bourne at University College London investigated the relationship between the percentage of properties which do not have a permanent resident (low-use properties), and housing affordability in different parts of England and Wales. His findings are published in the journal Palgrave Communications, which is part of the Springer Nature portfolio. “One of the goals of this research was to get an idea of the fraction of the population of England and Wales living in areas where low-use properties are more expensive than homes occupied by full time residents, which suggests that the most desirable properties are being bought for purposes other than use as a home, for example as investment opportunities or holiday homes,” Bourne explained. “Some of the most surprising findings were the sheer value and quantity of low-use properties in some areas, amounting to £21 billion in the London borough of Kensington and Chelsea alone, and £123 billion in the entire dataset. We estimate that in England and Wales, 39-47% of the population lives in areas where low-use properties are more expensive than permanently-occupied homes.”
People who have two houses are, quite obviously, going to be the richer people among us. The finding is thus that richer people live in more expensive houses. This surprise anyone other than a researcher at UCL?
Our second reason for inaction is that this is a 1 to 2% problem even if it is a problem. Governance is not accurate to these sorts of levels, it’s too blunt an instrument. Anyone think that the benefits system is accurate to 1 or 2%? The NHS? Tax collection? No, none of them are, are they? And no system trying to rule 65 million with clever plans from the centre is ever going to be. Thus giving us a useful little rule of thumb, one and two percent problems are those we don’t try to address through central governance.
The really big one is, of course, so what? These houses being talked about are not some gift of nature to which all have some right. They’re not the product of some beneficent state, they’re not gifties from the spending of righteously garnered taxation, they’re private property. And that people get to do as they wish with their own private property is the very definition of it being private property. How or even whether people live in their own home is no business of the State’s in the first place.
Finally, one little detail:
the percentage of properties which do not have a permanent resident (low-use properties)
Much student housing does not have a permanent resident. This has been adjusted for, right?