Popular Theft

This tweet caught my eye:

On the one hand, this should appall most decent people. What “help and encourage” means in the context of a government policy is “force people to do it whether they like it or not”.

On the other hand, I’m not sure what people expect. I have argued several times on here that my generation and the one or two that preceded it have utterly shafted future generations by inflating property prices for their own benefit, permanently pricing out anyone who was born too late to take part. The government was happy that cheap credit was giving the middle classes the impression they were rich, the banks were happy to keep lending ever-increasing amounts giving the illusion of a booming economy, and the property-owning classes made damned sure any government seeking to implement policies which would burst the bubble – such as raising interest rates, or relaxing planning laws – would be out on their ear in short order. The property market in the UK was a giant stitch-up of between the property-owning classes and successive governments for their own mutual benefit at the expense of pretty much everyone else, including everyone younger than they are.

Anyone who thinks the Corbyn-inspired millennials are going to just accept this is stupid: they won’t, and they don’t have to. Because another notable achievement of the Blair and Brown years aside from rocketing house prices was the replacement of outdated principles such as freedom and property rights with the notion that anything is justified provided you can get enough people to vote for it. I remember when the fox hunting ban was being rammed through parliament, a common refrain was “this is what the majority want” leaving aside the fact that what rural folk get up to ought not to be subject to the approval of urban lefties. A decade or so later we had the smoking ban, justified on the grounds that “most people approve of it”. For my part, I think it should have been left to individual landlords.

So if the Corbynistas vote in enough numbers to confiscate granny’s house, on what principle can anyone object? We’ve already accepted the idea that anything and everything can be changed on the whim of a majority vote, rights be damned. The irony is those property-owners who will suffer the most from any draconian, illberal, and downright immoral scheme to seize houses from under them will have voted New Labour, and thoroughly approved of each and every piece of authoritarian legislation for which the “will of the people” was wheeled out to justify. And let’s not pretend the Conservatives were any better, or their members voting for leaders who put principles over populism: they’ve given us Cameron and May in quick succession, neither of whom would recognise an individual right which the state may not infringe if it came from behind and kicked them square in the arse.

So I think we can expect to see more proposals like the one in the tweet above, and it’s going to be interesting watching people who were happy to abandon long-held principles for their own short-term political and economic gain suddenly rediscover them, and complain bitterly that the thugs at the door aren’t interested. They can’t say they weren’t warned.

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29 thoughts on “Popular Theft

  1. “The property market in the UK was a giant stitch-up of between the property-owning classes and successive governments for their own mutual benefit at the expense of pretty much everyone else, including everyone younger than they are.”

    While I loosely agree, this has not been the main driver. The simple fact is the housing market is now dominated by couples with two professional incomes. That, together with low interest rates, make it very difficult for anyone other than a couple of significant incomes to buy a house in the ‘nice’ places that couples on two incomes like to buy.

    That has been a major structural change that has made property an attractive investment as well.

    Let’s also not forget an immigration policy that pours people into a housing market that has a highly restricted supply.

    The place this younger generation has more of a grievance is lumped with tens of thousands of debt to get a worthless education that will require most of them decades to unlearn before they are functional people again. That is the true scandal.

  2. >another notable achievement of the Blair and Brown years aside from rocketing house prices was the replacement of outdated principles such as freedom and property rights with the notion that anything is justified provided you can get enough people to vote for it.

    Only if it’s something left-wing. Doesn’t apply to anything non-progressive, eg. capital punishment, immigration, low taxes, etc.

  3. But I thought moving people out of communities which they lived in for a while is an affront to human rights or something? That’s what gets said when someone suggests someone whose in council housing gets moved from Westminster to havering?

  4. How about not giving people housing benefit/pension credit to live in zones 1-3 – that would make housing cheaper overnight

  5. “Anyone who thinks the Corbyn-inspired millennials are going to just accept this is stupid: they won’t, and they don’t have to.”

    Indeed. There will be trouble. Social changes have created a coalition of the propertyless. But then again, a full-on Corbynite government would initiate social changes – including expropriations and confiscations – that will create a coalition of the propertied. You know, those people who have children to protect, and who will use their financial and legal knowledge and power to protect them. Then there will be real trouble.

  6. Tim writes: “I have argued several times on here that my generation and the one or two that preceded it have utterly shafted future generations by inflating property prices for their own benefit, permanently pricing out anyone who was born too late to take part.”

    I think Tim misses much of the cause, and oversimplifies the issues. Most price increases (IMHO) arise from increased demand and/or reduction in supply.

    Between 1961 and 2016, the UK population increased by 24% (from 52.8million to 65.6million).

    There are interesting figures here on natural growth versus net migration. Note in particular that net migration was negative to very low prior to 1991. It then shot up markedly so that, in the decade from 2001 to 2011, annual net migration was the cause of (close to) 59% of population growth – who doubts that, since then (though Wikipedia gives no data), net migration has remained a very strong contributor to the additional 2.4million population growth.

    More on population: here are net migration figures for the UK, EU and non-EU origins. Remember these are annual immigration, emigration and net migration – they are not snapshot population figures. Try this link if you are interested in snapshot population figures by country of origin, but please remember that these figures are not purely representative of net migration by country; these particular figures include the effect of deaths in the UK of foreign immigrants.

    So, have the number of homes increased. Here is a plot of housebuilding starts in England from 1970 to 2016. It looks good at perhaps around 150,000 per year (for 3/4 of the UK). But remember that there is no allowance for knocking down homes – and I understand house build policy is for a 70-year life for modern new homes – so eventually perhaps over a quarter of a million new builds might be needed annually just to keep pace with ‘wearing out’.

    Next comes where houses are. There is clearly a strong population bias (totals and growth) in London and the South-East. World-wide, the housing costs in major cities (let alone London as one of the World’s two A++ cities) are much higher and growing, compared to where the jobs are not. I understand that in places such as Singapore, property prices are so high that paying off the mortgage is often a multi-generational project (understood by the banks). So, what greedy selfish demographic is too be blamed for the problems of the rest of the world?? Now and in the future (China and India look out)!!

    The point I am trying to make is that there is, in the UK, evidence that increased demand and/or shortage of supply is affecting house prices, as is changing geographical requirements through employment. Throughout the world, somewhat similar problems may well be largely down to economic growth and and population growth.

    David Moore makes an interesting point on mortgages needing two incomes. However that is surely not something new – from my personal recollection, two incomes were often (even usually) required back in the 1970s; 95% mortgages were a great help too. And houses available back then mostly did not come with central heating, double glazing, fitted kitchens, etc – owners who could not afford these things did without – acquiring them later at extra expense.

    Finally for now, back to “Popular Theft”. All home movers interested in ownership are penalised by the government policy of high Stamp Duty. This has an adverse effect on labour mobility. It also has an adverse effect on the movement of retired people. Both of these have knock-on effects on economic growth. Moving to change job is made more expensive. Downsizing to afford oneself, the needs of ageing, are made more difficult (even for those who have) – and the government complains endlessly of this, while pulling private cash out of funds for care homes etc into its own greedy mitt.

    Best regards

  7. While your point about the responsibility of previous generations with regard to the problems with the housing market is well made, I have to say that I think many of the problems faced by millennials when it comes to housing are largely self inflicted. Due, mainly, to either the life choices they make or the views they hold. I’d argue, for instance, that choosing to become a Vegan Food Blogger isn’t perhaps the most lucrative career option if you want to be able to purchase a home of your own.

    Likewise, I’d make the point that, on the whole, the millennial generation’s being in favour of “open borders”, “refugees welcome”, and “freedom of movement”, hasn’t helped, but instead made things worse for them. All those immigrants/refugees are, after all, going to need somewhere to live. If you want more people to come into the country – while simultaneously moaning about being unable to get on to the property ladder, largely because prices have shot up as a result of the increased demand – I think you bear some responsibility for not having thought through the consequences of your actions.

  8. I would suggest this is more of a London problem than a national issue. I doubt professional couples dominate the market for terraced houses in Gt Yarmouth.

  9. I bet the bulk of old folks would love nothing better than to downsize to something more manageable. Unfortunately there’s either nowhere to move to, or the cost of moving is so prohibitive it’s not worth the bother.

  10. The liquidity of the housing market could be increased by setting stamp duty at whatever low level is required to defray the costs of the Land Registry. £100 per purchase? £50? The tax revenue lost could be regained by introducing my favourite new tax, the Lefty Levy.

  11. “I bet the bulk of old folks would love nothing better than to downsize to something more manageable.”

    If they want to give the house to their kids (or its sale proceeds) and they see property as a particularly safe or high earning class of investment, that can be a big disincentive sadly.

    Will be a long time before people start to se homes primarily in terms of a supply of housing services rather than as an investment asset.

  12. “Will be a long time before people start to se homes primarily in terms of a supply of housing services rather than as an investment asset.”

    Which in most of Switzerland it is. Still trying to get my boomer parents’ heads around the whole “no, I’m not going to make a mint on selling my properties in x years”. “No, we’re not going to sell our apartment after 5 years and upsize”. It really doesn’t work like that here, outside of a few already very, very expensive bijou neighbourhoods.

    They’ve got their heads around an apartment (a 100k roof replacement is only 5k my problem not 100k my problem is simple enough to understand), but they still can’t quite get the whole non-inflationary aspect of the bulk of the housing market. Even after I told them that the people who sold me a 1.5 room unit sold at a loss after holding for 22 years.

  13. The concept of selling a house after so long to make money rather negates the fact that the next place one buys is, er, a whole lot more expensive because everyone else has the same dream. It’s also a question of how long you wait to make that mint.

    When my parents sold their home in Elstree, Herts, for £3,500 they of course sold it far too soon: if only they had waited fifty more years they would have made nearly a million for the same pile of bricks and mortar. Except they didn’t live that long and anyway, unless you move as they did to an industrial city oop north then staying in the same district is pretty much financially self defeating. The idea then that everyone who hangs on for years sells for lotsacash and moves to say, a terrace house in Dingy Street, Grubbytown will actually only force the price of terrace houses up in aforesaid place.

    An estate agent once said to me the trouble with money coming up from down south is it still hops over certain places. Yes, that detached house I had in Rotherham did not — four bedrooms and garage and all the rest — appeal to people from the likes of Elstree. I wonder why?

    In other words, all this property craze is all hopeless. Yes, it is hard for young people to buy their own home these days but there are always council homes.

    However even that isn’t paradise: my mother had a council flat and the local council started offering people a choice of colours for their front door. Trouble was, people chose some colours and not others so (inevitably) to save money the council mixed all the paint they had for the remaining thousand front doors and everyone ended up with the same shade of turgid, sickly brown. Choice in property, in the end, was all down as it always is to what it costs.

  14. If we had US levels of property tax that I’ve seen mentioned, we couldn’t afford to keep the house we have lived in for many years. So Corbyn needn’t steal our houses, he could just tax us out.

  15. Euthanize the elderly; seize their assets. You can’t get anymore progressive than that.

  16. Pushing 60 and personally this is all rather academic but I am watching with a fascinated and detached eye. I can’t imagine my one befroom flat will be of any particular interest.

    I don’t think it’s “millenials” vs “baby boomers” as such as there is a significant subset of the former who will benefit directly from the latter ( bank of mum and dad anybody?) and there is a significant subset of the latter who’s profligate use of their houses as ATMs puts the average “millenial” to shame.

  17. I despair at this generation versus generation conflict that our successive governments have been stoking. And to be clear, the blame does most clearly rest with the governments that make pension promises they cannot keep, that continually inflate house prices, that push for >50% of the youth being university graduates and the costs and debt that entails, that push a “have-it-all, participation award” mindset throughout schools, that continually go ever further into debt and spend more and more money that is not theirs, that push “votes by age group” as one of the key/only analyses of every election result. It should be generations (well… individuals ideally) looking after each other, as in families and local communities

    Part of me wonders if it is just yet another sphere that the lefties want to push into conflict to bring society apart: class war, gender war, race war, age war.

  18. Part of me wonders if it is just yet another sphere that the lefties want to push into conflict to bring society apart: class war, gender war, race war, age war.

    Consciously or unconsciously they’re looking for “classes” in the Marxian sens to pit against each other to have a class war.

    The real true believers seem to believe that *this time* the class war will bring about the inevitable victory of the proletariat as Marx “scientifically” predicted, whoever they’re supposed to be these days.

  19. I now live on my own in a 3 bedroomed detached house. My kids have grown up and left and my wife has sadly passed on. I want to downsize to a 2 bedroomed terrace house close to my kids and release a bit of extra capital, but once you add up the legal, conveyancing, moving, and estate agents fees, plus the stamp duty, I will end up In a smaller house with no extra money. Staying put? Too bloody true. If the government wants people like me to downsize, make it worth our while.

  20. “Part of me wonders if it is just yet another sphere that the lefties want to push into conflict to bring society apart: class war, gender war, race war, age war.” You know Mal, I can’t help thinking these so-called ‘wars’ are nothing than the self vindication of noisy otherwise-useless mouths stirring up drama and conflict to make themselves feel important.

  21. One point I would make is that the initial post is predicated on the idea that everyone is ENTITLED to own a house …

    So a dustman with 27 kids is entitled to be a home owner with a property that is suitable for his large family?

    As an aside, when I was first married, my wife knew a local family living in a council house (as we were, living in a one bedroomed council flat). She had gone to school with the two daughters. The father, mother and the two daughters were all working at good jobs. The father was the life and soul of the local working mans club, drove a brand new car that was changed about every 18 months and they all had foreign holidays every year.

    They could not “afford” to buy a house whereas we bloated capitalists that lived like church mice and saved enough to put a deposit down on a house were snobs and social climbers.

    I think that there is a poverty of imagination and/or aspiration plus an entitlement attitude that masks the “we can’t afford to get on the property ladder”. Added to the point that a house is an INVESTMENT that must be traded for a bigger, better and more prestigious one further up the ladder is a bad attitude. Buy a house and look on it was a place to live which isn’t money down a rat hole in rent. End of. As Penseivat noted, by the time you take into account the costs of moving, chances are that the game isn’t worth the candle.

    But Millennials wasting their money on luxuries such as foreign holiday experiences, costly mobile phone plans, eating out and never learning to shop and cook, fashion and other non essentials are entitled to cheap and available housing? Hmmmmmm…

  22. Land price inflation is a long term phenomenon that performs irrespective of any tinkering by short term elected party policy. The majority of the gains generated by the productive economy will always find their way to being ultimately used to bid up the land prices with better location value. The productive gains of an economy will always be taken up by increased land values and this won’t stop unless there were significant changes to the current land ownership, lending and taxation systems. Currently there are no such changes proposed.

    The home ownership rate may have dropped slightly in the UK but I don’t think it is material. Politicians may promise affordable housing but this is nothing more than a hollow election promise, the only places with affordable housing are shitholes where nobody wants to live. If they weren’t in shitholes buyers would bid up the prices to ever increasing heights. Up until they won’t and decide that they don’t want to pay more, this is the top, then transactions slow, then price drop, then credit contracts, then prices slumps, then sentiment recovers, credit starts pumping again and land prices shoot higher than the last cycle high. The costs of building a house or their placement cost for an existing one only increases by the inflation rates of wages and materials. From an asset point of view the actually depreciate in value, unlike the performance of the land value.

  23. By the way, home ownership in Switzerland is under 40%. The overwhelming majority rent for their entire adult lives. But then the state and obligatory pension system reflects this, whereas in the UK it largely seems to be predicated on either having paid off your mortgage or living in a Council house.

  24. Property ownership in the UK is a highly emotive subject, but the thrust of Tim’s post is right – there is a stitch-up taking place, because in this country rising house prices are the first and only provider of the ‘wealth effect’ to the middle class – the saving habit has long-since died out and few people have much interest in stockmarkets. Interest rates are at their lowest in all recorded history, and people are in debt up to the eyeballs, because there is no incentive or mechanism to start the painful process of deleveraging. It could end very badly indeed.

    http://uk.businessinsider.com/chart-5000-years-of-interest-rates-history-2016-6

  25. Affordable housing is an interesting idea, and were I ever to be an architect (bit late now, I suspect) I would be interested in creating economy homes for people. Before you say I’m a socialist at heart who just wants everything for all, my solution might be starter homes that are nicely converted shipping containers.

    A door, a couple of windows and the odd dividing wall would give lots of singles/young couples a basic start. They could even, in the way yoof loves the lolz, paint them in outrageous slogans but no one would care as it’s only pressed steel and can be melted down when demand shifts.

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