Simpleton’s Economics (Economica Simplitica)

Chapter 3 Homelessness and New Builds

©GeraldineBanksJune2024

The image above says two things to me, it says “here  the keys to your new home “or it says, “Your home has just been repossessed, and you can no longer live there.”

Forty years ago, the banking rules allowing people to buy property were relaxed, and Adam Smith and Milton Friedman’s theories on free markets were unleashed on an avaricious property buying public. The bankers had a field day, and property became the be-all and end all. House prices started going up and, in truth, don’t seem to have ever stopped for properties in the right location.

The percentage of the population that owns a first home worth a million pounds has grown significantly. (Not even going to mention the second homes).

There is a housing shortage, so we must build more houses and people must accept that they will be living closer to each other, and that their  lives  will be disrupted while  the infrastructure, such as water, sewage ,power and broadband are laid to these new properties. To hell with any sort of planning, build , build, and build.

What is the real economic reason for this, is there really a shortage of housing for high earners? Is there really a shortage of housing for low earners?

Builders are just not interested in building houses for low earners, they want to build minimum four beds with garages, really they want to make big bucks, so they want a price tag of say £500,000, so they can make a 50% or 60% profit. That is the economic reality.

Councils can try as hard as they may, to negotiate an element of social housing , but building a property that will sell for £120,000 is hardly worth getting out of bed for if you are a builder. There are bigger fish to fry.

We are building new builds for people who are already on the property ladder and wish to upscale or downscale ( depending on their time of life). If you are close to retirement , you are probably thinking of a low maintenance bungalow.

It’s like private club, if you are on the ladder then you can play the game. If you are trying to get on the ladder then it’s a slippery slope unless you have help from your property owning relatives.

Hopefully the economists are doing surveys on this and there is a Think Tank that says low earners will never be in a position to own their own property and that they have been excluded unfairly  from one of the key economic indicators of success in society.

Actually , no, I don’t think that study has been done , or indeed the report written, or if it has they are being very quiet about it.

Getting back to the basic building blocks ,the real reason for continuing to build more houses for the rich is to keep the poor working. We are building new builds purely to employ labour in low-level jobs.

Building site workers on the whole are well paid and work at all sorts of jobs, not just skilled trades , like bricklaying , electricians and JCB drivers , but the ancillary staff, the humpers and dumpers or  as they are known the CSCS Green Labourers Card holders.

Without CSCS, you can not work on any building site, whether for housing , road infrastructure, or any municipal project. I suppose it ensures that the people working in locations that are inherently dangerous do not endanger themselves or others, which, considering the Construction Industry has a high accident rate.

Still,a lot of those Labourers will have few or any qualifications and will leave school to work on building sites.Unless we build and do infrastructure jobs(like repairing potholes),there are  no jobs for them.

I suspect the government realises that and hence Build,Build and Build.Also Building is like the Brewery Industry,there are a lot of  Political Grandées from all parties who have an  interest in the construction Industry.

The late Lord McAlpine, being one of them who ended his days running a Tuscany  Bed and Breakfast with his young wife , his Company McAlpine’s was found to have a database of  blacklisted CSCS workers who would not be employed on any McAlpine sites either because of a history of  Union Activity,or because they had raised concerns about Health and Safety at work.

Please don’t tell me  people like Lord McAlpine don’t have an interest in  controlling workers  and, therefore, the labour market.

Free movement of labour my foot. House Building for profit and employment for the lowly qualified,an economic success story,sponspred by lobbyists , political grandées and politicians alike.

Mind you, those building workers are the lucky ones(when they are working,they have a reasonable income).If you are on a low income and living in the private rental market,you are one monthly payment away from being homeless.

A reality that came close to me when my next-door neighbour had a no-fault eviction served on her. There was nothing she could do,despite not wanting to move out, she had to.I was very shocked.I didn’t know how much the law had been changed in favour of buy-to-let landlords.

Another  lady told me that her daughter had moved in with her boyfriend and was renting out her house.The agent handling the rental  told her that the daughters new tennant who had just moved in 3 months prior at an agreed monthly rate should be asked for an increase in rent to reflect the market value.The daughter said there was no need as the rent was covering the mortgage.The increase was nothing to do with the market,but was  been driven by a  greedy agent who wanted more for is fee.A Microeconomics nightmare.

In other words,there is a dangerous instability in the rental housing market,backed up by legislation put in place over a number of years and free market beliefs that anything goes.

The buy to let model simply does not work,as even on the supply side ,if the landlords have overstretched themselves and aren’t able to pay either for repairs or indeed their mortgage loans due to increased interest rates. Then, the property will be sold or repossessed.Resulting in more instability.Surely the economists could have produced a predictive model for this?

The answer my friend  is blowing in the wind.

We have had numerous governments who haven’t cared about what happened to people who weren’t part of what they perceived as the elite ,and now those people are  exposed to potential homelessness. 

There are no signs of a solution other than making buy to let Landlords bankrupt themselves, trying to do what social housing used to do  with public funding.

The costs of providing four walls and decent living conditions , whether in the private sector or the public sector, are the same.

There was no benefit in putting it into the hands of non-professionals and amateurs.We need social housing, not for profit, and that supplies decent living conditions for all.It’s a basic human requirement.

Anyone fancy living in a barge?