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Aug 06 2010

An Englishman’s Home is his Castle

Corfe Castle*

Back to rant for the blog post, this time on housing.

A house is like a millstone around your neck, once you’re in it the reluctance to do anything that might cause you to move out is massive.

I’ve been somewhat itinerant since leaving university after my degree, I lived in Durham, in Cambridge and then in Poynton and now in Chester. It goes with the job, I’m sufficiently specialised that I need to travel to find work. For families containing two academics this leads to an even greater “two-body” problem; not every town or village needs a research scientist of my ilk. The downside of this is a degree of rootlessness and a lack of a handy family network. I’m not sure how common this rootlessness is across the population as a whole, it’s true for many of the people I know.

It was when I was house hunting in 2000 that I got some hint of the credit crunch, I’d gone off to see the financial advisor upstairs from my estate agent to ask about offset mortgages (having been mildly burnt on payment protection insurance, I was trying to work out the hitch on offset mortgages). We had a bit of a chat; after some reassurance on what I was trying to get he pointed out that I was ultra-cautious and if I wanted he  could get me a x4 joint salary mortgage. I’d done the sums on this, and frankly it was scary but clearly a lot of people were doing this.

People often have a go at estate agents but personally I think it’s the other punters that really fuck you up. Estate agents at least have to make some pretence of professionalism whilst the punter is free to do as they see fit and since they’re unlikely to have bought and sold more than a couple of houses they can either by malice or ignorance make your life miserable. The bank and the solicitor’s ability to find another little fee to slice off you on the way irritated me too. “Searches” caused me particular ire – it’s not like they actually went and “searched”, they got someone else to do an indexed retrieval, it’s not like they went rummaging anywhere for something lost. Searching for documents these days takes bugger all time and effort. It’s perhaps for this reason that I thought HIPS were a good idea, because I was pretty unimpressed by the system currently in place.

House price inflation is apparently the only good sort of inflation: no one is pleased if cars, carrots, or computers get more expensive every year but for houses it’s different. For those of us on the housing ladder this inflation is no problem, for those not on the ladder it is the sight of the bottom rung being wound up beyond reach. Compared to the 1950’s houses are about x4 more expensive in real terms today, they’re about twice as expensive in real terms as when we bought our first house, about 12 years ago.

The real point of this post was a mild bit of ranting about care for the elderly and the sale of houses. Houses appear to be sacrosanct, you can be sitting on a house worth half a million pounds but rather than sell that to pay for your care the expectation is that the State should provide. Personally I’m hoping for my parents to piss away the inheritance in their twilight years and leave nothing to me – this includes the house. This attitude to housing and inheritance seems to affect every strata of society:

Owners of country estates apparently expect the public to pick up the cost of maintenance. And in the news this week, council houses – I must admit I didn’t realise that council house tenancies were for life and potentially beyond. This strikes me as a nightmare for those responsible for the councils responsible for social housing provision, particularly given the ‘right-to-buy’ legislation. An obligation to provide housing for all is a good thing, the mechanism that via council houses, housing associations and housing benefit doesn’t look like a great way to do it. Actually, housing associations do look like a good idea to me. If you were a company with this obligation you’d want to make bulk arrangements with landlords, and you’d be fantastically nervous about handing over valuable assets for decades. 

The move towards mass ownership of housing is relatively recent – mainly post-war in the UK (see page 12 here), and around Europe home ownership rates are broadly comparable, there are a couple of anomalies. I guess the reason for this is that home ownership fulfils a deep need for security, and literature and recent history reveal plenty of evil landlords.

I suppose the general point I’m making here is that we all want to pass on an inheritance, this is a very natural feeling but the effect of this desire impacts those that are still living and don’t benefit from an inheritance. I actually quite like Billy-Gotta-Jobs proposal on taxing all houses as capital gains on death, as a way of cooling house price inflation.

Update: as supergoonybird points out in the comments, BillyGottaJob’s proposal is actually for capital gains tax on *all* house sales – not just on death. This is a radical idea – but certainly one that strikes in the right place.

*Corfe castle because it’s close to where I was born and lived until I was 18. Image from here.

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