houses

An audit by Commission for Architecture and the Built Environment (CABE) on housebuilding in the UK has condemned the majority of new developments:

A staggering 82% of new homes built over the last five years aren't well-designed and fail to measure up to the building industry's own benchmarks, says the first national audit of new private housing design. Nearly a third are so poor they wouldn't have got planning permission as they stand.

See The BBC News Magazine for more details.

This article shows how badly the UK housing market is broken, and how grave deficiencies in the planning system have made it extremely difficult for those on average or below-average incomes have any hope of buying a property for themselves. It points out how the grossly inflated cost of property (which is of course not reflected in the RPI figures, because a house is not a "retail" purchase) makes us all poorer. Except the Treasury, which is getting over seven thousand pounds in Stamp Duty on the average FTB purchase in London, of course.

It points out that London is a law unto itself, and is distorting the figures for the whole of the UK, and making us outside the capital wonder how it can be that the performance of our BTL investment can be so much worse than that of the country as a whole.

It argues that the only solution is a good dose of rampant inflation, which will bring up salaries sufficient to cover the financing costs of property, and will erode the real value of loans. This assumes that the Bank of England will be unable to stem the rise in inflation. It may be that it cannot, but it will surely raise interest rates a lot in the attempt, which will cause a lot of pain in the short term.

And while I'm on this subject, I would like to draw your attention to this article in the FT. It points out that the price of flats is responding in a textbook way to the flood of supply that is coming onstream, driven by Government targets for high-density developments - 50 dwellings per hectare - which can be met only by building lots and lots of tiny flats. The combination of nil capital gain, and often extortionate service charges on new flats mean that BTL investors should avoid them at all costs.