Home sweet Home

This field on a cold January morning in Oxfordshire looks picturesque especially as the deer move across its landscape. However not for long as there is an application to build 150 new homes upon it.

Britain with 29.9 million dwellings needs another 1.5million homes and the Labour promise is to build 300,000 new homes per annum during their and this Parliament. In 2019 /2020 we saw the most ever built but still 53,000 short of the target.

The great gypsy property developer Tony Pidgeley told me that everyone should have their own front door. That may be so but ask any economist shortage of product protects value and housing is no exception. The rigid Planning Policies of post war Britain maintained the value of the English man’s castle. The only asset left sacred to the Chancellor’s grip with zero tax on any gain during one’s lifetime. That may well change as the £14 trillion housing stock is a juicy fruit to pick by rampant Reeves. Just ask the farmers about Rachel.

Tony the gypsy kept like other developers land banks and today there is no exception slowly introducing the stock into the hungry markets. In any property deal there are three components. One the land, the second cost to build and the third the profit which must exist to incentivise the Tonys of this world.

In a flatline market with zero GDP , rising interest rates, inflation rising the scene is not set for boom. Labour will languish and fail to produce the housing now needed. Yes immigration will create demand but many of those will not have the deposit or the income to keep the front door from the wolves that follow. Ok allow a 5% or 10% deposit and 90% mortgage but just then see that equity wiped out as the cracks appear in the very poor builds now produced by the amateurs out there. Gone are the master craftsmen. The woods look as bare as the prospect Ms Rayner Deputy Prime Minister is tasked to deliver . Where are the schools, the doctors going to be if you build the homes, your system is stretched , infrastructure, in for a drubbing.

Ok clever dick what’s the answer. Well what we need is a new model. Take out the cost of land , take out the profit element and concentrate only on the build costs. Time line ownership model is the answer. Where the landowner doesn’t sell the land and the only profit is on build costs. The young guy needs a home 3 /5 year before he/she partner up, the married couple need 25 years to breed and raise their kids while their careers end . The elderly will live only 10 years post retirement and on average we all move every 7 years. The average life expectancy of man / woman in uk is 73 years. We don’t need forever because there isn’t one.

The average dwelling price uk is £350,000 and even that Joe Public can’t afford that. Build cost of the same dwelling is one third of that 40% at most say £140,000 allow £30000 profit say total cost £170,000. Funding models make that available over the time line of occupancy and the nut gets cracked.

Home will become sweet Home as the occupants will have freed up their income to spend in the economy so the commercial world keeps spinning and with flow there is go. OK we won’t be able to pass on the home to our kids but maybe we will stop spoiling the urchins and let them see the woods from the trees. Anyway don’t forget Rachel who wants your inheritance. The existing model is flawed and not designed to meet demand.

For those that won’t let go of the old ways fair enough but don’t forget that a mortgage is literally a dead hand given for 25 years some 40 years and a ball and chain or a lock in to the system. Anyway Rachel will know the new model of timeline ownership as the new incumbent at Number 11 is unlikely to last 5 years behind that door. Britain is changing, it has to and the sooner we face the reality of where we are at the better.