The Indy‘s City editor (and he is very much a City editor, none of that “business” page nonsense) Anthony Hilton has joined the clamour for the simple plan to save the world!
Some of the larger associations are tapping into the aforesaid retail bond market, with Raglan, for example, raising £50m in September with an issue bought in its entirety by the Pensions Corporation, a pensions providing insurance company. But it is not enough. What we really need is for local authorities like Manchester, Leeds and Nottingham to float housing bonds in a similar way, but for much larger sums. They could then channel those millions into the thousands of housing associations which are too small to raise funds on their own account.
This does not happen because the Treasury – and hence George Osborne – does not want local government to be financially independent.
He’s thinking in terms of new build, housing associations, and the North, whereas I’m thinking in terms of buying up the BTL inventory, councils, and London. New build can’t possibly happen in time to save us, and the problem is concentrated in London. But I don’t see any disagreement of principle here.
The LSE Policy blog points out that George Osborne took the opportunity, during his “Hunker in the Bunker” mini-budget, to make things worse. They also provide a lot of useful detail if you’re trying to model the flow of Local Housing Allowance to landlords in London. If Osborne gets his way, the LHA rate will be held to a maximum 1% annual increase out to 2015 and to the CPI inflation rate thereafter. I had assumed zero growth in it, so I was pleased to be able to update the Simple Plan with some more data.
Updating it, I get a NPV of £22.19bn and therefore between 77,000 properties @£300k and 139,140 @Daniel Davies’ £166k, which I still struggle to imagine. Even coming up to £200k, though, still gets you 107,000 homes. On the other hand, the plan is quite insensitive to interest rates – at D^2′s pricing, even up at 3.36% you’d get enough stock to house the 133,000 LHA refugee households. Just getting rid of Gideon would add 2,200.
I had a twitterfest with Owen Hatherley and Rentergirl about this, but I really can’t get excited about how crappy a lot of the BTL new builds were in the light of the looming emergency. Anyway, the great bulk of the BTL new building was in the North, and a lot of the stock I envisage acquiring will be either conversions or else…you guessed it…ex-council.
Threats I worry about: the cost of management, which to be frank I have really no idea about, and the possibility that Osborne goes for broke between here and 2015 and abolishes housing benefit entirely.
Anyway, here’s Mr. Harriet Harman arguing for rent controls. It’s a start.