Now if you read this blog, you probably know I was briefly known for proposing that councils borrow against the stream of Local Housing Allowance payments and use this to buy up a lot of rental property. I called it the Simple Plan; it would simultaneously do something for the housing crisis, let the buy-to-let mob walk away with at least some of their money, and ease the squeeze on councils’ budgets by getting rid of expensive emergency short lettings.
It turns out the councils have invented their own, terrifying perversion of the Simple Plan. They’re borrowing from the central government Public Works Loan Board, all right, and they’re even issuing their own bonds. But what are they doing with the money? Rather than buying (or building) houses, and therefore also reducing their rental bills, they’re buying commercial property in order to make a turn on the spread between the rent and the PWLB repayments. This will work just so long as the commercial property market behaves and interest rates don’t go up.
Of course it won’t do anything for the councils’ public purposes, and it will only help their finances in so far as they get to pick up some coins in front of the steamroller. This is an example of one of the problems with any localist solution to our problems; local authorities are notoriously full of idiots, and because no bugger votes in local elections, it’s impossible to get rid of them until the damage is done. Here’s Brent being proud they’ve signed up a lot of private lets on long term contracts. You could buy them out and keep them for good and all! At least it’s less crazy than playing Forced Buyer of Risk with shopping centres.
If anyone’s looking for a good idea, by the way, I quite like this scheme which basically offers the BTLers a golden bridge to bugger off. Meanwhile, I associate myself entirely with Dawn Butler’s point that the Government housing white paper could be summed up as “whatever you do, do nothing.”