Category: London

You thought London mayoral candidates couldn’t get worse

Did you think Boris Johnson sucked? Try Ivan Massow, doyen of hipster Toryism (he was the nice version of Michael Portillo before Michael Portillo was the nice version of Michael Portillo) and prospective candidate for mayor of London.

Somehow, the mayoralty has become a strange attractor for people who combine vacuous celebrity and a particular kind of dilettante obsession with pet projects. You take the guy from the pub who has a dossier on reviving TSR-2 and merge in Him Off The Telly. Johnson is exhibit A, but Labour offered Alan Sugar at one point. Ken Livingstone had a distinct celebrity twat side. The Lib Dems had Brian the Amazing Pot-Smoking Copper. Those were the serious options.

The Blairite project to create directly elected mayors was interesting, looking back. A big idea of theirs was that political participation was an end in itself. The public had to be encouraged to take part. Another, bigger idea of theirs was that the public should be kept away from anything important.

A prospective mayor of London wasn’t meant to be able to control the railways or the schools or the police, for example, although this changed in practice. The two propositions – the public should participate, but their choices should be restricted – are of course conflicting. Why participate, if there’s nothing in it?

Mayors were meant to fix this by increasing the horse-race element of local politics and by attracting a different kind of candidate. Big celebrity personalities would battle it out, thus getting attention and also sidelining the structures of real political participation. Councillors are rarely celebrities.

The first winner was a proper politician, Ken Livingstone, but this was driven by historical reasons, and after all you weren’t meant to be allowed to vote for him. Once the new system bedded in, it seems to have worked in the opposite sense to that intended. Rather than driving participation, the first real celebrity mayor has won largely because he has reduced it. It’s a form of negative marketing – if Boris Johnson is in it, it can’t be serious. But, of course, it is.

So Massow. Like Boris, he’s a slightly shocking Tory but a Tory all the same. Like Boris, he has a pet project involving massive state-funded construction in the Thames Estuary. He’s commissioned architectural drawings to coo over, today’s easy buy-in to the appearance of seriousness.

This time, though, it’s worse. Boris Johnson wanted an airport; J.G. Ballard would have said, a shrine to the limitless possibilities only the sky can offer. Massow wants: a prison. A super-Titan prison on an island, with special river boats ferrying to the courts. Johnson’s project has the optimism of grandiosity; Massow’s is a massive monument to meanspiritedness.

Of course, the island jail is because the Americans have them, rather like the mayors. The river boats are interesting too, though. It’s a classic Tory pet project – Boris promised more of them back in the day, and all sorts of people like to propose it, but nobody who has studied it in any detail thinks it will ever be a serious transport solution.

But why, why do we need a giant prison in the estuary? Simple; yer man wants to bulldoze the others and give the sites to property developers. This will apparently solve the housing crisis. He knows this because a nick in Oxford has been turned into:

wonderful housing, funky bars and a huge shopping mall

This is, of course, the aim of all urban life, especially the mall bit. It turns out that there is no housing in the development:

Wait a moment, though, this sounds familiar. A prison turned into a posh hotel? Hadn’t I heard of something like that before, in Germany? The worst of this isn’t that it’s shameless hipster urbanism, it’s that it’s not even hip, it’s dated, obvious, and suiviste.

Pushing on, yer man has also apparently read a book about the General Strike of 1926 and wants a reserve of volunteer tube drivers to kill the RMT.

What gets me here is the triple-point, the apex, between the utter shallowness of the thinking, the vicious aggression (monster prisons, comedy GB75), and the desperate haste to press your money on horrible property sharks.

It’s also the representativeness of it. Massow’s putative mayoralty, hell, Massow himself, is a fine example of what this guy calls Fucking London, a collection of clichéd icons and mini-oligarch investment properties, boasting about a tolerance extended only to the rich, desperate to eliminate anything like a civic life, soaking in PR bullshit. And of course, it’s not just the Tories.

Let’s kill this before it lays eggs. I note that among other awful himoff options and borough nutters, Sol Campbell wants to be Tory candidate. I far prefer him – he’s a bloke from Tottenham who made enough money to drive a different Maserati every day and that’s basically it. He has about as many principles as a man who played for both Spurs and Arsenal would have, but at least he doesn’t want to build a prison island in the Thames and name it after himself. Perhaps there’s a crack for a spoiler campaign here. Labour for Sol. An asymmetric, nonlinear threat demands such a response.

Although. Apparently he has some “ideas”.

Every little helps, so we’re helping ourselves to every little we can

Look at this pitiful mess. People signed up for the shared ownership option on a block of flats in Streatham and paid deposits. Then the developer couldn’t get it built, so they were left waiting. Now, it’s finished, but the developer now wants twice as much money because, supposedly, the block doubled in value during the construction delay. The killer detail; the developer, Wandle, is a “social housing provider”.

Presumably, had they delayed another six months, they could have demanded four times as much money. Rising prices are actually functioning as an incentive to reduce supply. And you’ve got to love the quote from the Wandle spokesmonster:

“During the period following reservation and holding deposits being received, there were significant changes in the London property market which are beyond our control. Unfortunately this external market movement has resulted in substantial increases to the values of these homes in a relatively short period of time.”

There was nothing they could do about it. They might as well have been hit by an asteroid. The money just fell on them.

And the building. Is it, by any chance, ugly? You bet it’s fucking ugly. It’s been savagely beaten with the ugly stick, like an ugly black dog on an ugly chain. It’s a godawful blairhat mess sticking out of a groundscraper Tesco Extra with the motto EVERY LITTLE HELPS scrawled across the front, which in context sounds like Vladimir Putin’s sense of humour.

Shoreditch twats: not quite as bad as property developers

This post is a response to readers’ input to the open newslist

Daniel Davies mocked this guy, as having placed his bets on Camden staying deeply cool and missed out on the migration east. But he has a point.

Our startup moved to Shoreditch in 2008, making us a relatively early one although not first-generation. (That said, big telecoms infrastructure has been there since the late 1970s. Not long ago, I looked around a new data centre that was built in the shell of…an old data centre from 1978.) Over the next few years, I had the impression that some sort of final, definitive wave of money had been kept from rolling over the place by the crisis. There was already plenty of super-priced wankiness, but it hadn’t taken over and you could still just about find useful cracks to get into.

The (lovely, Ken Livingstone-inspired) Overground rail route was apparently meant to be surrounded by air-rights development, but that never happened, with the odd result that the area immediately around seemed to be reset to its role back when it was cool, before us computer-diary strivers showed up.

The mildly legendary Foundry was acquired for an “art’otel”, squirm now, but they couldn’t find the money any more and nothing happened. After a while, some of the people who would later occupy London occupied it as the Shoreditch Social Centre, painting the message carefully on the windows. Later still they were evicted and the whole thing covered with adverts, but the owners still can’t find the money, and as a result the ads have been torn down, the anarchists’ signage ironically revealed, and the space offered to (inevitably) artists. Again, in my time there, the crisis seemed to pause it all for some years.

Similarly, the planned development north of Exchange Square, over the railway lines, never happened and allowed odd things like a giant golf driving range made entirely of precarious scaffolding to sprout. Now, though, the Papermill pub (a poorish imitation of Berlin, but to us a cherished office boozer) has been demolished, leaving only its glass brick frontage (let’s hope they’re not saving the facade). The range is gone. The whole area is threatened with some sort of godawful banker facility called “Principal Place”. This is bad news; I always liked the clarity of the urban distinction running along that street, between the City and the city, as China Mieville might put it.

Now, even our landmarks are threatened. The nondescript building that housed the Tech Hub, across City Road from Inmarsat, is going to be replaced by something called, with a kind of Putinesque irony, the White Collar Factory. The City Arts & Media Project next door is already gone. The building behind, first used by the Home Office and then Occupy, is gone. The building next door to us (and Pachube) that was lovingly re-graffitied every month and used by all kinds of odd people, gone. The Watermark Club, a cabbies’ pub just up the street with sensible prices and weird 80s video games, gone. Actually somebody saved that machine and moved it to the Old King’s Head across the street, but it’s vanished from there now. The couriers’ base at the corner? I wouldn’t bet on it lasting. You get the picture.

XOYO still looks ok, but the industrial building round the front that used to be the Classic Car Club (yes, I know) is up for sale. Even the tube is in on it. Quite a few of the shops in Old Street station are out, one’s now a pop-up this, and I wouldn’t give a penny for the rather good bookshop’s chances. That said, they’ve painted it up in exciting new colours, as far as I can make out the only thing the Tech City Investment Organisation has actually achieved other than putting up the rent. The weasels are closing in.

And now, our landlord is getting shaky, which is hilarious because our building seems to have been put up or much restored in the 90s with a view to .com tenants (fibre in the basement, Roxys-reference name, generators out the back, glass bricks).

Perhaps the highest stage of capitalism is actually property development, not imperialism, which is altogether too risky. I’m beginning to reconsider whether there isn’t something in this Georgism lark after all. You say, well, this is just the whining of a gentrifier getting gentrified in his turn. But it’s Eric Pickles who’s the threat to the council estates just north of Old Street. Watch out!


I fucking told you. Eric Pickles has signed up for the deeply dodgy Create Streets agenda, on the basis of a report drawn up by a bunch of estate agents. On which planet isn’t this an outrageous conflict of interest?

Also, he wants to get rid of terribad concrete towers through….system building.

But Mr Pickles said he was keen to stop any more 1960s-style tower blocks, which he dismissed as “concrete carbuncles”.

Mr Pickles was today visiting Rainham, Kent, to promote affordable homes from new “offsite” construction techniques, billed as a modern successor to post-war pre-fabricated housing.

Meanwhile, I didn’t see any response from this event, bunch of plastic gangsters that you are.

Your chance to meet Create Streets.

So, it’s well known that I’m an obsessive about Create Streets, the flaky Tory wanktank that wants a whole succession of gimmes for developers who are in no sense their mates, except when they are.

Single Aspect notes that the Urban Design Group is having a thing on Wednesday the 23rd of April, i.e next week, 6.20pm, The Gallery, 70 Cowcross Street, London EC1M 6EJ to discuss “estate regeneration”, with an architect and none other than Create Streets identity Nicholas Boys Smith, Peter Lilley’s old bag-carrier.

I would totally go to this, but I’m out of town until the next day.

who you gonna call? the unacceptable behaviour team

The “Create Streets” lot are being mithered by the very serious people again. Dave Hill of the Guardian and Faisal Islam from the Ha! Ha! Poors Channel have been at it since the turn of the year.

The main reason seems to be that their Tory in residence, Peter Lilley’s old bag carrier Nicholas Boys Smith, has had a piece in Conservative Home. It must be time to scramble the Unacceptable Behaviour Team.

Says Boys Smith:

The problem is not just that there is limited space but that despite the desperate need for new housing, specific new housing projects often encounter local opposition – with long consequent delays. Just look at the controversy surrounding redevelopment at Earl’s Court or the Heygate Estate in Southwark.

Right. He also says:

However, if the potential long term returns from estate regeneration in London are excellent why is nothing happening? It is partly because the politics of regeneration are so hard. Put simply most people just don’t like most recent developments. It is also because the short term cash flow and returns from this type of estate regeneration are pretty bad. This is due to the cost of demolition, the time required for the additional value of an attractive ‘place’ to feed through fully to sale prices & market rental values and the need to ensure all those in social housing on the current site are re-housed.

He goes on with a policy recommendation or two. First up is some stuff about evil “high rise” (actually, not all the places he mentions are high-rise, or at least they’re no higher than his mate Heneage Stephenson’s 8-10 story projects in Dublin), and a bit of watered-down new urbanism about “connected streets”.

Actually, the architectural stuff is very flaky. We are told that:

current rules in London are even sharply biased against high density streets


the long term returns of developing low density post-war estates as attractive, high-density ‘normal’ and well-connected terraced streets of houses and medium rise flats could be fantastic


conventional high-density street-based developments generate 32 per cent more value per hectare


Many new large scale regenerations are being done at a sort of uber-density that is unpopular

So, to sum up, density is great and we should have more of it, but it’s also unpopular and evil and we should have less of it. Huh. Let’s forget the bullshit and get to the meat.

His big idea is that the Public Works Loan Board, the agency through which the central government finances local councils’ building projects, would lend money to the “owners of large estates” to knock them down and rebuild like he wants. These owners would have the right to sell the new properties privately and also to use Right-to-Buy sales to pay off the loan from the PWLB.

Obviously, if private sales and RTB are meant to pay off the loan, they need to happen. So we’re basically repeating the whole 1980s disaster over again, just for starters. He also suggests that the PWLB, and therefore the Treasury, might take a share of any capital gain on the value of the land and buildings in exchange for charging a lower interest rate:

Possibly rates could be more generous if there was some exposure to any capital value increase in the site

This implies selling or mortgaging the property in order to raise the cash to pay back the Treasury. Given that he would presumably work under Boris Johnson’s “affordable rent” rules (i.e. 80% of average market rates), and he intends to sell a whole lot of units, it is very obvious why there might be “local opposition” – the homes are going and they ain’t coming back. If anyone did manage to stick around, they would only do so by drawing heavily on Local Housing Allowance.

Is this cynical? Not for a moment. Boys Smith has already said that he doesn’t want to re-house the people who live there already:

the need to ensure all those in social housing on the current site are re-housed

And, of course, he wants something doing about their right to object to his plans via the planning process:

specific new housing projects often encounter local opposition – with long consequent delays. Just look at the controversy surrounding redevelopment at Earl’s Court or the Heygate Estate in Southwark

But that’s all right. He doesn’t believe they are real people.

Surely a massive increase of supply of good normal housing that real people want to live in is an idea worth piloting in the budget for March?

The “local opposition” wants to live there; presumably they aren’t really people.

Anyway, so “Create Streets” wants:

1) A carve-out of the planning laws
2) A huge soft loan from government
3) Continuing flows of LHA from government
4) To keep the proceeds of selling public lands
5) To use the coercive powers of the state for its profit

Isn’t this the definition of crony capitalism? And it’s a past modus operandi, too.

We know, after all, that one of “Create Streets”, Mr Heneage, is currently trying to pay off his debt to Ireland’s NAMA, the entity through which Irish taxpayers bought their banks’ bad deals, by offering the land he wanted to cover in 10 story minitowers as payment. And he’s already had three years’ forbearance on interest and principal off the Irish.

No wonder, then, that as Nicholas Boys Smith says:

parts of London which are well-connected and in the form of high-density terraced streets and squares are more valuable, other things being equal, than areas which are not.

Indeed. Being well-connected is always very valuable.

Boris Island: Shag, Marry, Avoid?

The Airports Commission is eventually going to opt for Gatwick. Prediction. How did I come to this conclusion? And how representative is the commission as an institution?

Well, we can understand the decision-making process here with a simple model. There are various actors involved, who have preferences. To illuminate this, let’s play a game of Shag, Marry, Avoid. We could call these “Tolerate, Demand, Veto” instead, but I think it’s much more fun this way. Basically, any actor has a choice they would prefer, one they would accept failing that, and one that they would reject entirely.

Once we’ve specified the actors, and coded them as Shag/Marry/Avoid for each airport option, we can then look at a rule to model the decision process. This is the table I came up with.

Under my scoring, first-past-the-post would return the Rt. Hon. Heathrow Airport MP on the strength of its 8 marriage proposals. However, this isn’t a parliamentary election, and second choices and veto power are both important. Under an alternative vote-like system, I get 8 votes to marry Heathrow and 8 for all other options. Typically, AV requires 50%+1 for a first round win, so we reallocate the shags – i.e. the second preferences. This gives us Heathrow 11, Gatwick 13, and (Boris Island 3, Stansted 3, Somewhere Else 2) drop out. If we then subtract the avoids, i.e vetoes, we get Heathrow 7, Gatwick 12 and (Stansted 3, SE 2, Boris Island -8).

Another way of doing this would be something like approval voting, where voters cross off all the candidates they reject, and the least rejected candidates win. This gets at the minimum consensus aspect of the whole thing. SE and Stansted both have 0 vetoes, Gatwick 1, Heathrow 4, and Boris Island 11.

This of course raises the problem with approval voting – unless you do something else, it’s possible to have a winner nobody positively wants. In real institutions that use it, this is often dealt with by requiring a given number of electors to second you before you get to take part.

If we require more than one “marry”, Stansted and Boris Island are both eliminated, leaving Somewhere Else, Heathrow, and Gatwick. SE has no vetoes, Gatwick 1, and Heathrow 4. SE wins, but if there has to be a winner, then it’s Gatwick. Alternatively, as I’ve included lobbies for the North and Midlands in the scoring, we might read that as being “Gatwick, plus expansion outside the South-East”.

Yet a third option would be a balance of opinion. We might count a Marry as one point, a Shag as 0.5 points, and an Avoid as -1, implicitly coding a Shrug as 0. In that case you get net scores of Heathrow 5.5, Gatwick 8, Boris Island -9, Somewhere Else 2, Stansted 1.5.

The upshot, then. All three rules tried converge on the same result. Hardly anyone actually wants Boris Island and a lot of people hate it. Quite a lot of people support Heathrow, but a significant group of actors also hate it. Gatwick is everyone’s second choice – quite an advertising slogan, no? – and only one group wants to veto it.

And further, the airports commission does seem to be surprisingly democratic, at least in that you can simulate it as a plebiscitary process with the same inputs and it gives the same outputs.

A slightly less simple plan.

So, Create Streets. Inside Housing has the story, pointing out that the thing campaigning for knocking down high-rise social housing in south London is basically a group of Tories. But there’s a bit more, or less, to it than that.

Their wesbite won’t tell you whether they are a company, a charity, a lobby, or just a bunch-of-guys who all happen to have a substantial vested interest in knocking stuff down and building new stuff. Neither will their twitter feed, however much I shout at it, although it’s doing some frantic linkwhoring and general pud-knocking (224 tweets since 13th of December).

Like so many things, it seems to be Policy Exchange’s fault, which suggests that PX now has a new role as a constructor-class for wanktanks:

But anyway. From their wesbite:

Heneage Stevenson worked for Schroder Salomon before becoming a partner at Bee Bee Developments, specialising in urban regeneration. He now runs his own property business. He has lived in South London for most of his life.

So, you’re a property developer and you just happen to feel south London could do with a massive urban regeneration programme? How could it happen? Like this. Here’s Bee Bee Developments, boasting about their massive development scheme from 2006, Players Square, in Dublin. O RLY. Property developer from 2006 Dublin? What could possibly go wrong with that?

Players Square, the property company proposing an alternative site for the national children’s hospital, owes €77m to the National Asset Management Agency (Nama) and has not made any loan repayments for two years. The company has written down the value of its land in central Dublin from €82m to €10m — an 88% haircut. The land, adjacent to the Coombe hospital off the the South Circular Road in Dublin, had permission for a development of almost 1m sq ft during the property bubble.

The project was to have included 754 apartments and townhouses, a new school, leisure centre, medical centre, offices and shops. No development has taken place, and Nama took over the Players Square loans from AIB in 2010. The company recorded a €74m loss in 2010 after writing down the value of its site, which left it in breach of its loan covenants…

This Irish Times story suggests that what’s going on here is that the Players Square developers are now trying to wriggle out of the deal by hawking the site to the Irish taxpayer, specifically to put the children’s hospital there. So, the debts ended up on NAMA’s books, they’ve had two years’ loan forbearance off the state, and now they’re suggesting that the public fork out and buy the site off them. Cute, in the Irish sense of the word.

Interestingly, back in the boom years, friend Heneage didn’t mind tall buildings so much; Players Square was meant to be 8-10 stories. That’s not Centrepoint but it ain’t terraced cottages either.

Moving on from Heneage, here’s his mate Nicholas Boys Smith* at Tory Kennel, arguing for doing something to housing benefit, with a canny bit of racism (polygamists? *dogwhistle*) thrown in.

Does anyone else see a plan taking shape? One thing we know about the October 2013 London housing bomb is that it’s going to hit private landlords and also housing associations like a hammer. The problem is voids; not the blog, or the howling emptiness of outer space, but just the fact that someone who has a fixed cost of capital and no tenants has a serious problem.

So, the Create Streets lot pile in to the fire sale, decant everyone to somewhere else, bulldoze everything, and create nice Poundbury-compliant streets for a far smaller number of far richer people. Profit!, as the Underpants Gnomes would say.

Profit for who? Here’s friend of the blog and Yorkshireman, Jones the tax:

*Yes, that’s the guy who was Peter Lilley’s bag-carrier.

TYR Rewind: slip inside this house and fuel the fire

Birdy! For it is he, back out of the woodwork to tell us that there might be a surge in homelessness, up or rather down to the depths of the 80s. Well, that’s grim, and only surprising in that the Tories took just two-and-a-half years to get back to mass homelessness.

Unlike Birdy I promise not to take off to LA with this project, as it is entirely free software and indeed in the public domain. Under conservative assumptions, the annual flow of Local Housing Allowance into rents for the 133,000 London households targeted by the Tories is around £2.3bn, even at the Tory-imposed 30th percentile rate. The rate at which local authorities can borrow from the Government over 10 years is currently 2.8%. This is probably above market, as investors are desperate for anything that pays a nonzero interest rate with any security at all, but it’s a safe assumption.

The present value of this stream of money, at that rate over 10 years, is £21.5bn. Put it another way – the LHA stream for the next 10 years, just for the people affected, at the rate the Tories have imposed, would be enough to pay down a £21.5bn loan.

Now, the Greater London Authority – i.e. Boris Johnson – has a further £2bn housing fund it is doing nothing with.

Depending on how desperate you think landlords will be to sell in the light of the coming slashing of LHA, we can use this to buy between 75,000 and 133,000 properties and incorporate them into the council housing stock, while keeping a billion as a maintenance sinking fund. The council housing departments can manage them. So could a housing association, or whatever, but I prefer the simpler solution.

It would even be possible for the London Labour councils to go ahead without waiting for the Tories, but it would be better to bring them along via the London Councils structure, which is currently Labour controlled.

The structure I envisage would be a company controlled by the participating councils. It would bid for the GLA money. It would raise the rest in a succession of covered bond issues. The participating councils would sign a management contract with it over their share of the property. At the end of the 10 years, the property might simply revert to the shareholders, that is, the councils, and the rents charged might revert to the social rates.

I see this plan preventing the coming housing disaster. I see it seeing off the bankruptcy of an unknown number of landlords, and the banks who love them. I see it using no more money than the government has already committed. I see it vastly increasing the council stock over time. I see it kicking the Tory initiative of moving 400,000 or so non-Tories out of the capital right back at them. I see it creating £20bn worth of rock solid securities for a market that is desperate for them.

The plan is very simple. It may seem radical. That’s because it is both. I contend that it is no sillier, though, than the very respectable Tory Sir George Young’s 1990s doctrine of letting housing benefit take the strain.

‘Housing benefit will underpin market rents – we have made that absolutely clear,’ he said. ‘If people cannot afford to pay that market rent, housing benefit will take the strain.’

This plan simply hoovered up cash from the productive forces of the economy (that’s us) and sprayed it on landlords. My plan hoovers up rather less cash, and sprays it on bankers (I think I see the problem!), or possibly on savers. There is no particular reason why the bonds could not be sold to the public, although that would be more complicated and slower at a moment when speed is important. The worst case scenario is April 2013, the best case is October 2013. I trust Rentergirl more than Polly Toynbee, but anyway, the bomb is going to go off between 6 and 9 months from now.

But the nice thing about doing it this way is that it eventually stops, while the Young plan just kept pouring your money on landlords, and actually paid over the odds to do so. So, let’s buy the houses, quick.

If you’re a conservative concerned about deficit reduction, this is cheaper and depending on the structure it might take borrowing off the headline metrics. If you’re Labour, it is socialism in action and a direct riposte to neo-Shirley Porterism. If you’re a Liberal, it’s local democracy and citizen activism doing stuff off their own hook. If you hate the banks, surely you hate landlords, and anyway we might be able to raise some of the money in the retail market. If you hate special investment vehicles of residential mortgage backed securities, well, so do I, but it looks like I reinvented one.

I have no financial or other direct interest in this plan. I would even offer it to Francis Maude.

A simple plan to save the world and win the elections

Everyone’s talking about the coming housing disaster again, after this Polly Toynbee column. Here’s the thread at Jamie Kenny’s in which we predicted how this would all turn out way back in July 2011, and here are the StabPrin posts from October 2010, including this valuable collection of links. Here’s some more early warning.

Anyway, the problem is simple enough. Buy-to-let landlords can’t actually cut their rents, because they are leveraged and they have to pay the carrying-cost of their investment, i.e. the mortgage. In fact, as most of them are in it for capital gains, the tenants are rather beside the point – they have them to pay the carrying cost of a leveraged bet on housing.

Therefore, the decision to slash Local Housing Allowance down to the 30th percentile of rents in your area, and also to impose a cap on an irrelevantly small number of people for PR reasons, implies evictions, an exodus from London, a wave of bankruptcies, repossessed properties rotting around London, and quite possibly one or more major financial failures. Way to go, Shapps! Perhaps I’ll take business advice from somebody else.

Now, Polly Toynbee reckons the crisis bursts in April. Rentergirl thinks there’s enough money in the sop fund and enough play in the system to get us to October 2013, rather as the second engine on a small plane is there to get you to the crash site.

London Councils, the umbrella organisation for the London boroughs, which is now controlled by Labour, reckons that all in all there are some 133,000 households impacted directly. That’s a lot of people.

So, what are we going to do about it?

Well. The government has set the amount of money it’s willing to pay in LHA at the 30th percentile of the rent distribution for properties of each size. How much money is that? In my area, which is part of the Valuation Office Agency’s Inner North London Broad Rental Market Area, it’s £290 a week for two bedrooms, £340 for three. The numbers are similar for most of the inner-ring of London. You can get the data here.

Skimming London Councils’ valuable research report Does the Cap Fit?, from November 2011, I couldn’t find an immediate number for the average number of bedrooms per household, although I think it could be derived from their tables. One conclusion that was clear was that the problem was skewed to the upper end of the distribution. So let’s use the £340 figure for now.

133,000*340*52 = that’s an annual flow of LHA into rents of £2.3bn. Quite the chunk of change.

OK, so we’ve sized-and-scoped the problem and identified the available resources. Here’s a really interesting article in Public Finance, regarding councils issuing bonds rather than borrowing from the Treasury’s Public Works Loan Board. Note especially that part of Comedy Eric Pickles’ Localism Bill provides for councils getting to keep their rent income.

So, here’s my simple plan. London Councils launches a company, Ponyco, controlled by its member boroughs. This minimises Tory obstruction. If necessary, just the Labour boroughs could go ahead, rather like Ed Miliband’s electricity company plan. We bid for Boris Johnson’s £2bn housing fund as Ponyco’s initial capital. Ponyco raises a covered bond issue, to be repaid out of the LHA-rent stream, secured on property. What property? Obviously, the failed BTLers’ investments, which Ponyco will buy and assign to the respective borough’s housing department to manage.

PWLB loans are made at the 10 year gilt rate plus 1%. At Friday’s rates, that’s 2.8%. As yer man points out, it might be possible to beat that in the market. Over 10 years, at that rate, the 30th percentile LHA income stream would be worth £21.5bn today, plus the shower-jobby fund. Daniel Davies reckons you could buy 12,000 homes with the Boris fund alone:

Using the same pro-rate, and keeping a £1bn back as a maintenance sinking fund*, that would mean a purchasing capacity of 135,000 gaffs. I think D^2’s number is low, though. At £300,000/house (i.e. what I paid for mine give or take a few grand) that would be 75,000. Much of the difference will come down to how desperate the BTLers are to sell and how hard a bargain the councils drive on them.

Either way, though, it’s either a complete solution to the problem or it’s a big chunk of the problem, and the limiting factor isn’t so much financing as the supply of properties. (We could up the capacity of Ponyco by extending the term of the bonds or by squeezing harder on the rate.) And, if you see the original policy as a Tory strategic initiative, it would boot it right back at them. If Boris or Shapps whines, I suggest sending teams of Labour activists to follow them around with the dealbook and a giant comedy biro. Make them wear it. After all…

Which reminds me I could have titled this post Girl, I’ll *House* You, like so. Jungle Brothers ftw, the year after the 1987 Rent Act.

Over time, turnover will lead to some of the properties becoming available. As this happens, the social housing waiting list can be relieved into them. As the bonds are paid off, the rent could even fall to social rented levels. Other UK councils could of course join Ponyco.

So, this proposal:

1) Solves the problem.
2) Does so at no extra cost to the taxpayer over and above the LHA budget as originally planned.
3) Vastly increases the London social housing stock.
4) Renders the Tories’ Porterism futile.
5) Provides the BTLers with a relatively dignified exit.
6) Sees off the possibility of a policy-induced bank failure and inevitable bailout.
7) Prevents the urban consequences of mass landlord failure.
8) Creates a whole bunch of paper that would be Bank of England eligible collateral.

Problems I see include finding enough large properties, due to the stereotype BTL two-bed flat, and the fact that the plan basically re-invents a special investment vehicle for residential mortgage-backed securities, which makes me wonder if I shouldn’t just climb a statue in Whitehall and stay up there until Francis Maude agrees to discuss the policy with me. Up the statue. Skyclad.

Of course, if Iain Duncan Smith doesn’t want me to nationalise everything, he can simply put the whole mess off to the indefinite future. He’s put it off before. He can cave and do it again.

*By definition, the properties have sitting tenants, and there is a waiting list, so I don’t think voids are a problem.