Housing policy? Build them and they will come

Housing policy? Build them and they will come

by Jonathan Stanley
article from Thursday 25, June, 2020

A LONG TERM consequence of the Covid-19 crisis will be increasing numbers of people working from home. On wee wet and windy isles like ours, where is home? Where should it be?

Scotland has a great natural resource that is not being made anymore yet has it in ample supply and that is land.

England is one of the most densely populated nations in Europe, take out the National Parks and other restricted areas of development and it is positively crammed. Scotland on the other hand is one of the least crowded, and its devolved parliament has control of taxation of property and of course, of stamp duty.

What if a program of housebuilding and encouraging relocation within these islands became the single biggest driver of regional development in Scotland with land seen afresh as the next big oilfield? Maybe for some, even a secret oilfield?

Like the title of one of our rockstar-in-chief's albums, the workforce is increasingly footloose and fancy free. People that can work anywhere often stay where they are, if where they are is nice to live. Whether it is the Bahamas, or Switzerland, or the South of France, or Flanders increasingly the wealth and income of the world is relocating to where success can find a home. 

These people are not attracted by "affordable housing" – which often means poor quality housing in a poor location. Affordable housing as a concept has held back so much of Scotland and we should remind ourselves that less than 20 years ago much if not most of Scotland's houses were affordable. These houses haven't changed but the economy has. There is a dearth of smaller homes to downsize to, this is true, but worse there are very few big bold and beautiful houses available too. Those that are, are hit with extremely high transaction taxes that by definition only raise revenue when transactions occur. 

High marginal transaction taxes are possibly the most stupid taxes of all because by their design they do not raise much money because they discourage transactions. It would be far better for government revenue, and for social mobility, for existing property tax bands to be retained but stamp duty to be abolished and replaced with a small annual charge, at say 4% of current duties. This would nominally be revenue neutral over 20 years but in reality would raise much more revenue and this could easily be rolled into existing council tax arrangements, in effect, revaluing council tax bands that have not budged since 1991. At £325,000 the stamp duty rate increases rapidly to 10% of the property value.

Now that frictional costs of moving homes has been minimized, we need to look at the size and value of properties under construction and planning processes for them. Accelerated and assumed planning permission for any residential property say over a £325,000 sale price, would mean bigger enhanced council tax payments for local authorities while exerting downward pressure on prices all the way down what we used to call the housing ladder. We need to start adding HIGHER rungs to this ladder to boost social mobility, not lower ones. 

I would personally campaign that Westminster imposes VAT, at a full 20%, on any residential property bought by non-UK citizens. This would shut down the menace of global capital using UK property as a means to launder money and speculate, while UK taxpayers pay the ever increasing cost of housing benefit as a direct consequence of these higher property values. At least it should be applied to London where prices are quite ridiculous.  

For the Barnett Formula to have credibility and for the North of England to receive a fair deal we either must make housing benefit funding equal for all regions of the UK or at least ensure some of that enhanced council tax funds part of the higher benefit bills especially in London and the South East of England.

By applying common sense to our housebuilding and housing benefit we can use ever higher quality of property to boost regional development in the North and achieve a fair contribution towards benefit bills where they are highest in the South. Both strategies take the tax pressure off workers and consumers and rebalance the union's finances so all parts of the UK get a fair and square stake in a property owning democracy. Home ownership is British. We embrace it far more than most western European countries in part because we love freedom. In Eastern Europe the same culture has emerged as their peoples know best the consequences of losing it.

The British vote with their feet, and in a footloose and fancy free economy Scotland should do everything it can to be the vote winner out of this painful epidemic. The additional income tax revenue from high earners will be most welcome in fixing our potholes. As the saying goes, build it and they will come. Build the best and the best will come. 

Why ever would the Scottish Nationalists object?


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