Last Chance Saloon

Not to brag, but I’ve just solved the housing crisis. But I’ll get back to that: firstly, I just want to look at where we are. Here’s the problem: about two million people who would’ve bought in the past few years, in normal historical conditions, haven’t been able to, and are now renting. This is a problem on several fronts, but mainly as our economy is essentially built around owner occupation: it is the main way in which most people are able to save and build capital, and plan for retirement, and has been incentivised as such for decades through our taxation system.

As millions of people are now excluded from buying, and home ownership for the under 40s has fallen off a cliff, this means they are not only excluded from security of tenure – renters only ever being two months away from eviction at the whim of a landlord, and the ensuing psychological impact that has over many years, even if the dreaded Section 21 notice is never actually issued – but they are also excluded from any form of capital accumulation, and thus have no stake in the system.

A few other countries have majority rental sectors – such as Germany – but people are encouraged to save in other ways, through the local Landesbanken system etc, and thus can accumulate a stake in the status quo without owning a home, and their home is in any case an actual home as they have decent tenure for rental properties. There is nothing wrong with the owner-occupier model of saving and investing per se, but clearly if most people under the age of forty are excluded from it and there is no route in, then it is not sustainable.

So we now have the rise of Corbyn, and the Tories scrabbling around for ideas to counter his rise to power. And for them, it's now or never. I cannot have been the only person to have watched Mrs May’s recent speech open mouthed: having briefed before the speech that she was going to unleash a new generation of council house building, she announced that she was in fact going to build 5,000 new council houses a year. There are 1.2 million people on council house waiting lists, and this was her answer. I was absolutely, completely flabbergasted. We’ve had the worst decade for real wages since the 1860s, home ownership is plummeting, and the Tory answer is, erm….well, just, well. Utterly bizarre. And Help to Buy is just…..I mean, how will this help affordability for First Time Buyers in any way, at all? AT ALL? I mean, crumbs.

If this is going to be as good as it gets, then Corbyn will win power, without any shadow of a doubt. Now, Corbyn has already talked about confiscation of private property in response to the simply awful Grenfell disaster: I don’t want to go into that because it is too horrible for words and a side issue in terms of solving the housing crisis: but Our Future Glorious Leader’s words were instructive, in that he saw no problem in simply confiscating empty flats nearby as a solution.

Once you start on this road, and are happy with the first ideological leap, then it’s very easy to make the next logical step: there are millions of renters, and not so many landlords, landlords have had it good in the last few years, so why don’t we just…….well, take their stuff, and, well, just give the flats to the renters? I don’t think we’re far from this stage. Fewer than 1 in 5 renters are saving for a deposit, and essentially, now, if you don’t own or have parents who own, you will never own – so taking stuff is going to be the next logical step, as there is no other step that they can see. If I was a BTL landlord, I would spend every waking minute haranguing my local Tory MP to ensure better rights for renters, and to solve this crisis asap, as if not my pension is going to go up in smoke. And the consequences of this sort of confiscation will be: well, total bankruptcy for everyone, to keep the story short. That’s just what happens.

So what do we do? Firstly, build a hundred thousand social houses a year, by letting Councils borrow money. Not difficult. A third of what we built after the Second World War when we were completely bankrupt.

And secondly: there are 11 million renters, and 2 million private landlords: transfer ownership of a chunk of these to the current renters, and the problem is a long way to being solved. If nothing is done, this will happen in time anyway: but through confiscation, and we’ll end up boiling stones for soup. So simply incentivise BTL landlords, right now, to sell to their tenants, at decent market values.

This is actually easy to do. There isn’t really a shortage of properties on a gross level: the ratio of bedrooms to people is roughly static, it’s just that the financial system around home ownership is completely screwed, people are stuck in properties they don’t want to sell as it will financially penalize them if they do, and others are renting houses they would normally have bought.

In fact, most BTL landlords can’t sell, as they have a large (normally 28%) CGT liability if they do, and no other decent investment options: so selling will mean they lose money, for a worse return. The solution is obvious –  say to landlords, if you sell to your tenant, then you will not have to pay any CGT. Suddenly, they save 28% on tax on the increase in value, which will be a big chunk of the gross value, in most cases. And if you are a BTL landlord and put money into the stock market from your property sale, we will exempt you from future stock growth CGT and stamp duty (this bit needs refining, but something along those lines).

The other crazy thing is the mortgage process: we were turned down for a mortgage 18 months ago (luckily not on the second mortgage application or I would be writing this having emigrated) on the grounds that we couldn’t afford the repayments, despite them being lower than the rent we had paid on time, every month, for FIVE YEARS. So say to all private sector tenants: if you can pay your rent on time for 3 years, every month, and can prove that you are funding it through your own endeavours: then a bank -  perhaps RBS, say, which we taxpayers frigging own – will guarantee you a mortgage based on those repayments. Certainty returns, tenants have something concrete to aim at, even if it's a few years away. And hey, why not take some of the 28% CGT saving from the landlord, and loan the tenant a 5% deposit from that saving?

Result: millions of private renters enter homeownership in the next year or two, millions more have a stake in the country again, the rest know if they work hard they'll get there eventually, and if they can't, the state will build them a council house: and the stock market is stock full of private investors and capitalism is saved.

You’re welcome Britain.