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Cities Face Real Cost of Luxury Housing

Mary Jander, Managing Editor, Future Cities
Wednesday, February 12, 2014 08:00 EST

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sunshine
sunshine  
2/20/2014 10:53:43 AM
User Rank Urban Legend
Re: London... A city for bankers and absentee landlords
Yes it's a sorry tale which is getting worse by the day......forgot to say I totally agree with you on the commute!

I resolved never to have more than a 30 min journey time and generally did this on foot or cycle, a better start and end to the day than the 'cattle truck' transport which is considered normal in London. Again only made possible by lower house prices many years ago.  

PostSandy
PostSandy  
2/19/2014 10:59:59 PM
User Rank Village Voice
Re: London... A city for bankers and absentee landlords
Eye-opening stuff, Sunshine. Thanks for that!

sunshine
sunshine  
2/18/2014 7:03:09 PM
User Rank Urban Legend
Re: London... A city for bankers and absentee landlords
@postsandy, yes we have schemes to help people buy homes. These are called 'affordable homes' but because they are sold at the same price as the high cost private sector, developer built homes people can only afford to buy a proportion of the home, usually 25%. The purchaser 'buys' this by providing a small deposit and takes out a mortgage for the rest of the 25%. The remaining 75% of the value is paid monthly as rent. The total monthly amount mortgage + rent equates to marginally less than the mortgage on a fully mortgaged property but doesn't require such a large (usually 40% deposit since banks screwed up so badly on their loan to value lending) However because this isn't really 'social housing' and the property values are linked to open market value it doesn't address the problem of a chronic sshortage of houses. We had a reasonable stock of social housing until the great Margaret Thatcher was told that if she sold off the social housing to the occupants, these new home owners would all vote for her and the Conservative party. This right to buy policy enabled many to buy at up to 50% discount off the market value...lovely for the individual living in desirable central city areas who could buy and sell for a healthy profit. Those dwellings lost to the poor forever were then used by wealthier residents as homes to be bought and sold or as rental properties in our ever expanding private rental market where rents are ever increasing. We have created a perfect situation for the rich to get richer.....what more can you ask of an advanced capitalist society?

PostSandy
PostSandy  
2/18/2014 1:04:59 PM
User Rank Village Voice
Re: London... A city for bankers and absentee landlords
Sunshine, in London is there such a thing as "public housing"? Like in Hong Kong, they've introduced a rent-and-buy program for people who earn 3000 pounds monthly or less, who can't afford down payment right away to rent first, and buy later. 

Re: improving transportation to bring in people living outside London, many people who works in NYC commute by trains everyday for more than an hour. These people live outside Manhattan. To me, however, no matter how comfy the train is, long commute definitely takes a toll on a healthy lifestyle. 

stillalive
stillalive  
2/18/2014 8:56:03 AM
User Rank Town Crier
Re: China - Middle Class Investing Gone Wrong?
kq4ym, agree with you about the China syndrome but on London the extra dimension is that to the rich of all nations, with no effective restictions on credit and/or cash transfer and with the daft UK taxation/domiciliatory rules, UK property has become just another commodity, with certain "estate agents" acting as commodity brokers.

How we get out of this before my and Sunshine's "prophets of doom" scenario occurs, is anybody's guess. Full regulation of the estate agents, swingeing council taxes for houses not occupied to a statutory number of persons, and even immigration quotas, might not be enough. But it is difficult to see how the additional housing proposed by certain politicians can be provided without building on river flood plains or worse on valuable agricultural and prime industrial land. The more overcrowded the UK becomes the more important these last two are.

kq4ym
kq4ym  
2/15/2014 12:35:44 PM
User Rank Urban Legend
China - Middle Class Investing Gone Wrong?
My understanding of the situation in Chine is a bit different perhaps than that in London, et al. China's developers were catering to the growing middle class, persuading the purchase of condos and homes as great investments. Huge urban projects grew at breakneck speed, only to now have many square miles of empty and in many cases unfinished projects.

How London can regulate the high end purchaser will be interesting to see as those investments are just a symptom of the growing chasm between the incomes and disposable incomes of the rich versus the middle class.

sunshine
sunshine  
2/13/2014 5:25:10 PM
User Rank Urban Legend
Re: London... A city for bankers and absentee landlords
@stillalive you make good points. However although flooding may change the financial balance I suspect that the wealthy will always find a way to protect their property and it won't be Central London that is sacrificed to the elements it will be the poorer parts of the country with less voice. Recent events in the UK how action is increased and money spent when the problem of flooding is closer to the Westminster heartland. Here is a link to a rather long essay by James Meek but we'll worth the effort if you want an increased understanding of the sorry plight of housing in the UK and particularly London ...... www.lrb.co.uk/v36/n01/James-meek/where-will-we-live ....if the link doesn't work type -London Review of Books Where will we live -and this should find it.

sunshine
sunshine  
2/13/2014 2:47:04 PM
User Rank Urban Legend
Re: London... A city for bankers and absentee landlords
There has been talk of taxing absentee landlords, but given the fact that this will simply be like applying bank charges, I doubt that this will have any real effect. The reality is that London does not have enough housing and the only way to change this is for the government or local authority to build houses for rent for those who currently cannot afford to live in the city. If this is not done, as @stillalive says there will be no-one to run the services needed for the city to function. Another alternative which is current policy is to build new faster transport systems so people can live in cheaper areas or even different cities and travel further to work .....this is also happening to London where the commuter catchment now extends to Norwich (2hrs away) Oxford (1.5hrs) Hastings and Margate on the south and west coasts are also becoming popular.

stillalive
stillalive  
2/13/2014 11:09:59 AM
User Rank Town Crier
Re: London... A city for bankers and absentee landlords
Ditto Sunshine, I too have commented earlier (in probably irrelevant blogs), but isn't it nice to have what any observant individual has seen being officiallly confirmed by the professional sociological  caucus? If things continue polarisation of haves and have-nots is inevitable, with (literally) Brixton style inflammable consequences.

I previously commented that the one exit from this situation which is consistent with the phenomenon might be the exodus of the skilled workers and professionals and the immediately followed by an exodus of private sector employers.  However the recent UK weather offers another scenario. If the flooding continues downstream from the middle reaches of the Thames, and the design criteria of the Thames Barrier are exceeded, then huge areas of prime and subprime properties, commercial and domestic, are affected. Their value will drop instantaneously. The initial effect will be a sharp rise in values in areas like Bishops Avenue, on the "Northern Heights", but my guess is that it will be followed by an equally swift and much deeper drop when Central and Local governments take measures to ensure that all available property is occupied by "FDPs" (flood displaced persons).

A footnote comment on the original article is that the decay and dereliction of the Bishops Avenue properties currently adds to the rate of increase of their value, not the reverse. This is because buyers of such properties always want to remodel them extensively, double level basements, roof terraces etc etc, and the further the decay has gone the easier it is to get planning permission for a completely new design of building.

Mary Jander
Mary Jander  
2/13/2014 10:34:37 AM
User Rank Staff
Re: London... A city for bankers and absentee landlords
Wow, as you describe it, @sunshine, this unfair trend seems to be indeed capable of decimating a city, even one as robust as London. It's time to take another look at how this unfortunate situation can be addressed.

Do you have any hope that awareness, raised by the recent newspaper investigation, will help drive action against the wealthy absentee trend?

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