Realist, not conformist analysis of the latest financial, business and political news

UCL Researchers Spout Through Their Botty Cheeks Over Second Homes

It’s considered impolite to use the phrase “speaking through their arse” in headlines these days but this is what we should be saying about this research from University College London. Apparently building more houses doesn’t solve the problem of house prices. These people need to go talk to the economics department of that university to get a little more up to speed on the role of supply in markets and the influence upon prices.

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Housing worth £123 billion is barely used in Britain, researchers have calculated, and have called for a one per cent tax on second homes to dissuade people from keeping hold of mothballed property. A new study by University College London (UCL) concluded that building new homes is not the answer to Britain’s housing crisis as they are likely to be bought up as second homes or investments in the most popular areas. Researchers collected information from around one third of local authorities in Britain covering 40 per cent of the population and found nearly 340,000 homes that were rarely used. [/perfectpullquote]

There are some 25 million dwellings in the UK – given that there are some 25 million households. So, 1.3% are un- or under- used. We can run the same numbers a little differently, there’s that £123 billion of underused property, total property wealth – net of mortgages please note as this is how we calculate it – of £4.5 trillion. That’s 2.7% and given mortgages that’s an overestimate.

This is not something that requires action for three rather different reasons:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Researcher Jonathan Bourne at University College London investigated the relationship between the percentage of properties which do not have a permanent resident (low-use properties), and housing affordability in different parts of England and Wales. His findings are published in the journal Palgrave Communications, which is part of the Springer Nature portfolio. “One of the goals of this research was to get an idea of the fraction of the population of England and Wales living in areas where low-use properties are more expensive than homes occupied by full time residents, which suggests that the most desirable properties are being bought for purposes other than use as a home, for example as investment opportunities or holiday homes,” Bourne explained. “Some of the most surprising findings were the sheer value and quantity of low-use properties in some areas, amounting to £21 billion in the London borough of Kensington and Chelsea alone, and £123 billion in the entire dataset. We estimate that in England and Wales, 39-47% of the population lives in areas where low-use properties are more expensive than permanently-occupied homes.” [/perfectpullquote]

People who have two houses are, quite obviously, going to be the richer people among us. The finding is thus that richer people live in more expensive houses. This surprise anyone other than a researcher at UCL?

Our second reason for inaction is that this is a 1 to 2% problem even if it is a problem. Governance is not accurate to these sorts of levels, it’s too blunt an instrument. Anyone think that the benefits system is accurate to 1 or 2%? The NHS? Tax collection? No, none of them are, are they? And no system trying to rule 65 million with clever plans from the centre is ever going to be. Thus giving us a useful little rule of thumb, one and two percent problems are those we don’t try to address through central governance.

The really big one is, of course, so what? These houses being talked about are not some gift of nature to which all have some right. They’re not the product of some beneficent state, they’re not gifties from the spending of righteously garnered taxation, they’re private property. And that people get to do as they wish with their own private property is the very definition of it being private property. How or even whether people live in their own home is no business of the State’s in the first place.

Finally, one little detail:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]the percentage of properties which do not have a permanent resident (low-use properties)[/perfectpullquote]

Much student housing does not have a permanent resident. This has been adjusted for, right?

0 0 votes
Article Rating
Notify of

Newest Most Voted
Inline Feedbacks
View all comments
5 years ago

There is a substantial “unused” house stock tied up in probate. In any given year roughly 1 million people die, maybe a bit less than half of them leave a property. Probate takes 6-9 months. So at the short end, at any one time there are some 200,000 houses empty due to being in probate. If the Govt facilitated a faster process, reducing probate to 3 months instead of 6, then 100,000 more houses magically appear for use…

5 years ago

“Much student housing does not have a permanent resident.” The best comeback I’ve read so far in 2019.

5 years ago

If they want to stop people using property as an investment, then find a way to make property prices fall (or at least stop going up). Like building lots of houses say.

5 years ago

Try, ‘speaking through their ears’.


A N Agram

Would love your thoughts, please comment.x