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State intervention, market forces and localism

Perhaps if one of the major political parties wins a majority next week we might get the political and legislative will to address the housing crisis.

We are all agreed that the problem is supply; many of us wish to see free market solutions, others market interventions and others a bit of both. Housing crisis

To the purist political and economic theorist, tax incentives or breaks such as the coalition Government’s Help to Buy or the failure to include buy to let mortgages in last year’s MMR are market interventions. So are plans to force housing associations to observe right to buy. Why not go a bit further and tax buy to let landlords sufficiently to disincentivise them? Or will that further reduce supply?  Otherwise, they may very well snap up the majority of the new houses that might one day be built. Was the decision to stop councils building a big mistake?

There is a worrying parallel between the grocery and housebuilding sectors. We are told that the era of giant out of town superstores is over and we now wish to shop locally. The big housebuilders are flying high on the stock market as analysts and investors foresee them building huge garden cities or out of town megalopolitan jungles. But is it what we really need? Surely not; we want to live in pleasant and established towns and cities with proper communities. So, surely now is the time to back local municipalities to look at smaller brownfield developments and offer tax breaks to members of the Federation of Master Builders, to train more brickies and to reopen the Bedfordshire and other brick works, shamelessly shut down by the failed megalomaniac conglomerates of yesteryear that went “global” in pursuit of cost saving. 

By  Allan Noel-Baker

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