You can’t hide from the words “credit” “crunch” and the dreaded r word “recession”. These terms seem to get sucked into every news story. The art world is described as “disgustingly decadent” as Damien Hirst’s pickled sharks sell for millions, when surely this is arts version of Malcolm McLaren’s and The Sex Pistols’ Great Rock and Roll Swindle. It’s a way of prizing out some ill-gotten gains from Russian oligarchs.
The obscene sums of money being lavished on football teams and players by Arabs and Russians increasingly upset much of the press and make this small town club supporter despair. But maybe we should be looking at this as “The Great Football Swindle” whereby millions are being brought into the game that otherwise would be thrown at yachts the size of small islands and on building unsustainable ski slopes in the desert.
When it comes to housing though the credit crunch seems to worry everyone, but maybe it shouldn’t.
I was booked to give a presentation at a business conference recently and arrived a bit early. The place was full of young, mainly male business middle management. A dozen or so of them saw me sat in reception, catching up on emails and came up to me. Most of them, knowing of my involvement in the housing industry wanted to probe me for my thoughts on the housing value falls. They all had “invested” in multiple buy to let properties in new build apartment blocks. You know, those cramped, shoe boxes that developers have been throwing up (and overstretched and under skilled planning authorities have been allowing), to sate the demand of a greedy investment market. There was palpable horror on their faces when I said that I expected their “investments” to further devalue with no sign of any recovery back to previous levels for many a year. With much relish I advised them to prepare to live in negative equity. If you’re going to gamble then be prepared to lose and gambling on new build flats doesn’t just hurt the investor it has seriously affected Britain’s housing stock. I also have no sympathy for the large house builders who have been happily throwing up characterless, cramped apartment blocks in the knowledge that 50 per cent of mortgages were being taken out by “buy to let” or worse still “buy to leave empty” investors. It became a numbers game, a licence to print money for house builders (who were able to brush the concepts of “home”, “livability” and “place making” aside because most people were not making homes, or living in the places they were buying). As the investor market has dried up, (and surely with so many investors in negative equity, it won’t come back anytime soon) then house builders fortunes have gone into free fall and some big names will go to the wall. In an effort to shore up the market the government are making noises that RSL’s (registered social landlords) could possibly, with government money, buy up all those units that the house builders cant sell (thus helping the house building industry’s crippling cash flow problems), making them available to the needy in the rental market or the emerging shared equity market. A very sensible and laudable idea that could start to help with the redistribution of property wealth. This would be all well and good if the flats available to buy from the house builders were fit for living in. But most are not, they are cramped, lacking in public space and suitable only for dormitory accommodation, not community or family oriented at all. The more enlightened RSL’s are thus turning the governments offer down.
Over the past few years I have been describing these “buy to let” apartment blocks as “slums of the future”, they are about to become the “slums of today”. There may be a silver lining though. The big house builders who have contributed to this mess are in such a pickle themselves that when the finance industry sorts itself out and mortgages become more readily available, will almost certainly not be in a position, nor capable of responding. We must hope and fight for communities being delivered by communities. Great new places like Vauban, Freiberg, Germany have been delivered by a combination of community build and small developers rooted in their communities. This system results in more care being taken. I was born and bred in Lancashire and a saying that sums up this is “you don’t shit on your own doorstep”.
Just maybe we are about to see the future of our communities, our places, our homes coming a bit more into our own hands. Just maybe this seismic shock that is going through the house building industry will result initially in a redistribution of responsibility a rethinking of what constitutes good place making and ultimately a redistribution of well being and wealth that results from this.