Unaffordable London

Yesterday I went door knocking/street surgery in my West Ham ward with local Party members.

It was a pretty successful and I think many residents were pleased that we were coming to speak to them and ask them their views.

I had some ear bashing about litter, dog mess and waste bins left in the street. But on the whole, it was pretty positive and solid Labour.

When we had finished we came across a local estate agent who was showing a couple a property for sale. We asked how much this property was. It was a 3 bedroom end terrace in need of improvement but it was for sale for £265,000!  If was modernised it would be worth £310,000.

What a huge amount of money. Who can afford this? When I got home I had a look at the various property websites.

If you could put down a 10% deposit you would still have to pay £1,391 mortgage repayment (interest and capital) each month to repay £265,000. This is also at historically low (and long term unsustainable) interest rates.

If you are on the medium London wage of £653 per week (£33,956 per year and obviously many Londoners are not paid this much) according to the Halifax you could only get a mortgage of £142,428. No where even near £265,000.

If you had a partner and were both on the London Living Wage (£8.55 per hour or £17,780 per year on a 40 hour week of ) both of you could only raise £152,908 for a mortgage.

The average rent for E15 is £343 per week which is £1 more than a London Living wage pay packet (£342 per week for 40 hours).

Newham has been traditionally one of the cheapest boroughs to rent or buy in Greater London.  But if you are on low wages or have no big deposit who on earth can afford to buy or rent anywhere in London?

Shared ownership mortgages for bail out money

Inside Housing report that the Halifax (HBOS) has had to provide shared ownership mortgages in order to get its £37 billion of taxpayer’s capital.

Good, there is a role for a Command economy in a crisis! Perhaps one of the unintended positive consequences of this current crisis is that a flexible shared ownership model will overtake “outright sale” as the preferred housing tenure model for many?

Our Brit fetish for supposedly 100% home ownership is out of line with the rest of the real world. Many people in insecure employment or who are otherwise vulnerable were persuaded to "buy" (mortgage to the hilt) their homes. Many are now possibly going to be evicted and lose everything. Shared ownership is not perfect and should not replace an option of secure tenancies at a fair rent but it is a far more socially just and equitable than outright sale.

What we need to do as will is persuade the middle classes to take part and create real mixed and sustainable communities. That is the next big problem. Any ideas Howard?

The Credit Crunch Comes Home

This morning my better half received confirmation in the post that HBOS (Halifax Bank of Scotland) is being taken over by Lloyds TSB (see left).

She had a Halifax saving account when it was privatised in 1997 and has kept the shares every since.

Lloyds TSB will pay for HBOS with its own shares. This means that the price paid for HBOS shares will be about £2.32 each. 18 months ago it was £12 per share. On one level - such is life I suppose.

Since she got these shares for nothing in the first place, I don’t think we can feel too cheated by all this.

Obviously, those who have invested their savings or pensions into HBOS will beg to differ. Also, during the summer I spent a night in Halifax, visiting old friends. HBOS has its operational headquarters in Halifax and is a major and significant local employer; my friends had family members who were employed by HBOS. So this must be a really crappy time for them.

What makes me burn over this particular issue is that HBOS was forced to seek a takeover because of the infamous “spivs and speculators”. They sold the company stock “short” on the basis of completely false rumours and lies and the business simply could not survive in such a difficult and impossible market.

These fraudsters (and the rest) need and deserve a good taste of porridge as far as I am concerned. But what really makes my eyes stand out is the prospect that these thieves used my own pension scheme “shares” to destroy HBOS. How many LGPS (local government pension schemes) lent hedge funds their shares in HBOS (for a small fee) only to find that that these same hedge funds had destroyed the underlying value of these shares by telling lies and spreading false rumours.

This is an inevitable consequence of what happens if owners of capital, such as pension funds, do not or are not allowed to take their responsibilities of ownership seriously. The “real owners” (scheme members) need to take charge. Things need to change.