Shared-ownership housing - good or a bad idea?

This is a discussion I have been involved in else where

http://www.zerogain.com/forum/showthread.php?t=8825

What do people think about the Government's plans for shared-ownership housing, whereby owners own 50% of the equity in a property and the banks / the Government will own the rest?

Personally I think it's a dreadful idea. I understand the huge pressures on young people and how difficult it is to get on the property ladder these days, but I really don't think this is the solution. To my mind, it will just further inflate the property bubble in the UK in the same way as letting parents underwrite mortgages for their children / shared ownership mortgages / self-declaring income mortgages have done, playing into the hands of speculators and developers, whilst not actually increasing the overall size of the housing stock.

Furthermore, I am concerned that if the UK Government and the UK banks start to become majorly invested in UK property, should a housing market price collapse take place, it is not just home-owners that wil suffer, but the banking system's strength and the whole of the state. At this stage in the cycle, I for one would not be buying into property, so I don't feel too happy about tax £s going into investments that could be worth 30-50% less in 5 years' time than today.

I think a far better solution would be the exploration of modular building techniques, relaxation of planning procedures so that councils will actually grant planning permission to housing stock that doesn't look like 1950s "noddy houses". This would increase the overall stock of housing, and would also, through the use of modern construction methods be cheaper and better for the environment. The Walter Seagal House on Grand Designs was a good example of what can be done, but unfortunately conservative (with a small c) planning officers are too backward looking to let it through.

"Modern construction techniques" reminds me of Ronan Point and the wonders of Bison Concrete Products and conjours up all sorts of images of Barratt Homes repairing 60,000 homes with rotting internal walls.

Well that's certainly not what I had in mind, in fact, the less concrete used the better, one of the most environmentally damaging products in its construction. was thinking more about the construction ideas contained in books like "XS - Big Ideas, Small Buildings" and Pierre D'Avoine's excellent pattern book for expanding housing in congested cities - "Housey Housey". I can commend both books as an example of what can be done without having to resort to the atrocious Barratt Homes approach.

How does concrete damage the environment?

Well, apart from the fact that it will last in the ground about 1000 years, its the methods of production with cement that cause the problems - wash out of limes into the water supply and the huge amount of energy required to make it - from what I've been told by experts and seen on TV, cement is amongst the most energy intensive materials used in the construction industry. I personally think far greater use should be made of wood and locally sourced materials, with concrete used as sparingly as possible.

it seems that most buy-to-let yields are lower than the rate you could get at ing direct (i.e. pre-tex rental yield sub 5%).

Well, concrete is made from natural products......aggregates of different sizes (stones and sand) and water and portland cement. But it doesn't last for 1000 years as concrete; it breaks down back to it's component elements much much quicker than that.

Portland cement does require a lot of energy to produce but quite honestly concrete provides designers with a material that is absolutely vital in construction. There are so many elements to which there are few viable alternatives; buildings need foundations to transpose loads down to load bearing statum and concrete is the cheapest and most efficient way to do this; modular concrete floor slabs are about the cheapest way I know to span steel beams, tilt up wall panels are one of the quickest and cheapest ways of forming an external envelope, concrete roof tiles are about the most durable domestic roof covering on the market etc etc.

BTW, I'd have thought that wood would be far more environmentally disadvantegous to be honest; not least because it comes from trees.

Not sure I follow this. Can you explain it again?

Depends on how its treated, what sort of soil its in, the mix, etc. etc. It's quite possible to fabricate concrete that would last well over 1,000 years.



I accept that in difficult engineering processes concrete is useful, and in domestic housing it is useful for the foundations, but I think as it is so cheap and can be melded to any shape pretty much, it has eliminated the need for architects/designers to think about better materials some of the time - they just go brick and block with concrete slab floors, and that's it. I would like to see promotion of locally sourced materials and encouraging people to learn to use them again (i.e. growth in wood-working, stonework, etc).



No - wood is accepted as the most environmentally friendly material in the home construction industry. Most sawmills / foresters will plant 2 trees for every one they fell to make into house-building materials.

Well - certainly in London, most buy-to-let landlords are probably seeing a yield to current value on their property of around 3-4% pre-tax (i.e. 2%-2.5% post tax at 40%) - so agents are seeing large number of these speculators now selling - obviously if they can get 5% pre-tax risk free from an ING Direct savings account, you don't want to have your capital tied up in a property earning you less than that, with all the hassle of dealing with agents and tenants, repairs, wear & tear, etc.

so the BTL market, particularly in the south-east has cooled off massively to the point where a lot of the properties are coming to the market. buyers at current prices are less than such properties for sale, hence prices are coming down. i predict that this is a trend that will eminate across the whole of the uk.

Well, it may be possible (As someone who spent a large chunk of a three year degree immersed in concrete technology I'd be interested to learn how)

I take your point about a rennaissance of artisanry; it'd be nice to see intricately carved beams and stone gargoyles everywhere but this is purely a matter of aethetics. I fail to see how this would cheapen the construction process and make homes more affordable and available which I thought was your original ambition.

I still don't follow what you mean by yield. Do you mean in a cash flow sense of the term (ie it costs $1000 a month to own a property which brings in $1030 in rent giving a 3% yield before tax)?

concrete structures also tend to require deep foundations owing to their weight, hence they are very invasive into the soil, require lots of digging, deep foundations.

traditional definition of yield is asset income / asset value, so the value would be the current market value (not the purchase price) and income could be defined as gross (i.e. before expenses) or net (post expenses). Most yields quoted are gross in the UK (i.e. pre-running costs and pre-tax).

Can you give me a numeric example? (I'm not being awkward but numbers (a bit like pictures) speak a thousand words!!

OK.

E.g. You've had your apartment in London valued at £500,000 for sale. Or the agent tells you you could get £20,000 a year (roughly £385 a week) in rental income. So that's a 4% rental yield (£20,000/£500,000). Clearly that figure's pre-tax, and its before the landlord expenses you are likely to also incur, such as the service charge for the apartment block, wear & tear.

sub 4% is now becoming normal in the London property market as the asset values have increased faster than incomes, so landlords have been unable to increase their rental income in line with the increase in the capital value. as such, many are now selling to use their capital to earn a higher return elsewhere.