Gentrification, good or bad?

[KentVillan]

6 minutes ago, nick76 said:

Because a large amount of the British electorate dream of the great life, to win the lottery, to have the great life, the second home, the nice car and happy family.  While that dream lives on is the reason why the electorate will never push to limit on what their dream could be and if it doesn’t impact them here and now they have too many current issues to care about other peoples issues miles away.

Absolutely, and I completely get that. The problem is that it has become self defeating, since most people spend the best years of their lives saving to buy property or paying down expensive mortgages, and not having the same level of disposable cash as many of our peers in other affluent countries.

I believe we can have a dynamic, free market economy with relatively low taxes, whilst still disincentivising the purchase of property as a means of parking wealth. Wouldn’t you rather that money was flowing into startups or growth businesses that employ lots of people?

Edited March 25, 2022 by KentVillan

[nick76]

3 minutes ago, KentVillan said:

The purchase of the house is not what generates the tourism revenue

I agree, the people who buy them have the tourism money to spend.

4 minutes ago, KentVillan said:

The point is the “opportunity cost” you outline isn’t really a cost. Property isn’t really a productive investment in the same way as investing in a business.

No but investments arent always equal are they.  Wealth portfolios have many different types of assets and property is one of them but also has the advantage that can get some non-financial benefit like a second home for personal use.  The property is highly likely to increase in value as well over time.  Spending money on rentals, hotels, lodges or caravans is just money spent i.e. once the holiday is over.

10 minutes ago, KentVillan said:

But leaving big tax loopholes for speculative property investors vs homebuyers doesn’t really have the effect you describe, and the idea that all that money would just funnel out instead to foreign countries is based on what evidence?

Common sense.  If I have a second home in Cornwall, in my head I will tending towards going there on my time off than abroad because I’d want to utilise it.  If I don’t have a property in Cornwall then while I might go to Cornwall occasionally, I will likely have more trips abroad and/or buy a property abroad if it made sense.  Buying the property in Cornwall almost locks in my tourism money to that community but if I’m not locked in I’m less likely.  While the ultra wealthy can have holiday homes they don’t visit, the average Joe whose done good and has a second home will definitely use it than going abroad most of the time.

[nick76]

9 minutes ago, KentVillan said:

Wouldn’t you rather that money was flowing into startups or growth businesses that employ lots of people?

That’s where the (again) human psyche comes in that wants the cake and eat it.  Do I care about other peoples start ups or employing people or do I want a place I can go to down the coast to zone out and take walks along the coast after working so hard in my day to day life.  The human psyche is powerful thing….

[KentVillan]

4 minutes ago, nick76 said:

I agree, the people who buy them have the tourism money to spend.

No but investments arent always equal are they.  Wealth portfolios have many different types of assets and property is one of them but also has the advantage that can get some non-financial benefit like a second home for personal use.  The property is highly likely to increase in value as well over time.  Spending money on rentals, hotels, lodges or caravans is just money spent i.e. once the holiday is over.

Common sense.  If I have a second home in Cornwall, in my head I will tending towards going there on my time off than abroad because I’d want to utilise it.  If I don’t have a property in Cornwall then while I might go to Cornwall occasionally, I will likely have more trips abroad and/or buy a property abroad if it made sense.  Buying the property in Cornwall almost locks in my tourism money to that community but if I’m not locked in I’m less likely.  While the ultra wealthy can have holiday homes they don’t visit, the average Joe whose done good and has a second home will definitely use it than going abroad most of the time.

This is just an explanation of why property is a good investment for the investor. I’m talking about it being economically productive in the wider economy, ie having multiplier effects or spillover effects or whatever.

And no, the *purchase* and *ownership* of that property through a tax efficient vehicle is not what generates the tourism revenue. If it’s an attractive place for tourists to visit then they can rent or stay in a hotel or drive down for the day, OR buy it in a slightly less tax efficient way that still generates money for the local economy.

There’s no good argument at all for making holiday home ownership tax efficient in a country with a shortage of housing supply.

It might make sense in rural parts of Italy where no Italians want to live. It doesn’t make much sense in Cornwall. The property would still be occupied in a higher tax environment (that’s why the prices keep surging, because demand is outstripping supply).

[KentVillan]

3 minutes ago, nick76 said:

That’s where the (again) human psyche comes in that wants the cake and eat it.  Do I care about other peoples start ups or employing people or do I want a place I can go to down the coast to zone out and take walks along the coast after working so hard in my day to day life.  The human psyche is powerful thing….

Yes I understand the human psyche, but government’s job is to not just be a **** drug dealer helping people get high on stupid ideas, but to think about the wider economy.

I’m not criticising your personal decision to buy a holiday home, or to factor in the tax implications. I’m saying the policies are flawed.

[fruitvilla]

First mistake in this ... gentrification/second home discussion is thinking about it as good/bad.

A better tack would be to think of it in terms of desires and outcomes of our actions. Firstly I have been relatively lucky and I managed to get a good education (at the ever suffering tax payer's expense). I was lucky and managed to get relatively well paying jobs, not some of the exorbitant type stuff out there, but probably well above average. And I was lucky in that I have a  relatively frugal mind set and have saved enough. All this is fundamentally lucky.

Now there are people out there who for variety reasons are not in a position to buy a house and gentrify it or buy a second home. So how do we get every one to a position where they can afford these things? Or even just a regular home. Ultimately it needs to be some sort of income levelling, not just raising minimum wage but lowering the wage of high earners. Here I don't mean just soaking the rich. I think in part we need to better educate (at school level) our young. Bearing in mind there may not be jobs for our better educated young. Also bearing in mind the average IQ is 100, and education can only do so much in that department. Better nutrition could likely help there a bit. So an enlightened socialism seems in order (not a rabid communism). 

The other thing to bear in mind ... to some degree we do live in a "sort of zero sum world". If we do well looking after local people without homes etc, we really don't want to make worse for others. The problem is not whether gentrifiers and second home owners are a blight or not, but who will be first up against the wall when the revolution comes?

[nick76]

12 minutes ago, KentVillan said:

Yes I understand the human psyche, but government’s job is to not just be a **** drug dealer helping people get high on stupid ideas, but to think about the wider economy.

I’m not criticising your personal decision to buy a holiday home, or to factor in the tax implications. I’m saying the policies are flawed.

 I think it comes down to your political view of the involvement of government will influence how you see them acting or not acting.  One person view that something is a stupid idea is another person view it’s the right idea thats why there is such a political ideology difference in this country and many countries.

 

 

[KentVillan]

10 minutes ago, fruitvilla said:

First mistake in this ... gentrification/second home discussion is thinking about it as good/bad.

A better tack would be to think of it in terms of desires and outcomes of our actions. Firstly I have been relatively lucky and I managed to get a good education (at the ever suffering tax payer's expense). I was lucky and managed to get relatively well paying jobs, not some of the exorbitant type stuff out there, but probably well above average. And I was lucky in that I have a  relatively frugal mind set and have saved enough. All this is fundamentally lucky.

Now there are people out there who for variety reasons are not in a position to buy a house and gentrify it or buy a second home. So how do we get every one to a position where they can afford these things? Or even just a regular home. Ultimately it needs to be some sort of income levelling, not just raising minimum wage but lowering the wage of high earners. Here I don't mean just soaking the rich. I think in part we need to better educate (at school level) our young. Bearing in mind there may not be jobs for our better educated young. Also bearing in mind the average IQ is 100, and education can only do so much in that department. Better nutrition could likely help there a bit. So an enlightened socialism seems in order (not a rabid communism). 

The other thing to bear in mind ... to some degree we do live in a "sort of zero sum world". If we do well looking after local people without homes etc, we really don't want to make worse for others. The problem is not whether gentrifiers and second home owners are a blight or not, but who will be first up against the wall when the revolution comes?

Good post, but I fundamentally disagree with the last bit. The UK is looked on with puzzlement by countries where smarter housing policies have lifted living standards for everyone, without dragging down the most affluent. There’s no need for our approach to it - it gives people a sense of increasing wealth when they get on the ladder and watch their house go up in value, but it’s mostly an illusion (unless you reach the step of owning multiple properties, collectively worth the same or more than your current place of residence).

You didn’t do well in life because of this country’s housing policy - probably in spite of it tbh.

[KentVillan]

3 minutes ago, nick76 said:

 I think it comes down to your political view of the involvement of government will influence how you see them acting or not acting.  One person view that something is a stupid idea is another person view it’s the right idea thats why there is such a political ideology difference in this country and many countries.

Ok but government is involved already (council tax, stamp duty, planning regulations, provision of waste collection, utilities infrastructure, etc etc). It’s not really about whether govt intervenes, it’s about closing loopholes and setting existing taxation policies in more sensible ways.

If we had a housing policy that increased supply & occupancy rates in desirable locations, our GDP growth would be higher, and you’d still enjoy a great life making more money - and still be able to buy a holiday home.

The problem is too many people believe in the “zero sum”, “no such thing as a free lunch” view of the economy which suggests every positive action by the govt must have an equally negative consequence somewhere else.

But that just isn’t true. Society progresses and living standards collectively improve because the world isn’t a zero sum game.

[fruitvilla]

9 minutes ago, KentVillan said:

The problem is too many people believe in the “zero sum”, “no such thing as a free lunch”

It's not so much they believe in "zero sum", but more they can point to where the plus bits are coming from. I am reminded of management speak of synergies when they really meant of doing the same or more with less. Having said that, there may be enough that we are wasting at the moment before we get to zero sum. In reality, I don't think we are disagreeing. I am all for building more homes etc. But I do wonder where the materials and energy come from. There is a cost associated with this and we can only worker harder and smarter for so long.

 

Of all the commenters ... on this thread I find yours sensible. And as an aside I left the UK in 1980 or thereabouts. 

[KentVillan]

15 minutes ago, fruitvilla said:

It's not so much they believe in "zero sum", but more they can point to where the plus bits are coming from. I am reminded of management speak of synergies when they really meant of doing the same or more with less. Having said that, there may be enough that we are wasting at the moment before we get to zero sum. In reality, I don't think we are disagreeing. I am all for building more homes etc. But I do wonder where the materials and energy come from. There is a cost associated with this and we can only worker harder and smarter for so long.

 

Of all the commenters ... on this thread I find yours sensible. And as an aside I left the UK in 1980 or thereabouts. 

Yes, that's a fair point, but I suppose a better way to illustrate it is to compare cities and countries, and look at obvious examples where one city (with similar resources) has clearly done something more efficiently on a similar budget.

For example, big cities that have poor public transport vs similar cities that have good metro / tram / bus / cycle networks. In the city with poor public transport, people just spend rush hours sitting in traffic jams, they have to leave the house earlier to get to work at the same time, they spend more on fuel, they have to own a car, the air quality is worse. They gain almost nothing from this. Aggregate it up across the whole population and it's just wasted economic potential and reduced quality of life.

Or countries that invested heavily in high-speed broadband while other countries left most of the population on dialup modems. Did saving that money really save everyone money or was it just a brake on the economy?

I think the housing supply problem is a bit like that. It's a problem that nobody really benefits from, and the downsides are very apparent. And the solution, while incurring some short term cost in taxation or govt debt, clearly improves the economy and makes most people's lives (across all strata of society) much better.

It's fine to say, "well these wealthy people buying up housing bring money to the local economy", but where do the people on the receiving end of that money (retail staff, leisure & hospitality workers, tradesmen, teachers, hospital workers, bus drivers, taxi drivers, street cleaners, gardeners, etc) live nearby to provide those services? Is the expectation that they all drive to the idyllic holiday village from 20 miles away everyday?

A functioning local economy, even if you're just looking narrowly at the needs of the wealthy residents, needs affordable housing, unless your aim really is to completely seclude yourself from wider society (which might make sense if you're a Russian oligarch or if you just really hate other people, but I don't think most people are like that).

So yes I do think people live together as communities that help everyone to have better lives, and yes that can be too idealistic ("let's create synergies, yeah") in some contexts, and sometimes it's just an excuse for cost cutting. But it can also definitely be a real measurable thing.

[chrisp65]

 

Cont.

[Seat68]

3 minutes ago, chrisp65 said:

 

Cont.

You would hope he is getting a fair bit of criticism on that post. But you know, it's expensive to go abroad for holidays so basically he is the 4th emergency service. God bless him. 

[chrisp65]

Just now, Seat68 said:

You would hope he is getting a fair bit of criticism on that post. But you know, it's expensive to go abroad for holidays so basically he is the 4th emergency service. God bless him. 

Apparently, due to receiving negative feedback, he has decided to allow one local family to rent one of the four houses from him.

 

Makes you feel all warm inside, that kind of basic human decency. Hope nobody perpetually vandalises the holiday lets.

 

 

[KentVillan]

25 minutes ago, chrisp65 said:

 

Cont.

Heroic lack of self awareness.

Absolutely despise people who post the brand new keys photo on socials btw (sorry if any of you have done it). Buying something for yourself does not merit an "announcement" you **** faces.

[HanoiVillan]

On 25/03/2022 at 20:30, KentVillan said:

Absolutely, and I completely get that. The problem is that it has become self defeating, since most people spend the best years of their lives saving to buy property or paying down expensive mortgages, and not having the same level of disposable cash as many of our peers in other affluent countries.

I believe we can have a dynamic, free market economy with relatively low taxes, whilst still disincentivising the purchase of property as a means of parking wealth. Wouldn’t you rather that money was flowing into startups or growth businesses that employ lots of people?

You would have to change *so much* about modern Britain to genuinely have a pro-growth mindset, from government to populace, that it just isn't feasible as a political project. We're a nation of coupon-clippers.

[KentVillan]

32 minutes ago, HanoiVillan said:

You would have to change *so much* about modern Britain to genuinely have a pro-growth mindset, from government to populace, that it just isn't feasible as a political project. We're a nation of coupon-clippers.

The coupon clipper mentality is a big tendency in British politics, but hasn't its influence been exaggerated a bit by electoral quirks and irresponsible politicians? (Osborne, Sunak)

[HanoiVillan]

21 hours ago, KentVillan said:

The coupon clipper mentality is a big tendency in British politics, but hasn't its influence been exaggerated a bit by electoral quirks and irresponsible politicians? (Osborne, Sunak)

I have thought about this, and I think my answer is no, not really, that there is instead a symbiotic relationship between the people of this country and the governments they continue to elect. Osborne was terrible for this country, and Sunak looks like he'll be roughly as bad given time, but people don't *want* growth, and as the country gets older it only looks like it's going to get worse.

[KentVillan]

4 minutes ago, HanoiVillan said:

I have thought about this, and I think my answer is no, not really, that there is instead a symbiotic relationship between the people of this country and the governments they continue to elect. Osborne was terrible for this country, and Sunak looks like he'll be roughly as bad given time, but people don't *want* growth, and as the country gets older it only looks like it's going to get worse.

I disagree, because the Blair/Brown years were very much dominated by a commitment to growth and reinvesting the proceeds of growth in public services, and that seemed like a new paradigm for quite a long time with fairly widespread public support.

What happened is that Blair disappeared down his War on Terror rabbit hole, Brown got obsessed with being PM... and then a narrow media elite (Murdoch, Dacre, Barclays) managed to successfully drive home the household budget / austerity analogy post-Financial Crisis to the extent that George Osborne had a free run as Chancellor on a completely insane austerity manifesto. But Sunak isn't enjoying the same levels of popularity trying to pull off the same book balancing act, and I wonder if this whole philosophy is losing mainstream support?

The reality is I don't think the last 2 or 3 Conservative govts were even voted IN, so much as the population weren't comfortable with Corbyn and (to a lesser extent) Miliband. It's really hard to say what the public actually want, and what a direction a strong leader could take them in.

This is from the British Social Attitudes survey.

It suggests belief in high tax / high spend vs low tax / low spend isn't that stable over time.

[chrisp65]

Can I ask what coupon clipping means?

Googled it, didn’t get a relevant answer.