60 Second: The European Conundrum

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Afternoon,

Samsung has announced that its new European HQ will be in Germany – not Britain as originally planned.

Why? Because young people – who they are trying to attract – will have more money in Frankfurt than London.

But why are Samsung and others shying away from Great Britain?

Because the cost of buying and renting is cheaper. So young people will have more disposable income.

When I first came to London in 1974, there was a massive recession, house prices were high and rented accommodation was almost impossible to find.

And in forty years little has changed.

The short answer is basic economics. Too much demand and not enough supply. Regular readers will know that I have ranted a lot about how the supply of housing is artificially constrained due to the quagmire that is known as the planning process.

This is particularly so in relation to release of land – especially the holy land known as the Green Belt.

2ead184b-e60c-4ff2-8270-06a385bb18f0Recently, there has been increased focus on the super-rich and how they use housing to store up property like gold bars which just increase in value.

But we need radical solutions.

Here’s one. Remember China’s one child policy; I would propose a one house policy. Every individual should only be allowed to own one house in the UK until we bring the housing crisis under control. Landlords would have to sell off their excess houses at the market price. Businesses would be exempt but would have to pay an additional levy which would go directly into building new houses. An additional levy would also be charged on houses that are unoccupied after a grace period.

When and if the housing crisis is finally solved, we can phase out this policy and steadily increase the number of houses landlords are allowed to own as well as reduce the levy.

An advantage of this policy is that it would provide an incentive to the 123 MPs, almost 30% of the Conservative and Liberal Democrats who are landlords, to get a move on.

Politicians are always saying China is the future and we need to look to it. Maybe they’re right.

Will this happen? I wouldn’t bet my house on it.

Have a good weekend,

Tom


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