Social Housing Bonds or crowd funding fulfilment

Many Governments have attempted to fix the housing issue by social housing building programmes, rent controls etc. This has lead to market distortions, the creation of near ghettoes and even a reduction in the availability of rental properties. The pandemic has exacerbated the problem and it’s apparent that a long term solution is needed. Governments can be good enablers, but are usually poor at implementing.

Now more than ever, the younger generation need jobs, decent housing and a stake in society.

There’s another group that do have the cash, stuffed under mattresses earning precisely zero. These are the savers, the older generation, the private pension pot holders. Near zero interest rates have saved businesses but continue to hollow out savings. The pandemic has pretty much entrenched this situation for the coming years.

My proposal is to connect these two groups – i.e. the older savers and the young needing decent housing and work. The savers have the cash and the young have the energy. Taxes on the younger population pay for pensions anyway, so why not connect the two in a more direct way?

I propose a Social Housing Bond. Issue a ten year bond ring fenced for rental housing construction, not council houses but administered by existing housing associations. I’ve had a peek around my own area of Northumberland and there are thousands of small, derelict or under-utilised plots of land owned by varying levels of Government which could be brought into use for no cost.

On this land, we can build small developments of 10 to 50 houses, be they decent apartments or family homes. This will fill in small gaps nicely and avoid over-loading local services. They also tend to be where the jobs are located, which is no bad thing. Typical social-level rents will give a 4% annual return for bond holders and leave around 2.5% for maintenance and admin. There are many billions of pounds of pensions and savings earning near zero returns, so a Government guaranteed bond giving modest but decent returns will be very welcome. Let’s make that income tax free as an added incentive.

While we’re at it, how about a nice bit of social engineering? Inevitably, there’ll be a waiting list for new, high quality and cheap rental homes. So, let’s take the young whose employment opportunities have been decimated by the pandemic together with the the intractably unemployed, the untrained and the unmotivated then dangle a great big, fat carrot in front of their noses.

Sign them up to a construction industry apprenticeship in plastering, tiling, joinery or, if they simply are incapable, they can learn to manage a sand heap, push a wheelbarrow and shovel rubble. It’ll be some time before Artificial Intelligence replaces those vital skills. If they sign up and fully participate then BING! Front of the queue they go. Just think, the average builders age is 57. We need more and younger. Brexit will most likely mean that we’ll be in desperate need of these skills very soon.

Hook them up with a local building company, give the business a tax break to reward them and get the apprentices working on their own housing project. Imagine, building your own house. It’s primal, goes straight to the ancient, tribal brain and the essence of providing a hearth and home for your family…and they will look after it.

If they’re a good tenant for five years, give them the right to buy at the cost of replacement plus a small premium to put some more cash into the pot. If they sell up in less than a further five years then there would be a 20% per annum profit claw back. Bingo, a new generation will be invested in society in a deep and meaningful way. This is “Help To Buy” with sharp teeth.

Those on the scheme can market it to their peer group by offering a kick back of a months free rent for each of their pals who complete the training course. Social media does this all the time as the Youtube generation monetise their lifestyles, so why not this? It wouldn’t take many early adopters to spread the news.

Some folk just need a cheap rent or a way into the housing market. However, others need more and this policy could help them all. So many problems solved with one idea. If policies were weapons, the Social Housing Bond would be a machine gun not a rifle.




%d bloggers like this: