Addicted to house price rises

I am not someone who follows Karen Whitefield’s words with any regularity. So, not being a follower of the Labour MSP for Airdrie and Shotts, I cannot assess what it is she has said that has so angered Housing Minister, Alex Neil, such that he has threatened legal action against her and any media outlet which repeats what she has allegedly said.

It appears that the matter is about the extent to which Mr Neil has gained personally from the sale of a property in Edinburgh for which the parliamentary allowances system at the time paid mortgage interest and other costs. With capital gain over time, it is reported that Mr Neil has made a profit of £100,000 on selling the property. Some people view that with distaste, in light of Mr Neil’s responsibilities for, among other things, affordable housing and homelessness.

I don’t want to dwell on Mr Neil’s circumstances because they have been well enough publicised these last 6 months. Besides, the Housing Minister is only one of a number of MSPs to have gained personally from the system of mortgage allowances (which is being phased out next May).

Instead, I want to highlight the wider issue of our addiction to rising house prices. Or really, since labour and materials have not risen dramatically in price, to question the addiction to rising land values. How often do we see newspaper reports of rising prices as a cause of celebration and are asked to take house price dips as a sign of doom? In what other area of social policy is hyper-inflation the source of such perverse delight?

And that addiction leads to another addiction, of course: that of gambling. For those not averse to taking a punt, property has secured better speculative returns than the casino for most of the last twenty years. Except when it all goes bust, most spectacularly, over the Irish sea, of course, but there’s plenty of casualties here in Scotland as well. That’s leaving aside what property bubbles do for access to housing for younger families or others desperately seeking a home.

But it’s striking just how pervasive that addiction is. It’s not just MSPs’ former allowances system. Even apparently benign policies are built on the premise that land values will continue to rise. For example, take the use of planning quotas in private development to secure a certain percentage of affordable homes: perfectly commendable in its own right but on shaky foundations if prices dip or flat-line. Or again, the various forms of shared equity schemes promoted by Government: designed to respond to real problems faced by first time buyers but predicated on housing being a sure investment bet.

So what we need to appreciate is that betting on land values may enrich us as individuals from time to time but it beggars us all. Locking capital up in decades old bricks and mortar while starving the nation of productive investment is no way to run an economy. That is why I am so delighted to read the Green MSPs’ report on Land Value Taxation commissioned from land right campaigner Andy Wightman. The report clearly spells out the benefits for the housing market and for how the burden of taxation falls. And it says how it can be done. This is no pie in the sky scheme. It can be done here and now. And its time has come.

Alison Johnstone is a Green councillor in Edinburgh and top Green candidate for Lothian in the 2011 Scottish Parliament elections.