The Barnet Eye always welcomes emails which concern our community and what is happening. We receive lots of these. Some are guest blogs, some are notices of events. There is a simple rule. If you send us an email, if we have something to say about it, we will. In this case I received an email from Cogress, who are a community of investors, about some stunning returns on investments in social housing in the London Borough of Barnet. It seems that you can get a 25% return on your money if you are prepared to invest in social Housing schemes.
Now as an investor myself, I have no issue with anyone wishing to use their money to make more money. Organisations like Cogress give people what clearly appears to be an excellent chance to make a pot of dosh.
What does concern me is that if the returns are really as high as is being stated at 25%, this justr shows how out of hand and overheated the private housing development market in Barnet is becoming. I've no ideological objection to the private sector taking up the slack in the social housing market, but it is clear that if you can obtain a 25% return, then something is not quite right with the way Barnet Council is managing its housing stock. Of course this is fantastic news for investors and landords (some of which are members of the Barnet Conservative administration). Again don't get me wrong, there is nothing wrong with being a landlord, it is a legitimate way to invest money.
The point is that the costs of social housing generally come back to the taxpayer. If there is a shortage of social housing stock, the costs rise and they turn into "excellent investment opportunities". This translates into 25% returns for investors. This is good for those at the top of the food chain, but what does it do for those in the middle and at the bottom?
Lets look at how it affects the middle class. Between the 1960's and the early part of this century, most middle class couples would get jobs, settle down, then plan to start a family and buy a home. The price of property in Barnet means that this is a pipedream, unless the bank of mum and dad can step in. What this means is generally children leave the area and mutual support networks break down. This means that grandparents are less able to help with childcare, whilst they are able to and children are unable to assist elderly relatives, when they start to develop care needs. The costs of the care then falls on the taxpayer and sadly many elderly people get very shoddy care, especially in a climate of welfare and adult social care cuts.
Then there is the effect on those at the bottom of the social tree. Rocketing housing costs force people in dependency on benefits. This means that there is a catch 22 situation where people don't take work because they end up worse off. For many in Barnet, a 35 hour week on minimum wage wouldn't even cover the cost of renting a basic flat.
The council didn't used to have this problem, large council estates such as Burnt Oak, Colindale and Mill Hill East to name a few were built to address these problems, Whilst these may not have been perfect, working class families at least had decent and affordable housing. Sadly under Margaret Thatcher, the Tories turned away from social housing. Building stopped and the stock was run down. This leaves us in the current situation where young families have virtually no chance of getting housed, until they are in dire straights.
The answer is simple. Barnet Council needs to start building social housing on a large scael in Barnet. The 25% profits talked about in the press release are largely paid for by the tax payer. Profits on this scale mean that Barnet Council could recoup their investment in less than four years. It is insanity for the Council to not be acting to lower the costs. It is even worse that they expect taxpayers to fuel this feeding frenzy of private profit at the public expense.
The council should be able to borrow money at rock bottom rates to fund council house building. This would mean that if the returns are 25%, they would be turning a profit from day one. This would allow them to spend more money on social care and for all of us, we'd get a better deal on our taxes.
I can see no sensible explanation why the council should pay private investors a 25% premium for something they could do for themselves.