Pension funds could finance new homes, report suggests

 
Rooftops of homes in Eastbourne The report suggests setting up a central fund of council pension fund assets

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A possible 100,000 to 300,000 homes could be built in the UK every year without using any government money, a study has claimed.

The Future Homes Commission, set up by the Royal Institute of British Architects, said council pension funds could be used to reach the target.

Some of the assets in local government pension schemes could be pooled to provide a £10bn housing fund, it said.

Housing Minister Mark Prisk said the ideas would be considered carefully.

He described the proposals as innovative and interesting.

'No better time'

The report said a housing revolution that would lead to economic growth and create tens of thousands of jobs was possible without increasing government debt.

Commission chairman Sir John Banham said local councils should lead new development.

"There is no better time to tackle the UK housing crisis," he said.

"After a year-long national inquiry, the Future Homes Commission has concluded a housing revolution is entirely possible and will lead economic growth.

He added: "We need to increase massively the number of quality homes being built for many years to come, but also to develop communities which enhance the quality of life for both new residents and those living in existing communities nearby. All this has to, and can, happen without any additional government funding.

"We strongly believe that local government can become the leader of new development once again, by using their assets and powers to create the type of mature, sustainable, mixed tenure communities that Britain needs and that institutional and international investors want to invest in."

Borrowing ability

The Local Housing Development Fund would be used to build quality homes that could be sold in the future to replenish the pot.

The study said the UK needed a threefold increase in the number of new homes to help end the "blight" of poor housing.

Councils have responded positively to the report but said the government must also ease restrictions on the ability of local authorities to borrow for house building.

The president of the Royal Institute of British Architects , Angela Brady, said the commission's recommendations "provide an excellent starting point for delivering a radically improved housing market".

 

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  • rate this
    0

    Comment number 575.

    I don't know what their obsession with pensions is. Not too long ago it was suggested that parents raid their pension funds to guarantee mortgages for their kids. It's like they think it's free money.

  • rate this
    +3

    Comment number 574.

    Surely to get a good return on investment there would have to be another housing boom?

    Considering new mortgage regulations are coming in and the average wage isn't going to rocket I can't see how there will be another boom, unless they start miss-selling mortgages again.

    I think this has the potential to leave a lot of people out of pocket come retirement.

  • rate this
    +1

    Comment number 573.

    @568.alexicon
    I don't think I have misunderstood anything.

    Austrian school economists like Dr Woods & Peter Schiff (who famously predicted the stock market crash, sub-prime crash, GFC), we'd like to think that the Austrian school has a slightly better track record of reliability & forecasts than the mainstream Keynesians'.

    What do you think?
    http://www.youtube.com/watch?v=2I0QN-FYkpw

  • rate this
    -1

    Comment number 572.

    #567. Bastiat

    So i was right.. you didn't read the whole article.

    Analyse recent 'laissez-faire' in the Finance sector plz.

    How about as a partial solution (along with Andyc555 54bn debt question) using some of the £514bn in the hands of the top 1000 richest people in the UK

    http://www.telegraph.co.uk/finance/9233605/Sunday-Times-Rich-List-2012-Wealth-of-richest-grows-to-record-levels.html

  • rate this
    +2

    Comment number 571.

    I am very concenned with this proposal that the houses built will be brought by the "buy-to-let" wealthy invester which will keep rents artificially high like they are now.

    There are thousands of people in shabby, sometimes dangerous and unhealthy properties and paying £600+ each month for something they will never own.

    It is deeply immoral.

  • rate this
    0

    Comment number 570.

    1. Pension funds and their trustees are legally obliged to maximise returns - so what would that mean for house prices and rent?
    2. Unless there are plans for further immigration - destructive on most levels - then the population bulge will resolve housing issues naturally over the next 25/30 years. What then for the funds locked up in assets with declining value?

  • rate this
    +1

    Comment number 569.

    Q How does the pension fund get a return on its investment????????

    I fail to see that any Board member or Trustee of any pension fund would invest capital in a scheme, that would not bring a return on the money invested. They would be in breach of their duty as overseers and managers of the fund.
    It is not their money it belongs to the people in the pension fund
    It would be a total disaster

  • rate this
    +1

    Comment number 568.

    560.Bastiat
    We let rates go up & we shrank Government.
    In just 1 year a Depression was Over:
    How do you explain that?

    You have totally misunderstood the history, The rates rose due to inflation and were cauasl to the crisis. The section you are referring to is opinion not fact. Essentially the US painfully rode out the recession, and the subsequent deflation played a key role.

  • rate this
    0

    Comment number 567.

    @558. ukblah
    Unfortunately we've never had laissez-faire, but we sure as hell need it now.
    What should we do? wHAT DO YOU SUGGEST? Maybe Regulate more, print more money, tax more, let politicians pick what sectors to pump counterfeit £s into. Yeah sweet, that's worked well, except here's the result of doing that & not having laissez-faire: http://www.debtbombshell.com/
    Look'n good!

  • rate this
    +1

    Comment number 566.

    When will learn that clever financial tricks always end in a tax-payer bailout? *If* it all went well then great, it should make money. But if it doesn't guess who gets to pay - they very people who are never, ever going to get the chance to buy those houses. Pensions are too important to be gambled with, investments need to be low risk.

  • rate this
    +1

    Comment number 565.

    #553. tony
    6 MINUTES AGO
    'MORE HOMES - - WHO CAN AFFORD TOBUY THEM?'

    Landlords and the already rich...so they can Rent them out to the peasantry thereby securing their own champagne swilling retirement in the difficult times ahead and proving themselves worthier human beings (like Pablo Escobar) than anyone else because of the cash they have.

    Mine's a Pint.

  • rate this
    +4

    Comment number 564.

    @553.tony
    "MORE HOMES - - WHO CAN AFFORD TOBUY THEM?"

    The wealthy buy-to-let investor, that's who.

    There are a significant number of empty homes throughout London beacuse they are own by overseas investors who sit on their assets to eventually sell at a much higher price while thousands of people born in the UK live in expensive rentals which they will never own.

  • rate this
    +2

    Comment number 563.

    If the Royal Institute of British Architects think it is a good idea, lets start with their pensions. Ask Sir John Banham how much of his pension is invested public hous buliding projects. If it is not good enough for their money, it is certainly not good enough for mine.

  • rate this
    +1

    Comment number 562.

    For this to work it would need close management, the hosue being developed by the funds not outside them - with all profits returning to the pension scheme. Unsold houses would belong to the funds and be rented out.
    It would would also need to show that the houses built, will mostly sell; ie that people can borrow the money to buy them. That requires secure jobs and banks that lend.

  • rate this
    +3

    Comment number 561.

    There is a very simply solution to the housing "shortage": Bring back tough rent controls. It will instantly remove all the fly-by-night / get-rich-quick amateur landlords, increase for-sale housing stock for those who want to dedicate their loves to one place for a long time and restore house prices and rents to something sensible.

  • rate this
    +1

    Comment number 560.

    @547. Good Egg
    Haha yeah right. Well, how do you explain our success in the past by doing exactly that? We let rates go up & we shrank Government.
    In just 1 year a Depression was Over: http://en.wikipedia.org/wiki/Depression_of_1920%E2%80%9321#Interpretations_of_the_end

    How do you explain that?

  • rate this
    -2

    Comment number 559.

    "shaftedagain
    LGPS is funded. where as the ones in the article aren't.
    What part of "funded", don't you understand?"


    Happy to oblige.

    http://www.thisismoney.co.uk/money/pensions/article-2129119/Council-tax-bills-leap-fund-54bn-pension-deficit-ticking-time-bomb.html

    What part of "£54bn deficit" don't you understand?

  • rate this
    +1

    Comment number 558.

    544. Bastiat

    I don't think you have read the whole article. Maybe you started at the end and read backwards until you hit the bit about laissez-faire Capitalism saving the day.

    When Interest Rates are high, it is not just savings that are affected.

    554. AndyC555
    'Now the best argument is to read the average BBC HYS'

    Ahh...the Silent Majority of Middle England...is that who you mean???

  • rate this
    +5

    Comment number 557.

    Do the people whose pensions these relate to get any say in the matter?

    Seems only fair that they should get to decide.

  • rate this
    +2

    Comment number 556.

    While they are at it they should stop taxing our pension funds too and bring in laws that prevent Pension fund Management companies just to sit on pension funds, do little with them but claim £millions in "Fund Management fees & Admin Costs".

    Pension funds are being plundered by the Gov't and snouts-in-troughs Pension Companies.

 

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