The private sector can’t or won’t invest in housing now. Normally, the aim wold be, say to build a house costing £100,0000 and would be sold at £120,000. But the developer cannot be sure of the £20,000 profit, so won’t invest currently. Renting likewise; interest costs of around £10,000 (at 10%) exceed the likely rent, say £6,000. But governemnt, through LAs or directly, can build the same quality house for far less as it would get around £30,000 back in income taxes from the builders a well as the VAT back on the materials. Total net cost to government is therefore closer to £66,000. It could then sell that for £100,000 and use the surplus to reinvestment or pay down debt. Better yet, its costs of borrowing are currently below 4%, so the interest payable on the £66,000 net cost is just £2,640. It could rent out the property at £5,000 and still make a positive return way in excess of its borrowing costs. Again, this surplus could either be used or further investment or paying down the debt. It would also save money a large sum, as builders come off the dole.

Action on housing is urgently required.

This post was mentioned on Twitter by leftfootfwd: Despite Labour’s huge council housing investment, many estates remain untackled: http://cli.gs/NWWaS...