The simple plan goes into action

Aditya Chakrabortty reports on the London Borough of Enfield’s housing department, under siege by the forces of Iain Duncan Smith. It looks like everything the bedroom tax critics thought might happen is happening, with the exception of the buy-to-let bandits going over the edge.

Actually, that might be happening as well, but it’s hard to say. Fergus Wilson seems…troubled these days. Perhaps one of Louise Casey’s family intervention teams could help. More seriously, the original BTLers might be smashing up in London and selling to overseas investors, but this would take a lot more data to answer and is not really the point.

Anyway, people receiving LHA are flocking into the borough, many of them in extremis, having been evicted. The council housing officers are running their blood to water trying to place them. Emergency, overnight rents are incredibly high and that’s how local landlords like it, to the extent that they don’t let on any other terms.

If you read The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, a key TYR Book!, you’ll recognise this as how Enron made so much money in California in 2000 – the publicly-owned grid had to keep the lights on, so they deliberately kept as much power off the market as possible so as to sell at the last-minute emergency rate, going so far as to book fake capacity and tie up the interconnectors so their competitors couldn’t jump in.

But Enfield won’t quit. They have a simple plan.

He’s bulk-buying homes for Enfield. Rather than keep paying profiteering landlords, Ahmet and fellow councillors established a company to purchase new houses, arranged a credit facility of £100m, and imposed targets for the number of units to be snapped up every month.

The programme began in March with one officer, an endearingly serious South African called Detlev Munster. Never having done anything similar, Munster did what boffins do: he drew up an intricate flow chart for how to hoover up homes.

Like so.

The problem is that when I created the simple plan, I never imagined that the property bubble would re-inflate. It’s taking a while to close on the transactions, and they have to bid hard against all sorts of other buyers.

So they’ve also started building. And they’ve discovered that a 100% council-owned special-purpose vehicle doesn’t actually have to offer right-to-buy discounts, which is ironic and also useful.

It might help if more councils came in, but then everyone who ever had an idea thinks more resources would fix the problems, although in this case it does actually sound like more staff would help a lot. The council, though, is in a sense bidding against central government via help-to-buy and funding-for-lending.