subprime

The British government, a government that I did not vote for, that I have not been allowed to vote for to be precise, a government that doesn't exactly claim to represent my will or even take it into account announced earlier this week it would use the taxes I pay to make mortgages available to those who can't afford them.

I have nothing against paying taxes. I see them as a small personal sacrifice for the greater good, a contribution to a civilized society. I also have no issues with taxation without representation and wouldn't get smelly feet throwing tea into the Thames to protest nonexistent injustice. Instead, I make sure that I vote in Germany every time an election comes my way, getting representation without taxation in the process and fast trains to boot. Paying taxes here is merely involuntary reciprocity. I'm ok with that.

I'm not ok with owning property at all cost. If you till the land under your feet or want to diversify your millions, go ahead and buy, but it doesn't make sense for everyone, especially in these globalized, mobile times. Why would you lock a large proportion of your wealth in an illiquid and immobile asset? And yet, the Prime Minister talks about owning a flat as an experience he wants "everyone in this country" to have.

To this end he proposed earlier this week helping people who can't afford the deposit with a state guarantee, as if the subprime lending crisis in the US had never happened. And as if the Spanish meltdown hadn't happened and unemployment weren't at 20% down there, he dreams of using construction and house price inflation to resurrect the ailing economy.

Property prices have outstripped incomes dramatically over the last decade. There is no way this can continue. People can only pay what they have. At the moment it looks as if a plateau has been reached. Now the Prime Minister wants to encourage the less well-off to join the party in the hope to prop up prices and avoid the inevitable. Rewind five years and transpose five thousand miles to the west. It's not going to be pretty.

If people don't buy, in a country as property-crazy as the UK, with estate agents more of a blight to high streets than betting shops, chicken shacks and off-licences, it is because prices are much too high relative to income. And as long as a fall in property prices is not hailed for making property more affordable but deplored for destroying wealth, this is not going to change.

The UK has to wake up to the fact that people will rent more. As the situation is at the moment, renting is not a pleasant experience. (When I leave London, I will quote renting as one of the forces driving my away.) Tenants live without any security. They can be thrown out with two months' notice on a periodic contract or else be served with rent increases every half year. I can see how a family would be reluctant to turn a flat into their home under these conditions.

Tenant protection has to be ramped up sharply. This is clear but only part of the story. New stock has to be added to the housing market, especially at the lower end. Rents in London are apparently up 12% this year, though I can't say by what method the numbers are compiled. My rent is up 4% over two years. Anyway, Londoners, including those in unfashionable boroughs, now pay £1200 a month on average. With an average job, that's almost impossible to afford.

Boris the Clown, when he ran for the office of Mayor of London, an election I was allowed to participate in, promised to flush the city with affordable housing. Not sure this is what got him elected, but the numbers made for good PR. Mind you, they weren't high enough for everyone to afford an adequate flat, but enough for a lucky few. Fifty thousand said the campaign promise, over the course of four years, twelve-and-a-half thousand per year.

Between last April and this March, 12,870 flats were finished, easily meeting the target. In the last six month, in stark contrast, fewer than 3000 were added and work started on another 56. Is this the grim face of the recession or the bite of budget cuts? In either case, fifty-six is nothing in a city of eight million. It's obvious that neither local nor the national government knows how to use my tax pounds wisely.