Monday, June 21, 2010

Chris Grigg & Sir Roger Moore; land & credit

Sir Roger Moore CBE, humanitarian worker, actor ( tv-The Saint, films-James Bond) exposed his financial affairs to Sarah Fleming (Sunday Times 2oth June 2010). Pause here: I am talking about land and anyone who has read this blog for Feb 25 , 2010, will remember Debbie Moore's  'no free lunches' claim and how Sherlock Holmes very quickly utterly rumbled her about that.  Sir Roger is no relation to Debbie (although he has does have a daughter Deborah...) but his run of house purchase gains started in the 1960's at £7,500 - sold £12,000; £17,000 sold- £35,000; £75,000 - sold £250,000. His comments are quite telling. He felt 'guilty' on his first gain and 'truly felt disgusted' at the last, some 10 years ago.  He now lives in Switzerland.  Seems that Sir Roger has an unusually unsuppressed conscience that has not been smothered in the way it is usually is with home owners - who appear to believe that they have a God-given right to their house price gains despite the fact that they have contributed nothing to the rise of the land's value, which is the key factor in the value. The cost of building improvements that they may have added themselves, are usually a small part of the underlying total gain. Sir Roger! He gets it. Respect! 

Chris Grigg I am sure 'gets it' absolutely, as he is paid to do so. He is the new chief executive of  British Land (BL is UK's No. 2 property company). He has previously been with Barclays and 20 years in Goldman Sachs.  He talks to Rebecca O'Connor in The Times June 21st 2010. When people find out what he does, they usually ask 'Is my house price going to go up? '. He says he is loath to give an answer. He says 'there are times when I will have a view. And times when I won't'.  
Lets split this Q & A into two parts.
1) Does he say? 'When you say house price don't forget that the price of houses  always drops because they deteriorate -  as anything man made does - what you really need to know is are land prices going up. 
2) Does he say? 'If you really want to understand if house/land prices are going up or down, read anything Fred Harrison has written and especially his finding going back for 200 years about the 18 year peak-to-peak price cycles.
But Grigg doesn't really let on any such property secrets but he scorns the view that property investment is innate 'People always talk about gut decisions in real estate... but ...really a judgment based on information.' One of these bits of information he suggests is 'looking out of the window at buildings'. Hey! that helps. 

Rebecca finishes the article with a reference to Grigg's previous career in banking and how Stephen Hester his BL predecessor went to rescue Royal Bank of Scotland. Property- banking /land-credit are inextricably linked as Rebecca suggests.

Credit fuels the property price cycle. What the gainers are doing is cashing in on the need everyone has of land for living and working. Bankers use the timing of the cycle to lend to developers to buy low and sell high, they take years of interest. Developers also rake off the land rent as part of their total real estate yield. The land rent in a more moral world would be due to the public purse, since it supplies the tax for infrastructure that gives the land much of its value.   Our political masters should use the innate human insight of such as Sir Roger Moore and boldly take control of these banking and land monopolies for the public good.
posted by Charles Bazlinton 

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