Housing Policy and Finance - Coursework Example

Housing Policy and Finance & Housing policy and finance Introduction Housing policy has its focus around the composition of housing financing, and how it influences the communication of monetary planning shocks. It covers three major areas, these including the significant dissimilarity in the characteristics of residential mortgage markets across the economies of industrialized states. Secondly, it addresses the wide range of indicators, which determine the communication of economical policy shocks to residential ventures. In this case, the prices of houses are significantly higher in the state economies with higher flexibility in the area of mortgage trades. Thirdly, the communication of the shocks is more effective at the state economies where mortgage equity offers are more prevalent and financing contracts are largely of the variable-rate type. Towards understanding these vital areas, a two-sector model is used – where collateral constraints and price stickiness are the main variables in determining how the reaction of the consumption and residential investments to fiscal policy shocks are altered, by the two alternative values across the two institutional features. These include, interest rate financing configurations (fixed vs. variable) and down-payment rates. From empirical evidence, the sensitivity of both the different variables to the fiscal policy shocks heightens with the reduction of the down-payment levels. They also increase in cases where variable-rate financing structures are available (Blakemore 1998). Discussion (c). Government’s policy agenda is the account of the problems and objects to be given service attention, during government planning and programs at any given time. These comprise the enumeration of the problems or subject areas that the people within – and those outside of the government structure offer unlimited focus at all times. These are created with the intent of directing government actions towards affecting those that are more likely to bring about the desired outcome. It also entails the process of arriving at significant organizational decisions, these including the identification of alternatives – like spending priorities and programs – giving preference to those of greatest impact. They fall under the areas of management, administration, politics and the financial mechanisms to be mobilized towards the realization of definite goals. Social housing finance policies on the other hand, is a set of formulations that offer a range of the available options, strategies, and goals in the area of offering public sector housing and access to housing facilities. The areas of focus for these policies include the following, but are not limited to these: the provision of unbiased access to housing, and promoting the creation of a favorable environment, which is friendly to the provision of inexpensive housing – both by the private and the public sector. It also focuses on the provision of housing to the vulnerable groups within the country. These policies achieve this through the creation of platform that increase the access to housing finance, both among the private as well as the public sector (Kingdom 2003). Social housing finance policies support governments policy agenda in the ways discussed below. The creation of a successful housing finance policy and its implementation, often call for the opening up of the country’s economy and market to direct foreign investment. The act of freeing up the housing market for foreign investment – directly or indirectly enhances the realization of other policy agenda areas. These include the social aspects of employment creation, youth empowerment, poverty reduction and social exclusion abolishment. The link between these areas can be explained in a simple manner, that the creation of polices that allow for more favorable housing financing – whether from national or foreign sources – the greater the advancement opportunities presented towards the fostering of other policy agenda areas. For instance, with increased housing financing, the more the revenues collected by the government. From the governments incomes realized, other policy agenda areas are affected – these including the promotion of education programs, and poverty eradication (Libcom 1998). From an improvement in the housing finance policies realized within a state economy, the more the improvement in the sectors of trade, property restitution, and technology in the areas of building and construction. These areas that are affected by the housing finance policies create a big impact in the overall policy realization at a national scale. This directly shows that social housing finance policies support the success of the government policy agenda, to a substantial extent. This is the case, mainly because the different policy areas are directly or indirectly connected. For instance, the availability of better housing facilitates serves as a source of income for real estate developers. This, further contribute to the development of other aspects of policy agenda, including the borrowing capacities of these entrepreneurs. In accounting for the impacts realized in government policy areas, as a result of the actualization of housing finance policies – the chain is endless, as the inter-dependability leads to newer developments at different levels. Other social housing finance policy areas that greatly impact on the on government policy agenda include the creation of institutional capacity in managing the housing sector, addressing the housing requirements of vulnerable classes, and the realization of housing and supply programs (Bache 2003). (d). Financial considerations mean the savings and investment status of an insured agent. It is used in establishing the size of life indemnity to be bought. The amount of savings and investment is then subtracted from the total insurance obligation. In assessing the effect of financial considerations on the policy decisions of a housing organization, there are a number of areas to be evaluated, so as to establish the relationship between considerations and the policies formulated, as well as the effects resulting from it. First, the efficacy of the policies formulated may be determined by the source of capital or the financing available for the projects in question. The role of the government is also a factor in deciding the policy decisions to be reached. Firstly, the debt and equity position of the housing organization is a key financial consideration area, mainly because it will dictate the total capital, available at the disposal of the enterprise. Also, the debt and equity standing of the building origination will be a major determinant in deciding the capital structure to be used. The consideration of securing the financing sources available to the organization, at the least cost is a major determinant when deciding the policy decisions to be made (Kingdom 2003). The financial consideration of seeking to maximize the value of a firm may be accompanied by the policy decisions of investing in a number of projects, especially those with low risks. Such a move is aimed at yielding a net profit value – which is to be evaluated on the basis of an effective discount rate. Capital budgeting is also done on the basis of the financial considerations of the business – which is mainly because the allocation of funds in competing projects is to be avoided. Also, of significance to both the investing and the expenditure policies assumed by building organizations include the quantification of uncertainty, flexibility valuation and project evaluation. These are of significance in determining the dividend decision, which may be used as a tool, in deciding to distribute the realized profits to the shareholders or reinvesting it into the business. Considering the significance of these aspects, it is conclusive that the effect of financial considerations on policy decisions is insurmountable – and a field that may determine the success or the failure of the local authority (Barker 2004). (a). The Town council of Veema Town has been offering the residents of the town with residential units – these including mobile houses – all provided for long-term occupancy. For the purposes of offering an explicative account to the new committee members – the focus of the paper will cover the housing investment programs put into place. This information will be helpful to the officers, in creating an understanding of the housing situation at the town and the ways in which the policies implemented affect it. This information will also be of help in offering evidence on the housing strategies implemented at areas with stocks and those without. This information will also be of help in evaluating how the stocks are managed – in reference to tracking progress against targets, offering official statistics and offering feedback to central housing agencies (King 2001). Government policies in respect to town council housing may be felt in the cases of policy changes and variations, these including housing reforms. One aspect here is the reduction of central funding – which notably devolves the responsibility of housing services to local authorities, like the Veema town council. Other changes like the reduction in central housing benefits affect the social housing policies in operation at the Local housing authorities. Private expenditure includes the funding offered by charities, NGOs, and other voluntary institutions. Government policies are indicating a rising level of capital investment in the extension of public housing – which calls for the aspects of establishing a fair transfer of risk among the different lines of financing. Firstly, there are business plan amendments to accommodate the development of private interest in the publicly financed sectors – which calls for political priority at the local authorities’ level. This is directly related to the resultant emptying out of the core state, which results in extensive, rapid variations in the models used for public housing delivery at the local authorities level. The transfer of service delivery also calls for increased control from the local housing sector on these private sector bodies – which primarily remain under a heavy control of the government structure at the different levels: top to bottom (Garnet & Perry 2005). The changes involved are complex, in the manner that there are cases that call for a complete substitution of public funding at local authorities, which calls for extra management of the financing available for such a sector. Therefore, this call for new budgeting and business plans to get the freed funds into use, as well as account for the funds from private funding. In other instances, the private funding may be introduced into public production – a situation that calls for increased amendments in the business plan priorities and operation areas, mainly in the case of long-term financing and investing. The areas most affected by these changes in the formulation of future business plans include relative efficiency, controllability and accountability. These extend beyond the scope of the local authority housing policies, to involve other stakeholders. The policy impacts felt at the local authorities levels, also, amount to pressures to introduce better housing at decreasing taxation levels as well as the establishment of a significantly market oriented structure of analysis (Dunleavy & Hood 1993). Government policies also play a major role in defining the macroeconomic aspects of private funding on the housing policies of these local authorities. These impacts center upon the areas of realizing economic growth for the entire economy from the advancing housing status over time, avoiding and addressing short-term fluctuations in the economy and how to influence the economic indicators that alter economic performance. Government policies also impose control on the issues arising from private financing from microeconomics perspectives. Here, areas like the impact of improved housing affects the saving levels at the local authorities as well as the households level (Bos 1986). (b). Government policies impact on the business plans of local housing agents, with reference to centralized vs. localized housing finance in a number of areas, these including: the elimination of bureaucracy, realizing communal/local control, placing government systems under public scrutiny, and strengthening accountability at the local levels. This is generally to imply that in the cases where the central government allows for the localization of housing finance, stronger localities are favored, as compared to weaker ones. The strength in adopting a localized housing finance system includes that a more effective assessment of needs and resources is achieved, which directly affects resource equalization. Centralization or localization policies affect the plans instituted by the local authorities in the area of tenure reforms. Changes in this area are reflected in more favorable rent policies, where variances like lifetime tenancies are introduced; the freedom to grant fixed term tenancies is made possible and there is the imposition of affordable rent – where many members of the society are able to access housing. The Other areas of impact are reflected in the aspects of allocating social housing, especially, where a localized model is in operation. This is mainly because local authorities set more effective definitions into the groups who qualify for such housing – in terms of those to be given priority; and social home change. Here, tenants are allowed more opportunities for changing their residence. Other impact areas include the addressing of overcrowded as opposed to under-populated housing; addressing homelessness as well as tenure and social housing control (Mullins & Murie 2006). (c). The impacts of government policy on the business plans of the Veema township authorities in the area of building new affordable homes will be affected in the ways explained below. The government puts forward policies on allocating housing finances with regard to client groups and dwelling place. The impact of this policy is that the local authority has prioritized the development of offering affordable housing in the areas where there are more vulnerable groups. These groups include the unemployed, the youth, and areas characterized by women-headed families. In the areas of dwelling place – priority has been offered to the areas where there is acute need for affordable, yet, favorable housing. These localities include slum areas. The impact of policy is mainly characteristic in the areas that the local authority has given financing priority. The impacts of government policies on affordability have been felt in the areas of rent allocation and the costs associated to the access of housing services. The impacts of policy, in the business plan of the local financing authority, are evident in the offering of financial services at comparably low levels of interest and down payment demands. This is especially the case, with reference to marginalized localities: these including slum areas and the localities characteristic with high rates of unemployment and low capital investment (Malpass 2005). Conclusion Housing and policy finance is a core area in the development of any society, whether from a local or an international level perspective. Government policy agenda is an enumeration of the areas to be addressed – by both government and non-governmental agents – and which are of crucial importance to the overall development of the Nation, at its different capacities. Financial considerations are the financial standing of an enterprise or authority – whether government or non-governmental – and is of great significance to policy decisions. This is the case, mainly because; the financial standing determines the investment areas, levels and priorities adopted. Private expenditure is the funding sourced from other institutions like NGOs and charities. It reflects the impacts of government policing in business plans, mainly because such funding calls for increased government control and alternative investing. Government policies impact on business planning, with regard to central versus localized control of financing in the areas of need and priority assessment. In the area of investing in new affordable homes, the priorities of the local housing finance are affected by government policies in the areas of priority groups and regions. References Bache, I 2003, ‘Governing through Governance: Education Policy under New Labor,’ Political Studies, 51 (2), pp. 300-314. Barker, K 2004, Review of Housing Supply. Delivering Stability: Securing our Future Housing Needs, HM Treasury, London. Blakemore, K 1998, Social Policy: an Introduction, Open University Press, Buckingham. Bos, D 1986, Public enterprise economics, North Holland Press, Amsterdam. Dunleavy, P & Hood, C 1993, From old public Administration to new public management. London school of economics? CIH Publishers, Michigan. Garnet, D & Perry, J 2005, Housing Finance, CIH Publishers, Michigan. King, P 2001, Understanding Housing Finance, Rutledge Publishers, London. Kingdom, J 2003, Government and Politics in Britain an Introduction, Blackwell Publishers, Oxford. Libcom, C 1998, The policy making Process, Prentice Hall Publishers, New York. Malpass, P 2005, Housing and the Welfare State, Macmillan Publishers, Basingstoke. Mullins, D & Murie, A 2006, Housing Policy in the UK, Macmillan Publishers, Basingstoke. Read More