Ending leasehold’s ‘industrial-scale racket’
Posted: July 12, 2019 Filed under: Housebuilding, Leasehold, Legal Leave a commentOriginally posted on July 12 on my blog for Inside Housing.
As far back as I can remember, every government has promised to tackle abuses of our outdated system of leasehold.
Between 1979 and 1997, the Conservative governments of Margaret Thatcher and John Major legislated four times on leasehold reform.
The Labour government of Tony Blair promised ‘a comprehensive package of leasehold reforms’ in 2000 and introduced the alternative system of commonhold in 2002.
Piecemeal reforms improved things a bit for leaseholders but commonhold has still only been used on 50 developments at an optimistic estimate – in contrast to the expansion of similar tenures like strata title and condominiums across the rest of the world.
Little wonder when leasehold offers so many advantages to be profitably exploited by landowners, housebuilders and freeholders.
Now, in the wake of the twin scandals of cladding and leasehold, all that could – finally – be about to change.
Housing in the Tory leadership contest
Posted: June 21, 2019 Filed under: Housebuilding, Land, New towns, Right to buy, Section 21, Uncategorized | Tags: Boris Johnson, Conservative Party, Jeremy Hunt Leave a commentOriginally posted as a blog for Inside Housing on June 19 – updated June 21.
Beneath the surface of a Conservative leadership battle dominated by Brexit and Boris Johnson there is a battle of ideas about the future direction of Conservative housing policy.
Put at its simplest, the battle is about whether to continue in the pragmatic direction signalled by Theresa May since 2016 or go back to the more ideological one taken by David Cameron before then.
But scratch a little deeper there are more fundamental debates going on about how far to go in fixing a housing market that most Tories agree has turned into an electoral liability for them.
Key questions such as how far the government should go in borrowing to invest in new homes and intervening in the private rented sector and the land market are back on the Conservative agenda.
The long-term cost of Help to Buy
Posted: June 13, 2019 Filed under: Help to Buy, Housebuilding, Uncategorized | Tags: National Audit Office Leave a commentOriginally posted on June 13 on my blog for Inside Housing.
Whatever you love it or hate it, Thursday’s report from the National Audit Office (NAO) will probably not do much to change your mind about Help to Buy.
If you think that the equity loan scheme first launched in 2013 has boosted housebuilding and helped more people to buy their first home, you will find evidence to support that view: new-build property sales increased from 61,000 a year in 2012/13 to 104,000 in 2017/18; and around 81% of people using the scheme have been first-time buyers.
If you think the scheme has mainly benefited housebuilders and the benefits for buyers have been more limited, you’ll find backing for that too: 63% of borrowers could have afforded to buy anyway; many of them have used the scheme to buy a bigger house than they could previously have afforded; and 10% of buyers had incomes higher than the £80,000 (£90,000 in London) limit for eligibility for shared ownership.
The report does reject one common allegation made against Help to Buy by estimating that homes sold under the scheme have cost just 1% more than similar new-build homes. Previous estimates ranging from 5% to 20% have not compared similar properties, says the NAO.
However, that is just part of a much bigger new-build premium (the difference between prices of new and second-hand homes) and the NAO seems to accept the high figure of a premium of 15-20% as a given rather than the product of market conditions that Help to Buy helped to create.
Pensions for property is still a bad idea
Posted: June 4, 2019 Filed under: Home ownership, Pensions, Uncategorized | Tags: James Brokenshire Leave a commentOriginally published on June 4 as a blog for Inside Housing.
Every seven years or so, it seems, a senior politician will be tempted by the alluring idea of linking pension savings to home ownership.
When James Brokenshire said on Monday that young people should be allowed to use some of their pension pot to buy their first home, he was following in the footsteps of Nick Clegg and Danny Alexander in 2012 and Gordon Brown in 2005.
He told a meeting organised by Policy Exchange:
‘It seems rather obtuse that we would deny people the opportunity to do this, given that we know those who own their own home by retirement are on average a) wealthier and b) do not have the burden of the largest expense in retirement – accommodation.’
This was one of several what he described as ‘personal ideas’ to ‘help empower consumers in the housing market’ and it’s one that seems superficially attractive given the size of deposit required by many first-time buyers.
And it was an indication of what the housing secretary really thinks about a brief that he could well lose once we have a result from the contest to be the new prime minister and Conservative leader (he ruled himself out).
For him, the idea of allowing people to use their pensions for housing is common sense:
‘It is, after all, their money. Not the fund’s, not the state’s, it’s yours and the next Conservative government should free that capital up, and trust the individual to make the choice for themselves.’
The choice of venue seemed appropriate given that Policy Exchange has been the source of so many of the worst ideas in housing since 2010.
But this one has drawn condemnation from two different directions, with housing groups saying it would fuel house price inflation with tax-subsidised pensions and the pensions lobby arguing that it could destabilise saving for retirement.
Within hours of Mr Brokenshire’s speech, Sky News was reporting that the Department of Work and Pensions (DWP) had complained to Downing Street about a ‘risky’ plan that had not been discussed with them.
A source said:
‘We cannot support this policy because the evidence shows it will be risky and does not help the people it intends to help. The housing market doesn’t need people to dip into their pensions to buy more houses.’
Though this may seem a bit rich coming from those who designed universal credit, the DWP is quite right about the plan: tax breaks are there to boost pension saving not house prices.
Rising house prices would skew the housing market even more in favour of people with wealthy families but falling prices would undermine retirement incomes and increase costs for the DWP.
In fairness, though, Mr Brokenshire was joining an all-party group of senior ministers seduced by different versions of the same idea.
Go back seven years to 2012 and deputy prime minister Nick Clegg and Treasury chief secretary Danny Alexander were proposing ‘pensions for property’ at the Lib Dem conference.
The scheme to allow parents and grandparents use their retirement savings to guarantee a deposit for their children and grandchildren had far more detail than the one floated by Mr Brokenshire but it looked just as dumb. Thankfully nothing ever came of it.
Go back another seven years to 2005 and Labour chancellor Gordon Brown was proposing that residential property should be one of the eligible categories for investment by people with self-invested personal pensions (SIPPs).
This idea was if anything even worse, with huge tax subsidy for housing investment by the wealthiest section of the population and no benefits for first-time buyers.
Thankfully, the Treasury saw sense at the 11th hour and ruled that residential property would not be eligible but that did not mean that the housing and pensions issue had gone away.
The boom in Buy to Let that was just starting to get underway was partly fuelled by older home owners seeing investment in renting as a more flexible way of saving for retirement but it took ministers years to see the impact on would-be first-time buyers.
James Brokenshire is not the first politician to connect pensions and housing and see a way of appealing to aspirational voters but this is a seven-year itch that does not need scratching.
‘A striking and complete disconnect’
Posted: May 22, 2019 Filed under: Poverty, Universal credit, Welfare reform | Tags: Roger Alston, United Nations 1 CommentOriginally posted as a blog for Inside Housing on May 22.
Not much in today’s report from the UN Special Rapporteur on Extreme Poverty will surprise anyone who has worked in housing over the last decade.
The coruscating criticism of universal credit, the benefit cap, the benefits freeze, the under-occupation penalty and all the other welfare ‘reforms’ seen since 2010 arrives at a time when we have almost become immured to their impact on tenants in general and lone parents and disabled people in particular.
And it was only last week that the latest Homelessness Monitor from Crisis showed the effect of all that on the wider housing system, giving social landlords an incentive not to rent to the poorest people and driving them into a private rented sector in which housing benefit no longer covers their rent.
Yet the final report from Professor Philip Alston is still a shocking reminder of dire consequences that he says are ‘obvious to anyone who opens their eyes’ and of a government response that hovers between hostility, indifference and complacency.
Part of this is due to the Special Rapporteur’s vivid turn of phrase about what he calls ‘the systematic immiseration of millions’. Some choice examples include:
- ‘Much of the glue that has held British society together since the Second World War has been deliberately removed and replaced with a harsh and uncaring ethos.’
- ‘The driving force has not been economic but rather a commitment to achieving radical social re-engineering – a dramatic restructuring of the relationship between people and the State.’
- ‘The British welfare state is gradually disappearing behind a webpage and an algorithm, with significant implications for those living in poverty.’
- ‘It might seem to some observers that the Department of Work and Pensions has been tasked with designing a digital and sanitized version of the nineteenth century workhouse, made infamous by Charles Dickens.’
But what really struck me reading this final report was how completely he skewers the government’s response to criticism.
