Hunt’s statement of intent

Posted: November 18, 2022 | Author: | Filed under: Benefit cap, Cost of living, Energy efficiency, Housing market, Local housing allowance, Social housing | Leave a comment

Originally written as a column for Inside Housing.

Eight weeks after Liz Truss and Kwasi Kwarteng shrank the economy with their growth plan, chancellor Jeremy Hunt completed his reversal of almost all of their plans in his Autumn Statement.

He was speaking against a backdrop of dire forecasts of recession, unemployment, falling living standards and rising taxes that spoke of bad news to come for housing and tenants and landlords alike.

The complete rewrite of the Autumn Statement leaves a long list of tax increases and spending cuts in its wake, even if many of them will not take effect until after the next election and so may not happen. However, there was still a little hope amidst the gloom.

Here are five points I picked up from the statement itself and the background documents.

The cap and the freeze

Perhaps the most surprising thing about the statement – with a nod to expectations management by the Treasury – is that there is also some good news. The announcement that the government will stick to previous pledges to increase benefits (and pensions and the minimum wage) in line with prices was not completely unexpected but will still come as a relief to tenants and landlords alike.

But Jeremy Hunt’s decision to increase the overall benefit caps by the same amount is much more of a surprise. Without this, thousands more households faced being capped as their benefits rose to hit thresholds that have been frozen since they were cut in 2016. The main thresholds for families will now increase to £22,020 a year outside London and £25,323 in the capital. The cost is estimated at £315 million in 2023/24 and almost £2 billion over the next five years.

And yet… these are still far below the average earnings figures that were misleadingly used to justify the cap in the first place. And they leave people who are already capped facing rent increases with no extra income to pay for them.

Finally, buried deep in the background documents is more gloom: the assumption that Local Housing Allowance rates for private renters will remain at 2022/23 levels, which have themselves been frozen since April 2020. This despite rapidly rising rents. If confirmed, the result will inevitably be rising rent arrears and homelessness.

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Taxing questions

Posted: November 10, 2022 | Author: | Filed under: Home ownership, Land, Stamp duty, Tax | Leave a comment

Originally written as a column for Inside Housing.

Around £50 billion worth of austerity looks inevitable in next week’s Autumn Statement but it remains to be seen how chancellor Jeremy Hunt will strike the balance between spending cuts and tax rises.

Even if recent reports that suggest he will increase benefits and pensions in line with prices prove to be correct, there are still big questions over local housing allowance (still frozen despite rising rents) and the benefit cap (which will catch thousands more tenants if the thresholds stay frozen) and housing budgets already eroded by inflation look vulnerable to cuts in capital spending.

On tax, the stamp duty cut was one of the few measures proposed in the mini-Budget in September that has survived the demise of Liz Truss and Kwasi Kwarteng. So far at least.

But there has been very little debate about where the tax burden should really fall, and in particular about the balance between taxes on income and taxes on wealth.

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The state of the (housing) nation

Posted: November 1, 2022 | Author: | Filed under: Bed and breakfast, Decarbonisation, Homelessness, Housing market, Levelling up, Private renting, Social housing | Leave a comment

Originally written as a column for Inside Housing.

The UK Housing Review Autumn Briefing Paper is published this week and as usual provides an invaluable guide to the state of the housing nation. Here are five graphs that illustrate key points about five different parts  of the housing system:

Shifting rules on rents

What everyone wants to know, of course, is what will come in place of that purple line on the right but the graph is a reminder that so-called long-term deals on social housing rents can quickly disappear. The four-year rent reduction at the end of the 2020s that ended the previous one is now set to be succeeded by an annual increase significantly below the 11.1 per cent implied by the CPI plus 1 formula.

The decision is finely balanced between cost of living considerations and housing investment, with the existence of housing benefit making it much more complex than it was in the famous case of Clay Cross 50 years ago.   

The Briefing Paper quotes estimates by Savills that a 5 per cent cap on rents in England (the government’s favoured option) would cost councils £500 million and housing associations up to £1 billion. One association says that even a 7 per cent cap would mean a 21 per cent reduction in new build and there are also major concerns about the impact on investment in existing stock and on supported housing.

A cap would help tenants not on housing benefit but the major beneficiary would be the Department for Work and Pensions unless its savings are reinvested in housing.

That point was really brought home to me when I interviewed the Welsh housing minister recently. She was only too aware that the more she restricts next year’s rent increase, as might be her instinct, the more savings will go straight back to Westminster, with zero chance of them coming back to Wales.

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