Originally published on August 28 on my blog for Inside Housing.
The emphasis is firmly on home ownership in plans widely reported this morning to make it easier for shared owners to buy an increased share in their homes.
The government will consult on plans to make it easier to staircase up by allowing them to buy an extra 1% at a time rather than the current 10%.
That may be attractive to some shared owners but it will do very little to tackle other longstanding problems with the tenure – rising service charges, repair bills, problems selling – and the government will have to find a way to stop transaction costs such as mortgage fees and surveys making it unaffordable.
This isn’t a new idea for shared ownership – Thames Valley already has a scheme called Shared Ownership Plus that allows people to buy an extra 1% of their home each year without paying those extra costs.
However, in terms of a big idea to fix the housing crisis it is hard to disagree with the Labour verdict that this is ‘tinkering’.
At the same time the government will make it easier for people buying under Help to Buy to take out a mortgage that runs for 35 years rather than the current 25.
That is in line with developments elsewhere in the mortgage market and it will reduce monthly repayments but it could lead to increased prices and will cost more in the long run.
However, it seems clear that these could be just the first in a series of measures aimed at boosting home ownership.
Writing in the Times this morning, housing secretary Robert Jenrick hints at more more radical plans to revive what he sees as the ‘moral mission’ of a property owning democracy.
Part of that could be a ‘homes for locals’ scheme:
‘I want local young people, whether growing up in Cornwall or Cumbria, to be able to stay in their communities and build a family where they feel at home. It’s not right that people on low incomes risk being forced out, and I will be tackling this challenge head on. And to get Britain building, I want communities to feel that new housing brings real benefits to local people. What a difference it might make to the planning system if existing residents knew that a good proportion of new homes would be sold at discounted prices to people from that area trying to get on a foot on the ladder.’
The Times reports that ministers are considering a scheme to give first-time buyers a 20% discount to buy in the area where they grew up with the cost to be ‘borne by developers’.
It sounds like a revival of David Cameron’s starter homes plan and it will raise exactly the same issues plus some new ones.
What happens to the discount? Will it remain in perpetuity or be pocketed by the first buyer?
Who really bears the costs? As things stand, the developer will simply cut its other planning contributions, making the discounted homes a ‘cuckoo in the nest’ as people who need other forms of affordable housing will lose out.
And how will they decide whether someone is a local – some people grow up in one place, but many others move around a lot before their 20s and 30s.
All of these ideas sound like gimmicks that will not change very much but this is all about sending out the right signals ahead of the election that everyone assumes is coming, whether or not the government’s plan to suspend parliament until a new Queen’s Speech on October 14 goes through.
Preparations for an election are already underway, with departmental special advisors told to draw up plans for their sections of the next Tory manifesto.
It seems unlikely, therefore, that the Ministry of Housing Communities and Local Government would use up its best (or worst) ideas at this stage.
So what price a rehash of the failed manifesto from 2015 and a lurch back to the ownership-at-all-costs agenda of David Cameron and George Osborne?
First, though, there is the small matter of the spending review for next year that chancellor Sajid Javid has just announced will be next Wednesday (September 4).
The prospects for housing are already looking ominous ahead of that. Writing in The Telegraph, the chancellor singles out Brexit preparations, the NHS and education as his priorities but warns that spending departments cannot expect a blank cheque.
According to the Financial Times:
‘While the spending review will be billed as an “end to austerity” for schools, hospitals and the police, other departments will face a continued squeeze. Housing and defence are among those likely to face a tough settlement.’
Originally posted on July 22 on my blog for Inside Housing.
Three different news stories in the last 24 hours provide a powerful reminder of what could be at stake for housing in the transition from Theresa May to Boris Johnson due on Wednesday.
The government’s consultation on ending Section 21 no-fault evictions was finally published on Sunday along with a proposal to give private renters access to the government’s database of rogue landlords.
Conservative think-tank Onward called for cuts in stamp duty with proposals very similar to those put forward by Johnson during the leadership campaign.
And the Conservative Brexiteer-in-chief Jacob Rees-Mogg wrote a pamphlet for the Tory Institute of Economic Affairs putting the libertarian case for an end to ‘socialist’ interference in the housing market. .
The timing of all three is significant as it provides some indications of what the outgoing regime thought important enough to get out before the other lot take over and what the wider Conservative party thinks might be possible under the new regime.
Originally 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.
Originally 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.
Whether you put it down to carelessness or couldn’t care less-ness, the inaction inside government inaction that has sparked open letter from A Voice for Tenants (AV4T) is symptomatic of a wider political paralysis.
As the group themselves point out, they are not representative of the eight million people living in social housing in England but they are the best we have until the government keeps the prime minister’s promise to bring tenants into the political process.
The letter is all the more effective for the contrast between its moderate language and its stark message that working behind the scenes has not produced results.
The only option left seems to be to embarrass the politicians into living up to what they have said over the last two years – accepting Inside Housing’s open invitation to a meeting seems the bare minimum they should do.
And there is a strikingly similar message in the Times this morning from Grenfell United, as it attacks ‘indifferent and incompetent’ ministers who took their ‘kindness as weakness’.
Two years of meetings have produced too little action, they say, with no progress on their call for a new model of housing regulator and thousands of people still living in ‘death traps’ with combustible cladding.
Grenfell and tenants were top of the agenda for the ministers in post at the time of the fire – the work of Alok Sharma and his civil servants is praised in the AVT letter – but have slipped down it as the months and now years have passed.
Originally published on March 19 as a blog for Inside Housing.
The leasehold scandal will have far-reaching implications for housing that will be felt well beyond the major housebuilders with whom it began.
A report published by the all-party Housing, Communities and Local Government Committee on Tuesday takes as its starting point the doubling ground rents and onerous contract terms faced by buyers of new homes who it says were treated ‘not as homeowners or customers but as a source of steady profit’.
And it also highlights the issue of leaseholders facing huge bills to remove and replace combustible cladding raised in its work on fire safety.
But this report goes well beyond those recent high-profile problems with leasehold and poses some fundamental questions about a tenure that only exists in England and Wales – and they are ones that will require answers by social landlords as well as private sector housebuilders and freeholders.