Home alone: what Brexit could mean for housing

Originally published on June 24 on Inside Edge 2, my blog for Inside Housing

As the dust settles on the momentous vote for Brexit, the one certainty seems to be uncertainty.

I blogged last week about what would follow a Leave vote that seemed a possiblity but no more than that. Here’s my updated take on the likely consequences for housing now that it’s a reality. 

Housing market

The markets are signalling, no screaming, that they expect huge dislocation. Shares in leading housebuilders led the stock market plunge, with falls of 40% or more at one stage, and banks were not far behind with falls of 25%.

You could read this as a signal that the City expects house prices and land prices to fall with severe impacts for both – or as a reaction to panic and uncertainty.

Either way, there will be short-term consequences. Housebuilders look certain to scale back development, stop opening new sites and hold off on decisions to invest in land. Equally, few people will want to buy in a market that could be about to see prices fall and the wider market will stall.

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Brexit door

Originally published on June 16 on Inside Edge 2, my blog for Inside Housing 

In two days’ time you could be having your breakfast to the news that the UK has voted to leave the European Union.

Whether that thought makes you choke on your cornflakes or rejoice that this is the last time the blurb on the box will be dictated by Brussels, I think we can all agree that the consequences will be profound.

Housing has only featured as a second rank issue in the campaign, well behind the economy, immigration, sovereignty and our place in the world. Yet the effect of a Leave vote on the housing market is just as much a part of Remain’s pitch as the housing impacts of immigration are part of Leave’s.

So what if Project Lie really does beat Project Fear on Thursday?

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Stable door

Originally published on Inside Edge 2, my blog for Inside Housing

Back in 2010 a Conservative housing minister mused that a period of stable house prices would be a good thing. Six years later – and in the context of the European referendum – it would apparently be a disaster.

A report today from the Treasury warns that prices could be 10%-18% lower by 2018 if we vote for Brexit next month. It’s part of a message that a leave vote would trigger what David Cameron calls a DIY recession that would cost hundreds of thousands of jobs.

I’ll leave the wider economic arguments to others (though note this would be quite a mild recession by comparison with the recent past) and concentrate here on house prices. This may seem a minor point by comparison with the more general impact on the economy but it’s interesting that this was the aspect of today’s Treasury analysis that George Osborne chose to trail last week.

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What David Cameron’s tax returns say about property

Next time you read about ‘fat cats’ earning more than the prime minister here’s something to bear in mind: so does his house.

The summarised tax returns released by David Cameron this weekend show that he had a total taxable income of just over £200,000 in 2014/15. The first £141,000 of that were his earnings as prime minister: he has not taken a pay rise since 2010 and has also voluntarily waived a £20,000 prime ministerial expenses deduction since 2011.

Most of the Panama Papers coverage has concentrated on Cameron’s links to his father’s offshore fund and an inheritance gift from his mother. However, he is also the first prime minister to rent out his existing home while living tax-free in Downing Street. The accounts show that he had a net rental income of £47,000 from letting out his house in Notting Hill, an amount that notes to the accounts confirm is his 50 per cent share of the proceeds:

Tax

So the total rent (after expenses) received by the Camerons last year was £94,000 and in the first five years since he became prime minister they gained a total of £432,000 in rent.

However, that is not the total amount they will have ‘earned’ from their house as London house prices have also soared over the same period. The exact value of the Cameron house is hard to pin down, since they are reported to have spent £600,000 on renovations after buying it in 2006. Some reports put the value at £2 million in 2010, others £2.7 million.

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10 things about 2015: part 1

Originally posted on December 30 on Inside Edge 2, my blog for Inside Housing

Has there ever been a year quite like it for housing? Here’s the first part of my look back at the issues I’ve been blogging about in 2015. 

1) Be careful what you wish for

It was the year that Homes for Britain became Home Ownership for Britain as political campaigning turned into political salvaging. Housing professionals may made their case from Land’s End to London, filled the Albert Hall and secured wide ranging support for its case for more homes. But the election result changed all that – and many of them had booed the representative of the party that won.

True, housing and the need for new homes moved up the political agenda as the year went on but not quite in the way campaigners had imagined. As the election neared the Tories promised a ‘housing revolution’. What amounted to Plan C, the third revolution in five years, took a poor record on supply, and traded it in for what amounted to homes for votes on a grand scale. The campaigners who had filled the Albert Hall found themselves facing the extension of the Right to Buy to housing association tenants.

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The final countdown

It’s been a tough job with so many to choose from but here are my 10 worst housing policies of the election campaign.

As we prepare to go to the polls, here are a few final reminders of what’s on offer:

1) We’re not going to tell you (Conservative). With extra points for repeated appearances, the Tory refusal to spell out where £12 billion of cuts in benefit spending will come from takes top spot. I first blogged about this before the short campaign began and we’ve learned little more apart from a pledge (sort of) to protect child benefit. Within hours of Iain Duncan Smith telling the BBC yesterday that ‘the work hasn’t been done yet’ on the specifics, The Guardian was publishing leaked documents with DWP proposals including increasing the bedroom tax and cutting housing benefit completely for the under-25s.

2) Exempt main homes worth to £1 million from inheritance tax (Conservative). Brilliant! A tax cut for the very well housed (aka bribe for Tory voters) that will further establish inheritance in its rightful place as the main route into home ownership.

3) Extend the right to buy to housing association tenants (Conservative). Yes, it’s true we’ve tried this before and had to drop it. Yes, forcing charities to sell their assets is a bit iffy. But trust us now we’ve found a way to pay for it: forcing councils to sell their best stock. All the homes sold will be replaced one for one, honest. What’s that you say? It doesn’t stack up? Sorry, we seem to be running out of time for questions on this one.
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Rentier nation

For all the political rhetoric about home ownership, official figures released today confirm that England continues to become a nation of private tenants.

The dwelling stock estimates published by the DCLG show that 137,000 homes were added in the year to March 2014. Of these, an astonishing 90 per cent were private rented (123,000). The owner-occupied stock increased by 24,000 but the social and affordable stock fell by 1,000 and the other public sector stock by 9,000. These figures reflect net changes in the stock, so they include existing homes changing tenure as well as new homes.

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