A stamp duty denial and the Budget(s)

Originally published on August 20 on my blog for Inside Housing.

A stamp duty plan that apparently never was offers a tantalising preview of a Budget and spending review that will take place in neverland.

Saturday’s Times reported that sellers rather than buyers would pay stamp duty under plans for a tax shake-up by chancellor Sajid Javid.

The plan seemed either fraught with problems (sales would dry up as buyers waited for the change to take effect) or pretty meaningless (sellers would simply add the extra cost to their asking price).

And the story seemed built on flimsy foundations and journalistic hype – in the interview itself Javid was asked if he was considering the change and did not deny it but that escalated into a definite change in the headline – but presumably there was off-the-record corroboration too.

By Sunday the man himself was taking to Twitter to deny that he was planning anything of the sort:

Clearly this government is not quite the messaging machine with iron discipline that we’ve been led to believe and is just as prone to getting its wires crossed as any of its predecessors.

But what does this episode tell us about what’s to come for housing in the Budget – there is no confirmation yet whether that will be before or after the ‘do or die’ Brexit date on October 31 and there could even be one before and one after  – and the spending review to follow next year?

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The man who collects houses

I’d never heard of Ken Griffin before a week in which the hedge fund billionaire bought the most expensive home ever sold in the United States and then snapped up (as you do) what is thought to be the priciest home sold in Britain for a decade.

I use the words ‘houses’ and ‘home’ in a loose sense, of course. Because we are talking about penthouses, apartments and condos too. And because, despite spending $238m on a four-storey penthouse in a new skyscraper in New York and £95m on a London house near Buckingham Palace, it’s hard to see how he will spend much time living in either of them.

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Griffin’s Citadel hedge fund is actually based in Chicago, where he already has two more homes. The most expensive ever sold in the city, a $59m four-storey penthouse, offers a place to crash after day at the office. Fitting it out could cost another $25m but if he needs somewhere in the meantime he also owns a whole floor of the Waldorf Astoria plus a two-storey penthouse in another skyscraper.

For weekends or holidays he can fly down to Florida, the state where he was born and has acquired a $230m portfolio of land and property in Palm Beach near President Trump’s Mar-a-Lago estate. One property (which cost $15m) will apparently be used as a guest house while some of the four others could be demolished to make way for a gargantuan beach house. That’s almost forgetting the $60m penthouse in Miami that he seemingly never moved into and has now put back on the market.

If he fancies a change of scene, he can nip over to Hawaii, where he bought one property for $11m in 2009 only to buy a second for $17m three years later.

I’m labouring the point here but it’s worth it on a few different levels, most obviously for what it reveals about the astonishing lives of the ultra-rich but also for what this extreme case says about our attitudes to housing and property and about what has happened since the financial crisis.

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Five wasted years

Originally published on April 17 on my blog for Inside Housing.

Dominic Raab’s comments about immigration and house prices may have sparked a furore but they also shine a light on something else about the recent history of housing.

Amid mounting pressure, on Friday the Ministry for Housing and Communities Local Government (MHCLG) published updated analysis that he had relied on for his claim that he had been told by civil servants that immigration has increased house prices by 20 per cent over the last 25 years.

When I tweeted about it, the man himself came back to me with this:

In fairness, he could have added that the increase was actually 21 per cent but, as I suggested last week, that is minor by comparison with the 284 per cent total rise in prices that happened between 1991 and 2016 and accounts for just £11,000 of the £152,000 increase.

According to the analysis, increases in real earnings were a much more important factor in price rises.

Look a little deeper, though, and the analysis does not really prove very much either way.

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Mr Buggins, immigration and house prices

Originally published on April 9 on my blog for Inside Housing.

The latest Mr Buggins to take his turn in the housing minister job gave a revealing first print interview on Sunday that speaks volumes about his priorities.

The new(ish) minister – I forget his name, they come and go so quickly – makes the seemingly incendiary claim that immigration has pushed up house prices by 20 per cent over the last 25 years.

He tells the Sunday Times that he is writing to the Migration Advisory Committee (MAC) to urge it to consider the negative effects of immigration on housing demand as well as its positive economic benefits.

Mr Buggins is playing a key role in the drive to boost housebuilding but he says: ‘You’ve got to deal with demand as well as supply. You can’t have housing taken out of the debate around immigration. If we delivered on the government’s target of reducing immigration to the tens of thousands every year, that would have a material impact on the number of homes we need to build every year.’

He says he’s been told by civil servants that immigration has had a sizeable impact on prices based on the Office for National Statistics house price index from 1991 to 2016.

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Starting with the evidence

Originally posted as a column for Inside Housing on October 20. 

Almost everyone agrees there is a housing crisis, that the housing market is broken and dysfunctional and that urgent action is required – but why and what exactly should be done about it?

For most of the last seven years, the answers to these questions seem to been scribbled on the back of a fag packet at Policy Exchange or emerged fully-formed from the brilliant mind of Iain Duncan Smith.

Any idea of evidence-based policy disappeared after 2010, with evaluations of policy published only reluctantly and ignored when their conclusions are inconvenient.

That has begun to change under Theresa May, who became prime minister with a reputation for taking her time over decisions and insisting on looking at the evidence for herself before she took them.

With the Conservatives apparently prepared to consider some ideas that were previously off limits, and even to fund social rent once again, the political consensus about the need to do something about housing is growing.

So the timing could hardly be better for a new initiative dedicated to supplying the evidence to help diagnose the problems with the housing system and come up with solutions.

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Book review: The Financialization of Housing

The Global Financial Crisis was a wake-up call to the world about the dangers posed by a toxic mix of finance and housing, one that has still not been properly heeded.

The mortgage-backed securities, collaterialised debt obligations and other financial instruments that financed the expansion of sub-prime and predatory lending were the result of a wave of innovation by a finance industry that had been deregulated over the previous 20 years. Britain marked the 30th anniversary of the Big Bang in the City last month but similar things happened around the developed world.

All that innovation and securitisation led to exponential increases in the amount of credit circulating within the financial system but it still needed something to be secured against. Which is where housing came in: a mortgage finance system that had been based on long-term mortgage lending funded from savings was transformed into a vehicle for the expansion of credit. And the relationship between the price of homes and the earnings of people buying them was also transformed.

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The Financializaton of Housing: A Political Economy Approach, a new book by Manuel Aalbers, is the most comprehensive attempt I’ve seen to outline this process and its consequences. It’s part of a multinational research project based at the University of Leuven in Belgium on what he calls the Real Estate/Financial Complex in 12 different countries around the world. The metaphor is a deliberate echo of the military/industrial complex and serves to emphasise the connections not just between the real estate and financial sectors but also between each of them and the state.

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Beyond the fringe

Originally posted on October 11 on my blog for Inside Housing

Gavin Barwell has apparently spent the last two weeks telling old people who should inherit their property wealth and young people they should live in rabbit hutches.

The comments prompted outrage online and in the comment pages of the newspapers and the ones about inheritance saw him ‘slapped down’ by Downing Street. These were ‘personal comments’ and ‘certainly not policy’, said No 10.

But what did the housing minister actually say?

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