Fixing social care by protecting property wealth

Originally published as a column for Inside Housing.

Boris Johnson has broken all kinds of election promises in his announcement on health and social care levy but for housing purposes there is one pledge remains front and centre.

Amid the wreckage of the triple locks on pensions and tax rates, it’s a survivor of the sunlit days of July 2019 when the new prime minister stood outside Number 10 and said: ‘My job is to protect you or your parents of grandparents from the fear of having to sell your home to pay for the costs of care. And so I am announcing now on the steps of Downing Street that we will fix the crisis in social care once and for all with a clear plan we have prepared to give every older person the dignity and security they deserve.’ Note the order of priorities.

It was there too in the Conservative manifesto in December, even though the ‘clear plan’ had become a somewhat vaguer aspiration for a cross-party consensus.  The significant bit came next (with original emphasis): ‘That consensus will consider a range of options but one condition we do make is that nobody needing care should be forced to sell their home to pay for it.’

And it’s there front and centre in the plan announced this week for a new £86,000 cap on the amount that anyone in England will have to spend on their personal care costs.

There are still some big caveats to mention – not least that the cap does not include accommodation costs and that social care comes after the NHS in the queue for cash – but the net effect should still be that people get to keep far more of their housing wealth and pass it on to their children and grandchildren.

Yet when we consider the details of the Health and Social Care Levy that will pay for it all, it’s striking that one category of assets and income is left completely untouched.

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Tackling the blight of second homes

Originally published as a column for Inside Housing

As the staycation summer starts to draw to a close, spare a thought for everyone living in the places where the rest of us have been on holiday.

Coastal areas and beauty spots in the countryside are well used to tourists but this year has really brought home the impact of second homes, holiday lets and relocating buyers on housing for locals.

On the beach on the  Llyn peninsula in North Wales, the message is Hawl i Fyw Adra (the Right to Live at Home) while demonstrators have scaled the country’s highest mountains to protest that Nid yw Cymru ar Werth (Wales is not for Sale).

In the South West of England, there are persistent reports of Londoners snapping up homes they’ve seen online without even viewing them in person and of tenants being evicted to make way for lucrative holiday lets.

House prices beyond the reach of local wages and rents inflated by holiday lets have long been features of the market but a new development this year is an acute shortage of any homes for rent, let alone affordable ones.

A quick search on Rightmove for my home town in Cornwall reveals just four rentals listed all summer – a studio flat, two bedsits in an HMO and a retirement flat.

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Guarantees, cladding and the housing market

Originally published on April 20 on www.insidehousing.co.uk.

The housing market is at a frenzied record high as house prices rise by more than 2 per cent in a single month.

Just the moment then for the government to step in with a scheme to guarantee 95 per cent mortgages for anyone who thinks they have to climb the ladder before it disappears out of reach.

The house prices in question are only asking prices as recorded by Rightmove but the £6,733 average increase between March and April reflects a rush to beat the end of the stamp duty holiday and demand for more space from people who have done well during the pandemic.

It’s now 13 months since the start of the pandemic and, to pick another measure, house prices are up by around £16,000 or more than 7 per cent since then, according to the Nationwide.

Prices initially fell amid the economic uncertainty but surged again on the back of the stamp duty holiday introduced by chancellor Rishi Sunak last July and then extended in March.

The overwhelming beneficiaries are people who already own homes who have been able to sell them for higher prices that now wipe out the stamp duty savings for most buyers. For all the rhetoric about helping people on to the housing ladder, few first-time buyers saved much in stamp duty and all now face having to spend considerably more in total.

The mortgage guarantee scheme, essentially a rehash of one part of Help to Buy, should help them by addressing a genuine problem with the supply of high loan-to-value mortgages.

However, lenders are cautious. The Financial Times reported on Saturday that the largest banks are refusing to lend on new builds under the scheme and that they may also charge higher rates and apply stricter affordability criteria.

From their point of view that makes sense to guard against falling prices, especially when they factor in the new-build premium that adds around 10 per cent to the cost of a new home. .

And the benefits look dubious for first-time buyers too. Based on the Nationwide index, a 95 per cent loan on home at the current average price would be £220,000 – more than the total price was when the stamp duty holiday was first announced.

None of this makes any sense and yet, in an under-supplied and under-taxed housing market fuelled by credit and low interest rates, somehow it does.

As memories fade of the housing market crash of the early 1990s and the downturn after the financial crisis, the logical next step would be a relaxation in affordability checks on mortgages to allow loans at larger income multiples, ignoring the lessons of the 2000s and the economic headwinds that could lie ahead as furlough ends.

But all of this is happening at the same time as the entire market for recently built flats remains mired in the continuing fall-out from the fire safety crisis.

Inside Housing reported on Friday on cases of leaseholders buying flats on the basis of External Wall System (EWS) form declaring that their cladding was safe only for new inspections to decide that it must be removed.

One buyer purchased a £350,000 flat rated A1 and safe in February only for the EWS to be downgraded to B2 just 34 days later. That made her flat worthless and left her facing costs for waking watch and cladding remediation.

If the EWS rating can be changed at the drop of a hat like this, why would anyone risk buying a recently built flat?

The government has grudgingly and in stages committed a total of £5.1 billion to fixing the cladding crisis so far and it has announced some welcome reforms to leasehold.

But leaseholders in buildings below 18m are only eligible for loans and help does not apply to other fire safety problems, leaving a significant chunk of the housing market in limbo.

The fact that at the same time the government has spent £5.4 billion on the stamp duty holiday says it all about where its priorities really lie.   


We need to talk about tax reform

Originally published as a column for Inside Housing on November 12.

When the pandemic is eventually over, one of the big political questions will be how the  government will go about recouping the huge sums pumped into keeping the economy going.

Chancellor Rishi Sunak told the Conservative conference that he believes it is his ‘sacred duty’ to balance the books. Even before the costs of the second wave, a document leaked from the Treasury in May suggested that tax rises or spending cuts equivalent to £25-£30 billion would be needed.

However, Mr Sunak is boxed in by manifesto promises not to increase income tax, VAT and national insurance and not to scrap the triple lock on pensions.

Cutting public spending will not be easy either. If anything the pressure will be the other way as the government looks to implement its levelling up agenda.

That applies even to the depressingly familiar remedy of cutting benefits, with calls for temporary increases in universal credit and local housing allowance to be made permanent set to grow as unemployment rises.

However, housing could still be a key battleground when it comes to tax and areas not covered by those manifesto promises. So far, it’s been another cost to the Treasury, with the £3.8 billon earmarked for the stamp duty holiday, but sooner or later attention will turn to the other side of the ledger.

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The problems with Johnson’s housing priorities

Originally written as a column for Inside Housing on October 6.

You are prime minister. You have £5.8 billion to spend on housing. What do you do?

Before you answer there is a catch. You are a Tory prime minister. So this has to be all about home ownership.

This is not about the Affordable Homes Programme either – although the modest increase in that is tilted towards home ownership too.

You may have guessed by now that this is about decisions already taken by Boris Johnson’s chancellor Rishi Sunak, decisions that are looking worse and worse the more time goes on.

That thought was prompted by the only ‘new’ idea that I’ve seen emerging from the Conservative Party conference: a plan to create ‘Generation Buy’ by encouraging low-deposit mortgages to help young people on to the housing ladder.

The idea revealed by Mr Johnson in a Telegraph interview on Saturday is not especially new – essentially it’s a rehash of the mortgage guarantee part of Help to Buy and it harks back to the days when Gordon Brown wanted to encourage long-term, fixed-rate mortgages – and it seems to be inspired by a report published by the Centre for Policy Studies last month.

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A Cabinet of housing ministers

Originally published as a column for Inside Housing on July 16.

We have become so used to lamenting the revolving door for housing ministers that it’s easy to miss the fact that Boris Johnson Cabinet is now full of people with housing connections.

That thought was prompted by the realisation that less than a year ago the man who could very well become our next prime minister was still on the most junior rung of the ladder at the Ministry for Housing Communities and Local Government (MHCLG).

Rishi Sunak has won widespread praise for his performance and chancellor during the pandemic and currently seems hot favourite to be the next Conservative leader if the Tories go through another Dr Who-style regeneration ahead of the next election.

In July 2019, though, the current chancellor was still answering questions about council reorganisation in Northamptonshire, anti-social behaviour and non-domestic rates as parliamentary under-secretary for local government.

But he had already boosted his career prospects significantly by signing a joint letter with two other new-ish Tory MPs giving early backing to Boris Johnson as party leader. Appointed chief secretary to the Treasury a year ago next week, he was joined in the Cabinet by the other signatories: housing secretary Robert Jenrick and culture secretary Oliver Dowden.

Previous housing secretary Sajid Javid became the new chancellor but within seven months he resigned in a row with Dominic Cummings over special advisers and Mr Sunak stepped into his shoes.

Within another month, the lockdown began, the new chancellor was doling out the cash and Brand Rishi was building its glossy momentum.

His own ties may be more to the LG end of the MHCLG brief but look around the rest of the Cabinet table and you cannot move for former housing ministers. Read the rest of this entry »


Sunak fails to look beyond the short term

Originally published as a column for Inside Housing on July 8.

This was a Summer Statement that was all about protecting jobs and getting money into the economy as quickly as possible.

Judged in those terms, while it does not go as far as some had advocated, the two big housing measures in chancellor Rishi Sunak’s Plan for Jobs look carefully calibrated to achieve both.

The £3.8 billion cut in stamp duty (increasing the nil rate from £125,000 to £500,000) is calculated to boost transactions, generate jobs and drive additional spending estimated at around 5 per cent of the house value.

And the Treasury reckons that the £2 billion Green Homes Grant (funding two thirds of the cost of energy efficiency work up to £5,000 for owners and landlords and all of the cost up to £10,000 to low income owners) could support over 100,000 green jobs as well as cutting carbon emissions and fuel bills.

But it’s not hard to find holes in the Summer Statement where other housing responses could and should have been: the statement does nothing more for affordable housing, it fails to fill holes in the safety net and, as  Generation Rent points out, vouchers to eat out are not much use if you cannot afford to stay in.

And though the two measures that are there should boost the economy in the short term the longer-term benefits of both look uncertain at best even when you judge them in isolation and in their own terms.

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What help for housing?

Originally posted on insidehousing.co.uk on April 23.

An extension of Help to Buy looks likely, a stamp duty holiday probable, but what else should the government do when the housing market eventually emerges from its Coronavirus freeze?

Vested interests are already out in force making their case and can cite the effect of a downturn on housebuilding numbers, the economy and tax receipts in their support.

And if anyone is feeling a sense of déjà vu this is of course pretty much where we were in 2008, when the housing market slumped in the wake of the credit crunch.

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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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Regime change

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.

But the Sunday Telegraph already had two stories based on think-tank reports due on Monday that put the emphasis firmly back on home ownership.

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.

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