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.
Originally posted on November 30 on Inside Edge 2, my blog for Inside Housing
Part 1 of this blog looked at the apparent winners and the big losers from George Osborne’s announcements last week. But there is one more group lurking on the edges of the playground, ostracised by virtually everyone. What happened to George’s well-heeled former chums should be a warning to everyone else.
Buy-to-let landlords and second home owners thought they had worked hard, done the right thing, bought a house and then another (and another). Contrary to what everyone said about them driving up house prices and destroying local communities, they thought they were providing desperately needed homes and helping pay for local services. They thought the Conservatives were on their side after they blocked a Labour tax rise on second homes in 2010 and kept buy to let out of European mortgage regulation in 2013.
They thought George was ‘one of us’. After all, he made £450,000 profit on his taxpayer-funded second home and rents out his main home for £10,000 a month while he lives in Downing Street. And they voted Conservative in May when those horrible Labour oiks planned rent regulation and a mansion tax.
Their thanks for all this? Sand kicked in their faces with cuts in tax relief in July and the Chinese Burn of hikes in stamp duty and capital gains tax in November. The fate of these entrepreneurs and investors turned enemies of aspiration should be a warning for all those who are currently part of the Osborne in-crowd.
Originally posted on November 30 on Inside Edge 2, my blog for Inside Housing
For some reason, George Osborne made me think back to the school playground as he set out his spending plans for the next five years.
As the sidekick and heir apparent to the head boy, the chancellor has the power to get what he wants. First he had to correct his mistake from the Summer Budget when he was caught redhanded trying to steal the dinner money of most of the poor kids. He has now handed it back to the Strivers but will be waiting for them in the bushes to claim it back after school.
With that out of the way, he was free to get the gang together to build some homes, by which he means almost exclusively homes to buy. First in line were his main allies the housebuilders.
When you’ve already benefited from billions of pounds worth of loans, guarantees and relaxations in the rules on planning and energy efficiency, what’s another £2.3bn between friends? Yet this was different: the first time that I can remember that grant (presumably it is grant) has gone to pay for something that will not be recycled into more homes.
Originally posted on October 30 on Inside Edge 2, my blog for Inside Housing
Few blockbuster franchises stop at just two films and the reclassification of housing associations in England as public sector will be no different.
The implications from Friday’s decision by the Office for National Statistics (dubbed Judgment Day II: the Reckoning by Pete Apps in his blog yesterday) are multiplying by the hour and are far too numerous for one blog. But here are some quick thoughts on the decision itself – and on possible sequels to come.
So what does it mean? First, and most seriously for George Osborne, it will add £60 billion of previously private sector housing association debt to the public sector balance sheet. The ONS decision says that this is likely to happen just in time for Budget 2016. Whoops! No wonder the chancellor sounded so relaxed/resigned about the prospect when questioned in a House of Lords committee last month (see my blog here).
Originally posted on July 13 on Inside Edge 2, my blog for Inside Housing
It may have important new provisions on housing and planning but the name of the government’s new productivity strategy rather gives the game away.
Described as ‘the second half of the Budget’, Fixing the Foundations was published by the Department for Business Innovation and Skills but includes chapters on housing and planning and welfare that amplify decisions taken in the first half.
But does the name remind you of anything? Go back four years and David Cameron himself was launching a ‘radical and unashamedly ambitious’ housing strategy. The title? Laying the Foundations.
Once they’ve stopped sucking air through their teeth, any builder will tell you that once you’ve laid the foundations and built on top of them, it’s enormously expensive to start to fix them. It’s also a pretty good indication that the foundations were pretty rocky to begin with.
How has George Osborne got away with a Budget that will hurt the very people he claims it will help most: hardworking families?
The headlines are all about One Nation, National Living Wage and tax cuts but, as the dust settles, the calculations that have emerged so far make clear that the poorest households are going to suffer significant cuts in income. While a series of cuts such as the lower benefit cap will hit out-of-work households hard, people in work face a series of technical changes to tax credits and benefits that will make many of them substantially worse off.
To give some idea, here are the three main cuts:
- A four-year freeze in working age benefits saving £4 billion by 2020/21. The Institute for Fiscal Studies estimates that this alone means that 13 million families will lose an average of £260 a year. Of those, 7.4 million are in work and will lose £280 a year. The freeze will also hit child benefit, which David Cameron promised to protect.
- £6 billion worth of cuts to tax credits (and subsequently universal credit) and associated housing allowances from April 2017. The IFS says new claimants will lose credit entitlement for more than two children, losing the average of £3,670 a year that currently goes to 872,000 families (548,000 in work). On top of that, the family element in credits for the first child will be cut for new claimants and housing allowances associated with both will be cut too. Kate Webb of Shelter calculates that just one change – the removal of the family premium, an allowance of earned income before housing benefit starts to be withdrawn for working families with children – could cost a single mother working 20 hours a week at the new national living wage £11 a week. That’s not much less than the bedroom tax.
- Cuts to work allowances that mean working households will lose tax credits/universal credit much more quickly than now. At the moment, credits start to be withdrawn once family earnings rise above £6,420. That will fall to just £3,850. This will cost 3 million working families just over £1,000 a year each. Credits will also be withdrawn at a faster rate once they hit that threshold.
Originally posted on July 5 on Inside Edge 2, my blog for Inside Housing
Bring it on. We are determined take you on. Who do David Cameron and George Osborne have in mind?
If you haven’t seen it yet, you need to read their op-ed in Saturday’s Times on ‘Here’s how to build a homeowning Britain’. They mean England of course. You can read extracts on the Number 10 website but that only gives a flavour of the full article so I’ve posted it here.
Ahead of the Budget, they promise that ‘a shake-up of inheritance tax and crackdown on nimby councils will give young people a foothold on the property ladder’. It is not just an explicitly, distinctively Conservative vision for housing but also a declaration of war against anyone opposed to that vision. Here’s my take on the key points:
‘Having your own place is an important stake in our economy. It’s also one of the best expressions of the aspirational country we want to build, where hard work is rewarded.
‘It’s also about social justice. We don’t want this to be a country where if you’re rich you can buy a home, but if you’re less well off you can’t. We want it to be One Nation, where whoever you are, you can get on in life.’