Here’s how to build a home owning Britain
David Cameron and George Osborne
A shake-up of inheritance tax and crackdown on nimby councils will give young people a foothold on the property ladder
At a time of uncertainty abroad, here at home we will be delivering a budget next week with economic stability at its heart, offering security for working people.
Encouraging home ownership is central to that. 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.
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So the Conservatives will pledge a ‘housing revolution’ at the election. Sound familiar?
In an interview with the Sunday Telegraph over the weekend, George Osborne outlined a Tory plan to help a million more people into home ownership in the next parliament thanks to schemes like Help to Buy, Right to Buy and the Starter Home scheme.
‘I would like to see us double the number of first time buyers, up to half a million. That is the kind of level we saw in the 1980s. There is no reason why our country can’t achieve that again. That’s a goal we set ourselves today.
‘I think we can deliver a revolution in home ownership and make this the home-owning democracy, the home-owning society that I think is one of the Conservatives’ core beliefs.’
The chancellor says that visiting building sites is ‘the best part of my job’, not to mention donning high-vis jackets and being pictured with happy first-time buyers. ‘It reminds me of why we are doing this. Ultimately this is about people’s aspirations, their futures and their dreams.’
Question of the day: why won’t George Osborne say where he will find another £10 billion of cuts in welfare?
The obvious answer is that he doesn’t want us to find out before the election but there is a more immediate one too: because he can get away with it.
I found myself shouting at the radio twice today as interviewers failed to pin down first Osborne and then financial secretary David Gauke. The £10 billion figure is the so-far unexplained bit of the total £12 billion of welfare cuts Osborne is planning after the election. It matters both in its own right and because it enables him to deflect the Office for Budget Responsibility’s point about ‘rollercoaster’ cuts in public services.
So it turns out that subsidising housebuilders may not have been the best way to boost housebuilding after all.
It’s bad enough that even developers are now arguing that the government has made too many concessions to them. Now it turns out that George Osborne was warned by his own civil servants that Help to Buy could end up going to homes that would have been built anyway.
I’m catching up on a week’s worth of news that shakes the twin pillars of government policy on housebuilding and home ownership: cutting ‘red tape’ to make sites more viable for new homes and funding equity loan and guarantee schemes to persuade people to buy them.
-> Read the rest of this post on Inside Edge 2, my blog for Inside Housing
What would it mean if George Osborne succeeds in cutting public spending to its lowest level since the 1930s?
The scale of the cuts for the rest of this decade implied by the deficit reduction targets in the Autumn Statement takes us into territory uncharted since the war. Many people believe Osborne has moved from the realms of the unlikely to the realms of fantasy and it’s not hard to see why. If the chancellor missed the deficit targets he set out in 2010 by a wide margin, why should we accept what he says in 2014? Especially when he says he can cut taxes at the same time.
Osborne must have hoped that all the headlines would be about stamp duty reform. Instead, news coverage has instead been dominated by the Office for Budget Responsibility’s projections of what further austerity would mean for the public sector. This graph on government consumption as a proportion of GDP sums it up:
George Osborne has spent so long outsourcing responsibility for the housing market to Mark Carney that it’s easy to forget the Bank of England’s actual brief.
Far from controlling house prices, or tackling affordability or making the market less dysfunctional, the Bank’s Financial Policy Committee (FPC) ‘is charged with a primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system’ and a secondary objective ‘to support the economic policy of the government’.
So the measures the FPC announced today on high loan to income (LTI) mortgages and a slightly strengthened stress test on lending are about preventing future house prices from increasing household debt to a level that poses risks to the financial system rather than tackling current price levels and affordability.
-> Read the rest of this post on Inside Edge, my blog for Inside Housing
As George Osborne prepares for next week’s budget, even the people who’ve benefited are calling for changes to help to buy. But is he listening?
A survey out today finds that most mortgage lenders and brokers now believe that help to buy 2 – the more controversial mortgage guarantee element of the scheme – will be scaled back or scrapped before the official end date of 2016.
Read the rest of this post on Inside Edge, my blog for Inside Housing
The ‘hard truths’ about welfare outlined by George Osborne beg far more questions than answers when it comes to housing.
In a speech yesterday the chancellor set out plans for £12 billion worth of cuts in welfare and £13 billion cuts in departmental budgets in 2016/17 and 2017/18 if the Conservatives win the next election.
And he singled out housing as the target of two specific cuts: housing benefit for the under-25s; and council housing for people earning more than £60,000 a year.
However, a quick look at the detail of those proposals raises real doubt about how much they would really save and what else might be on the Tory agenda.