YESTERDAY's Budget was certainly not short of housing measures. Chancellor Alistair Darling made a welter of announcements including an enhanced shared equity scheme for key workers, a cut in stamp duty for people in shared ownership, consultation on strengthening the mortgage market, a fundamental review of housing benefit for people in work to improve incentives, indentifying more public sector sites for new homes and an Office of Fair Trading inquiry into sale and leaseback schemes. Small wonder that the Budget was warmly welcomed by CLG ministers.

Yet the Budget was also notable for the things he did not do. He did not attempt to match the Conservatives by pledging more general cuts in stamp duty. He resisted pleas to cut VAT on refurbishment to bring more empty properties back into use.

Poor Mr Darling even got it in the neck for the CLG's Housing and Regeneration Bill, with the National Housing Federation warning that the legislation will result in housing assocaitions being reclassified as public bodies and their £47bn of borrowing becoming public debt. 

The revamp of open market homebuy will inevitably take many of the headlines. It would be hard to criticise 'a new shared equity mortgage to help an extra 20,000 people buy their own home' except for one thing: that was how the existing scheme was described when it was launched in October 2006 and it has been widely criticised for being too complex and inflexible. One of the four mortgage lenders that were involved has since pulled out of the market and the other three will not be involved.

Two new schemes will see 'thousands of first-time buyers and key workers could see their purchasing power boosted by up to 50 per cent with new home loan, according to the CLG.

The two schemes (more detail on the Housing Corporation website here) will offer higher equity loans of up to 50% of the value of a property. Ownhome will be provided by a partnership of Places for People and the Cooperative Bank and MyChoiceHomeBuy by a consortium of eight associations. In addition, shared owners will not now pay stamp duty until they own more than 80% of their homes.

All that is good news for the lucky key workers and first-time buyers who will benefit. However, it remains to be seen how the funding will work and whether key workers really find the new schemes easier to navigate than the old one. 

And the whole idea remains open to the fundamental criticism that subsidising homes for them merely increases prices for everyone else. That might be seen as a price worth paying but for the fact that another part of the Budget will be working directly against that aim. 

For, even as key workers attempt to use their increased spending power, they will be competing for property with second home owners and buy-to-let landlords who know that from April they will be paying less than half as much capital gains tax when they sell.

Posted by Jules Birch, March 13

Posted in Finance, Housing associations, Housing benefit, Mortgages, Politics , Stamp duty, Low-cost homeownership

STRATOSPHERIC house prices, a dire shortage of social housing, families languishing in temporary accommodation. It's not hard to see why Londoners said affordable housing was their number one concern in an opinion poll this week.

So today's launch of a new vision for the capital's housing by London Councils at a conference bringing together planners, developers and housing professionals has to be welcomed. Stressing, rightly, that increasing the supply of new homes will not be enough on its own, the cross-party review of housing policy puts a new emphasis on affordability and aspiration [download a full copy here]. New ideas include:

- exploring how to raise the stamp duty threshold for first-time buyers in London

- introducing a ‘rent-free shared ownership’ housing model for low and middle income families (where a housing association retains a 50% equity stake in perpetuity)

- using social housing as a 'ladder of opportunity' to get more people into work and into the housing market with ideas new 'micro housing equity' models alongside more familiar shared ownership options

- developing a new common allocation standard reflecting local needs to identify who benefits most from social housing 'rather than a narrow focus on housing need alone'

- lobbying for greater freedoms for councils to make better use of their land and finances to build more homes, including HRA reform and looking at the taxation arrangements for public land

- offering more personalised support to people and by lobbying for changes to national homelessness policy. 

The document certainly has some interesting ideas, and it's a real achievement to get cross-party agreement for it, but some of the ideas on temporary accommodation and, especially, allocations, will be controversial. 

It may also leave many people wondering how it relates to what other people are doing about housing in the capital. There are lots of mentions of the boroughs and housing associations, but none of the London mayor, the Thames Gateway or the Homes and Communities Agency.

In fairness, those links may become clearer when the more detailed strategy is published later this year. But after last year's spats over the mayor's new housing powers and strategy Londoners need everyone involved to be working together.

Posted by Jules Birch, Jan 24

Posted in Local government, Social housing, Low-cost homeownership

THE GOVERNMENT'S drive to expand homeownership looks set to be the next casualty of the credit crunch. 

A sobering response to the housing green paper by the Council of Mortgage Lenders yesterday says expansion beyond the current 70% is becoming 'increasingly difficult' and 'requires more financially marginal and vulnerable households to be drawn into ownership'. Lenders want a review of the income support for mortgage interest (ISMI) safety net.

The CML also calls time on the expansion of shared equity schemes through private finance - a key part of the green paper's aspirations on ownership because it would enable public funds to help more people. The response says: 'On shared equity, the government should concentrate its efforts on publicly funded schemes linked to new supply. We are not convinced that the development of fully privately funded shared equity loans is possible at this point.'

The ISMI safety net was cut by the Conservatives in 1995 so that new borrowers only get help after nine months and only up to a mortgage threshhold of £100,000 and never restored under Labour.  Payment insurance was meant to bridge the gap but take-up has fallen to just 20% of mortgages. The CML wants a review of the timing of ISMI help and an increase in the threshold (if it had risen in line with house prices it would now be £300,000). If a commitment from the government to increased public spending seems unlikely at this point but political damage from rising repossessions might yet prompt a change of heart.

On help for first-time buyers, lenders say they are finding it increasingly difficult to deal with a 'complex patchwork' of different schemes and consumers may be missing out on the best mortgage because of the extra work involved.

Open market homebuy, launched in a fanfare of publicity a year ago, comes in for particular criticism. It has proved 'complicated and unpopular' and the lenders who got involved 'have devoted considerable resources' to resolving problems only to see the government 'change the parameters of the scheme before the pilot had run its course'. 'At a time when the market is still in the throes of financial turmoil it is unlikely that there will be any significant appetite for new and potentially risky forms of investment.'

Posted by Julian Birch

Posted in Low-cost homeownership