SO the rumours about a new housing market package were true. The details announced in today's draft Queen's Speech are still sketchy but it is clear that it will be on nothing like the same scale as its predecessor in 1992 - £200m not £577m to buy homes that will probably cost three times as much now means it's probably worth just 10% of that in real terms.

However, the same logic applies of acquiring homes for the social sector at the same time as preventing worse problems in the private sector. After Caroline Flint unwittingly revealed yesterday the government's view that house prices will fall by 5-10% this year and 'we can't know how bad it will get', action was clearly needed.

In fairness to her, it was actually a pretty sensible assessment of the state of the housing market - unless, of course, you're the housing minister on the way into a cabinet meeting.

The scenario painted in the snatched picture of her briefing notes (if you missed it, go here) would actually be pretty good news for the first-time buyers but the government cannot afford to contemplate the prospect of things getting any worse. 

One temptation must have been to steal an idea from Tory policy advisor Kirstie Allsopp and scrap stamp-duty for first-time buyers. But quite apart from the fact that yesterday's tax cut must have cleaned out the coffers, that sounds like a fruitless way of spending government money if prices are going to fall and help first-timers out more without it costing you a penny.

But there are some other policies in the draft speech [PDF here] that also appear to come from the blue end of the wardrobe. The original housing market package was of course also a Conservative idea and making all first-time buyers eligible for shared ownership schemes subject to an income limit comes bears some distinct similarities with Boris Johnson's programme for London. 

A statement from the CLG says all first-time buyers with a household income of under £60,000 would be eligible for Homebuy. Johnson's plan helps all basic rate taxpayers.

The details will be what matter. Where will the money come from (Gordon Brown suggested it would be reallocated)? What safeguards will prevent expanded equity becoming a route to negative equity for its customers? And how will this market package avoid some of the mistakes made last time?

On the last point in particular it could do worse than ask Anthony Mayer. Appointed yesterday as head of Oftenant, he was chief executive of the Housing Corporation at the time of the last package.

Elsewhere in the speech are plans to extend Oftenant to local authority tenants, a proposed housing reform green paper 'towards the end of 2008' setting out options to 'encourage people towards greater economic independence and social mobility', yet another review of housing benefit and reform of banking regulation.

Posted by Jules Birch, May 14 

Posted in Housing market, Politics , Social housing, Welfare, Tenants

SALE AND rent back is one of the biggest housing scandals of the noughties and the proliferation of companies offering dubious help to distressed homeowners (just try googling the term) will only accelerate as arrears and repossessions shoot up this year.

So the companies and investors involved in launching the National Association of Sale and Rent Back (NASARB) this week deserve at least one cheer for trying to clean up the sector. Its first committee meeting on Friday will discuss a voluntary code of practice, membership criteria and preparting a letter to financial secretary Kitty Ussher.

Such voluntary regulation may at least establish some standards of decency. Homeowners who take up the schemes are currently wide open to abuses including offers way below market value, extorionate rent increases, lack of protection from eviction by their landlord or if their landlord goes bust.

The irony is that the basic principle is the same as the mortgage rescue schemes that helped many homeowners in the last recession. The difference is who is offering the schemes: many buy to let investors openly target homeowners in trouble because they know there is money to be made. Today's Sun features the story of one charming financial advisor and his victims, including video of him boasting of the profits he's made.

NASARB was formed at the initiative of mortgage broker The Money Centre, which wants to see the code of practice include undetakings not to use section 21 orders, which mean tenants can be forced out of their homes with just two months'notice, and an assurance not to increase rent by more than the rate of inflation. 

In October, Shelter, Citizens Advice and the Council of Mortgage Lenders made a joint call for statutory regulation through the Financial Services Authority. It seems hard to understand why lenders are regulated in the advice they give but sale and rent back companies are not.

Officials from the Treasury, Ministry of Justice and Office of Fair Trading are currently looking into the issues but are also considering counter-arguments that the government should not be interfering in private house sales or looking to regulate part of the private rented sector.  Unless and until they act, NASARB deserves support - but they should act.

Posted by Jules Birch, Jan 15 

Posted in Housing market, Tenants

THE UK'S housing stock is now worth £4,000bn - almost three times as much as our £1,300bn gross domestic product.

The numbers in the Halifax's annual survey of the value of our homes [download word doc here] are truly staggering. But the most significant one is that housing equity has risen quicker than mortgage debt. In 1997, UK homes were worth £1,300bn, three times the level of outstanding mortgage debt (£431bn). In 2007, our $4,000bn homes were worth 3.4 times the level of mortgage debt (£1,200bn). The result is that homeowners are now sitting on housing equity of £2,800bn, up from £870bn in 1997.

That's great news for anyone who has owned their home for that long - it represents a notional profit of more than £100,000 for each of them. It's not bad news for anyone who bought even a year ago - house prices still rose three times faster than mortgage debt in the last 12 months.

For many homeowners the profits only exist on paper but they have nevertheless made homeownership a one-way bet: taking on more debt has guaranteed greater profits. No wonder buy to let has taken off as it has.

The government is another prime beneficiary - thanks to successive increase it made £6.4bn in stamp duty in 2006/07. In 1997 it made just £1.4bn in tax but paid out £2.7bn in mortgage tax relief that has since been scrapped. Net gain: £7.7bn. 

But what about the losers? Current and future first-time buyers are effectively paying for those profits. And it's hard to look much beyond tenants for the really big losers. In the private sector they are lining the pockets of buy-to-let investors and in the social sector they have watched their chances of getting on to the housing ladder soar out of reach.

In its 2001 manifesto, the government promised to 'examine the ways in which tenants can be helped to gain an equity stake in the value of their home'. Nothing has happened since then, but homeowners have gained an average of £75,000 each in housing wealth.

Posted by Jules Birch, Jan 14

Posted in House prices, Stamp duty, Tenants