Monday, 29 May 2017

Inside edge

All posts from: October 2009

Home front

Thu, 29 Oct 2009

The battle lines on housing between Labour and the Conservatives are getting sharper by the day and there is also an emerging second front between the two main parties and the Liberal Democrats.

There may not be an issue quite as iconic as the right to buy was in 1979 but political divisions certainly seem stronger than in the eighties, nineties and noughties. The key issue is new homes and the way things are shaping up it is set to pitch that most Tory of industries, housebuilding, into the Labour camp.

That is remarkable for anyone who remembers the mutual admiration society between Margaret Thatcher and the housebuilding and construction tycoons Sir Lawrie Barratt and Frank Taylor in the 1980s. Thatcher famously bought a Barratt house to retire to while Taylor  was a key Tory donor.

Flash forward 25 years and the Labour communities secretary was able to seize gleefully on comments by the chief executive of the firm that Taylor founded in this week’s communities and local government questions. ‘It was not me but the chief executive of Taylor Wimpey who described his party’s policies as “scary as hell” because of the uncertainty being created,’ John Denham told shadow planning minister Bob Neill.

The issue was of course the Conservatives’ pledge to abolish regional spatial strategies. For the Tories it’s all about giving power over planning decisions back to local communities; for their opponents (and more than a few housebuilders) the result will be disastrous for new homes.

A succession of Conservatives questioned Denham and housing minister John Healey on the issue. While they came from all around the country, the region seeing the most controversy is the South West, where a legal challenge to the strategy means it will not be finalised until next (election) year.

With Labour holding only a handful of seats in the region, the main battle in the South West is between the Conservatives and the Lib Dems, who have to steer a delicate line between being pro-housing and being out-nimbied.  Denham’s Lib Dem shadow, Julia Goldsworthy, said the regional spatial strategy process had undermined confidence in the political system and made many people angry.

Denham’s answer summed up the Labour case against the Tories. ‘We need to ensure that we have sufficient land for housing, growth, economic development and jobs for the future,’ he said. ‘That cannot be a purely local decision; it must have regional and national elements. I hope that she is not joining with the incredibly damaging position of Conservative front benchers in saying, “Jobs don’t matter. Housing doesn’t matter. Growth doesn’t matter.” All they want is local populism. There are difficult choices to be made, and we need political parties in this country that, unlike the party opposite, will face up to those difficult choices.’

While Goldsworthy and other Lib Dems pressed home the attack over the fact that the strategy for the South West is determining planning policy despite being only a draft, a succession of Conservatives attacked the government over the strategies which shadow communities minister Stewart Jackson alleged were ‘deleting the green belt across the country’.

But there was time too for a Labour-Lib Dem bust-up centred on Liverpool. Labour MP Peter Kilfoyle attacked the Lib Dem city council for not applying to join the council house building programme but appointing an assistant executive director of housing on £102,000. Healey told him: ‘I was disappointed that it chose not to see the chance to build new council homes for people in the city as a priority, and that, like other flagship Liberal councils in Hull and Newcastle, it did not bid.’

All in all it’s shaping up to be the biggest election for housing in England since 1979 and the right to buy - which the SNP is about to abolish in Scotland.

 

Home front

Thu, 29 Oct 2009

The battle lines on housing between Labour and the Conservatives are getting sharper by the day and there is also an emerging second front between the two main parties and the Liberal Democrats.

There may not be an issue quite as iconic as the right to buy was in 1979 but political divisions certainly seem stronger than in the eighties, nineties and noughties. The key issue is new homes and the way things are shaping up it is set to pitch that most Tory of industries, housebuilding, into the Labour camp.

That is remarkable for anyone who remembers the mutual admiration society between Margaret Thatcher and the housebuilding and construction tycoons Sir Lawrie Barratt and Frank Taylor in the 1980s. Thatcher famously bought a Barratt house to retire to while Taylor  was a key Tory donor.

Flash forward 25 years and the Labour communities secretary was able to seize gleefully on comments by the chief executive of the firm that Taylor founded in this week’s communities and local government questions. ‘It was not me but the chief executive of Taylor Wimpey who described his party’s policies as “scary as hell” because of the uncertainty being created,’ John Denham told shadow planning minister Bob Neill.

The issue was of course the Conservatives’ pledge to abolish regional spatial strategies. For the Tories it’s all about giving power over planning decisions back to local communities; for their opponents (and more than a few housebuilders) the result will be disastrous for new homes.

A succession of Conservatives questioned Denham and housing minister John Healey on the issue. While they came from all around the country, the region seeing the most controversy is the South West, where a legal challenge to the strategy means it will not be finalised until next (election) year.

With Labour holding only a handful of seats in the region, the main battle in the South West is between the Conservatives and the Lib Dems, who have to steer a delicate line between being pro-housing and being out-nimbied.  Denham’s Lib Dem shadow, Julia Goldsworthy, said the regional spatial strategy process had undermined confidence in the political system and made many people angry.

Denham’s answer summed up the Labour case against the Tories. ‘We need to ensure that we have sufficient land for housing, growth, economic development and jobs for the future,’ he said. ‘That cannot be a purely local decision; it must have regional and national elements. I hope that she is not joining with the incredibly damaging position of Conservative front benchers in saying, “Jobs don’t matter. Housing doesn’t matter. Growth doesn’t matter.” All they want is local populism. There are difficult choices to be made, and we need political parties in this country that, unlike the party opposite, will face up to those difficult choices.’

While Goldsworthy and other Lib Dems pressed home the attack over the fact that the strategy for the South West is determining planning policy despite being only a draft, a succession of Conservatives attacked the government over the strategies which shadow communities minister Stewart Jackson alleged were ‘deleting the green belt across the country’.

But there was time too for a Labour-Lib Dem bust-up centred on Liverpool. Labour MP Peter Kilfoyle attacked the Lib Dem city council for not applying to join the council house building programme but appointing an assistant executive director of housing on £102,000. Healey told him: ‘I was disappointed that it chose not to see the chance to build new council homes for people in the city as a priority, and that, like other flagship Liberal councils in Hull and Newcastle, it did not bid.’

All in all it’s shaping up to be the biggest election for housing in England since 1979 and the right to buy - which the SNP is about to abolish in Scotland.

 

I'll second that

Wed, 28 Oct 2009

Property speculation on expenses has always seemed to me to be more serious than the odd bathplug or moat, so the leak that MPs will be banned from claiming for second home mortgages is welcome news.

Reports say the ban will be one of the key recommendations made by Sir Christopher Kelly when he publishes the results of his inquiry next week. But what took so long? Why did it need an independent inquiry to recommend that what is good enough for MSPs in Edinburgh should also do for MPs in London? And why were the Lib Dems the only party calling for a ban? 

As I pointed out five months ago, changes in the rules at the Scottish parliament made the Westminster look untenable. From 2011 mortgage claims by MSPs will be banned to stop them profiting from property speculation using public money. Those with constituencies more than 90 miles away from Edinburgh will be able to claim an accommodation allowance but they will have to use it to rent or get a hotel. 

Any ban at Westminster would have to be phased in too, which means new MPs will be able to sit in their rented rooms and contemplate profits made by their predecessors that run into millions of pounds. More than 400 MPs made mortgage claims of more than £15,000 last year. To take one example from the Telegraph, one Tory shadow minister made a £320,000 profit on a flat on which he had claimed more than £40,000 in purchase and mortgage costs.

Meanwhile MPs who made their profit and evaded paying capital gains tax on it by flipping the designation of their second home look set to get away with it after the Speaker ruled against broadening the scope of the Legg inquiry. 

It’s almost as though the notion of the right to profit from home ownership had become so embedded at Westminster that it needed an outsider to point out the obvious. 

I'll second that

Wed, 28 Oct 2009

Property speculation on expenses has always seemed to me to be more serious than the odd bathplug or moat, so the leak that MPs will be banned from claiming for second home mortgages is welcome news.

Reports say the ban will be one of the key recommendations made by Sir Christopher Kelly when he publishes the results of his inquiry next week. But what took so long? Why did it need an independent inquiry to recommend that what is good enough for MSPs in Edinburgh should also do for MPs in London? And why were the Lib Dems the only party calling for a ban? 

As I pointed out five months ago, changes in the rules at the Scottish parliament made the Westminster look untenable. From 2011 mortgage claims by MSPs will be banned to stop them profiting from property speculation using public money. Those with constituencies more than 90 miles away from Edinburgh will be able to claim an accommodation allowance but they will have to use it to rent or get a hotel. 

Any ban at Westminster would have to be phased in too, which means new MPs will be able to sit in their rented rooms and contemplate profits made by their predecessors that run into millions of pounds. More than 400 MPs made mortgage claims of more than £15,000 last year. To take one example from the Telegraph, one Tory shadow minister made a £320,000 profit on a flat on which he had claimed more than £40,000 in purchase and mortgage costs.

Meanwhile MPs who made their profit and evaded paying capital gains tax on it by flipping the designation of their second home look set to get away with it after the Speaker ruled against broadening the scope of the Legg inquiry. 

It’s almost as though the notion of the right to profit from home ownership had become so embedded at Westminster that it needed an outsider to point out the obvious. 

Going local

Tue, 27 Oct 2009

One way or another localism is going to be crucial in the next decade but does anyone know what it really means?

The Conservative vision put forward in the party’s white papers on planning and housing seems to offer an attractive alternative to top-down targets and centralised funding. The flagship policy of matching the additional council tax for each new home built for six years should give local communities an incentive to be pro-development (although most of it is not new money).

And even if the Tories do not win the general election, a consensus is emerging across the political spectrum about the need for more autonomy for local authorities and stronger public-private partnerships.

A clutch of reports and consultation responses out this week show just how widespread that debate is becoming - and how complex some of the issues are.The British Property Federation (BPF) responded to the Conservative white papers by welcoming localism and ‘plans to pay councils to build’. But its response - for some reason accompanied by a picture of the Spitting Image puppet of Margaret Thatcher - is also a plea to the party to adopt existing BPF priorities such as tax increment financing, build to let and empty rate relief on new development.

The New Local Government Network (NLGN) published a report yesterday warning of a public sector ‘tsunami’ next year as public spending cuts hit investment in transport, schools, housing and other facilities and calling for new freedoms for local authorities to raise funds.

Local authorities get 75% of their funding from central government, it points out. Much of the rest is dependent on the market and income from capital receipts and section 106 contributions has slumped. Unless action is taken, it warns of a return to the 1990s backlog of public investment.The report calls for a range of innovations including reform of the private finance initiative (PFI), user charging, municipal bonds, mutualisation and new forms of partnership with the private sector. ‘The constitutional circumstances which have created a local government community almost totally reliant on Whitehall now risk leaving much of our public services and facilities bereft of investment,’ said NLGN director Chris Leslie. ‘We urge preparedness within the sector for the looming political obsession with national debt which could see a Treasury cutting capital grant and loan availability severely.’

All of those proposals can be lumped together under the heading ‘localism’ but so too can freeing local communities to be nimbys. So can the government’s ‘total place’ initiative to treat local government spending as a single sum rather than separate ring-fenced budgets.

Localis, the think-tank at the heart of the debate within the Conservative party, has called for more radical localism and much greater devolution of financial power. It is also one of several right-wing think-tanks calling for local authorities to be freed from national obligations on allocations and security of tenure.Scrapping top-down targets and making funding less centralised is one thing but abandoning control from Whitehall and national legislation is quite another. How local will the -ism really be?

Going local

Tue, 27 Oct 2009

One way or another localism is going to be crucial in the next decade but does anyone know what it really means?

The Conservative vision put forward in the party’s white papers on planning and housing seems to offer an attractive alternative to top-down targets and centralised funding. The flagship policy of matching the additional council tax for each new home built for six years should give local communities an incentive to be pro-development (although most of it is not new money).

And even if the Tories do not win the general election, a consensus is emerging across the political spectrum about the need for more autonomy for local authorities and stronger public-private partnerships.

A clutch of reports and consultation responses out this week show just how widespread that debate is becoming - and how complex some of the issues are.The British Property Federation (BPF) responded to the Conservative white papers by welcoming localism and ‘plans to pay councils to build’. But its response - for some reason accompanied by a picture of the Spitting Image puppet of Margaret Thatcher - is also a plea to the party to adopt existing BPF priorities such as tax increment financing, build to let and empty rate relief on new development.

The New Local Government Network (NLGN) published a report yesterday warning of a public sector ‘tsunami’ next year as public spending cuts hit investment in transport, schools, housing and other facilities and calling for new freedoms for local authorities to raise funds.

Local authorities get 75% of their funding from central government, it points out. Much of the rest is dependent on the market and income from capital receipts and section 106 contributions has slumped. Unless action is taken, it warns of a return to the 1990s backlog of public investment.The report calls for a range of innovations including reform of the private finance initiative (PFI), user charging, municipal bonds, mutualisation and new forms of partnership with the private sector. ‘The constitutional circumstances which have created a local government community almost totally reliant on Whitehall now risk leaving much of our public services and facilities bereft of investment,’ said NLGN director Chris Leslie. ‘We urge preparedness within the sector for the looming political obsession with national debt which could see a Treasury cutting capital grant and loan availability severely.’

All of those proposals can be lumped together under the heading ‘localism’ but so too can freeing local communities to be nimbys. So can the government’s ‘total place’ initiative to treat local government spending as a single sum rather than separate ring-fenced budgets.

Localis, the think-tank at the heart of the debate within the Conservative party, has called for more radical localism and much greater devolution of financial power. It is also one of several right-wing think-tanks calling for local authorities to be freed from national obligations on allocations and security of tenure.Scrapping top-down targets and making funding less centralised is one thing but abandoning control from Whitehall and national legislation is quite another. How local will the -ism really be?

Whose benefit?

Tue, 27 Oct 2009

What is it about housing benefit that produces so much misery and so many well-intentioned plans that go wrong? Yesterday a report by Shelter has found that a quarter of private tenants are falling behind with their rent as a result of direct payment of the local housing allowance and Grant Shapps pledged to let tenants choose to get it paid direct to their landlord.

Today Inside Housing has revealed the plight of vulnerable housing association tenants left facing rent shortfalls of £10,000 a year. This time last year the furore was all about tenants getting paid too much - the government was forced to announce caps on the allowance after media reports of a family that received payments of nearly £3,000 a week to rent a seven-bedroom home in Ealing, west London. Over the last few years take your pick from the problems caused by the single room rent, broad rental market areas, the verification framework, benefit administration chaos, the housing association rent formula…the list goes on.

This time next year there will probably be a Conservative government with Iain Duncan Smith in charge of mending ‘broken Britain’ and drawing on radical plans by his Centre for Social Justice think tank  for a universal life credit combining housing benefit, council tax benefit and working family and child tax credits for all low earners. How long before that too falls victim to the problems that seem to dog any reform plan? And will people out of work be ‘supported’ back into it by cutting their benefit and undermining their security of tenure?

The problems facing housing benefit/local housing allowance are bad in the social sector, worse in supported housing and even worse in the private sector. The root cause is that housing costs linked to market rates inevitably rise faster than politicians and taxpayers are prepared to pay for them. The problems will get even worse at a time of rising unemployment and shrinking public spending.

Add to the equation the steady shift from bricks and mortar to personal subsidies and the accompanying slowdown in social sector development and widespread use of the private rented sector to house homeless families and problems like the ones revealed this week are more or less inevitable. Somehow, somewhere there must be a system that allows landlords a reasonable return without letting them charge what they like, that pays reasonable rents for tenants without trapping them on benefit and that controls costs for the taxpayer without creating misery for claimants. But that’s what the architects of the local housing allowance thought they had designed and probably what the social security commissioners involved in the latest debacle thought they were doing.

Whose benefit?

Tue, 27 Oct 2009

What is it about housing benefit that produces so much misery and so many well-intentioned plans that go wrong? Yesterday a report by Shelter has found that a quarter of private tenants are falling behind with their rent as a result of direct payment of the local housing allowance and Grant Shapps pledged to let tenants choose to get it paid direct to their landlord.

Today Inside Housing has revealed the plight of vulnerable housing association tenants left facing rent shortfalls of £10,000 a year. This time last year the furore was all about tenants getting paid too much - the government was forced to announce caps on the allowance after media reports of a family that received payments of nearly £3,000 a week to rent a seven-bedroom home in Ealing, west London. Over the last few years take your pick from the problems caused by the single room rent, broad rental market areas, the verification framework, benefit administration chaos, the housing association rent formula…the list goes on.

This time next year there will probably be a Conservative government with Iain Duncan Smith in charge of mending ‘broken Britain’ and drawing on radical plans by his Centre for Social Justice think tank  for a universal life credit combining housing benefit, council tax benefit and working family and child tax credits for all low earners. How long before that too falls victim to the problems that seem to dog any reform plan? And will people out of work be ‘supported’ back into it by cutting their benefit and undermining their security of tenure?

The problems facing housing benefit/local housing allowance are bad in the social sector, worse in supported housing and even worse in the private sector. The root cause is that housing costs linked to market rates inevitably rise faster than politicians and taxpayers are prepared to pay for them. The problems will get even worse at a time of rising unemployment and shrinking public spending.

Add to the equation the steady shift from bricks and mortar to personal subsidies and the accompanying slowdown in social sector development and widespread use of the private rented sector to house homeless families and problems like the ones revealed this week are more or less inevitable. Somehow, somewhere there must be a system that allows landlords a reasonable return without letting them charge what they like, that pays reasonable rents for tenants without trapping them on benefit and that controls costs for the taxpayer without creating misery for claimants. But that’s what the architects of the local housing allowance thought they had designed and probably what the social security commissioners involved in the latest debacle thought they were doing.

This land is your land

Tue, 27 Oct 2009

Reports that HBOS is in talks to hand over its land holdings to a group of leading housebuilders sound like just another piece of fall-out from the housing market crash - until you ask yourself who really owns that land.

The holdings are the legacy of the bank’s disastrous strategy of making direct investments in a clutch of leading property developers and housebuilders as well as lending money to them. The strategy contributed to the multi-million losses that led to HBOS having to be bailed out first by Lloyds and then by the taxpayer.

Before the shit hit the fan, HBOS had built up stakes of up to 50% in four of the top 20 housebuilders (Miller, Crest Nicholson, Countryside, Cala) plus other companies including Tulloch and Kenmore. 

On the latest figures I can find, between them they own land with planning permission for more than 40,000 homes and their total land holdings are enough up to 150,000 homes. That’s not in the league of the Barratts and Taylor Wimpeys but it’s still a significant proportion of the housing land held by private builders and is the equivalent of a year’s production at pre-crash levels or two years at current levels. 

Details about the proposed deal are sketchy but the idea seems to be that HBOS would hand over the land to companies like Barratt, Persimmon and Bellway and homes would be built in a series of profit-sharing joint ventures.

That seems to work for Lloyds in terms of repairing its balance sheet and it works for the housebuilders too because a sell-off could trigger a further fall in land values.

But does it work for the majority owner of Lloyds? Perhaps, if it leads to the government and taxpayer recouping the cash. But how far is a deal that further concentrates the ownership of housebuilding land really in the public interest? Why not deal instead with the new developers that are already expressing an interest in the Homes and Communities Agency’s public land initiative? Why not make the HBOS land part of that initiative?

It could be that a deal with the big companies still makes the most financial sense but not without at least considering the alternatives first. 

 

This land is your land

Tue, 27 Oct 2009

Reports that HBOS is in talks to hand over its land holdings to a group of leading housebuilders sound like just another piece of fall-out from the housing market crash - until you ask yourself who really owns that land.

The holdings are the legacy of the bank’s disastrous strategy of making direct investments in a clutch of leading property developers and housebuilders as well as lending money to them. The strategy contributed to the multi-million losses that led to HBOS having to be bailed out first by Lloyds and then by the taxpayer.

Before the shit hit the fan, HBOS had built up stakes of up to 50% in four of the top 20 housebuilders (Miller, Crest Nicholson, Countryside, Cala) plus other companies including Tulloch and Kenmore. 

On the latest figures I can find, between them they own land with planning permission for more than 40,000 homes and their total land holdings are enough up to 150,000 homes. That’s not in the league of the Barratts and Taylor Wimpeys but it’s still a significant proportion of the housing land held by private builders and is the equivalent of a year’s production at pre-crash levels or two years at current levels. 

Details about the proposed deal are sketchy but the idea seems to be that HBOS would hand over the land to companies like Barratt, Persimmon and Bellway and homes would be built in a series of profit-sharing joint ventures.

That seems to work for Lloyds in terms of repairing its balance sheet and it works for the housebuilders too because a sell-off could trigger a further fall in land values.

But does it work for the majority owner of Lloyds? Perhaps, if it leads to the government and taxpayer recouping the cash. But how far is a deal that further concentrates the ownership of housebuilding land really in the public interest? Why not deal instead with the new developers that are already expressing an interest in the Homes and Communities Agency’s public land initiative? Why not make the HBOS land part of that initiative?

It could be that a deal with the big companies still makes the most financial sense but not without at least considering the alternatives first. 

 

Making allowances

Thu, 22 Oct 2009

The retreat from the lofty ideals of the local housing allowance continues today with a pledge by the Conservatives to give private tenants the right to have their benefit paid direct to their landlord.

Shadow housing minister Grant Shapps said the current situation was ‘bad for everyone’ and the switch would destigmatise a system that has led to landlords pulling out of the market and increase the supply of homes available to tenants on benefit.

It’s hard to disagree with that but then direct payment has looked pretty pointless ever since the government scrapped shopping incentives in the Budget. The allowance was already up for review by April 2010 and last week the work and pensions select committee announced its own inquiry.

The whole point of the allowance in the private rented sector was that tenants would get a flat-rate sum paid direct to them and be able to choose whether to rent a more expensive home and top it up or rent a cheaper one and keep any surplus up to a maximum of £15 a week.

Supporters argued this would give tenants a greater sense of financial responsibility at the same time as introducing more choice and competition - although a backbench revolt over the scrapping of the £15 a week incentive has not materialised yet. 

However, landlords have never liked direct payment despite some encouraging results from areas that piloted it. The National Landlords Association argued this week that landlords are owed £220m in rent arrears on local housing allowance tenancies.

If direct payment follows shopping incentives into the dustbin all that will be left will be to find a new name for the local housing allowance. How about housing benefit?

 

Making allowances

Thu, 22 Oct 2009

The retreat from the lofty ideals of the local housing allowance continues today with a pledge by the Conservatives to give private tenants the right to have their benefit paid direct to their landlord.

Shadow housing minister Grant Shapps said the current situation was ‘bad for everyone’ and the switch would destigmatise a system that has led to landlords pulling out of the market and increase the supply of homes available to tenants on benefit.

It’s hard to disagree with that but then direct payment has looked pretty pointless ever since the government scrapped shopping incentives in the Budget. The allowance was already up for review by April 2010 and last week the work and pensions select committee announced its own inquiry.

The whole point of the allowance in the private rented sector was that tenants would get a flat-rate sum paid direct to them and be able to choose whether to rent a more expensive home and top it up or rent a cheaper one and keep any surplus up to a maximum of £15 a week.

Supporters argued this would give tenants a greater sense of financial responsibility at the same time as introducing more choice and competition - although a backbench revolt over the scrapping of the £15 a week incentive has not materialised yet. 

However, landlords have never liked direct payment despite some encouraging results from areas that piloted it. The National Landlords Association argued this week that landlords are owed £220m in rent arrears on local housing allowance tenancies.

If direct payment follows shopping incentives into the dustbin all that will be left will be to find a new name for the local housing allowance. How about housing benefit?

 

Floating voters

Wed, 21 Oct 2009

MPs from all parties sprang to the defence of sheltered housing residents and their resident wardens yesterday in one of those debates that shows that parliament is actually about more than the expenses scandal.

Tory backbencher Geoffrey Cox kicked off a Westminster Hall debate on a subject that has been covered extensively in Inside Housing in recent months and MPs produced a litany of complaints including wardens told they will be sacked or disciplined if they speak to anyone about changes in the system and residents being consulted on a switch to floating support after the decision has already been made.

The MPs heard that 500,000 people, or 7% of the retired population, already rely on sheltered accommodation. Yet Help the Aged estimates that changes to supporting people will drive a massive switch from resident to floating support - from 5% of schemes now to 40% within the next two to three years.

Several backbenchers supported the general drift of changes to Supporting People but warned that administering authorities were being too intransigent in inisisting that floating support is always best and were not dealing with the costs of not having wardens.

Cox accused the government of abdicating responsibility by leaving the decision to individual authorities. And he and other MPs accused providers of denying elderly residents their consumer rights. ‘Individuals have made important decisions to their detriment, based on the understanding that 24-hour wardens would be present, and then they find that those wardens are removed,’ he complained. ‘That cannot be right. In particular,it cannot be right when written or oral representations have been made to residents saying that the 24-hour warden will be there and that there is no risk of them being removed from that particular housing development. How can it be right then to break those representations? It cannot be right, and I apprehend that the legitimate expectations to which such situations have given rise are the basis of some of the cases before the High Court now.’

There was also a shot across the bows of providers moving to a more business-oriented model from Lib Dem MP Dr John Pugh. ‘Sheltered housing providers need to think hard about their mission,’ he said. ‘They are identified with a particular product and a particular kind of client relationship. I know that some of the larger ones want to change the nature of that relationship, and are more attracted to the provision of peripatetic care packages than to the traditional role of providing sheltered housing in the understood sense. However, such providers risk becoming more business-like and losing some of their original sense of mission or soul. One thing weighing heavily on people who complain about what sheltered housing provides is the very high salaries paid by some of the bigger housing associations to their chief executives.’

The MPs calling for change did not get much out of junior housing minister Ian Austin, who insisted that everyone agreed that ‘local authorities are best placed to identify the services that are required to meet the needs of their local areas and to balance local priorities’.

But he did have a pledge about consultation. ‘However, we are equally clear that in developing and commissioning local services, local authorities should take into account the views and experiences of local service providers, local people and especially of service users,’ he added.

What that will amount to in practice remains to be seen but Austin also said that the working group on sheltered housing chaired by junior communities minister Lord McKenzie would provide ‘precisely the sort of leadership that has been called for in this debate’ and would also address points about lack of consultation and lack of clarity in complaints procedures by providers.

Whether or not that will be enough to satisfy campaigners remains to be seen. However, there is no doubt that the debate was well timed. New population projections released today that show the number of people over 75 will grow by 1m over the next ten years and 4m over the next 25. Who will look after them and how?

Floating voters

Wed, 21 Oct 2009

MPs from all parties sprang to the defence of sheltered housing residents and their resident wardens yesterday in one of those debates that shows that parliament is actually about more than the expenses scandal.

Tory backbencher Geoffrey Cox kicked off a Westminster Hall debate on a subject that has been covered extensively in Inside Housing in recent months and MPs produced a litany of complaints including wardens told they will be sacked or disciplined if they speak to anyone about changes in the system and residents being consulted on a switch to floating support after the decision has already been made.

The MPs heard that 500,000 people, or 7% of the retired population, already rely on sheltered accommodation. Yet Help the Aged estimates that changes to supporting people will drive a massive switch from resident to floating support - from 5% of schemes now to 40% within the next two to three years.

Several backbenchers supported the general drift of changes to Supporting People but warned that administering authorities were being too intransigent in inisisting that floating support is always best and were not dealing with the costs of not having wardens.

Cox accused the government of abdicating responsibility by leaving the decision to individual authorities. And he and other MPs accused providers of denying elderly residents their consumer rights. ‘Individuals have made important decisions to their detriment, based on the understanding that 24-hour wardens would be present, and then they find that those wardens are removed,’ he complained. ‘That cannot be right. In particular,it cannot be right when written or oral representations have been made to residents saying that the 24-hour warden will be there and that there is no risk of them being removed from that particular housing development. How can it be right then to break those representations? It cannot be right, and I apprehend that the legitimate expectations to which such situations have given rise are the basis of some of the cases before the High Court now.’

There was also a shot across the bows of providers moving to a more business-oriented model from Lib Dem MP Dr John Pugh. ‘Sheltered housing providers need to think hard about their mission,’ he said. ‘They are identified with a particular product and a particular kind of client relationship. I know that some of the larger ones want to change the nature of that relationship, and are more attracted to the provision of peripatetic care packages than to the traditional role of providing sheltered housing in the understood sense. However, such providers risk becoming more business-like and losing some of their original sense of mission or soul. One thing weighing heavily on people who complain about what sheltered housing provides is the very high salaries paid by some of the bigger housing associations to their chief executives.’

The MPs calling for change did not get much out of junior housing minister Ian Austin, who insisted that everyone agreed that ‘local authorities are best placed to identify the services that are required to meet the needs of their local areas and to balance local priorities’.

But he did have a pledge about consultation. ‘However, we are equally clear that in developing and commissioning local services, local authorities should take into account the views and experiences of local service providers, local people and especially of service users,’ he added.

What that will amount to in practice remains to be seen but Austin also said that the working group on sheltered housing chaired by junior communities minister Lord McKenzie would provide ‘precisely the sort of leadership that has been called for in this debate’ and would also address points about lack of consultation and lack of clarity in complaints procedures by providers.

Whether or not that will be enough to satisfy campaigners remains to be seen. However, there is no doubt that the debate was well timed. New population projections released today that show the number of people over 75 will grow by 1m over the next ten years and 4m over the next 25. Who will look after them and how?

Stamp collecting

Wed, 21 Oct 2009

With barely two months to go before the end of the stamp duty holiday, the chorus is growing for another extension. But can the government afford it when official figures show it lost almost £4bn in receipts from the tax last year?

The threshold where buyers start paying stamp duty was temporarily raised from £125,000 to £175,000 for a year from September 2008. This was extended to the end of the year in the Budget in April.

According to the Halifax, the result was that an extra 31% of buyers paid no stamp duty. Overall, 63% of all buyers and 83 per cent of first-time buyers were exempt. Just one more reason why the housing market has been so resilient recently. 

But the holiday is not the reason why total receipts have fallen so sharply - on those figures it has cost something like £200m.

Compare that with the latest figures from HM Revenue and Customs. They show that the total stamp duty yield attributable to residential property fell from £6.7bn in 2007/08 to just £2.9bn in 2008/09, blowing a £3.8bn hole in the government’s finances thanks to the fall in house prices and (especially) transactions.

Stamp duty has been a huge cash cow for Labour, raising more than £40bn since 1997 thanks to the introduction of higher rates for more expensive homes. Since 2000, stamp duty has been 3% on properties worth over £250,000 and 4% on those worth over £500,000.

Those slabs create all kinds of distortions around the thresholds but it has produced a tax that has three pretty good things going for it in my book - it is next to impossible to avoid and the bill is higher for the rich and for people in London and the South East. Almost half of the take in 2008/09 came from sales in those two regions and from houses worth over £500,000.

Those kind of figures make it hard to see the government bowing to pressure from the 1808 Coalition to abolish the tax in its current form - the fact that 86% of estate agents think it is unfair is another good reason in favour - even if the arguments in favour of a more general reform of property taxation are pretty overwhelming. 

However, the coalition might have stronger arguments for extending the holiday - on the one hand, it would benefit thousands of buyers without losing too much; on the other if it helps underpin a recovery that gets transactions going again it could even lead to an increase in the total take. 

 

Stamp collecting

Wed, 21 Oct 2009

With barely two months to go before the end of the stamp duty holiday, the chorus is growing for another extension. But can the government afford it when official figures show it lost almost £4bn in receipts from the tax last year?

The threshold where buyers start paying stamp duty was temporarily raised from £125,000 to £175,000 for a year from September 2008. This was extended to the end of the year in the Budget in April.

According to the Halifax, the result was that an extra 31% of buyers paid no stamp duty. Overall, 63% of all buyers and 83 per cent of first-time buyers were exempt. Just one more reason why the housing market has been so resilient recently. 

But the holiday is not the reason why total receipts have fallen so sharply - on those figures it has cost something like £200m.

Compare that with the latest figures from HM Revenue and Customs. They show that the total stamp duty yield attributable to residential property fell from £6.7bn in 2007/08 to just £2.9bn in 2008/09, blowing a £3.8bn hole in the government’s finances thanks to the fall in house prices and (especially) transactions.

Stamp duty has been a huge cash cow for Labour, raising more than £40bn since 1997 thanks to the introduction of higher rates for more expensive homes. Since 2000, stamp duty has been 3% on properties worth over £250,000 and 4% on those worth over £500,000.

Those slabs create all kinds of distortions around the thresholds but it has produced a tax that has three pretty good things going for it in my book - it is next to impossible to avoid and the bill is higher for the rich and for people in London and the South East. Almost half of the take in 2008/09 came from sales in those two regions and from houses worth over £500,000.

Those kind of figures make it hard to see the government bowing to pressure from the 1808 Coalition to abolish the tax in its current form - the fact that 86% of estate agents think it is unfair is another good reason in favour - even if the arguments in favour of a more general reform of property taxation are pretty overwhelming. 

However, the coalition might have stronger arguments for extending the holiday - on the one hand, it would benefit thousands of buyers without losing too much; on the other if it helps underpin a recovery that gets transactions going again it could even lead to an increase in the total take. 

 

Never again?

Mon, 19 Oct 2009

Top marks to the Financial Services Authority (FSA) for resisting the temptation to allow a return to business as usual in the mortgage market.

In a discussion paper published this morning, the regulator proposed a range of measures that in effect will save borrowers and lenders from themselves. They include:

  • affordability tests for all mortgages that make lenders ultimately responsible for assessing a borrower’s ability to pay
  • a ban on self-certified mortgages - the so-called liar’s loans that accounted for half of the market in 2007
  • no specific controls on loan to value or loan to income but stopping loans that show toxic combinations of risk factors
  • banning lenders from making arrears charges on customers in arrears who are repaying them
  • making all mortgage advisors personally responsible to the FSA
  • regulating buy to let and second charge loans for the first time.

In doing so, the FSA has resisted pressure from mortgage lenders and brokers to rein back from the approach advocated by the Turner review earlier in the year. Instead it will take a new regulatory approach. ‘We shall no longer intervene based solely on observable facts but will be proactively analysing risks at an individual firm level, making judgements about the prudential and conduct risks firms and consumers may face through,for example,high-risk lending strategies. We will intervene where necessary.’

As FSA chief executive Hector Sants told the Today programme this morning it’s extraordinary that banks need to be told not to lend to people who cannot afford to repay or that borrowers need to be stopped from taking out unaffordable loans - but the lesson of the crash is that they do.

The controls will operate in addition to prudential reforms that will increase the amount and quality of capital that banks have to maintain for their mortgage lending. And it does not rule out future caps on loan to value, loan to income or debt to income as part of that broader framework in future.

The measures were ‘welcomed’ by the Council of Mortgage Lenders (CML) despite its plea to the FSA last week not to regulate self-cert and buy-to-let loans. However, it pointed out the irony of proposing new controls on irresponsible lending at the same time as politicians call for more lending.

Other responses today have focussed on the potential plight of self-employed people, for whom self-cert mortgages were often the only route into the housing market. However, the FSA denies the ban will effectively freeze them out. ‘Self-cert mortgages were designed by the market to meet the needs of self-employed borrowers but grew waybeyond the consumer groups for which they were originally intended,’ points out the discussion paper.

It also remains to be seen what effect the new regime will have on lending for shared ownership and shared equity. Neither is mentioned in the discussion paper beyond the inclusion of shared ownership rent in a best practice test of free disposable income.

The FSA proposals now go out to consultation until the end of January and a feedback statement will be published in March - just weeks before a general election and a possible Conservative government that is pledged to scrap the regulator and give control back to the Bank of England. 

Never again?

Mon, 19 Oct 2009

Top marks to the Financial Services Authority (FSA) for resisting the temptation to allow a return to business as usual in the mortgage market.

In a discussion paper published this morning, the regulator proposed a range of measures that in effect will save borrowers and lenders from themselves. They include:

  • affordability tests for all mortgages that make lenders ultimately responsible for assessing a borrower’s ability to pay
  • a ban on self-certified mortgages - the so-called liar’s loans that accounted for half of the market in 2007
  • no specific controls on loan to value or loan to income but stopping loans that show toxic combinations of risk factors
  • banning lenders from making arrears charges on customers in arrears who are repaying them
  • making all mortgage advisors personally responsible to the FSA
  • regulating buy to let and second charge loans for the first time.

In doing so, the FSA has resisted pressure from mortgage lenders and brokers to rein back from the approach advocated by the Turner review earlier in the year. Instead it will take a new regulatory approach. ‘We shall no longer intervene based solely on observable facts but will be proactively analysing risks at an individual firm level, making judgements about the prudential and conduct risks firms and consumers may face through,for example,high-risk lending strategies. We will intervene where necessary.’

As FSA chief executive Hector Sants told the Today programme this morning it’s extraordinary that banks need to be told not to lend to people who cannot afford to repay or that borrowers need to be stopped from taking out unaffordable loans - but the lesson of the crash is that they do.

The controls will operate in addition to prudential reforms that will increase the amount and quality of capital that banks have to maintain for their mortgage lending. And it does not rule out future caps on loan to value, loan to income or debt to income as part of that broader framework in future.

The measures were ‘welcomed’ by the Council of Mortgage Lenders (CML) despite its plea to the FSA last week not to regulate self-cert and buy-to-let loans. However, it pointed out the irony of proposing new controls on irresponsible lending at the same time as politicians call for more lending.

Other responses today have focussed on the potential plight of self-employed people, for whom self-cert mortgages were often the only route into the housing market. However, the FSA denies the ban will effectively freeze them out. ‘Self-cert mortgages were designed by the market to meet the needs of self-employed borrowers but grew waybeyond the consumer groups for which they were originally intended,’ points out the discussion paper.

It also remains to be seen what effect the new regime will have on lending for shared ownership and shared equity. Neither is mentioned in the discussion paper beyond the inclusion of shared ownership rent in a best practice test of free disposable income.

The FSA proposals now go out to consultation until the end of January and a feedback statement will be published in March - just weeks before a general election and a possible Conservative government that is pledged to scrap the regulator and give control back to the Bank of England. 

Taxing questions

Thu, 15 Oct 2009

Two tax agendas. One could help prevent boom and bust in the market,  reduce risks for developers, boost investment in rented homes and maybe even solve some of the government’s financial problems. The other could boost profits for estate agents and existing homeowners.

No prizes for guessing which is more likely to happen.

The first is one of eight key proposals in a new report from the Building and Social Housing Foundation (BSHF) for reform of Britain’s dysfunctional housing system. Taxation based on property or land values could help to prevent crashes by discouraging speculative purchase of assets, it says. The reduced volatility would reduce risks for developers and therefore the returns they require and increase scope for investment in long-term rental.

The second calls for the abolition of one of the only existing taxes on house values. The National Association of Estate Agents and Association of Residential Letting Agents want the abolition of stamp duty. They have formed the 1808 Coalition, named after the year it was introduced, to campaign for reform starting with the extension of the stamp duty holiday beyond the end of the year.

Options proposed by the BSHF include:

  • Reforming the council tax to make it less regressive or replacing it and stamp duty with one property tax
  • Equal tax treatment for owning and renting and for first-time buyers and existing homeowners
  • Gradually introducing capital gains tax on first homesInheritance tax incentives for older people to pass on property assets during their lifetime.

Politically impossible? Yes maybe, but the same was said about abolishing mortgage tax relief in the 1990s. It was an unfair subsidy that distorted the housing market and also an absurd one since it was a relief on a tax on imputed rental values that was abolished in the early 1960s.

However, as the report points out, few people noticed when it was finally scrapped because it was phased out over a period when interest rates were falling. Crucially too, it happened in a period when people could remember the crash of the early 1990s and see that it made sense.

The wake of the noughties crash offers an opportunity to go further with reforms that could benefit the housing system as a whole and maybe even help the government out of a financial hole too. If it’s brave enough.

Taxing questions

Thu, 15 Oct 2009

Two tax agendas. One could help prevent boom and bust in the market,  reduce risks for developers, boost investment in rented homes and maybe even solve some of the government’s financial problems. The other could boost profits for estate agents and existing homeowners.

No prizes for guessing which is more likely to happen.

The first is one of eight key proposals in a new report from the Building and Social Housing Foundation (BSHF) for reform of Britain’s dysfunctional housing system. Taxation based on property or land values could help to prevent crashes by discouraging speculative purchase of assets, it says. The reduced volatility would reduce risks for developers and therefore the returns they require and increase scope for investment in long-term rental.

The second calls for the abolition of one of the only existing taxes on house values. The National Association of Estate Agents and Association of Residential Letting Agents want the abolition of stamp duty. They have formed the 1808 Coalition, named after the year it was introduced, to campaign for reform starting with the extension of the stamp duty holiday beyond the end of the year.

Options proposed by the BSHF include:

  • Reforming the council tax to make it less regressive or replacing it and stamp duty with one property tax
  • Equal tax treatment for owning and renting and for first-time buyers and existing homeowners
  • Gradually introducing capital gains tax on first homesInheritance tax incentives for older people to pass on property assets during their lifetime.

Politically impossible? Yes maybe, but the same was said about abolishing mortgage tax relief in the 1990s. It was an unfair subsidy that distorted the housing market and also an absurd one since it was a relief on a tax on imputed rental values that was abolished in the early 1960s.

However, as the report points out, few people noticed when it was finally scrapped because it was phased out over a period when interest rates were falling. Crucially too, it happened in a period when people could remember the crash of the early 1990s and see that it made sense.

The wake of the noughties crash offers an opportunity to go further with reforms that could benefit the housing system as a whole and maybe even help the government out of a financial hole too. If it’s brave enough.

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