Looking ahead to the release of Wednesday’s Autumn Statement, CEO of eMoov.co.uk and former Brentwood First councillor, Russell Quirk, has outlined what he believes needs to be done to fix Britain’s broken housing market.
In his latest blog post, Russell tackles the issues that need to be addressed in the nation’s property industry, from the Help to Buy scheme to the 3% levy on second homes and buy to let purchases to the timeless issue of housing supply.
The Autumn Statement is this Wednesday. A platform for the Government to tweak a few fiscal levers and make some often big policy announcements. And a chance to re-set things when and if the Budget earlier in the year has not gone down so well.
This year should be interesting as it will be culminate as a game of two halves. The first half of the Treasury’s game was played with George Osborne as club Captain and David Cameron as Manager. But a major change at half time (the EU referendum) has since put Philip Hammond out on the field with Theresa May watching closely from the touchline. And if they were to change strategy entirely for this Wednesday’s speech, it wouldn’t be the first time that Hammond and May have torn up Osborne and Cameron’s playbook since taking office in the summer.
Consequently, I have high hopes for this Statement where housing related announcements are concerned. Especially as Philip Hammond is a property developer. Yes, our Chancellor is the majority owner of Castlemead Limited a resi construction firm turned healthcare home provider. So he should understand the housing market better than most. He’s also an Essex boy, educated in my home town of Brentwood, a hive of business activity being home to Ford of Europe, BT and, of course, eMoov and so I trust that his first foray at the Despatch Box might be a more commercially sensible one.
In previous years we have seen a real mixture of housing policies appear from such events. Help 2 Buy on the positive side; Stamp Duty threshold changes (and hikes); reduced tax relief on buy to let owners’ mortgage payments; and, latterly, a 3% levy on second homes and buy to let purchases, as the not so positive. And what we have heard every year for, well, forever, have been repeated announcements and re-announcements on the thorny issue of housing supply.
To be clear on this point (and I have been a staunch critic of successive administrations that have failed to deliver on housing provision) the UK needs around 250,000 homes built each year. This is to service the demand that exists from a growing population, a longer life expectancy and an ever higher rate of single occupancy (at approximately 23% now).
But we’ve not built more than 200,000 homes in a year since the 1980’s. Having said that, we have had numerous Chancellors, Prime Ministers, Housing Ministers, their shadows and successive London and regional Mayors talk a lot about building enough. But they never, ever do.
Once Mr Hammond has risen to his feet and got the ‘boring’ stuff out the way of deficits, fiscal prudence, inflation, economic tests, employment, pensions and public sector spending, I hope that given past rhetoric and consequential failure, he will set out a housing plan that looks something like the following (Phil, copy and paste this into your speech by all means) and that is actually executableRussell Quirk
The Grey Belt
Re-designate the swathes of unattractive parts of the green belt and brownfield sites within the green belt as ‘grey’ belt. Industrial estates, scrap yards etc… should all be reclassified in order that planning officers are unable to apply a ‘Computer says no’ approach to them. Politically, building on grey belt will be acceptable. But don’t just talk about it. Do it.
Force councils to identify their own land that is laying to waste that is then developed and with proper incentives to encourage such. And penalties if not. There’s lots of the stuff (I know because as a former councillor I identified dozens of acres of it in Brentwood and got it built on) and despite there now being a mandatory asset register of such land, councils are not being entrepreneurial enough in utilising it. National government too – There are 180,000 publicly owned property assets across the UK that could be evaluated for development. But don’t just talk about it. Do it.
A Government Developer
In conjunction with the above, set up a government owned development company. Not a panel or a commission but an actual developer that identifies suitable land, takes a planning application through the formal process itself, hires the construction contractors and builds out the housing. Itself. A mix of tenures and house types including social housing and build to rent, of course. Frankly, if Persimmon, Bellway and Wimpy want to land-bank hundreds of thousands of plots without building on them, let them. But UK housing must no longer be held to ransom by them.
Tax Reliefs on Social Housing Investors
Introduce a scheme that encourages high net worth individuals and companies to plough their profits into building social housing with significant tax relief on those profits in return. Keeping the (small) rental yields into the bargain and mandating that each scheme be kept for 5 years and could then be traded to another, similarly wealthy and socially conscious entity.
Better Planning Process
De-politicise the planning process. Remove the threat to new housing schemes from handfuls of local people scaring the bejesus out of local councillors by threatening not to vote for them next time unless they ‘block’ NIMBYist home building. How? Utilise neighbouring authorities, County Councils or, bite the bullet entirely and require local councils to form local plans democratically and amend them more frequently but then allow a professional panel of experts to make the final decision on schemes above a certain size whilst delegated authority would apply to smaller schemes.
So, there are my housing supply solutions. Easy…
(PS. A good start would be to elevate the Housing Minister to Cabinet rather than excluding him/her as being less relevant than, say, the Secretary of State for Wales:
But we also need reform of Stamp Duty. A tax that was thought up to fund a war against France. And which I don’t think is likely anymore, Brexit notwithstanding.
In 1997 Stamp Duty Land Tax (SDLT) was responsible for £1bn in revenue to the Exchequer. Once Gordon Brown had finished playing with it and penalising home buyers in the south east of England paying higher prices than elsewhere, particularly first time buyers, the take grew quickly to £9bn now. In my opinion it’s a tax on aspiration and has an unfair geographic bias and penalises higher priced homes far more than lower priced homes. Property socialism, if you will, and with which Karl Marx would be most satisfied I’d imagine.
So, reform. The reform of stamp duty is well overdue. It should ideally be repealed but, with a £9bn value, that’s not going to happen. My suggested solution therefore is to at the very least make it incumbent upon the seller to pay the levy, the seller being the entity that has, in the every most cases, at least made some money on the asset rather than kicking the beleaguered home buyer in the teeth at a time when they’re scraping together deposits and legal fees. That’s still not fair. But it’s fairer. Oh, and make it a flat tax of 2% above the UK national house price average and pledge that the threshold keeps pace with prices rather than sneakily allowing ‘creep’ as we’ve seen to date.
Whilst I do have a very nice job running the UK’s best estate agency business (no honestly, it really is) I’m also open to providing my thoughts and ideas to assist the powers that be too. Politicians have often said that they wish more ‘ordinary’ folk, business people and the like would get into politics. Well, I got out of local politics precisely because most politicians and civil servants are entirely threatened by such an approach and because they crave the protection of the status quo. That attitude has to end as, even with a property developer in charge of the public purse, solving big problems in society such as housing, needs something of an apolitical and entrepreneurial attitude and creativity or else we’ll keep being fed the same old rhetoric with little in the way of any ‘doing’.
Enough is enough, especially when the answers are staring the government right in the face. If only they’d actually open their eyes to see them.
In the meantime I’ll just wait by the phone…Russell Quirk