THE UK HOUSING MARKET IS BROKEN
Finally, an admission from the chancellor that Britain’s housing market is well and truly broken. Even a political party overflowing with estate agents, landlords and property developers knows the housing market is falling, not least because their own sons and daughters despair at affording a home.
But grand promises of 400,000 new homes, a help-to-buy scheme in London, and a doubling in the budget may still not be enough to reverse the decade-long fall in home ownership, the central tenant of Conservative philosophy.
No longer do rising house prices produce a feel good factor among the voting population. Instead, there’s the feel bad factor of a generation used to renting, paying half or more of their income to their landlord. It may explain why in this autumn statement the chancellor has made a second assault against one of the more powerful bastions in his own party, buy-to-let landlords.
In July’s budget he took millions off landlords with new taxes coming into force in 2017. He will find a further £1bn a year by making investors pay an extra 3% stamp duty on the buy-to-lets and second homes. In real terms, this means that on a typical buy-to-let purchase of £184,000, the tax will rise from £1,180 to £6,700. The Association of Residential Letting Agents promptly called it “catastrophic” while the National Association of Estate Agents said it would “put a stop to those entering the sector”.
Telegraph readers will be in shock. The paper’s “Axe the buy-to-let tax grab”, campaign features “persecuted” and ‘’demonised” landlords, despite the fact they have made fatter profits than any other group of investors this century. The boss of one big estate agency group, Ludlow Thompson said the chancellor is now treating the buy-to-let market “like the tobacco industry”.
About time, first-time buyers will say. They have queued at new home launches, or grim “open days”, where they have been consistently outbid by the financial firepower of tax-advantaged buy-to-let landlords.
Hitting landlords and second-house buyers should provoke a welcome reduction in demand.
What about the supply side of the market? The promise is 400,000 affordable housing starts by 2020-21, including 200,000 starter homes sold at a 20% discount to market value, with £2.3bn allocated to building the first 60,000. Another 135,000 homes will be built under shared ownership schemes open to anyone earning under £90,000 (in London) or £80,000 elsewhere. Combined with an easing up if planning rules, it adds up to a developers’ charter, with Taylor Wimpey, Barratt Developments and Persimmon among the fastest-rising shares on the London stock exchange on the day of the chancellor’s speech.
Delivery is the problem. It’s a very good time to be a brick maker or bricklayer, with the industry hitting capacity constraints. Quite why this has become such a problem is a mystery; with a much smaller population, Britain built many more houses every year in the 1950s and...