A new paper by the influential Institute of Economic Affairs has said that almost all of the Government’s interventions in the housing market have been “a step in the wrong direction”.
It particularly criticises Help to Buy, changes to Inheritance Tax and higher taxes for buy-to-let landlords.
It picks out Stamp Duty reforms as the one step in the right direction – but still criticises it for impeding downsizing.
The paper, by Dr Kristian Niemietz, also says that green belts are not just outdated but conceptually wrong and should be abolished in their entirety.
It is particularly critical of the impending higher tax burden on buy-to-let landlords, saying: “Letting a property is a business like any other and the cost of servicing the mortgage is a business cost like any other. Thus the tax system should treat it as such.”
The paper says that the UK’s housing stock is not just inadequate in total but also mostly in the wrong place.
It adds that there is no specific shortage of social housing, private rental accommodation or first-time buyer homes, but an overall shortage of inexpensive housing across all tenures.
It says that boosting home ownership should not be a policy aim in its own right. Instead, the Government’s aim should be to improve affordability generally.
The paper says that the housing crisis is because of high costs of buying and renting.
Both house prices and rents are among the highest in the world, both in absolute terms and relative to average incomes.
Since 1970, house prices have gone up four and a half times after inflation.
No other OECD country has experienced price explosion of such magnitude. Indeed, no other OECD country’s experience even comes close, the report claims.
OECD countries consist of the world’s wealthier countries, including the US and Canada.
UK house building has had lower rates of house building than any other similar country for over three decades, the report says.
With regard to Cameron and Osborne’s attacks on small buy-to-let landlords, Dr Kristian Niemietz should understand that they are designed to help major City institutions to get a piece of the buy-to-let pie.
The corrupt electoral system and implosion of the Labour Party means that the Tories are in a virtually unassailable position and can now pick and choose their friends.
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With respect all of that is going on right now was begun in August 2005 by Gordon Brown and his short lived policy that residential property would be an allowable asset in SIPS. It was only the folk in the City, Radio 4 listeners and broadsheet readers who learned of and grasped the implications. Having researched, understood and started the process of acquisition the cunning plan is paying off handsomely. What Cameron and Osborne are trying to do is fix the broken market caused by Blair, Brown and co by attempting to scare private investors out of the scheme and make it less attractive for those who want a bit more than £75/week pension when they get to the proposed retirement age of 75.
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One root of the housing crisis was the disposal of council houses – through the right to buy and stock transfers to Housing Associations. Had the original dwellings (largely built after WW2 been retained in public ownership the debt of construction would have been paid down and the rents would only have needed to cover management and maintenance. Successive governments have chosen to use public subsidy to help consumption of housing (housing allowance, help to buy) when the long term is best served by subsidy on the supply side – making land available, building council houses.
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While I largely agree with your comments and views it is not unreasonable for tenants in the public sector to buy their homes should their social mobility allow it. Otherwise they would be forced to leave, what is after all, their home. However, it should have been sales at a full open market price (or minimal discount <10%) and ALL proceeds should have gone to new build social housing. That way the public purse would have reaped the rewards and a greater supply of social housing could have been generated which would have possibly kept up with the increasing population and needs for social housing. JUST A THOUGHT!
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The private housing market should never have been allowed to be politicised and now we are seeing these interventions unfolding.
There are a lot less resell houses coming on the market so buyers are chasing their tails trying to move.
All Ossie & Co have done is disrupt the market in such a way its going to make the population less mobile.
You want to change where you live from London to Yorkshire? Great, your London pad will be harder to sell with the increase in stamp duty if it’s over £900000(ish) and there is nothing worth looking at in Yorkshire (or wherever) even if you can sell quickly and then try the rent stock it is also falling away because again Ossie & Co stopped landlords buying by hiking the stamp duty there too.
Well Done Mr Osborne, I thought the only buffoon in the tory camp was the mayor, looks like you have taken that crown.
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The Noughties saw the British public, and other countries, encouraged to ‘BORROW, BORROW, BORROW, it’s free money* (*not necessarily free)’, and much of that borrowed money was used to purchase properties, leading to the much higher than inflation price rises. The current result of which is a large chunk of UK citizens having loads of mortgage debt to service and all their pension plans tied up in the value of their home. Thus no ‘government’, from either side of the house, can do anything to bring down house prices, lest they have to pick up the welfare tab for the majority of the country. The savers’ countries, Germany and China, look on with a little shake of the head – ‘stupid Brits’.
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Sounds like we should all sell up and move to the Costa Del Sol!
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Did that already, didn’t like it after a year plus the locals don’t like the brits at all.
Their favourite saying is get off our mountain (Gibraltar) and take your F&^%*$ng green monkeys with you.
They say it in Spanish.
Ole
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