Opinion: The Budget left out property and the housing crisis – but here’s what Philip Hammond should have done instead
Apart from a nod towards business rates (the devil will be in the Finance Act detail), the Budget was almost a property-free zone.
But Mr Hammond missed out on some much-needed blue-sky thinking, especially if the government is going to fix what it calls the ‘broken’ housing system. Here are some things that Spreadsheet Phil might have considered.
Private renting tax relief
Remember the good old days of MIRAS (Mortgage Interest Relief at Source), that gave home-owners a tax break? Why not bring it back, but extend it to people in long-term rentals (say, five years or more)? For those who cannot get on the housing ladder, it would be a real incentive and take some of the sting out of the ‘stigma’ of renting.
Municipal bonds
These are also known as the Bank of Grandma and Grandad. Older readers may remember the days when residents could walk into their local Town Hall and voluntarily give the council their cash (as opposed to paying their council tax). The loans to the council, which could be as low £5, paid a fixed rate dividend of about two percent. The council used the cash to reduce its bank borrowing and keep down rates/poll tax/ community charge. All loans were redeemable on an annual basis but, like the National Lottery, could roll over.
Call me old fashioned but giving pensioners an opportunity to invest in their local community, with a no-risk organisation, at a reasonable rate of return providing affordable housing for their neighbours or grandchildren seems like a no brainer. Shame someone didn’t tell Phil.
Help the Homeless
It is rather incongruous that in the richest part of one of the richest cities in the world people are still sleeping in the street. Phil could have shown his Phil-anthropic side by helping local authorities with one of the biggest holes in their budgets.
Temporary accommodation means that local councils are forking out £2m a day for this very reason, putting homeless families up in bedsits, B&Bs and hostels at extortionate cost. A central government-led solution is essential.
Public housing
The biggest house-building boom in the UK was in the 1960s when good old pipe-smoking, mac-wearing Harold Wilson was in power. He managed to get almost 350,000 homes built – almost double the current rate. Why not try to repeat that by giving local authorities the ability to borrow while capital is cheap to fund housing? The government has repeatedly resisted calls from the Conservative-controlled Local Government Association for this freedom. Maybe it’s time to listen to the grassroots.
Stamp Duty
Once a small detail in any house purchase, it is now a major cost heading towards £50,000 for any decent sort of family home in London. It has now gone beyond a joke and – when we get Brexit out of the way – reducing this punitive tax must surely become a priority. Over to you, Phil.
Curtin & Co is a public affairs consultancy specialising in the politics of planning
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