Thursday, 26 November 2015

They own land! Give them money!

George Osborne at his pathetic vote-buying best:

1. Help to Buy Shared Ownership: current restrictions on who can buy a home through shared ownership will be removed from April 2016

Currently, these are allocated in several different ways including criteria set by local councils, for example whether potential buyers work in the local area or if they are already in council housing.

Help to Buy Shared Ownership will lift the limits so that anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, can buy a home through shared ownership.

Yes, housing is so very affordable nowadays that households earning £80,000 or £90,000 need subsidies to afford one.

2. London Help to Buy: If you live in London the government will lend you 40% the price of your home from 2016

Help to Buy Equity Loans are already open to both first-time buyers and home movers on new build homes in England with a purchase price up to £600,000... to reflect the current property market in London, from early 2016 the government will increase the upper limit for the equity loan it gives new buyers within Greater London from 20% to 40%.

With London Help to Buy equity loan:
•you’ll need to contribute at least 5% of the property price as a deposit
•the government will give you a loan for up to 40% of the price
•you’ll need a mortgage of up to 55% to cover the rest

The taxpayer backing low interest loans of up to £240,000 to speculate on London land prices? What could possibly go wrong?

3. First-time buyers will be able to get a 20% discount on 200,000 new Starter Homes

Starter Homes are new build homes available at 20% off the market price. They are only open to first-time buyers under 40. You can register to find out about Starter Homes in your area.

£2.3 billion will be spent on building 200,000 Starter Homes over the next five years.

The 20% discount is probably illusory. There will always be far more people wanting to buy them than are available, so the remaining non-discounted homes will be sold for higher prices to those above the income limits and it all averages out.

So basically they are going to bung the land bankers £11,500 per home for a random number of homes.

4. Money raised from tax on people buying their second home will be used to help those struggling to buy their first home

From 1 April 2016 people purchasing additional properties such as buy to let properties and second homes will pay an extra 3% in stamp duty.

That's the only mildly good idea present, although probably unenforceable.


mombers said...

Would be very interesting to see the details of the stamp duty change. Can spouses both have homes? What if you buy it to live in but let it out instead? At least companies have been exempted - I would much rather rent from a company than an amateur. And a company at least can distribute its ill gotten rents a bit more widely than amateur landlords

mombers said...

Have also yet to have a proper response from my former or current MP on how exactly they are going to allocate the 'Starter Homes'. Obviously hundreds of thousands of people are going to apply, it's up to £90k for free. So do they have a lottery or do they allow people to camp outside the offices on a first come first serve basis? They could of course auction them but the discount will go to around 0% then as the excess demand bids the prices up.
I suggested that all of this magic money that they are raising via confiscating housing associations homes and more expensive council homes could be distributed more widely to all under 40s. Private renters and homeowners can buy their homes or mortgages for the same handout?

Woodsy42 said...

Don't see how this stamp duty thing can work without serious unexpected consequences.
Example: When we bought our current house we had a 3 month overlap and a bridging loan (circumstances beyond our control- shit happens). So if when we come to downsize I wanted to do the same again, but this time to renovate the replacement property and get it suitable for old age before moving, would I get penalised?

Random said...

George Osbourne on Twitter:
"#SR15 will turn Generation Rent into Generation Buy – great to hear @PersimmonHomes plan to build 80k homes by 2020, creating 1k new jobs"
What an arse.

Random said...

You just have to listen to Cameron speak. Look at this:
But for me, there’s one big piece of unfinished business in our economy: housing. A Greater Britain must mean more families owning a home of their own. It goes back to those Conservative beliefs: reward for hard work. If you’ve worked hard and saved, I don’t want you just to have a roof over your head – I want you to have a roof of your own. In the last five years, 600,000 new homes have been built. More than 150 people a day are moving in thanks to our help to buy scheme. And in our manifesto, we announced a breakthrough policy: extending the right to buy to housing association tenants. Some people said this would be impossible. Housing associations would never stand for it. The legislation would never pass. Let me tell you something. Greg Clark, our brilliant communities secretary, has secured a deal with housing associations to give their tenants the right to buy their home. That will mean the first tenants can start to buy their homes from next year. Yes, as we said in our manifesto, 1.3 million to be given the chance to become homeowners. A promise made. A promise kept. But the challenge is far, far bigger. When a generation of hardworking men and women in their 20s and 30s are waking up each morning in their childhood bedrooms – that should be a wakeup call for us. We need a national crusade to get homes built.
That means banks lending, government releasing land, and yes – planning being reformed. And in all these things I’ll be working with a great London mayoral candidate – and, I hope, soon to be our London mayor – Zac Goldsmith. But I want to single someone out. He’s served this country. He’s served this party. And there’s a huge amount more to come. So let’s hear it for the man who for two terms has been mayor of the greatest capital city on earth: Boris Johnson. Increasing home ownership means something else. For years, politicians have been talking about building what they call “affordable homes” – but the phrase was deceptive. It basically meant homes that were only available to rent. What people want are homes they can actually own. After all, the officials who prepare the plans for the new homes, the developers who build them, the politicians who talk about them, most of these people own the homes they live in. Don’t they realise other people want what they’ve got – a home of their own? So today, I can announce a dramatic shift in housing policy in our country. Those old rules which said to developers: you can build on this site, but only if you build affordable homes for rent, we’re replacing them with new rules. You can build here, and those affordable homes can be available to buy. Yes, from Generation Rent to Generation Buy, our party, the Conservative party, the party of home ownership in Britain today. A more prosperous Britain. But we must not stop there as we build a Greater Britain. We are not a one-trick party. For us, economic success – that’s not the finished article. It’s the foundation on which we can build a better society. Our patriotism has never been simply some grand notion of ruling the waves, or riding high in the money markets but a deep compulsion which says: “You make a country greater by making life better for its people.” And today, that means entering those no-go zones, where politicians often don’t dare to venture. It means taking on our big social problems, entrenched poverty, blocked opportunity, the extremism that blights our communities. "
What the fuck he is away with the pixies!

Steven_L said...

I've been kicking myself for not being long on land banker shares since about 2011. I keep thinking I missed the boat and all the bungs are priced in, but they keep proving me wrong!

They've bunged them so much I reckon if I'd put all my spare cash long on Persimmons and co every month for the last 4 years instead of spending it I'd have enough to buy one of their overpriced rabbit hutches now.

Mark Wadsworth said...

M, the allocation will be complete nonsense, it will descend into a lottery. They will probably sell half that promised 200,000 (while banking the subsidies) and over five years that's about one slightly less unaffordable home per six or seven FTBs.

W42, exactly. Like I said, it's probably unenforceable. But instead of asking me, why don't you pop off a submission to the HM Treasury consultation if and when it is set up?

As it happens, SDLT is a stupid tax. Anything that has special rules for second or third homes is stupid. If one guy owns one house to live in worth £600,000, he is no different to somebody who owns two homes worth £300,000 each. Or a landlord in a £150,000 home who owns three BTLs worth £150,000. Land Value Tax is a far better way of levelling the playing field.

R, yes. that's classic Home-Owner-Ism. Professing to want more owner-occupiers while presiding over a steady decline on owner-occupation rates. Talking about "rewarding hard work" while actually rewarding landlords and bankers who do pretty much f- all.

SL, the really good time to buy Barratts etc was back in 2009. But like you say, every year you think the bubble must pop and every year they dream up new subsidies.

Steven_L said...

March 2009 was the best time to buy most equities. But few have risen so steadily and consistently than the land bankers. And few sectors were as obviously all donating money hand over fist to the tories.