Monday, 25 February 2013

Even Tory voters support a mansion tax

With the issue of housing costs finally climbing higher up the agenda of the media, albeit scandalously late, it is interesting to note that public support is at odds with the views of much of the mainstream press.

The Lib Dem's mansion tax - including the suggestion of it being extended to second-homes - is now supported by Ed Miliband's Labour Party. The prospect of the two parties voting together on the issue (however symbolic that may be) is now a distinct possibility, with Clegg's suggestion that the Tory Party is 'turning a blind eye to the super-wealthy' a sign of things to come.

The right-wing media has - as would be expected - criticised such a policy, even while finally admitting, hypocritically, that housing costs are getting out of control for the majority.

A poll by YouGov, however, shows that voters have a different view. Two-thirds of British people support a mansion tax on properties worth over £2 million, with a majority in favour of the tax to be extended to properties valued at over £1 million.

On balance, Conservative voters also favour a tax on £2 million houses.

That even Tory voters support the concept of a mansion tax shouldn't be surprising. Previous polls have demonstrated that Conservative voters (unlike the MPs and other leaders they elect) tend to support higher taxes on the rich, regulation of internships, a higher minimum wage and a host of other policies that the right-wing press vilifies.

Sunday, 24 February 2013

A middle-way solution to the scandal of the buy-to-let 'racket'

The Guardian's Patrick Collinson has penned an interesting piece on buy-to-let and its capacity to damage the chances of first-time house buyers to afford a first home. He asks why building societies, with their history of helping people purchase a home, are now more interested in the quick profits gained from lending to landlords:

"When a loan is granted to a landlord, it effectively means yet another property is removed from owner occupation.

It doesn't help that buy-to-let remains unregulated, with loans calculated on a cheap interest-only basis (with tax benefits thrown in), while today's first-time buyers have the full force of post-financial crisis regulation dumped on them".

As this blog has argued, it is precisely this issue of a minority swallowing up multiple homes that a Government one day soon has to confront. Collinson suggests a clever 'middle-way' solution, which would stimulate house building, control the frankly ridiculous costs of property in the south-east of England and avoid claims of a 'socialist' attack on aspiration that will inevitably come from the right-wing media.

His solution would be to restrict buy-to-let mortgages only to the construction of new property. This would avoid the current scandal of those in possession of multiple homes from hoovering up existing housing stock and stimulate new house building.

It would also restrict the explosive growth in private rental costs that make more and more of London unaffordable for tenants. There is no doubt, though, that even this reasonable suggestion will be fought tooth-and-nail by a small minority who gain a great deal from maintaining the status quo.

Sunday, 17 February 2013

A super-tax on second homes is long overdue

Recent posts on this blog have highlighted the obscene costs of housing in London, with some staggering figures provided by Shelter showing that in 5 London boroughs average monthly rent for a 2-bed property is now 75% or more of local median take-home pay.

A feature of the market is the degree to which the very rich are dominating the landscape - with the top 10% of households by property wealth accounting for almost half of all property wealth in London and the bottom 40% having almost no household wealth at all.

At the same time, those forced to rent in private accommodation are seeing record rental costs - jumping almost 5% in a single year.

Figures out this week, finally covered by the Standard (showing that the ridiculous situation is even bothering traditional Tory constituencies) show that an average first time house buyer without 'bank of mum and dad' will need to save for 24 years to accumulate the deposit required to cover a home in London. The average deposit is set to rise to a jaw-dropping £100,000 by the end of the decade. A recent survey from Halifax, meanwhile, classified 100% of London boroughs as being 'unaffordable' for first-time buyers.

Two major factors driving these prices are the distorting effect of rich second (or third, forth) home owners and also buy-to-let landlords hoovering up existing housing stock. These effects are illustrated by figures showing that almost 60% of buyers in central London areas such as Kensington, Chelsea and Marylebone were from overseas and for 37% of these their London property is not their primary residence. Even in the comparatively less affluent borough of Camden, 1 in 16 properties are left empty by their owners.

Meanwhile, last year saw a 15% rise in buy-to-let mortgage approvals. That house building growth has stagnated demonstrates that these landlords are buying existing stock, rather than stimulating new house building, and therefore pushing up prices for those seeking a home rather than an investment opportunity.

News today that the Liberal Democrats are set to consider a 'super-tax' on second homes, in a week that saw Ed Miliband back a mansion tax, is long, long overdue. The alternative will be a generation of people shut out from home ownership, trapped paying exorbitant rents to a minority of very rich landowners. Other countries have used similar policies to prevent the scandal of empty properties owned by the very wealthy resulting the the destruction of local services. It would have a dramatic - and positive - effect in London too.

The question will be whether the powerful vested interests that would stand to lose from such a policy, coupled with the resistance to 'taxes on aspiration' that many British people seem wedded to, will manage to bury what could be a transformative idea.