We’ve been here a few times before: a chancellor with his face pinned against the wall pushing back with a slurry of promises on housing. Yet the dogged insistence of the prime minister Theresa May – representing for the Tory middle classes – that the sacred greenbelt must remain, is a chilling indictment that precisely nothing will change.
You can replay some of Blackstock’s housing analysis across the BBC, LBC and a rather humorous Facebook homes discussion on Sky News. Read below for five things Mr. Hammond should have told Andrew Marr at the weekend and probably won’t say in the Budget. For each one he says tomorrow, we’ll give you a box of Budget Donuts, just write your name and address on the back of a tenner.
1. “I recognise housing isn’t just a numbers game”
Fobbing off the public with false unemployment figures (he told Andy Marr there were none) or promises of how many homes “they” (politicians, not the unemployed) will build is one thing we’ve seen over the years. But it’s another when you consider this won’t actually make any difference to affordability. While academics debate whether there actually is a shortfall of housing (or whether some of it is simply in the wrong place) whatever the outcome of that debate, pricing is driven by what private companies can charge to maintain the commitments they rightly have to shareholders. Cheap debt and subsidised deposits – via Help to Buy – simply hike up prices. And share prices.
2. “Actually, training brickies is a waste of time”
We hear a lot of backwash about training and skills, yet when Greg Clark appeared on the Today Programme yesterday, there wasn’t one mention of construction. Yes, that little sector generating 7% of GDP. While Sajid Javid seems plugged into Generation Avocado, he should usher Mr. Hammond out of Surrey and out into the wilds, where he’d see most young folk don’t want to toil on miserable building sites. If we’re going to focus on innovation and build houses, propelling precision manufacturing, offsite or modular construction has to be the way to go.
3. “Sorry for Right to Buy, but we thought the commies were coming”
Far from being just the moment Britain’s housing stock got crucified – sold off for a pittance to end up largely rented back to everyone else, the advent of Right to Buy marked a one massive depressing milestone: the politicisation of housing. Few policies could have had such lasting damage and yet, even now, no one has formally scrapped the RTB extension for housing associations. The bitter irony here is that if the government doesn’t pull its finger, the commies will really be coming for them this time. Doh.
4. “I’ll harvest £60bn of patient capital by incentivising build to rent”
The embryonic “build to rent” sector – where institutions and pension funds invest in rental housing build clusters of homes they hang on to – could drive a whopping £60bn of new cash into housing. Yet the government is sticking to its punitive stamp duty surcharge and unworkable planning levies that make many projects unworkable. This is because they generate investor returns in a different (slower) fashion than building for sale. In short, they make less profit and need less onerous taxes to be viable. While this smacks somewhat of the tiny violin, think of it like this: one in four people rent and this is a golden goose of new cash waiting to invest. These guys have no need to build slowly or stagger delivery to hike up sales prices. It could make a difference if this capital was unleashed.
5. “I’ll help silver savers downsize because it could add billions to the economy”
Oldies sit on a whopping £1.54tr of un-leveraged housing equity. Money that’s doing nothing. It could be buying holidays, iPhones or paying for your lunch. Even if you work for Savills and treat Nobu like everyone else does Pret. But seriously, by encouraging silver savers to slide down the ladder out of homes too big for them, we could free up family housing and incentivise more long-term investment in purpose-built senior living developments. The chancellor should cut stamp duty for downsizers and pave the way for senior living. With a bit of thought and innovation, these could cater for carers too and find ways to save the NHS millions by combining primary healthcare and emerging meditech innovations onsite. Purpose-designed buildings could invariably reduce falls or injuries, offer enhanced monitoring and, from the economy’s perspective, free up cash and make the whole thing far more efficient.