Benefits to Bricks

Benefits to Bricks

15:01 PM, 9th June 2022, About 2 years ago 24

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Prime Minister Boris Johnson spoke at Blackpool concerning government plans to tackle inflation and the cost of living crisis.

However, there was particular emphasis on home ownership and housing supply policies with the phrase coined in the speech of “Benefits to Bricks.”

Outlined Policies for housing included:

  • Expand the policy of Right to Buy to the 2.5million households in Housing Association homes
  • Government is to use legislation to protect the rights of tenants and leaseholders by making it easier for leaseholders to buy their freehold and escape the trap of rising ground rents.
  • Boris sees himself as completing Margaret Thatcher’s Right to Buy revolution
  • Instead of using a “huge wall of benefits money” to pay for rents government wants it to be used by the mortgage industry to cover mortgage payments and allow benefits tenants to use the money to save up for deposits with specific ISA products.
  • The government wants to make it easier to get a mortgage and will work with the mortgage industry to achieve this and wants a healthy continuous supply of 95% Loan to Value residential mortgage products available to the market.
  • The money raised by right to buy is to be used to build at least as many and more homes, but when questioned Boris could not commit to any future home building figure.

Main exert from the speech transcript:

“The overall burden of taxation is now very high – and sooner or later, and I would much rather it was sooner than later, that burden must come down.

This burden is an aberration caused in no small part by the fiscal meteorite of Covid, and it must come down because the answer to the current economic predicament is not more tax and more spending.

The answer is economic growth.

You can’t spend your way out of inflation, and you can’t tax your way into growth.

So that is why the time has come for this Government to do what it has been straining at the leash to do for the last two years, but which has been difficult because of the covid crisis.

And that is to enact the supply side reforms that will cut costs for government, cut costs for business and cut costs for people across the country.

Let me take them in that order.

It cannot be right that the size of central government has increased by 23 per cent since 2015.

There are 91,000 more officials than there were.

I believe we have the best civil service in the world – but in view of the pressures on families, we must now find efficiencies and prune Whitehall back to the size it was only five or six years ago.

Something we can achieve without harming the public services they deliver.

And in expanding and encouraging the private sector, it is time for the government to stop spending, and to start cutting taxes and cutting regulation.

This has been an era of phenomenal corporate welfare.

From PPE contracts that were driven by the desperation of the pandemic, to billions of pounds invested – driven by the same desperation – in vaccines and anti-virals, to the whole array of businesses that were, quite rightly, supported and by furlough and Bounce Back Loans and all the rest of the programmes.

Of course this government will continue to invest in the bedrock on which businesses build their foundations: in infrastructure, skills and technology.

But sometimes the best way that Government can help is simply to get out of the way. To do less or better, or simply not at all.

If government has billions, the markets have trillions, and we need to see more of that investment by businesses here in the UK.

That is why we are now taking advantage of Brexit freedoms and accelerating reform of Solvency 2 – a one-size-fits-all EU diktat which has been unnecessarily preventing insurance and pension funds and others from making giant investments in UK firms and in infrastructure.

We have put in a superdeduction of 130 per cent on capital investment, giving UK firms an unparalleled opportunity to invest.

We are opening freeports around the country, with low tax arrangements and special planning regimes to enable growth and investment.

We can turbo-charge the City by rewriting and improving EU regulations such as MIFID 2.

Now we need to go further and we will, identifying all the ways in which government rules and regulations are pushing up costs for business, increasing prices for everyone in this country.

Over the next few weeks this Government will be setting out reforms to help people cut costs in every area of household expenditure, from food to energy to childcare to transport and housing.

And we will do this despite any complaints that there may from those who are want to preserve the status quo because this is a Government that is firmly on your side.

We are on the side of British farmers. We need to grow and eat more of our own food in this country and it is sensible to protect British agriculture from cut price or substandard food from overseas

But we are also on the side of British consumers

We do not grow many olives in this country that I’m aware of.

Why do we have a tariff of 93p per kilo on Turkish olive oil?

Why do we have a tariff on bananas? This is a truly amazing and versatile country, but as far as I know we don’t grow many bananas, not even in Blackpool.

We are on your side in tackling fuel bills, and not just with cash help that I’ve set out just now.

We have cut fuel duty already by a record amount – and we want to make sure businesses pass on savings to consumers whether at the pumps or in the supermarkets or anywhere else

and I know many businesses can see the wisdom of protecting their customers rather than simply taking profits now.

One of the ways of course to reduce energy costs is to increase supply.

That is why the British energy security strategy is going for a step change in the quantity of wind power we generate – 50 GW by 2030, returning the UK to the status of the number one offshore wind power producer in the world.

We are undoing the mistakes of many previous governments, and building a new nuclear reactor every year rather than one every ten years, along with many other reforms.

Over the next few years, this will have a dramatic effect on the UK’s power output – one that will be immensely beneficial for consumers and business alike.

We are on your side in cutting the cost of transport, not just with the fantastic investments we are making

It is time for us all to grasp the nettle of reform, and move – sensibly and responsibly – to the end of some outdated working practices.

There are fully manned ticket offices in this country that barely sell a ticket a week.

Ten years ago, as Chairman of Transport for London, I moved to take advantage of new technology by closing those ticket offices on the underground.

It was initially painful and the union chiefs predicted catastrophe, but we successfully made the argument that staff were better and more productively deployed on the platforms, interacting with the public.

The time has come to do the same thing across the transport network.

The union barons will once again protest.

But the winners will be railway staff – whose industry will be placed on a much sounder long-term footing – and the fare-paying travelling public.

We are on your side in cutting the costs of childcare, by making it easier to be a child-minder, and making sure parents make the most of their tax-free childcare allowances that already exist but aren’t taken up.

All these costs and more we will address in the coming weeks.

But today I want to talk about the single biggest chunk of household expenditure – and that is the cost of housing itself.

Just this year alone the price of a home in the UK has soared by an average of 9.8 per cent to an average of £278,000 – £24,000 higher than this time last year.

And in 2021, prices rose faster than wages – so that if you’re one of the millions on the outside of the market looking in, for every week and month that goes by, the dream of ownership recedes further into the distance.

The average age of first-time buyers has been rising continuously, the proportion of young people who can afford to buy their own home has been falling.

Between 2005 and 2016, the proportion of 25 to 34-year-olds who owned their own home fell by 20 per cent – whereas in almost every other country in Europe that proportion was actually rising.

It’s true that we still have higher rates of overall home ownership – just ahead of France, and ahead of Germany.

It’s true we’re building as fast as we can, and after a sustained decline in home ownership rates under the last Labour government, that rate is now starting to climb thanks in part to our decisive action to support first time buyers and build more homes.

Last year there were over 400,000 first time buyers of property, a 20-year high.

But the raw numbers disguise the fact that home ownership is overwhelmingly concentrated among the over-65s, those who were able to buy in an era when housing was much cheaper.

If you look at the Millennial generation, I can see some millennials here, just 31 per cent own their own homes in the UK.

In France that figure is 41 per cent.

Partly this is a function of supply.

When Labour last left office in 2010 they famously confessed that there was no money left

They also handed us record low levels of housebuilding.

We’ve been sorting that out ever since – thanks to planning reforms over the past decade, housebuilding rates hit a 20 year high just before covid struck.

Although not in the capital, I should add, where Londoners need their present mayor to get building at the speed and scale achieved by his immediate predecessor.

But despite the progress across much of the country we remain one the slowest and least prolific home-building countries among all the 28 members of the OECD.

Since 1970, France has built 16.7 million homes, whereas we have built just 8.9 million in the UK – and in that period our population has grown by more than 12 million people. It’s not true that there is not space for these, there are places we can build.

So Michael Gove has been developing plans to work hand in hand with local communities across England to build more of the right homes in the right places.

We are going to put more publicly owned brownfield land to use and seek to unlock small sites that are ideal for the kind of unobtrusive development that communities welcome, with priority for first-time buyers and key workers.

We are supporting self-build and custom-build homes, as has long been proposed by my colleague Richard Bacon.

And we will sensitively make use of existing planning rights, for example by making it easier to turn disused agricultural buildings into homes for local

first-time buyers, and to support farmers in growing and diversifying their businesses.

But it is not enough just to build more homes.

We need also to recognise that while the people of this country overwhelmingly want the chance to own their own home, for too many the finance required is simply not available.

The challenge facing first-time buyers today is far greater than anything we have seen before.

20 years ago – in 2002 – a home cost average four and a half times your income.

Today that multiple has risen to nine times your income.

We have a ludicrous situation whereby plenty of younger people could afford to make monthly payments – they’re earning enough to cover astronomical rent bills – but the ever-spiralling price of a house or flat has so inflated deposit requirements that saving even just 10 per cent is a wholly unrealistic proposition for them.

First-time buyers are trying to hit a continually moving target.

And of course the global rise in the cost of living is only making life harder for savers.

So we want it to be easier to get a mortgage.

Working with lenders so that they recognise the credit worthiness of tenants with a track record of paying their rent on time.

Making sure that the self-employed also get the mortgages they need.

This Government has made sure that there is a healthy supply of 95 per cent mortgages. Tens of thousands of first time buyers have since bought their home thanks to our mortgage guarantee scheme

But we’d like to go further.

So today I can announce a comprehensive review of the mortgage market.

Reporting back this Autumn it will look at how we can give our nation of aspiring homeowners better access to low-deposit mortgages, and what our own mortgage industry can learn from counterparts around the world who have all kind of alternative ways of offering finance, managing risk, and unbolting the door to ownership.

And just as no generation should be locked out of home ownership because of when they were born, so nobody should be barred from that same dream simply because of where they live now.

For four decades it has been possible for council home tenants to use a discount to buy the property they live in.

Over that time almost two million people have been helped into home ownership.

They have switched identities and psychology, from being dependent on the state for every repair – from damp-proofing to a new front door – to being in charge of their own family home, able to make improvements and add value as they please.

For various reasons the number of tenants who actually use this freedom has been steadily diminishing.

So now is the moment to widen the possibilities, and to give greater freedoms to those who yearn to buy.

I want us to deliver on the long-standing commitment, made by several governments, to extend the right to buy to housing associations.

There are still 1.6 million households living in council homes.

But there are now 2.5 million households whose homes belong to housing associations – and they are trapped.

They cannot buy, they don’t have the security of ownership, they cannot treat their home as their own or make the improvements they want.

And while some housing associations are excellent, others have been known to treat their tenants with a scandalous indifference.

So it’s time for change.

Over the coming months we will work with the sector to bring forward a new Right to Buy scheme.

It will work for tenants, giving millions more the chance to own their home.

It will work for taxpayers: responsibly capped at a level that is fully paid for; affordable within our existing spending plans, and with one-for-one replacement of each social housing property sold.

Even as we deliver this home ownership revolution, we will continue with our revolution in renters’ rights.

As the fifth anniversary of the Grenfell tragedy approaches, we need no reminders of the importance of landlords listening to and working with their tenants.

Which is why we’re giving tenants across the social and private sector better homes, greater security and access to the kind of justice we all deserve but which many are currently denied.

We’re also dealing with the scourge of unfair leasehold terms, often every bit as onerous as the conditions imposed upon tenants by landlords but applied to those who as homeowners should have far greater control over their homes and their lives.

In this Parliament we will supercharge leaseholders’ ability to buy their freehold, helping 4.6 million households genuinely to own their own home with discounts of up to 90 per cent for those trapped with agious, escalating ground rents.

We will finish the right to own reforms Margaret Thatcher began in the 1980s, ending the absurd position where first time buyers spend their life savings on flats, only to find themselves being charged hundreds of pounds for painting their own doors or unable even to own a pet dog.

That’s what being on your side is all about.

When ownership remains beyond the reach of a great many hard-working people, it’s neither right nor fair to put ever-vaster sums of taxpayer’s money straight into the pockets of landlords.

The total bill for Housing Support stands at about £30 billion each year, and the Office for Budget responsibility has warned that if we don’t take action, it could reach £50 billion by 2050.

That is cash, taxpayer’s cash that is being simply swallowed to pay the mortgages of private sector landlords or by housing associations.

It is time to put this huge wall of money, taxpayers’ money to better use.

It is time to turn benefits to bricks.

So we will look to change the rules on welfare so that the 1.5 million working people who are in receipt of housing benefits and want to buy their first home will be given a new choice:

to spend their benefit on rent as now, or put it towards a first-ever mortgage.

Doing so removes a significant barrier that currently prevents hundreds of thousands of families from buying their own home.

To remove another we’re going to explore discounting Lifetime and Help to Buy ISA savings from Universal Credit eligibility rules.

Not letting anyone claim benefits while sitting on vast savings pots that they could be drawing on. That’s not the people we’re targeting here.

But making it easier for hard-working people to put away a little each month until they have enough for a deposit on their first home.

To help keep people in a home if they’re unfortunate enough to become unemployed, we’re going to let people access support for paying their mortgage that much earlier that is presently the case.

And last of all we’re going to look at how we can securitise some of that colossal £30 billion housing benefits bill, so we can build more social homes with the potential for Right to Buy.

Taken together these measures will not only help us to build more homes in the right places, but will help millions more people realise what is currently an unattainable dream of home ownership, and that will be of massive benefit to them, social benefit to this country.

and of course it will be of economic benefit as well.”


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Phil Harris

7:04 AM, 12th June 2022, About 2 years ago

95% LTV mortgages are going to fuel house price inflation over the next few years. Unless the Government somehow ensures that these high LTV products are only available to people on benefits, and block the mortgage companies from offering them to more credit-worthy ordinary high salary people/Ltd companies. It sounds strange saying it out loud- the less credit worthy; the smaller the deposit…

Also, Boris mentions that houses now cost 9 times earnings… do they not understand that easily available credit will make this worse? Also quite funny that he mentions “9 times earnings” - and then goes on to discuss enabling people on benefits to buy their own home.

Jessie Jones

13:08 PM, 12th June 2022, About 2 years ago

The Labour Party insist that they are the party to support 'working people'
The Tory Party seems to be focusing all their efforts on those on benefits.
As the UK Government steers this country ever closer towards Socialism, I am no longer sure which of these parties is the left wing party.

Mark Alexander - Founder of Property118

13:56 PM, 12th June 2022, About 2 years ago

Reply to the comment left by Jessie Jones at 12/06/2022 - 13:08
The Labour Party wanted to bring Right to abut into the private sector and eliminate the 20% tax credit on finance costs.

I think we have a choice between left and looney left. Centre politics have certainly gone as the song would suggest … To The Left To The Left …


16:07 PM, 12th June 2022, About 2 years ago

Every time Governments tinker with the housing market, it leaves me with the same feeling as when I take my car to a main dealer for a service. They always seem to find something else to charge for, they ignore the things which they were supposed to look at, and you end up with an over-priced bill.
The point of this seems to be, if they are homeowners, they will vote for us and if they lose their home, it will be the fault of the banks.
I am at a loss to understand how selling a scare resource will increase supply of a price restricted product, especially when sold at an even bigger discount than £16,000 already available under the housing association right to acquire.
As he mentions, some HA's have shocking reputations which would even make some rogue landlords gasp. They are already subject to the decent homes standard and the Queen's speech promises stronger regulation.
All that Help to Buy did was prop up sale prices for the home builder donors, while they were allowed to put up flammable cladding and sold properties with ground rent increases akin to pay day loan charges.
Then covid comes along, and the Chancellor removes stamp duty, allowing those with covid savings to buy second homes, helping drive up house prices. All this while landlords, who struggled to access any covid support, could not evict tenants who elected to take rent holidays.
This weekend, the Government announced they will cap the rise in student loan rates at 7.3% (increasing from 4.5%), while extending the term, so students face the possibility of still making payments in their 60s. Surely, this well-educated cohort, with higher earning potential, are those who stand a more realistic chance of becoming homeowners. This would be improved if the Government were to link the rates charged to the rates which government pays on its debt (either Base + % or yield on medium/long dated bonds), rather than the current RPI + %.
If the government are serious about helping the home buying process, why not address the reason why 1/3 of sales fall through and insist on exchange within 28 days? That would help make the process more certain and improve productivity.
As for more energy generation, this is the party which boasted about fixing roofs while the sun was shining, but presided over a poorly regulated energy industry which was allowed to ignore price risks while removing the ability to absorb price shocks as they reduced storage capacity.
Once again, part of their solution hinges on a review, which based on the progress on MEES/EPCs and Renters Reforms, is unlikely to be completed this side of the next general election.
Rather than these headline grabbing announcements, which are as likely to come to fruition as Northern Rail, why not publish the revised EPC requirements and give landlords access to the 130% capital allowances, so they can invest in fabric first based energy efficiency? This would reduce energy demand, fuel poverty, energy bills and the need for government funding for associated benefits.
That would be better use of taxpayers' money.
Giving 95% mortgages to those who can at best barely afford them, when property prices are at all-time highs and interest rates are already rising. Didn't we try that in 2008? How did that work out?

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