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Westlake Legal Group > home ownership

Adam Honeysett-Watts: After three years of gloom under May, it’s time for fun with Johnson

Adam Honeysett-Watts is Director of Conservatives in Communications and works in the financial technology sector. 

Before this leadership election got underway, I wrote that the next leader must be able to tell the Tory story – of aspiration and opportunity – and identified Boris Johnson as the person best-positioned to do that.

Having previously supported David Cameron and then Theresa May, I like to think I back winners – at least, in terms of those who reach the top. That said, while the former will be remembered for rescuing the economy – while giving people the power to marry who they love and an overdue say on Europe – the latter, much to my disappointment, has no real legacy. Johnson should avoid repeating that mistake.

His final column for the Daily Telegraph, ‘Britain must fire-up its sense of mission’, was jam-packed with the kind of Merry England* (or Merry UK) optimism that we experienced during the Cricket World Cup and that the whole country needs right now: “They went to the Moon 50 years ago. Surely today we can solve the logistical issues of the Irish border”. Quite right.

You’ve guessed it, I’m chuffed that Conservative MPs, media and members supported Johnson’s bid to become our Prime Minister. I’m looking forward to May handing him the keys to Number Ten and him batting for us after three, long years of doom and gloom. Sure, optimism isn’t everything – but it can set the tone. A detailed vision must be articulated and executed by a sound team.

Whichever side you were on before the referendum (or are on now), in the short term, we need to redefine our purpose, move forward with our global partners, unite the UK – and defeat Corbynism.

Mid-term, we should invest further in our national security and technology, improving education and life chances and encouraging greater participation in culture and sport, as well as boosting home ownership. Plus the odd tax cut here and there would be well-advised.

However, we must not put off having debates – for fear of offending – about controlling immigration and legalising drugs, and about funding for health and social care, as well as protecting the environment, for these issues matter and will matter even more in the future.

We should also avoid the temptation to ban political expression, alternative media and sugary foods, and celebrate instead free speech, press freedom and the right to choose.

Again, I look forward to Johnson peddling optimism and hope that people get behind him, because, ultimately, he will write our next chapter – and if we jump onboard and provide support, much more can be achieved by us all working together.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Chris Philp: Cut Stamp Duty – and unleash a new Home Ownership Revolution

Chris Philp is has served as PPS in the Treasury and MHCLG, and on the Treasury Select Committee. He is MP for Croydon South.

One of the signal achievements of the Thatcher Government was the home ownership revolution. Millions of people were able to buy their own home for the first time – through right-to-buy and a more dynamic housing market generally. Sadly, much of that good work has been undone in the years since.

Home ownership rates have fallen from a high of 71 per cent in 2005 down to 63 per cent today. The falls are especially acute amongst those in their 20s and 30s, where home ownership rates have almost halved since the early 1990s. No wonder we have trouble getting younger people to vote Conservative.

Home ownership is an inherently beneficial thing. Those who own their own home enjoy secure tenure and lower housing costs than those renting. Over the long term, it is financially better to own rather than rent – even if house prices do not rise faster than inflation. And owning a property gives people a real sense of a place they can call home. It is no surprise, then, that 86 per cent of the public aspire to own their homes. Given only 63 per cent actually do, around a quarter of our fellow citizens wish to own their own home but do not. We should help them.

Stamp duty is a major barrier to buying a home. It is a cash cost that cannot be mortgage-funded. Given that up-front cash costs are the biggest impediment to buying, this is serious. Stamp duty acts as a barrier for buyers of all kinds, which means housing stock is not freed up by downsizers and there are negative effects on labour mobility.

It should be a legitimate – and popular – objective of public policy to help prospective home buyers. In the last ten years, owner occupiers have been crowded out by financial investors and second home buyers, often from overseas, who have superior financial firepower. They currently make up around a quarter of all residential sales, and even more of new build sales. The Government has already recognised this by abolishing stamp duty for first time buyers purchasing properties under £300,000 and cut it by £5,000 for those buying at under £500,000.

We need to do more. As I and Guy Miscampbell set out in a new report for Onward, the Government should:

  • Abolish stamp duty entirely for all purchases of a main home under £500,000.
  • Halve current rates of stamp duty for purchases of a main home over £500,000.

This would abolish stamp duty for nine out of ten owner-occupiers and save a family buying an average priced London home £13,000, or half of a five per cent deposit. The cost of this policy is £3.3 billion. But it would help more people buy their first home, and make moving house – for a new job, to downsize or to upsize – much easier. For the most expensive properties, where stamp duty is currently charged at a marginal rate of 12 per cent, it is likely that transaction volumes are being suppressed. Halving stamp duty for those properties should result in a positive Laffer effect, due to an increase in transaction levels.

But any new policy should be fiscally responsible. To fund the £3.3 per year billion cost, I propose a number of smaller tax changes, where there is broad public support for taxation and a clear case for action:

  • Introduce a one per cent annual tax on the value of homes left empty for more than 6 months in a year, raising £645 million.
  • Increase the current three per cent stamp duty surcharge on second homes and investment properties to 5 per cent, raising £790 million.
  • Introduce a further three per cent stamp duty surcharge of non-UK resident buyers of residential property, raising £540 million.
  • Introduce an extra higher band of council tax at a £1,700 per year council tax premium for the 0.4 per cent most expensive properties, raising £173 million.
  • End all council tax reliefs for vacant and second home property, raising £75 million.
  • Create a new eight per cent (up from five per cent) stamp duty band for the portion of commercial property purchases over £1 million, raising £682 million.
  • Levy stamp duty on residential properties transferred by selling the company that owns them via transparent ownership rules (which would also help combat money laundering), raising £175 million.
    Double the Annual Taxation on Enveloped Dwellings, raising £140 million.

These measures taken together will help first time buyers, down sizers, upsizers and people moving home to help their job. It will tax overseas investors (usually from the far east) who are treating UK homes as a financial asset and crowding out first time buyers with their superior financial firepower.

Tilting the playing field back towards UK-resident first time buyers and owner-occupiers is the right thig to do. The new Government should use the coming autumn budget to do exactly that.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Tom Tugendhat: The last two men left standing in this contest must resist the temptation to slug it out

Tom Tugendhat is Chair of the Foreign Affairs Select Committee, and is MP for Tonbridge and Malling.

In a contest which has been framed around personality, it is striking how many ideas have been generated by the Conservative leadership contest.  Each of the ten candidates original candidates had something to say. Each has championed a new vision of Britain, and each has given Conservatives plenty to think about.

It’s also showcased some good news about how the Conservative Party is changing. Which other party in any other country could boast a contest that included a television presenter, two newspaper columnists, an entrepreneur, an old-school adventurer, a second generation Muslim immigrant, or the son of a Jewish refugee? Not as tokens, but each arguing on merit their own cause as an advocate of an idea.

I backed Michael Gove’s determination to do everything he can to strengthen our United Kingdom and make this country a cleaner, greener place to live. But there are parts from other campaigns that were inspiring. I love Esther McVey’s promoting of Blue Collar Conservatism that has underpinned the Conservative movement for generations and Dominic Raab’s focus on home-ownership and cutting taxes for the lowest-paid.

Andrea Leadsom’s defence of EU citizens who live in the UK and the need to give them (my wife included) certainty about their future status is a proposal I completely back and Matt Hancock’s continued emphasis on mastering cutting-edge digital technologies as the key to our country’s future prosperity is one I have been pushing for since I discovered that parts of Kent are less well connected than Kabul or Khartoum.

At a time when faith in politicians is waning, Rory Stewart showed us just how we can rebuild trust not only through outreach but by talking about the real issues that change people’s lives.

And Boris Johnson? What isn’t there to say about him? He has picked up school places and tech infrastructure, taxes and the living wage and, closest to my heart in our in a time of educational separation – apprenticeships. That, along with his ability to animate the faithful make his contribution so powerful.

But he’s not alone. No one could be unmoved by Sajid Javid’s back story and determination. His pledge to recruit 20,000 more police is a welcome return to the values many expect of us – protecting those most in need. And as chairman of the Foreign Affairs Committee, I’ve long admired Jeremy Hunt’s ability to master the widest of briefs and understand the details that drive change in our world. His commitment to fund our armed forces and diplomacy properly is also hugely welcome.

The range of these ideas gives me great hope for the future. Partly because they confound the lazy allegation that we have run out of them. Partly because none of them need be mutually exclusive. And partly because Brexit is the biggest shift in UK policy in generations with massive implications for everything from the NHS to housing policy: there is a massive opportunity for creative thinking.

While there is no shortage of ideas, there has been a shortage of leadership. We need a Prime Minister now who will take us through Brexit and confront the challenges beyond. The 2016 referendum, and the three years since our vote to leave, have revealed many profound political problems – common to many other countries – that we now have both an opportunity and a duty to address.

The poorest have felt the impact of the financial crisis hardest, while the benefits of our economic growth have been imperceptible to too many: especially those who do not live or work in our big cities. We have to build beautiful new housing that reflects the way we live today. We need to ensure that our education system is focused on endowing our young people with the skills that translate into career security in a world which has already been transformed by internet connectivity and will be further by automation and AI. Finally, everything we do must be sustainable. The policies we pursue today must not imperil our children’s future.

The temptation for the last two men left standing in this contest will be to slug it out. There is a real danger that the race becomes acrimonious and divisive.  We are at our best as a country when we are unified. I know from my time chairing the committee that has scrutinised both Foreign Secretaries that each man is above this.

Let us spend the next week scrutinising these two potential leaders. Then let’s unite behind whoever wins to deliver Brexit and a compelling vision of the future for this great country.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Eddie Hughes: Why I am fighting for fairness for leaseholders

Eddie Hughes is the MP for Walsall North.

The leadership election and the focus on resolving the Brexit impasse are rightly at the forefront of everyone’s mind at the moment, but beneath the Brexit surface life is going on for people and there are many pressing issues that can’t wait. Housing is one of them.

Before entering Parliament, I worked as Deputy Chief Executive of a specialist housing provider in the West Midlands, and Chairman of whg, a large housing association in the West Midlands. I have seen first-hand the importance of getting housing policy right – such as the government’s announcement in October 2017 that the Local Housing Allowance cap would not apply to supported housing or the social housing sector

Conservatives nationally and locally are beginning to clean up old, contaminated industrial sites which is unlocking land for housing development. This takes time, but is the right thing to do, and protects valuable green spaces from being concreted over.

However, it’s not just about building more houses, there are many problems in the housing market that need resolving now. Leasehold is just one example.

Imagine for a moment, you own a lovely one or two-bed apartment or perhaps even a recently built house. You’ve lived there quite happily for a few years, but you decide it’s time to move – maybe because of schools, for work – or perhaps to move up the housing ladder. You’re primed and ready to go. But the estate agent asks for a copy of your leasehold agreement. And there, in the small print, you get hit with the fact that you cannot sell your property. You’re trapped. Thousands of people across the country are in this position and it cannot be right.

This feudal ‘leasehold ground rent scandal’ needs attention right now. In many cases, developers have created leases with ground rent clauses that have since fallen out of favour with lenders, leaving owners stuck with an unsaleable property because buyers can’t get a mortgage. This isn’t the fault of the leaseholder who couldn’t possibly have foreseen the problem when buying.

In some cases the ground rent doubles every ten years, in other cases it doubles just once, and there are reports of lenders refusing to lend on what they deem as unreasonable or onerous ground rent clauses. Some won’t lend if the ground rent exceeds 0.1 per cent of the property value at any point during the lease. Leasehold campaigners argue that there are close to 100,000 people affected by terms that leave them with ground rent in excess of 0.1 per cent of the property value. I would argue that such circumstances are onerous.

The result is an unsaleable property and in many cases, the developer is long gone having sold the freehold on to a distant investment company. They have, of course, made their money twice – not only from the sale of the leaseholds in the first place but by selling on the freehold.

Now there’s nothing wrong with a freeholder taking a reasonable ground rent, in my view, but when that ground rent becomes onerous and stops someone from being able to sell their home – that’s when it becomes a problem. The rights between freeholder and leaseholder need to be redressed. That’s why I’m proposing a Private Members Bill in the Commons this week.

The result of developers selling on the freehold to investors is that some freeholders are remote, uninterested in helping out their leaseholders, or those that do are charging unfair fees and legal costs for what should be a very simple solution. I know one such scenario where there is a £180 charge just to discuss terms with the freeholder.

My Bill simply proposes the creation of a legal obligation for freeholders to grant a quick and simple lease variation to leaseholders where ground rent prohibits resale. Secondly, it’s important that ground rents are capped at 0.1 per cent of the property value. If the Bill progresses, there will be an opportunity to shape the clauses, especially in light of the excellent MHCLG Select Committee report on problems in the leasehold market.

Systems and institutions are supposed to serve the public and I hope we can all agree, as Conservatives, that we can’t have people unable to sell their properties. Drastic and immediate action is required – and it is required now. It’s time to show people we are on their side.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Howard Flight: Ministers must embrace supply-side reform to revive home ownership

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

The main domestic policy which helped keep the Conservatives in power in the second half of the 20th Century and especially under Thatcher was both supporting the principle of Britain being a property owning democracy, and also making it continue to happen.

In the 1980’s we achieved in excess of 70 per cent of the population owning its primary residence.

The last 20 years have seen house prices increase to levels pricing many out of the market. As people need to be housed, notwithstanding prices, this in turn led to a major increase in the buy to let market, providing in total some eight million housing units. Much of this had been achieved by entrepreneurial individuals spotting local opportunities.

While it was under the 13 years of Labour Government that the property owning democracy started to decline, measures taken by the Conservatives since returning to power in 2010 have messed around with the housing market, in several areas causing serious harm.

It has been clear for some time that it is the supply side which has been allowed to get out of kilter, largely as the result of cumbersome planning laws and requirements. If supply is less than demand for a continuous period of time, it is not surprising when house prices go on rising.

The Government’s measures to streamline the planning process have had only mixed success. A lot of the ‘Interest Group’ environmental requirements, complicating the planning process – for example ‘bats in the loft’ – have not been sensibly simplified and are causing serious supply side pressures.

The shortage of supply is likely to see rent rises of three per cent per annum over the next few years as the result of the demand for new homes outstripping supply.

Where I would have thought the most important thing for Government to be doing now is increasing the supply, we are now seeing measures which may serve to worsen the supply shortage further.

The major growth in the private rented sector with children living within it has led to much greater scrutiny of how the sector operates. It is vital that tenants and landlords both have the confidence that they can ensure their respective rights are upheld in a timely and effective way through the courts. The evidence shows, however, the court system failing to ensure that this happens.

What is needed is the establishment of a single, dedicated housing court as a matter of urgency. As the sector grows it is vital that tenants and landlords both have the confidence that they can ensure their respective rights are upheld in a timely and effective way including through the courts.

For tenants the system is far too complex. The web of different types of courts and tribunals enforcing the laws can make it difficult for a tenant to navigate the system. As a previous report by Citizens Advice noted: “the time involved in taking a disrepair claim to court puts off just under half of tenants whose landlord took longer to complete repairs than is normally reasonable”. More than half said the complexity of the process stops them.

For landlords who seek to repossess a property through the courts, for reasons such as rent arrears or anti-social behaviour by the tenant, it can take many months between applying for an order to it being enforced. Such lengthy legal limbo is not good either for the landlord or the tenant. Figures supplied by the Ministry of Justice in response to a written question from Kevin Hollinrake MP show that the average time to progress from a claim in possession in 2017 was 22 weeks across England and 25 weeks in London.

The Government has announced its intention to overhaul the way that landlords regain possession of their property to provide greater security for tenants. While it is fair that no landlord should evict a tenant without good cause, it is deeply worrying that the Government’s plans could lead to new forms of rent control.

Finally, under George Osborne’s period as Chancellor, the Treasury persuaded him that increasing the tax burden on smaller buy-to-let operators would reduce buy-to-let activity and so make available more properties for owner occupiers to buy. This has ignored the evidence that there is very little competition for the same properties between buy-to-let and owner-occupier purchasers.

The decision in 2015 to restrict mortgage interest relief for the sector was a big mistake. The argument that the tax system favoured landlords over and above home owners was simply wrong, as the Institute for Fiscal Studies noted at the time. The main effect has been to reduce the supply of buy to let properties, where as a result rent levels have increased. For the time being the priority should be to increase the supply of residential properties, and the best bet to this end is still buy-to-let. But we are in a crazy situation where landlords wanting to add to the net supply of homes to rent are being stung by an extra three per cent stamp duty.

The Government’s schemes for first time buyers are surprisingly generous, but can be no more that a short term palliative. It is blindingly obvious that what is needed is an increase in supply of residential property, which in turn needs both considerable streamlining of the planning system and a more positive approach to private sector landlords.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com