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| Osborne stamp duty move does little to fix London's housing problems | Osborne stamp duty move does little to fix London's housing problems |
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| Thanks to George Osborne, would-be first-time purchasers of average-priced London houses - the average being a trifling £514,000 or so - now have a slightly better chance of snapping up that one-bed flat in Whitechapel or bungalow in Harrow than they did on Wednesday. That’s because they’ll need to pay about £5,000 less in stamp duty than they would have before his autumn statement. | |
| Typical-first time buyers in the capital cough up a quarter of the total cost of the property as a deposit. The chancellor has reduced their upfront costs. Those who could previously only scrape together a £120,000 down payment might now be able to top it up to the required £125,000 by raiding the stamp duty stash they’d put aside. Slightly more than peanuts for buyers, I suppose, but maybe not for long. The changes are likely to push prices up, benefiting existing owners more. “A cynic might argue that the chancellor was trying to engineer a mini-house price boom just before a general election,” a property economist has remarked. | Typical-first time buyers in the capital cough up a quarter of the total cost of the property as a deposit. The chancellor has reduced their upfront costs. Those who could previously only scrape together a £120,000 down payment might now be able to top it up to the required £125,000 by raiding the stamp duty stash they’d put aside. Slightly more than peanuts for buyers, I suppose, but maybe not for long. The changes are likely to push prices up, benefiting existing owners more. “A cynic might argue that the chancellor was trying to engineer a mini-house price boom just before a general election,” a property economist has remarked. |
| Osborne’s move has been described as turning stamp duty into “a virtual ‘mansion tax’” because it will reduce it as applied to 90% of purchases in London yet hike it on those greater than £937,000 - buyers of properties worth north of £2m will be hit for an extra 50 grand or so. Throw in the (generally welcomed) abolition of the old stamp duty “slab structure” and you’ve got a property tax reform that makes Labour’s main offering look even more like a populist blunt instrument. | Osborne’s move has been described as turning stamp duty into “a virtual ‘mansion tax’” because it will reduce it as applied to 90% of purchases in London yet hike it on those greater than £937,000 - buyers of properties worth north of £2m will be hit for an extra 50 grand or so. Throw in the (generally welcomed) abolition of the old stamp duty “slab structure” and you’ve got a property tax reform that makes Labour’s main offering look even more like a populist blunt instrument. |
| So by all means admire the redesign and clever sums. Once you’re bored with that, consider what they do to help London’s housing problems as a whole. Andrew Carter of the Centre for Cities comments that the stamp duty change “focuses on boosting the demand for new housing, when we know that in high-demand cities like Cambridge, London, Oxford and Brighton, it is the supply of new housing that needs most urgent attention.” Those arguing for the devolution of all property taxes raised in London for use by London government towards, among others things, addressing housing shortages - that’s just about everyone, including Boris Johnson, London Councils and business group London First - have, as expected, had no joy. | So by all means admire the redesign and clever sums. Once you’re bored with that, consider what they do to help London’s housing problems as a whole. Andrew Carter of the Centre for Cities comments that the stamp duty change “focuses on boosting the demand for new housing, when we know that in high-demand cities like Cambridge, London, Oxford and Brighton, it is the supply of new housing that needs most urgent attention.” Those arguing for the devolution of all property taxes raised in London for use by London government towards, among others things, addressing housing shortages - that’s just about everyone, including Boris Johnson, London Councils and business group London First - have, as expected, had no joy. |
| Then there’s the struggling and vulnerable London private renter. One analyst has pointed to benefits from Osborne’s reforms for the sort of buy-to-let landlord who seeks out flats for sale in zone three - your Neasdens, Tootings and Wansteads. This won’t do much for their tenants, according to Alex Hilton of Generation Rent. “When house prices go up, so do rents because of the large number of homes going to buy-to-let landlords,” he points out. “We’ve also heard about the six more years of austerity we face. But this isn’t austerity for landlords, whose profits and capital gains seem sacrosanct.” | Then there’s the struggling and vulnerable London private renter. One analyst has pointed to benefits from Osborne’s reforms for the sort of buy-to-let landlord who seeks out flats for sale in zone three - your Neasdens, Tootings and Wansteads. This won’t do much for their tenants, according to Alex Hilton of Generation Rent. “When house prices go up, so do rents because of the large number of homes going to buy-to-let landlords,” he points out. “We’ve also heard about the six more years of austerity we face. But this isn’t austerity for landlords, whose profits and capital gains seem sacrosanct.” |
| Hilton calls for “urgent action on housing costs in London through rent controls, land value taxation or a massive increase in social house building” and points out that Osborne, unsurprisingly, has offered none of these things. Osborne might point out that not much of it is being offered by his political opponents either. And even when Ed Miliband pledged quite modest private rental reforms - not “rent controls” as we have known them - back in the spring, powerful interested parties screamed in agony. Conclusion? Even beginning to address London’s problems with housing security and costs will take great political courage and even more political savvy than the chancellor routinely demonstrates. | Hilton calls for “urgent action on housing costs in London through rent controls, land value taxation or a massive increase in social house building” and points out that Osborne, unsurprisingly, has offered none of these things. Osborne might point out that not much of it is being offered by his political opponents either. And even when Ed Miliband pledged quite modest private rental reforms - not “rent controls” as we have known them - back in the spring, powerful interested parties screamed in agony. Conclusion? Even beginning to address London’s problems with housing security and costs will take great political courage and even more political savvy than the chancellor routinely demonstrates. |
| This article was updated at 16:05 to include the sentence about property tax devolution | This article was updated at 16:05 to include the sentence about property tax devolution |