Tag Archives: stamp duty

Stamp duty cut is a £1.3bn bung for second home owners and landlords

Robert Jenrick: he has an opportunity to do the right thing for a change. Does anybody honestly think he’ll take it?

This Site said it yesterday and now the Labour Party has confirmed it: Rishi Sunak’s stamp duty cut is a bung for rich second home owners and landlords.

I said the cut might be a good idea if it helps people buy houses and boosts construction – but according to Labour, buyers of buy-to-let properties, holiday homes and other second homes will benefit.

In 2019/20, 34 per cent of homes bought were second properties, meaning this is a bung to second home owners costing taxpayers £1.3 billion.

Labour has called for the government to exclude second properties from this cut – arguing that this could fund a gap in local councils’ finances which the Local Government Association predicts will be £1.2 billion by the end of the year.

It’s just a shame that the government minister responsible is Robert Jenrick, who does not have a reputation for doing the right thing.

Here’s Labour’s Thangam Debonnaire:

“It is unacceptable that the Chancellor tried to sneak out this huge bung to second home owners and landlords while millions of people are desperate for support. He should be targeting support to those who need it, not helping people invest in buy-to-let properties and holiday homes.

“An unnecessary subsidy for second home-owners will only worsen the housing crisis by reducing the supply of homes overall.”

It’s a good point – but will our unaccountable Tory government take it?

Source: Revealed: Sunak’s secret £1bn giveaway to second home owners and landlords – The Labour Party

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‘Budget for housing’? Who’ll be able to buy one after Hammond’s feeble offer?

This Writer certainly won’t be rushing out to the estate agents after Philip Hammond’s Budget speech.

As Labour’s housing spokesperson, John Healey, tweeted:

Instead, Mr Hammond announced that he is scrapping Stamp Duty for first-time buyers.

This was the stand-out “rabbit-from-a-hat” in this year’s Budget statement. And it is no good to anybody apart from those who own houses already.

Here’s the explanation, from the Office for Budget Responsibility:

It says: “Eligibility criteria match those of the post-crisis ‘stamp duty holiday’… HMRC published an evaluation part way through that holiday. It concluded that the majority of the value of relief fed through to higher house prices and that it “has not had a significant impact in terms of improving the affordability of residential property for FTBs [First-Time Buyers]. It is estimated that most of the buyers who benefitted from the relief would have purchased property in its absence anyway (i.e. are deadweight).

“As with the post-crisis holiday, we have assumed that the consequence of introducing the relief will be to increase house prices – in this case by around 0.3 per cent… Prices paid by FTBs would actually be higher with the relief than without it.”

Let’s have some comments from informed sources. Here‘s Politics Home:

“The OBR went on: “The costing assumes a small number of additional first-time buyer purchases (around 3,500) but that these will displace other purchases by those who would have bought and paid the main rate of stamp duty.

“”It is also possible that non-first time buyers will abuse the relief. The measure is expected to increase house prices. It receives a high ‘uncertainty’ rating.””

The article added: “Shadow Housing Secretary John Healey mocked Mr Hammond saying on Twitter that it “must be a new record for unravelled budget: big stamp duty announcement demolished by OBR before Cx finishes his speech.””

Only around 3,500 additional first-time buyer purchases? How does that add up, then? Like this:

The Daily Mirror expanded on this: “According to the OBR projection, the stamp duty cut will encourage a tiny number of people to buy a house – and as a result, the cost for each of them is nearly a million pounds. The rest of it is wasted, because the people who get it would have bought the house anyway.

“A million pounds.

“As the Resolution Foundation’s Torsten Bell points out, it would be much cheaper to literally build them a house each.”

Shadow Chancellor John McDonnell was scathing: “For all the fanfare on housing, today saw more tinkering in place of decisive action, with only one third of funding announced today genuinely new. The Chancellor announced no measures to directly increase house-building and, without that, lifting stamp duty for some will only drive up prices and benefit sellers, as the OBR have acknowledged.”

So, rather than make it easier to buy a house, the result will be the same as Help to Buy, the Osborne scheme from 2013 that was recently renewed – it will make houses more expensive.

So why do it?

The obvious answer is: To keep house prices high, even when (if?) hundreds of thousands of new houses are built.

We know that house prices have been allowed to rise, meaning homeowners now have a huge investment tied to the price of their property – but one that could fall in value if new, and cheap, houses are built.

If the value of housing falls, there will be a knock-on effect on the economy, as it means UK citizens will have less spending-power – there will be less money available, even if only in theory (as most people actually live in their houses, rather than using them as the financial investments that some Tories consider them to be).

The Tories are committed to building hundreds of thousands of new houses a year, so they had to find a way to keep prices sky-high.

But won’t the logical result of this be the creation of house after house that nobody can afford?


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Osborne’s ‘banana republic’ plan for the UK

As he will be remembered: George Osborne.

As he will be remembered: George Osborne [Image: Steve Bright for Channel 4].

If The Guardian had its way, George Osborne would have been giving a Twilight Statement, rather than an Autumn one – as in “Twilight of his career”.

“The choice confronting the country was, [Osborne] said, whether to stick the course of a ‘long-term economic plan’ which was working, or whether instead to hand power back to a Labour party that would ‘squander the economic security’ he had painstakingly built,” mocked the paper’s editorial column, “through cavalier decisions on borrowing and public spending” [Italics mine].

Cavalier decisions, according to any dictionary, are those offhand choices that show a lack of proper concern. The Boy hasn’t been taking his job seriously.

“That proclaimed long-term plan… turned out to need a short-term rewrite,” the column continued. ”

“The resolute Mr Osborne of 2010 stated that the national debt would by now be falling, from a maximum of just below 70% of GDP, but instead it continues to march towards a peak which he now concedes will be over 80%.

“He was, he said then, on course to ‘meet our fiscal mandate to eliminate the structural current budget deficit one year early, in 2014-15’, something he now accepts will not be done until well into the next parliament.

“And the headline measure of the government overdraft, which the ‘long-term plan’ had initially pencilled in as £40bn this year, was on Wednesday revised up to £91.3bn, which represents slippage of well over 100%.”

Over 100 per cent! That should be a sacking offence – and voters should bear that in mind next May.

“Much of the shortfall in revenues can be traced back to the great stagnation of 2011 and 2012, for which Mr Osborne and his premature retrenchment bear considerable responsibility,” the article continues. “With its mandate still fresh, the coalition timetabled front-loaded cuts for political reasons, hoping to create room for giveaways later, as 2015’s date with the voters moved on to the horizon. But with decidedly unserious [cavalier?] disregard for the frailty of the economy of the time, it virtually snuffed out growth.”

How refreshing to see a representative of the mainstream press openly stating what we’ve all known for years!

“Indeed, GDP only began bouncing back in earnest after Mr Osborne silently conceded defeat on plan A, by incrementally postponing ever-more of the austerity into the next parliament.”

Interesting. Here at Vox Political the belief has been that he conceded defeat on plan A by concocting an apparent attempt at Keynsianism in his ‘Help to Buy’ scheme, that in fact proved to be another housing price bubble of the kind that caused the recession – and one that has yet to burst. Turning to Keynesian economics represented the failure of his neoliberal policies, you see, but he never openly conceded the point – even though he was clearly interfering with the markets.

“He is, reportedly, confecting a parliamentary vote this week to lock the next parliament into the same sort of fixed timetable that he failed to deliver the first time around, and to close off the same flexibility which ultimately saved his bacon. The purpose is, we must presume, to confront the opposition with an awkward dilemma, between offending its anti-austerity base and exposing itself as profligate. Such game-playing surely doesn’t qualify as serious economics.”

Certainly not – and it won’t work in any case. The next government – if not Tory, can simply disregard such a decision as no Parliament may bind the next.

Measures announced in the Autumn Statement were intended to indicate a “Tory tax-cutting route… that can, supposedly, leave everyone better off”. But this is “an illusion.

“Mr Osborne is boosting tax allowances for higher-rate taxpayers, while freezing the amount poor workers can earn before their universal credit is reduced.

“And after next year’s election… Messrs Cameron and Osborne are pretending that there will be no need for any tax rises, and that further spending cuts can do all the work… There is no serious way that this can be done.

“The OBR’s tables state that, under current plans, the day-to-day funding for all services beyond the NHS and state schools will now have to fall from £3,020 per head at the end of the last Labour government, to £1,290 by the decade’s end. That is a real-terms decline of more than half [57 per cent plus change], the bulk of which is still in prospect, for policing, justice, local government, culture and everything else besides.”

Most of the savings so far have come from cutting pay – a safe bet when private wages are stagnant, according to the article, and probably one of the reasons Osborne was embarrassed by collapsing Income Tax receipts. Nevertheless, he is raising the tax-free allowance (the amount you can earn before having to pay Income Tax) from £10,000 to £10,600 per year. Clearly he intends to have even less in the kitty next year, so the cuts can go on and on and the UK can be ultimately reduced in stature to its position in the 1930s, before the NHS and the welfare state, the only difference being we would be utterly in hock to the bankers.

His would be the first government to voluntarily turn its country into a banana monarchy. (Well, we’re not a republic, are we?)

The result? “Recruitment difficulties…malfunctioning courts, unruly jails, boarded-up youth clubs, overgrown parks, shuttered museums, perhaps even rubbish piled up on the streets.”

Mention of rubbish on the streets is a deliberate reference to the ‘Winter of Discontent’ (1978) that sounded the death-knell of the Labour government of the day and paved the way for 35 years of neoliberalism. How humiliating for Osborne if he became the Tory chancellor who demonstrated that the ideology his party has so slavishly followed, since Thatcher first slammed Hayek’s book down on her lectern and yelled “This is what we believe now”, had achieved nothing but the same result.

But then, as the article concludes, Osborne is “not nearly as serious as he likes to pretend”.

Follow me on Twitter: @MidWalesMike

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