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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

Budget 2012: What could it mean for housing?


The forthcoming budget is likely to impact housing, with announcements expected on property taxation, green issues, welfare and homeownership. Our policy team outline exactly what they would like to see in the Chancellor's announcement.

In a couple of days, the Chancellor will announce his 2012 Budget. Notwithstanding any future leaks; a fair amount of jockeying, stakeholder rousing and general rhetoric abounds. In particular, the Chancellor is facing increasing pressure to announce tax cuts to help the poorest, propose mansion and tycoon taxes on the wealthy and generally redirect financial contributions to help society.

So far, relatively little on housing has been leaked, but it is unlikely any major announcements on investment in housing will be made. There simply is not the money to enable the Chancellor to make such statements. Instead, a restatement of existing policies is more likely alongside some minor announcements on use of the Green Deal for social housing and incentives to support and promote construction. So what does CIH want?

Property taxation
Whilst this recent debate has been about mansion taxes vs tycoon taxes, CIH would be concerned in the current economic climate for a wholesale review of council taxation (suggested for a so-called mansion tax or levy). How property is taxed is a big issue locally and nationally. In our work on welfare reform (with a range of housing providers including local authorities) we see the issues already evident in ensuring the council tax benefit localisation plans can be implemented fairly. CIH is interested in the government’s plans for reform but would urge government to work with the sector to understand the implications of such reform and how it could be rolled out.

Mindful of the economic uncertainty and lack of investment in housing and construction, measures to stimulate house building need more teeth. There should be targets for the use of the stimulus money and a recognition that the release of public sector land must only be on the basis that developers do not simply hang on to their land banks; they must use their land banks first. We would expect the Chancellor to make some kind of statement about this. We would also expect to see an increased spend on infrastructure. Vince Cable’s leaked letter to the Prime Minister last week noted concerns that spend on housing infrastructure should not be left behind as it is an important element in getting the economy moving. Consequently, we would hope to see a statement on increased investment in house building as well as promoting work on improving and ‘greening’ the existing housing stock. We see this activity as part and parcel of a wider stance of improving the economy through construction, and knock on effects such as better use of housing to meet wider need and improved mobility. Whilst government is putting finances into the private sector, we are concerned that the expectations of developers are not articulated clearly. We don’t have confidence that this will re-shape the market.

Green issues
We believe there is scope for green investment via VAT incentives and more pump priming for the Green Deal to encourage people to use it, especially those on low incomes (fuel poor households with hard to heat homes).  Loss of private sector housing renewal funding in 2010 is making the problem even more difficult to address where homes are in poor condition. We would welcome proportionate access to the Green Deal for the social housing sector, should the Chancellor offer it.

Supporting private rented sector and investment/regulation
Concern within the sector is growing for what is seen as fundamental failings in fiscal policy to support the private rented sector’s regeneration and renewal. The budget is an opportunity for government to reassure the sector that these issues are not forgotten and change is afoot.

Stimulating and increasing institutional (pension fund) investment in the private rented sector is already on the table. Sir Montague’s current review will report on the barriers to investment later in the year, but we hope the Budget recognises the incentives likely to be needed and proposes further investment in REITs (Real Estate Investment Trust) for social landlords.

Whilst we recognise government has signalled its intentions not to introduce further regulation of the private rented sector (as stated in the housing strategy), we are concerned that in light of the sector's growing contribution to meeting housing need, that the time has come for a review of the sector and letting agents’ practices. Consistent with this, we would also wish to explore the role/contribution of social housing providers as managing agents for lower rental private sector landlords. This would include setting standards for accommodation, including SAP (Standard Assessment Procedure) and HHSRS (Housing, Health and Safety Rating System) ratings, with support and incentives for landlords to comply and enforcement action where required.

Welfare reform will be bringing enough financial changes to housing providers, tenants and residents over the following few years. As such, the appetite is simply not there to see yet more changes in the budget. We are already extremely concerned about the cumulative effect of welfare and benefits changes on tenants, homeowners and housing providers and the focus must be on what the detail of new regulations is, as well as the practical transition and implementation. It is clear that funding will be needed to manage the transition and support local areas to provide advice during this time. Supporting and managing change in communities as a result of economic downturn, political and social reform is a key mission for the affordable housing sector.  

Home owners
Housing announcements last week focussed on the reformed Right to Buy and New Buy schemes. We were hoping for a variable discount rather than a fixed one, and have already raised concerned over the claims that Right to Buy will provide one new affordable rent home for each council house sold. We believe this provision will be difficult to maintain given the fixed discount policy announced last week. However, we do not believe further adjustments will be made in the budget.

Promoting homeownership through stability in the mortgage market, deposits and so on, is a government priority. We would back changes to SMI (Support for Mortgage Interest) to support those who need it, based on lender rates rather than those set by DWP, and urge the Chancellor to implement a long-term reform of SMI.

CIH believes the return of stamp duty to £125,000 is a mistake in this market. With a relatively stagnant market and the inability of first time buyers to enter the property market due to high deposits and mortgage fees, the added cost of stamp duty is a deterrent to purchase. We would argue for a more proportional basis for stamp duty, which takes into account the overall increase in the average cost of a home in the UK, and more importantly, the average cost of a home for first time buyers. We urge government to work with the sector and mortgage experts to explore different policy options.

Independence in older age
Information on progress in developing more accessible and fair and trusted equity release products for low income home owners would be welcome in the statement. This is increasingly important to address the condition of private sector housing (and given the lack of funding for private sector renewal), and to deliver government’s agenda on Living Well at Home, sustainable hospital discharge and the New Deal for older people. CIH welcomed the additional investment from the Department of Health of monies into the Disabled Facilities Grant programme, and would like to see further cross-government investment in this and other critical preventative services (including housing related support). We have expressed concern about the potential conflict between the drive for greater independent living for older and disabled people and the potential impacts of welfare reform (notably the measures on under occupation). These concern remains, in spite of the additional funding for discretionary housing benefit, which is a short term measure.

Supported housing
Government’s recent engagement with the housing sector to address some of the approaches to investment in housing support services and the risks for smaller and specialist providers is welcome, and we look forward to this providing different approaches that can support and sustain valuable services. However, we would also like to see government commitment to a review of the long-term impacts of some of the investment decisions made locally, notably on protecting the most vulnerable in society and the programmes for increasing prevention and supporting people into work.

It remains to be seen whether any of these measures will be in the budget, but we hope government continue to take notice of housing professionals’ concerns regarding the mass of changes taking place, which will have a major impact on expectations and aspirations for delivery.

Look out for our response to the Budget and full member briefing following the budget announcement - where we will look at exactly what the impact could be for housing throughout the UK. We have a range of experts available to discuss the implications - contact us on with your comments and concerns.

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