Superficially the politics of Johnson's new right to buy gets his blighted government out of several holes. He has given his levelling up agenda the appearance of forward momentum when it's still on the starting blocks and is likely to remain there. It gives a hand up for people locked out of property ownership, and so ticks the one nation box. And for Tories who think in the longer term, turning social renters into home owners has conservatising effects that their party will reap the electoral benefit from further down the road. And lastly, it helps out the Tory landlord base by eating into the social housing sector and removing lower rent competition. A nice bit of triangulation that keeps its traditional backers happy and is pregnant with the possibility of creating new Tories, right?
Unfortunately for Johnson, implementing it comes with the sorts of difficulties he'd soon get bored of before moving on to something else. Taking property from one arm of the state and selling it off, as Margaret Thatcher did with her famous right to buy scheme, is one thing. But quite another to expropriate the private property of independently incorporated organisations and flog them at a discount. It's a legal minefield and one sure to keep the lawyers happy, especially if the forthcoming legislation is sloppy and leaves the government open to court challenge. Johnson's pledge to work with the sector to find the best way of dismembering it is a recipe for a veritable dog's dinner. Then there is the diminishing of social housing stock. Selling one house doesn't mean another can be whipped up in short order. New builds take time, and housing associations will require new plots to build them on. If the government returns to them the value of the expropriated house, are they going to assist with land purchases too? And if their existing stock is vulnerable to sell offs, it becomes more difficult for associations to access finance for new construction. On these crucial, practical issues, Johnson expended not a single utterance.
Then there are problems with getting people on social security on the housing ladder: doing so requires serious reform of how UC and mortgage financing works. As Andrew Fisher rightly notes, banks typically require a 10% deposit for a house. Average prices are hovering around the £280k mark, but most forms of UC won't pay out if a recipient has savings of £16k an over. And so there's one gaping hole in the mooted scheme. Either the savings roof is abolished or significantly raised, the government massively subsidises prices so they're in reach, or they legislate against the banks to force them to drop the deposit threshold. Whichever way you look at it, the policy can mean handing money over to people the Tories have spent the last 12 years attacking and defaming, or they significantly intervene in the housing market. Thinking about the febrile state of the parliamentary party, it's going to cause jitters among the ruling class warriors and the hard neoliberals alike. Parliamentary rebellions can't be ruled out.
This is Johnson's idea of getting on with the job. Almost three years as Prime Minister and there's still nothing to show of his pledge to regenerate and rebalance the British economy. The housing shortage remains as prices and rents climb ever higher, there's no action on the cost of living, and destitution stalks the land with greater swagger than it ever did during the Tories' austerity years. The impact of Johnson's scheme will benefit a handful of people and shrink the capacity of social providers to build. Meanwhile there's no relief for anyone else. If anything, it retrenches the the dysfunctions in the provision of housing. Johnson billed this a "revolution". No, but it certainly looks like a counterrevolution.
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You've also got the issue that Support for Mortgage Interest (SMI) payments made as part of Universal Credit and the legacy means tested benefits is currently paid as a loan, on which the government charges interest, which has to be paid back when the property is sold.
ReplyDeleteSo what happens to SMI when there is a new tranche of UC claimants who are allowed to divert their housing benefit portion of UC into a mortgage? Will that mean the housing element of UC used in this way also become a loan? Or will they end the SMI to loan thing that was only introduced a couple of years ago? Or will the government simply allow there to be a two-stream benefits system where those who bought their houses years ago when working but fell on hard times such as disability etc will be far worse off than people who may come from one of IDS' families where three generations have never worked but fancied owning their own house? Run that one by the Daily Mail.
Also SMI is paid at a standard interest rate, currently 2.09%. I'm not really up on mortgage rates these days but I'd be very surprised that anybody considered 'sub-prime' will find a mortgage anywhere near as cheap as that. So that's another SMI mainstay out of the window.
Conclusion; this is utterly unworkable and the fact that the media reported this as a serious policy shows how far they are prepared to indulge this idiot
"PM wants benefits claimants to be able to buy homes."
ReplyDeleteAhem. This must all about preparing the ground for further UC cuts. "Why the scroungers are all so well off they can buy houses/latest trainers/flat screens etc!"
Johnson is surely just about firming up the gammon vote? Angry gammons will make the effort to vote come election day.
We should not assume that Johnson and his backers are worried about workability. Think of the Brexit agreement and the NI Protocol or deportations to Rwanda. It is how it plays with the red wallers and their ilk. They will have heard the headlines and be enquiring now on how they can buy their 'council house'.
ReplyDeleteAnd just like the opposition to deportations or to details of Brexit the 'Mail' and 'express' will be able to blame lefty lawyers or smirking Starmer for it not operating smoothly and depriving hard working housing benefit receivers of their free born Englishman's right to own. The probability that it will make things worse for others and reduce the social housing stock will be of no concern to them.
It could be a vote consolidator.
Or maybe, Andy, the media don't understand this matter any better than Alexander De Pfeffel does. In which case they're falling down on their job (but is that news?)
ReplyDeleteI always think that "right to buy" is an Orwellian phrase. It should be "right to force the taxpayer to buy you a house."
«As Andrew Fisher rightly notes, banks typically require a 10% deposit for a house. Average prices are hovering around the £280k mark, but most forms of UC won't pay out if a recipient has savings of £16k an over. And so there's one gaping hole in the mooted scheme. Either the savings roof is abolished or significantly raised, the government massively subsidises prices so they're in reach, or they legislate against the banks to force them to drop the deposit threshold. Whichever way you look at it, the policy can mean handing money over to people the Tories have spent the last 12 years attacking and defaming,»
ReplyDeleteThis proposal for an outline of a policy is not targeted at people living in places where houses cost £280k, in those places property owners already vote tory and the rest don't matter.
The proposal is transparently targeted at red-wall brexiters living in "the north" in "pushed behind" areas, under the delusion that what switches votes to the right is house ownership as such, rather than booming house prices. But nobody with sense goes hugely in debt to speculate on something that does not rise in price fast.
Some right-wingers seem to believe their own propaganda that "people to own their homes", when instead they want to own a government guaranteed way to make huge property profits entirely redistributed upwards, work-free, tax-free, from "losers".