Blog 16th January 2017

Jan 16th 2017, 09:18

Blog 16th January 2017

I am writing this blog on the train. Tomorrow I will be presenting an in-house training session on right to buy, capital receipts and 1-4-1 replacement of sold homes at a local authority in Eastern England. This is obviously an important subject and I am looking forward to the day.


Following the government’s announcement that the Starter Homes scheme will go ahead, I decided to ask my MP a question about it. My MP is Rory Stewart, who is Minister of State at the Department for International Development. I included in my question some local data but I think the main issues are relevant in all parts of England. I am grateful to Rory Stewart for replying and as I found his reply interesting I have decided to include my question and his answer in full in this blog.




“I am looking at the government’s starter homes announcement and some statistics about housing and incomes.


“Shelter have calculated that to be able to afford a ‘Starter Home’ a person would need:

  • In England, an income of £50,000 a year and a deposit of £40,000.
  • In London, an income of £77,000 a year and a deposit od £98,000.

“According to the Land Registry the average value of a house in Cumbria is £145,000 and according to the Cumbria Intelligence Observatory the median average annual income of households in Cumbria is £25,000. It is clear that the Starter Homes scheme will benefit very few people in Cumbria.


“I would therefore like to ask you the question: Why should the average Cumbrian with an annual household income of £25,000 and a house worth £145,000 pay their taxes to subsidise a person with an annual income of £77,000 and capital of £98,000 who wants to buy a house worth £450,000?”



“Obviously this is a major, and problematic issue: we need more affordable houses, we need to help first-time buyers onto the property ladder, and we need to build more homes - and starter homes - in a sensible, sustainable way that is right for each locale.

“Regarding house-building generally, the Government is now doubling investment in housing to more than £20billion to support the largest affordable housing programme by any government since the 1970s. It has already announced £8billion to deliver over 400,000 affordable starts by 2021 and is now going further with an additional £1.4billion to deliver 40,000 more affordable homes. Nearly 300,000 affordable homes have been provided since 2010.

“A £5billion package of investment in housing has also been announced, including £3billion to build more than 25,000 new homes this Parliament under the new Home Building Fund. By focusing on accelerated construction and the development of brownfield land, these funds could deliver up to 200,000 homes over the longer term. There are plans to deliver 1 million homes in total by 2020.


“Over 220,000 people have achieved home ownership as a result of the Government's Help to Buy schemes, and I am delighted that the Help to Buy Equity Loan scheme has been extended to 2021. This allows buyers with a 5 per cent deposit to benefit from a government loan of up to 20 per cent of the property price. 

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“While mortgage repayments on a home might be manageable for someone who has already been paying market-rate rents for a comparable property, it is often the accessing of the deposit that is a major obstacle for first-time buyers.

“Regarding Shelter's figures, I do not see how a conclusion can be drawn that the Starter Homes scheme is unworkable. Many properties in areas like Penrith and north Cumbria, are still affordable for a first-time buyer; a cursory check of a local property website just now shows me a wide selection of modern and period 2-bedroom properties available to buy for less than £100,000.”

I wrote a briefing paper on starter homes last year that can be downloaded from HERE

Theresa May, the Prime Minister is expected to announce on Tuesday that the United Kingdom is prepared to leave the European Single Market and the Customs Union because of the importance that she attaches to ending the free movement of labour and reducing immigration.
In this context, Philip Hammond, the Chancellor of the Exchequer, gave an interesting interview to ‘Welt am Sonntag’ (a German newspaper) that was published yesterday. In it, he suggested that upon leaving the European Union the United Kingdom could abandon the current European-style social model with European-style taxation and regulation systems, and ‘become something different’.
The interviewer commented that:


“The impression on the European continent is that your government sees the future business model of the United Kingdom as being the tax haven of Europe”.
And Philip Hammond responded that:


“We could be forced to change our economic model, and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do. The British people are not going to lie down and say ‘too bad, we’ve been wounded’. We will change our model and we will come back, and we will be competitively engaged.”


So, it appears that the United Kingdom may be transformed into a competitive and flexible low-wage, low-taxation, low-public-spending economy that is capable of competing on equal terms with countries such as China and India. That would have many significant implications not least for public services.


Our next seminar is on ‘All You Want to Know about Service Charges in Social Housing’ and will be held in London in 15th February. For more information or to make a booking please click HERE

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