When it comes to the autumn statement and the annual budget, you have to analyse it as you would a magician’s show. Sitting back and enjoying the artifice and performance is one option, but to find out what has really been said and figure out how the trick has been pulled off, you need a keen eye for sleight of hand.
Superficially, Philip Hammond’s first autumn statement seemed to accept the fact that housing costs and worries are foremost in people’s minds. The Conservatives’ volte face on letting agents fees is to be tentatively welcomed: for years we were told scrapping the fees would push landlords out of the market by cutting their bottom line. This argument rests on two fallacies: that people choose to rent out homes for any reason other than to make money; and that, faced with the choice between earning slightly less from tenants, and earning nothing at all, some landlords would decide to jack in their rental portfolios.
So the move is a sweetener for anyone likely to move house and continue renting soon. For people looking to own, or needing emergency accommodation, however, the picture is far less rosy.
Again, the headline figures were tending towards the positive: Hammond’s announcement of £4bn to fund new affordable homes was a headline-grabbing number. As always, though, it’s worth reading the small print: the £1.4bn tranche earmarked for local authorities to provide new affordable homes specifies the homes built can be shared-ownership schemes, or “affordable rent” (that is, don’t forget, 80% of the local market rent) but not social rent, which in many areas is the only truly affordable housing tenure.
The Office for Budget Responsibility (OBR), in its economic and fiscal outlook, remains less convinced of the government’s ability to increase housebuilding. “Dropping the requirement for housing associations to move to a shared-ownership model and abandoning plans to force higher rents on some tenants will both reduce the cash inflows available for housebuilding,” it says. “Partly offsetting that, additional grant funding and other smaller measures will increase cash inflows and boost housebuilding. The net effect is to reduce cumulative housebuilding by housing associations by around 13,000 over the forecast period, with a boost next year becoming a drag by 2019–20.”
The number of social rent homes has already plummeted and now the focus is on building homes that the vast majority of people in housing need cannot afford. The OBR has also warned the scrapping of letting agents fees could also result in higher rents, further denting would-be homeowners’ ability to save for deposits, and excluding even more people from the private rented sector, thanks to the Local Housing Allowance cap.
But a spectre is haunting Britain – the spectre of Brexit.
Hammond announced the referendum decision had blown a £59bn hole in the public finances. With the government finally giving up on the idea of “balancing the books” by 2020, and admitting that austerity has not resulted in a huge public finance windfall, we are now braced for another cataclysmic dent in the nation’s wealth.
That Hammond was more restrained on housing than his predecessor George Osborne is little surprise. Osborne promised big and barely delivered, while Hammond has promised little and the OBR is already convinced he will follow suit.
In the wake of the Brexit vote, it feels as though housing has been downgraded as a national concern – a fact that won’t give much comfort to the millions of people affected by our dysfunctional system.
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