When the Daily Mail turns against the Chancellor for ‘picking the pockets of pensioners’, accusing him of making four million elderly pay for his tax giveaway to the rich, you know that the budget was a failure at least in PR terms. It’s amazing the difference a smart phrase makes: the ‘bedroom tax’ made headlines and now the ‘Granny tax’ will haunt George Osborne.
The attempt to camouflage the reduction in the top rate of tax to 45p with other tax increases on the rich mainly involved residential property: a new higher rate of stamp duty, penalties against the use of companies to avoid stamp duty, and capital gains tax applied to foreign owners of residential property. Useful things to do but if you are one of the 14,000 people earning £1 million or more in this country, the benefit of a £40,000-plus income tax reduction each and every year will probably mean more.
Ed Miliband caught the mood in his excellent ‘Same Old Tories’ speech in response to the Chancellor.
Down amongst the detail of the Treasury’s Budget Red Book were some other housing measures. John Perry of CIH has picked up quickly on a reference to the implementation of HRA reform which implies the Government might resile on previous promises:
Tucked away …was a worrying mention of the effects on public borrowing of council housing finance reform. The Office for Budget Responsibility has forecast that the resultant debt will be half a billion pounds higher than expected in the coming financial year, and this may grow to be £0.9bn higher by 2016-17. The estimates are said to be ‘highly uncertain’, but are enough to make the Chancellor warn that he will ‘take action to address the increase in public debt’ if the forecasts don’t change.
A new consultation on the potential for REITs – real estate investment trusts – to help provide new social housing seems to be repeating a circle we have already gone around, but more progress seems to be being made with TIF – tax incremental financing – which attracted some funding.
CIH and the NHF have both picked up on the danger of a new cap on the costs of implementing Universal Credit and the threat of a further multi-billion cut to welfare payments. The property industry seemed cock-a-hoop (why does that make me feel edgy?) that the Government is proceeding with the National Planning Policy Framework, the announcement of which is now imminent.
Other previous announcements are reaffirmed, including the New Buy scheme, the ‘reinvigorated’ Right to Buy, the Get Britain Building Fund, and the accelerated sale of public land.
I can’t imagine that the changes to property taxes will have much impact on the flow of foreign capital into residential property and the knock-on effect that has on the whole market. Nor do I think they will stop Mick Jagger or Bob Geldof in their tracks when looking to buy a new mansion. The biggest concern for the housing world is probably the new threat of more welfare cuts to come and a cap on Universal Benefit. Housing benefit has become the balancing factor whenever benefits are capped and it remains highly vulnerable to further cuts.