Mays speech. In 2016 she got Hammond to write to the BOE saying it would end in 2018 in another bit of Anti-Osbourne Spite. The assumption was it would come to an end because of the evidence the biggest impact it had been on raising developer profits, and, in London, boosting house prices.
Ironically the fall in house prices in London may have saved it. We may I suspect be in the same position as Australia where similar schemes have become a very expensive way of providing a permanent boost to the housing market, postponing financial corrections and making the big final correction far worse. Its like if Yellowstone changed to a policy of putting forests fires out rather than letting them burn, a policy that would one day see the whole forest burn down at once.
10 billion (presumably over 4 years) is a reduction from the 16 billion of HTB1. So presumably will be focused on first time buyers
That 2.5 billion a year
Here a better way to spend it
- spend 1/3 of this on acquiring agricultural land at existing use value to build housing (as the conservatives promised in their manifesto). Thats enough land for around 400,000 houses a year. Continue this programme over 10 years and we will have enough land for a 30+ year housebuilding programme to fully meet the nations needs.
- Spend 1/3 of it split between boosting local transport funding in growth areas by 50% and increasing capital investment in rail by 50%. This will fully fund major projects such as rail restoration and BRT necessary to ensure the housing is sustainable and deliverable.
- Spend the final third increasing the Homes and Communities Agencies Budget by 1/4 (largely decentralised to local development corporations) and refocus the budget to triple output of affordable housing by only using it to build on land bought at existing use value under measure 1 rather than boosting land prices. These corporation would be able to capitalise the value of future land value uplifts to lend to builders to ensure schemes have a positive cash flow and are built quicker. The balance sheets of some larger housebuiolders will be hurt by measure 1, measure 3 will ensure a flowering of 100s of more competitive and efficient builders in the place of the current oligopoly. Fixing the broken market.
We need to see the housing budget in a different way. The National Infrastructure Commission for example is a set a target of 2.5% of GDP fixed capital investment – with infrastructure defined as excluding housing. And it is said that we cannot afford infrastructure to facilitate homes (despite project as as the 6 billion Smart Motorwatys project which have been a total waste of money seeing congestion grow not fall). No spending on bricks and mortar rather than land is fixed capital investment. The target should be changed to around 2.7% of GDP fixed capital investment (Infrastructure plus housebuilding). The best way of getting more bang for buck on fixed capital investment is to buy up land at existing use value so it doesn’t get diverted into rentier incomes.