Budget Resolutions and Economic Situation — House of Commons, 2015-07-09
Topic: Housing
Siobhain Ann McDonagh (Labour, Centre-left): I represent a south-west London suburban constituency, not an area normally associated with high housing stress, difficulties and problems. I have had the great fortune to be the MP for Mitcham and Morden— the place of my birth—for the past 18 years. Half the people I see at my advice surgery come to me with housing issues For 16 years, before I first entered the House, I worked for Battersea Churches Housing Trust and, before that, for Wandsworth Council in the homeless persons unit. I have seen long queues for bed-and-breakfast accommodation. I have seen people in desperate straits, but that has not prepared me for the length and depth of the problems that people face in securing housing in my constituency I sometimes hear myself tell constituents things like, "Oh, please don’t go homeless on a Friday or a Monday, because God only knows where the council will be able to put you. You see, they can’t take into account the fact that your daughter is doing her A-levels or O-levels, that your mum is ill, that you have a job. They have to put you in temporary accommodation where they can find it." These are things I say without even thinking about them On a Friday night, I regularly see vulnerable children with vulnerable mothers go off to bed and breakfasts on the other side of London, if not in Birmingham. I am not ashamed to say that I wake up in the night and think about what happens to those families—what sort of accommodation they are going to and how they will manage. However, it is not on behalf of those people that I stand to talk this afternoon because many Opposition Members will do that more eloquently than I can The people I want to speak for are all those in good jobs who save their money, but cannot get a foot on the housing ladder. They cannot buy their homes partly because they are being eased out of London by those who already own a home: the buy-to-let landlords. Housing is becoming an investment model, rather than somewhere to live, have a family, put down roots and become part of the community. It has become a real problem for that generation. The possibility of buying the home in London that my family had in the fifties and I had in the eighties is not there for the generation coming up now. We have to do something for them if we are to avoid the family breakdown and problems that will inevitably arise if we do nothing For those reasons, I welcome the Government’s announcement that they will look at the £14 billion in tax breaks that landlords can claim every year. There are not many things that I, the Chancellor and my hon. Friend the Member for Islington North (Jeremy Corbyn), who is standing in the Labour party leadership election, agree on, but reform of buy to let and how buy-to-let landlords are treated in the tax system is one of them. The Exchequer gives tax relief on mortgage interest payments, money spent on repairs and maintenance, and even accountants’ fees to help landlords to take full advantage of the relief. Some of the tax breaks help tenants—we should encourage landlords to keep their property in a good state of repair and to improve living conditions—but it is completely unfair to give landlords a £6 billion tax break on mortgage interest payments Why is it right to subsidise the mortgages of people buying their second, third or fourth home with taxpayers’ money when so many people cannot afford even to take out their first mortgage? People paying off the mortgage on their own home that they live in do not get those tax breaks. We should be incentivising buying to live, not buying to let. Mortgages for landlords are cheaper than mortgages for first-time buyers, in part thanks to that subsidy, and it distorts the housing market. As of last week, the cheapest two-year buy-to-let mortgage cost less than half the cheapest two-year first-time buyer deal, according to brokers. That puts first-time buyers at a real disadvantage compared with buy-to-let landlords, who are swamping the market and shutting out first-time buyers. A third of Members of this House are themselves buy-to-let landlords The changes announced by the Chancellor yesterday are a drop in the ocean and do little to tackle the ridiculous double taxpayer subsidy of private rental landlords. We are, in effect, giving a double taxpayer subsidy to buy-to-let landlords because we give tax breaks of £6 billion that encourage people to buy to let and monopolise the housing stock, and then, when tenants cannot afford the growing rent, the taxpayer has to give them housing benefit. Housing benefit paid to private landlords has now reached £9.3 billion, or 38% of the total bill. With fewer people able to buy homes, there is more demand in the private rental sector, which in turn pushes up rents I am pleased that the Government have agreed this is a problem, as the Budget shows, but their proposals utterly fail to confront the buy-to-let taxpayer subsidy in any significant way. The flawed principle that landlords can claim tax relief on their mortgage interest will remain; landlords will simply get a slightly lower tax relief. The Government’s own documents estimate that it will save the taxpayer just £665 million pounds a year by 2020—just one tenth of the £6 billion in mortgage interest claimed back in tax breaks by landlords in 2012-13 To seriously tackle the root causes of the housing crisis in this country, we have to go further than reducing these unfair tax breaks by a meagre 10%. Taxpayer subsidies should be used to help people to get on the housing ladder, not to pull the rug from under their feet. By looking again at mortgage interest tax breaks for landlords, and cutting them by more than just 10%, or even limiting them to new builds, the Government could save up to £6 billion—the equivalent of grants to housing associations that could enable them to build 100,000 new social housing units. Spending the money on building new homes, instead of on existing bricks and mortar, also helps to stimulate the economy and provides jobs. For every £1 spent on housing construction, an additional £2.09 of economic output is generated.