Department of Health and Social Care and Ministry of Housing, Communities and Local Government — House of Commons, 2018-07-02
Topic: Housing
Craig Mackinlay (Conservative, Centre-right): We have heard some fantastic speeches from Members on both sides of the House about adult social care. I am not sure that we have been given the solution, but I think we have realised that there is a problem that needs to be solved Housing represents, potentially, a great asset for people in later life, which can help to pay for adult social care and other services that people need as they age. My worries are about house-price-to-earnings ratios and house price inflation. In 1996 the Nationwide house-price-to-earnings ratio was just 2.8, which means that 2.8 times someone’s earnings could buy that person the average house in the United Kingdom. Over the past 40 years, house price inflation has averaged 5% a year. That affordability gap is now extremely wide throughout the country. It is bizarre. One would have thought that the areas with the highest house prices would have the lowest ownership, but the reverse is the case. In the north-east, 60% of people are owner-occupiers, and the house-price-to-earnings ratio is just over 5. In the south-east, where house prices are obviously higher, 70% of people own their homes, but the ratio is now close to 10. That does not quite follow the pattern that we might expect Back in 1995, it would have cost first-time house buyers 17.5% of their incomes to service their mortgages. According to the figures that are available, in late 2016 the proportion was 33%. At the peak in 1989, base rates were approaching 14%, and it was costing 56% of income to maintain a mortgage, so we are not living in unusual times Thankfully, we are narrowing some of the gap between housing requirement and provision. It has been running at an estimated rate of 230,000 a year for some years, and will continue into the future. We built 217,000 houses last year, which is all to the good, but we have a fundamental problem: we do not seem to want to live together as generations any more. We seem to want independent living, and that can often lead to lonely living. There is a potential solution there, which might also solve some of the adult social care problems Is it time that we had a debate about a further loosening of planning law? Let me put some questions—not solutions—on the table. Are we allowing a degree of timidity in relation to development? Are we just trying to add little bits to existing conurbations, thus increasing pressure? Are we not thinking clearly enough about the building of completely new towns, with proper infrastructure—road, rail, health provision and schools—as part of the plan, rather than simply adding to the edges of existing communities Should we be trying to unlock brownfield sites? I can think of a perfect 5-acre derelict site that used to be the gasworks in the middle of Ramsgate. No one wants to develop it because of the remediation costs. Should legislation be introduced to force what are often utility companies to regenerate on pain of, perhaps, an additional business rate charge, or should the Government provide loans with a clawback provision to inject the seed capital to get developments moving We do have an existing stock, and I think that two measures would be helpful. Capital gains tax and inheritance tax are a problem, particularly for older people with holiday homes. Let us suppose that an elderly couple have had a holiday home for many years. One of them might become a widow or widower. They have fond memories, and do not want to rent out the property because of the aggravation that it would involve. Most people will not face an inheritance tax charge. Why on earth would they want to sell an asset that is hugely pregnant with gain, paying capital gains tax at 18% or 28%? They would rather leave it in their estate until they die, and perhaps pay nothing at all. As for those with a chargeable estate, why should they pay a 28% capital gains tax charge, and then a 40% inheritance tax charge on the £72 that is left in cash after that tax has been paid, which would represent a total tax charge of 57% The second measure I present is downsizing relief for stamp duty. Often, again, this would affect the elderly person, perhaps on becoming widowed. There is a north-south divide in this of course: in parts of the country it will be perfectly possible to buy that downsized smaller property for within the £125,000 stamp duty threshold for paying zero, but for many in the south, particularly in London, there will be a huge stamp duty to pay. My proposal is that we should have a downsizing relief for people moving to a smaller floor-area property—the threshold could perhaps be 75%. The Treasury might say it would lose money, but it forgets that for every seller there would be a new purchaser, so we would be creating stamp duty on purchases that might not otherwise have happened at all.