LETTER: Ways to address home ownership problems

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I became politically aware in the mid 1950s and every year since then there has been a continuing housing crisis. The recent White Paper on the housing crisis is a regurgitation of potential solutions that have been tried in the past with at best limited success.

Occupancy of a dwelling with appropriate 21st century facilities is a necessary, but not sufficient base. Those for whom home ownership is an impossible dream, who are good tenants, should be offered protected tenancies in appropriate dwellings at an affordable rent.

Owning a dwelling is to own a financial asset whose value can and does appreciate over time. For most home owners their house is their most valuable asset which increases in value every year when the demand of housing increases quicker than the supply of available housing, new build or refurbished.

The value of your capital assets increases, your loan liability diminishes. For some the value of their home has become an integral part of their financial retirement plans or equity release to meet substantial spending outlays.

Owner occupied dwellings are financial assets which on sale are not subject to a capital gains tax charge. All other privately owned residential property is. If all residential properties were liable for capital gains tax on sale the government tax receipts would initially range between £20-30 billion depending on the level of activity in the housing market. The revenues from this tax could be hypothecated to addressing the UK’s chronic housing crisis.

Capital Gains Tax on all residential property is difficult to evade, easy and inexpensive to collect, certain and proportionate in its yield (the bigger the house the more tax you pay). The threshold before liability for Stamp Duty Land Tax on purchasing property could be raised to incentivise young people into home ownership and older people to ‘downsizing’.

The banding regime for council tax assessment could be raised and widened. The inheritance tax liability on residential property should be subject to automatic review. Some funding could be available for house building without adding to national debt.

Some of the flaws in the UK’s dysfunctional housing market coud be addressed.

The corporate tax regimes allow businesses to offset the whole of their borrowing charges against its current year’s operational (profits) reducing its tax liabilities.

Hopefully this concession will be reduced to the German model of only 30 per cent.

Too many people gain from encouraging the continuing rise in house prices, 63 per cent of UK residential properties are owned freehold or are being bought on a mortgage. Buy to let private landlords’ average portfolio of properties is three units. Rapid appreciation in the value of potential development sites or empty homes generates acceptable increases in wealth.

All these groups have an interest in ensuring the supply of desperately needed accommodation never approaches the demand for housing.

Tweaking at the supply side difficulties looks good for they identify the villains in the game, the planners, the NIMBYs, the bankers, unscrupulous landlords and developers, but never the real beneficiaries; those who own property or can service the debt on purchasing a property. Potential residential property owners have the vote, are older and use their votes.