House building is also an important engine of growth for the wider economy. Speeding up the release of land with planning consent would help to increase the supply of land to build homes in places where the need is greatest. Linking this with clear, simple and co-ordinated government and local authority-backed home purchase schemes will help many first-time buyers who simply cannot raise the funds for a full deposit.
The positive elements of existing government schemes are that they provide a mechanism for people to own their own home who are unable to get financing through a traditional mortgage. However, given the myriad of schemes available, consumers can often become confused about which scheme is best for them. The schemes, which are administered by different agencies, would benefit from rationalisation and clearer signposting for consumers. A good starting point would be a high quality UK-wide and consumer-facing housing portal, allowing people to input their details and requirements which would then signpost them to specific advice about their options.
Government should also consider its wider housing policy platform and recognise that issues affecting housing can cut across a number of different departments, including the obvious ones such as DCLG, Treasury and DEFRA and even the less obvious like Transport, BIS, Home Office and Education. The BSA would urge the Government to consider the creation of a powerful and cross-departmental Minister of State for Housing possibly sitting in the Cabinet Office and responsible for coordinating and developing a more ambitious and holistic approach to Government policy-making in this area. The BSA believes that not only would this offer more effective coordination of issues such as the recent problems over flood insurance, but also provide better longer-term planning of policies and strategies.
Support for Savers
We appreciate that the Government has taken some steps to help savers, with the introduction of the Junior ISA and by linking future increases in the annual ISA subscription limits to CPI inflation. However, the Government has thus far failed to take on board other sensible reforms to ISA rules, including allowing the transfer of stocks and share accounts to cash and the lifting of the limit that allows a saver to invest only up to 50% of their annual allowance in cash accounts.
However, we consider there is a more radical way for the Government to provide help to hard-pressed savers, many of whom have seen the real value of their savings eroded as the rate of inflation has exceeded interest rates year-on-year for the past several years. Over the last 20 years we have moved from an economy based on saving to one based on borrowing. People need to be rewarded for thrift, to know that the Government values those who look after their own futures and to help out savers at a time of very low rates. Given the period of lower for longer interest rates and the continued pressure to keep the bank base rate at 0.5% (or even lower), the BSA believes that the Government should declare of moratorium on taxation of savings interest at least for the period of ultra low rates.
Another option being considered within our sector is a specific ISA product where funds deposited would be allocated directly to fund housing development and purchase.
Stamp duty Land Tax
The BSA calls for an end to the slab structure of Stamp Duty Land Tax. It is the norm for other UK taxes to be calculated on a marginal basis and the application of this principle to stamp duty would avoid the “bunching” of house prices just under the threshold, be fairer to consumers and promote a healthier housing market.
The BSA continues to be perplexed by the reluctance of successive governments to move to a fairer and simpler method of taxing house purchases, especially given its importance to the health of the economy. The BSA also contends that a move to a marginal rate for stamp duty would have little or no effect for the exchequer, but would just distribute the existing tax take more evenly across the housing market.
The Scottish Government has recently consulted on moving from a slab to a marginal system for stamp duty from April 2015. Also, the recommendations from the Silk Commission looking into future powers and competencies of the National Assembly for Wales, has included the transfer of responsibilities for stamp duty from Westminster. Given these potential changes in how stamp duty will be administered across the UK, there is now a unique potential for Government to seize the initiative and bring about reform.
Flooding insurance
The BSA and its members are increasingly concerned that there is still no resolution on the universal availability of flood insurance, despite the fact that the Statement of Principles expires in June. This situation is already presenting problems for consumers as many people are already seeking to renew home insurance policies which expire after the Statement of Principles comes to an end.
If a resolution is not reached to ensure the provision of flood insurance for all UK home owners, the consequences of moving to an open market could be grave for both consumers and mortgage lenders. Consumers in areas at a high risk of flooding may experience either very high insurance premiums or be unable obtain flood insurance altogether. In addition these consumers would be likely to experience difficulty in selling their home, as potential buyers would find it difficult or impossible to get a mortgage, with a possible negative impact on value.
Householders can also consider a range of measures to improve the resistance and resilience of their homes to flooding the low-tech, such as non-return valves on wastewater pipes, which prevent flood water coming into the home and rising up through sinks, toilets and baths, to the high-tech solutions like self-closing barriers which will activate when they sense water. However, there will be a significant cost to consumers in carrying out these measures and the Government should consider a scheme to assist with access to financing, perhaps similar to the Green Deal or simply extend that initiative to include flood resistance and resilience adaptations for homes in at risk areas.
The Government has been keen to reassure the industry and consumers that discussions are ongoing but time is increasingly short. We urgently need a satisfactory resolution on flood insurance to ensure peace of mind for consumers and security for lenders
