Lunchtime news Wednesday 24 September 2023

Speaking at the Labour party conference yesterday housing minister Caroline Flint admitted that the government’s target of building three million new homes may never be reached, but said government would encourage the development of the private rented sector as part of a range of measures to kickstart the housing market. She said that the professional rented sector could help provide a better quality of home and more choice for people, adding that the government was exploring other options such as how financial products were marketed, extending the shared equity schemes and ensuring people on low incomes have secure housing.

Meanwhile, Hazel Blears launched an attack on Boris Johnson at a fringe event at Labour party conference, saying that affordable housing in London under the mayor was under threat and was creating ‘ghetto cities’. Ms Blears said that Mr Johnson was moving away from the former mayor’s affordable housing percentage, which aimed at a level of 50 per cent of affordable homes. She said it was important that developers and local authorities are not allowed to spend money for affordable homes elsewhere, or provide affordable homes ‘off-site’. She added that the government is considering changes to its policy of charging business rates to owners of empty commercial properties.

The Council of Mortgage Lenders has confirmed what we all already know – trying to predict short term house price movements is ‘futile’ at the moment. Having admitted its earlier prediction of a 7 per cent fall in prices this year had rapidly become outdated, they go on to say the property market is unlikely to recover from its current slump before 2010.

New figures out from HM Revenue and Customs show that the number of houses sold dropped to its lowest level since records began in 1959, and less than half the figure a year ago. Just 62,000 houses were sold in August, which combined with yesterday British Bankers’ Association figures of just 700 mortgage a day being taken out, indicate that the housing market has ground to a halt.

To make matters worse, recent advice published by Revenue and Customs has also indicated that house builders will face extra tax bills if they rent out the homes they have been unable to sell. Developers may be forced to repay the VAT they have already claimed back, because of the different tax treatment between selling and letting properties

The head of the Housing Finance Corporation has warned that two more housing associations are likely to go bust in the coming 12 months, in a repeat of the Ujima crisis. Speaking at the National Housing Federation conference the chief executive said that probably a lot of failing housing associations will be swept into larger groups, but two are likely to fold entirely.

In America, the Federal Bureau of Investigation has begun an investigation into the four major US financial institutions recently caught up in the financial crisis. Fannie Mae and Freddie Mac, along with Lehman Brothers and AIG are being looked into after allegations that fraud may have caused the troubles at the companies and whether executives deliberately misled the stock market about the health of their businesses.