Javid rejects moving stamp duty liability from buyers to sellers
He made the statement after an interview in The Times which claimed he was supporting such a move.
The policy has been touted by trade body the Association of Accounting Technicians (AAT) as a way to help encourage people to move.
In July the AAT said the now Prime Minister Boris Johnson was interested in pursuing the idea after it had been in contact with the then prime ministerial candidate.
However, Javid, who Johnson appointed as Chancellor on becoming Prime Minister, has now rejected the idea outright.
In a tweet on Sunday, Javid said: “To be clear, I never said to @thetimes I was planning to put it on sellers, and I wouldn’t support that.”
He added that bold measures were needed on housing, “but this isn’t one of them”.
In the Times interview, when asked about the policy, Javid said he was a “low tax guy” and wanted to see simpler taxes, but did not outright endorse the mooted stamp duty change.
Brokers not swayed
The AAT published the report ‘Time for Change: Alternatives to tax rises’ in September 2018 outlining some details of its proposals.
Mortgage brokers gave the possibility a tepid response. While there are some potential benefits to the policy, there are also significant risks.
The AAT believes that the change would increase the amount of house purchases by reducing immediate upfront costs for all home buyers except down sizers, which in turn should free up smaller properties for first-time buyers.
But, sellers could add the cost onto the asking price of the property, or sales could be deterred if sellers were unable to command the asking prices that they needed.
Phil Hall, head of public affairs and public policy at the AAT said: “We do not believe that switching stamp duty liability is a panacea, but it would be considerably fairer, simpler, more effective and cheaper than the current stamp duty regime.”
James Brokenshire replaces Sajid Javid as secretary of state for housing
Brokenshire replaces Savid Javid has taken on the role of home secretary, after Amber Rudd’s resignation over illegal immigrant targets.
Housing became a cabinet position at the start of the year when it was added to Javid’s remit, alongside communities and local government.
Brokenshire was secretary of state for Northern Ireland from July 2016 to January 2018 and was elected MP for Old Bexley and Sidcup in 2010.
Dominic Raab remains as housing minister, after taking the position from Alok Sharma in January amid a wider reshuffle.
Brokenshire today wrote on twitter said: “Honoured to have been asked by the Prime Minister to serve as Secretary of State at the Ministry of Housing Communities & Local Government.
“Looking forward to taking the Government’s agenda forward especially on building the homes our country needs. @mhclg”
Government proposes compulsory ombudsman for home builders
Its questions come as part of a consultation into creating a single housing ombudsman to tackle complaints and redress issues within the property sector.
Proposals also include naming and shaming poor practice to help tackle the worst abuses.
Unlike other areas housing has more than four different complaints bodies.
“In other markets, such as financial services, a single ombudsman scheme operates,” the consultation said.
“This has the potential not only to create a stronger brand, giving consumers a clearer sense of where to go, but also to help ombudsmen more effectively drive service improvements. This option could potentially enable data to be aggregated and trends to be more easily spotted.
“Efficiencies may also be possible to achieve and could potentially make it more cost effective to fill any gaps in the system,” it added.
House builder complaints
The government appears to have concerns about how home builders are handling complaints.
It highlighted that too often it received letters from consumers detailing protracted disputes over snagging issues and cases where the home buyer did not feel they had been treated fairly during the purchase process.
“It is not always clear to home buyers who they should complain to and who is responsible for putting things right,” it said.
“The redress system is fragmented and we are concerned there are gaps in protection. For example, there needs to be more robust protection for homebuyers in the first two years after purchase.”
Private landlord redress scheme
The government said it had committed to changing the law to require all landlords to join a redress scheme making sure that every tenant has access to effective dispute resolution.
However, it wanted feedback on how this should be funded – including the possibility of a flat fee dependent on the size of the landlord’s portfolio, or the number of complaints received.
Overall, the Ministry of Housing, Communities and Local Government (MHCLG) consultation, which is open until April 16, is seeking views on:
- the current complaints and redress landscape, how it is working and if more can be done to improve it,
- what standards and services should be expected of a redress scheme/an ombudsman,
- how to fill the existing gaps between current services,
- whether a single ombudsman service is needed to simplify access to redress across housing, and if so, what form that should take and what its remit should be.
Earlier this month the Ombudsman Services announced it was withdrawing from the property market in recognition of the need to streamline service provision and reduce consumer detriment.
Housing secretary Sajid Javid said: “For too long, tenants and homeowners have navigated multiple complaints procedures to resolve disputes about everyday household repairs and maintenance.
“Fixing this housing crisis is about more than just building homes, it’s ensuring people have the answers available when something goes wrong.”
Are two heads better than one for housing policy? – Bamford
Given the continued flux in housing policymakers it is not surprising when a cabinet reshuffle is announced we tend to end up with another individual fulfilling the role – Dominic Raab replacing Alok Sharma this time.
However, the sharp-eyed among you will have noted I wrote ‘cabinet reshuffle’ when we are all aware that the housing minister hasn’t held a place at the cabinet table anyway.
Recent governments have determined that the housing minister is a junior position beneath the secretary of state for the Department for Communities and Local Government (DCLG), and given that they already attend cabinet why have the housing minister there as well?
After all, it’s only one of the most important sectors of the UK economy and has been deemed to be ‘broken’ for longer than I can now remember.
Therefore, Theresa May’s recent ‘reshuffle’ – for those individuals willing to make a move – has been of interest because of her decision to make the current head of the DCLG, Sajid Javid, the new secretary of the renamed Housing, Communities and Local Government department.
We’ll all have to get used to Javid being the new housing secretary and his department morphing into the DHCLG, plus we also have a new housing minister although he still won’t sit at the cabinet table. Are you still with me?
Given Theresa May’s recent pronouncements on the UK housing “crisis” and the lack of supply – she called it her “personal mission” to build more affordable homes – perhaps we should have anticipated such a move.
Some might suggest that two heads at the cabinet table would be better than one. Indeed, a minister dedicated to housing rather than one also spread across other areas might well have provided greater confidence to the market and perhaps ensured that recent progress continued apace.
For instance, last year there were over 200,000 new homes built in England, the first time in 10 years that such a number had been achieved.
Admittedly we appear to have quite a long way to go to reach the government’s stated ambition of 300,000 new homes per year by the middle of the next decade.
The big question in all of this of course is whether we are just dealing with semantics here.
Javid himself has tended to make a lot of the big housing-related announcements of late anyway; the housing minister continues to work under him at the DCLG; and one would hope that Javid was already a strong advocate for the housing market when sitting at the cabinet table.
Is the government merely putting a new label on a position which, quite frankly, already existed? Doubling up, without needing to bring another chair in?
Does anything actually change?
I’m not so sure. It’s been obvious since the General Election, and Theresa May’s loss of her overall majority that housing, the home-buying process, and key housing areas – for example, leasehold – have been a much higher priority for the government.
There’s no hiding the fact that the Conservatives did not truly appeal to younger voters at the last election, and that housing is a major issue for this demographic. Therefore, it’s an area the Conservatives needed to address – and keep addressing – which is why we’ve had the extra money for Help to Buy, the stamp duty cut for first-time buyers, and quick action on the leasehold new-build scandal.
This is a government that wants new homes built and wants to show it is taking the issue seriously.
Whether Javid’s ‘new role’, or the fact Raab remains in the background, actually changes anything remains to be seen.
But (even if it’s just a sleight of hand move) to have a ‘sort of housing minister’ officially sitting at the cabinet table must be better than the previous approach we’ve seen taken.
After all, you can’t change the game, if you’re not in play. Now, where have I heard that before?
Javid retains post as May makes housing a cabinet position
However, Number 10 has added housing to the department name, making Javid’s job title now secretary of state for housing, communities and local government.
Javid has been a prominent voice regarding the state of the UK housing market, calling it “broken” on more than one occasion.
He has also called for greater regulation within the house building sector and focused on abuses of leasehold properties.
Javid has been at the front of moves to introduce fees and regulation for letting agents.
The addition of the word housing to the previously named Department of Communities and Local Government (DCLG) may be a bid to emphasise the government’s attempts to tackle the housing crisis.
Following the announcement, housing secretary Sajid Javid said: “Building the homes our country needs is an absolute priority for this government and so I’m delighted the Prime Minister has asked me to serve in this role.
“The name change for the department reflects this government’s renewed focus to deliver more homes and build strong communities across England.”
There has been no update on current housing minister Alok Sharma’s position within the government.
Any moves involving junior ministers, which includes housing, are expected to take place tomorrow.
Government’s leasehold ban sees big developer values plummet
By just after midday, Berkeley fell 1.35% to £41.56 on the news and Persimmon was down 1.1% at £26.93.
Retirement housing builder McCarthy and Stone fell the furthest, down 9% at 154.5p, as it is expected to make £33m from the sale of ground rents in 2018 and believes it should be exempt from the legislation.
The government’s move followed the Department for Communities and Local Government’s (DCLG) consultation paper out in July ‘Tackling unfair practices in the leasehold market’, which got a massive 6,000 industry responses.
Problems the government aimed to target include escalating ground rents, the sale of the freehold in order to make a substantial profit, and the rise in fees and premiums to leaseholders.
Builders have increasingly made new properties with no shared areas leasehold, instead of freehold, allowing them to sell the contracts on at a profit, often on Help to Buy new build homes.
In August, Countryside Properties began buying-back controversial leaseholds with clauses that double ground rent every 10 years.
Earlier this year, builder Taylor Wimpey set aside £130m to tackle the problem with its leasehold properties – a bill which hit profits by 24% in the first half of the year.
Communities secretary Sajid Javid said: “It is unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.”
“It’s clear from the overwhelming response from the public that real action is needed to end these feudal practices.”
The Conveyancing Association argues that leasehold should only be applicable where there are genuine shared amenities and the term of the lease should be 999 years with a peppercorn ground rent, if commonhold is not a better solution.
Government leasehold response slammed as ‘weak’ by industry practitioners
As far back as July, the government appeared to be gunning for rip-off freeholders and builders selling homes with escalating ground rents, or selling the freehold for substantial profit resulting in rising fees and premiums to leaseholders.
These measures are a bid to address the issues for 4.2m leaseholders and the 1.4m and escalating numbers of leasehold houses across England.
Leasehold generally applies to flats with shared spaces, making multiple ownership more straightforward, but developers have been increasingly selling houses on these terms.
Government hit by harsh criticism
However, the government’s response appears to have taken a patchy approach to the consultation’s recommendations.
Louie Burns, managing director of Leasehold Solutions, said: “Of course, we would welcome any reforms that actually make the leasehold system fairer for the millions of homeowners in England and Wales caught in the web of paying extortionate ground rents, onerous service charges and lease extensions.
But he added the abolition of ground rents for new leases looks attractive but could in practice create a two-tier market, if older new homes with ground rents look more expensive on the open market.
Burns said: “Essentially developers have got off scot-free and, as usual, existing leaseholders will suffer the harshest consequences.”
Burns also said the government will allow shared ownership to continue being sold as leasehold and made no mention of commonhold, which the Conveyancer’s Association also thought was a more practical option.
“We are also disappointed that the new measures do not address the flawed valuation models used to calculate the cost of lease extensions and freehold acquisitions, which clearly favour the interests of freeholders and cause distress and financial hardship for many leaseholders. Leasehold reform can only be effective if a fair and transparent valuation system is imposed,” said Burns.
The consultation which proceeded today’s changes Tackling Unfair Practices in the Leasehold Industry received 6,000 responses with MPs slamming the raft of shabby practices.
Government measures out today include a ban on ‘almost all’ new-build houses and changes will also be made so that ground rents on new long leases – for both houses and flats are set to zero.
The government said it will also make it ‘cheaper and easier’ for existing leaseholders to buy-out their freehold and there will be better information available about redress for those consumers who face the most onerous terms.
Measures to be introduced include:
• legislating to prevent the sale of new build leasehold houses except where necessary such as shared ownership
• making certain that ground rents on new long leases – for both houses and flats – are set at zero
• working with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending a lease much easier, faster and cheaper
• providing leaseholders with clear support on the various routes to redress available to them
• a wider internal review of the support and advice to leaseholders to make sure it is fit for purpose in this new legislative and regulatory environment
• making sure freeholders have equivalent rights to leaseholders to challenge unfair service charges
Communities Secretary, Sajid Javid said: “It’s clear from the overwhelming response from the public that real action is needed to end these feudal practices. That’s why the measures this government is now putting in place will help create a system that actually works for consumers.”
The government will be ‘writing to all developers to strongly discourage’ the use of Help to Buy Equity loans for the purchase of leasehold houses’ before legislation. It will also request that the industry provide redress for customers with onerous ground rent terms.
High street has ‘significant untapped potential’ for new homes
A report published today by the FMB highlights that “there is significant untapped potential to create additional homes above shops on or around the high street”.
While it does raise some issues that need to be tackled, it said these could be successfully navigated by working together.
This report was given backing by Communities secretary Sajid Javid, who was speaking at the FMB to coincide with its launch.
“This government has, quite rightly, put a lot of time and effort into regenerating high streets and strengthening local economies,” he said.
“That has generally focussed on the retail side of things, but as the report you’re publishing today shows there is no reason why commercial and residential cannot coexist happily together. I grew up in the flat above the family shop, so I’ve seen for myself how it can work not just in theory but in practice too.
“That’s why last month’s Budget set out plans to make it easier to create quality homes in empty spaces above high street shops,” he added.
Not insurmountable challenges
The FMB report noted that there is the potential to bring forward additional residential units across a wide range of building types in differing urban settings, with the high street chief among these.
There are challenges to development but they are not insurmountable, the FMB said. And in order to overcome these challenges, it proposed the following recommendations:
- Local authorities should explicitly make reference to building homes above shops on the high street within their various planning documents.
- Local authorities should help find ways to overcome disparate ownership and limited building access and/or infrastructure in order to make redevelopment of residential units easier.
- Where the market is not yet strong enough to make such development viable, central government should make available low cost loans, grants and fiscal incentives.
- Local authorities, local community groups and developers should work collaboratively with property owners to highlight the potential of this type of development.
- All partners involved in building residential units above shops should harness the ability of local community groups to catalyse development.
Javid reveals government focus on housing design
Javid has been vocal about the importance of aesthetic considerations when building new properties, previously noting that ugly homes should not get planning permission.
Speaking last month at the National House Building Council, he said: “One of the single best ways to guarantee that a community will rise up against plans for any kind of development is to try and impose row upon row of identikit red-roofed boxes.
“To put it bluntly, ugly homes don’t get planning permission. And nor should they.”
Raise the bar
In a bid to support this effort to improve builder designs, the Department for Communities and Local Government (DCLG) is hosting a design conference.
Speaking at the Federation of Master Builders, he said: “In the spring, we will be working with the sector and with local government to host a national housing design conference.
“It will be a showcase for ideas, insights and best practice from across the country and across the world, kicking off a real debate about how we can raise the design bar for everyone.
“But I want you to be building houses that are worthy of your skills as master builders. And this conference will go a long way to help making that happen,” he added.
Javid criticises builders on complaints and ugly properties
Communities secretary Sajid Javid (pictured) also chastised property developers for failing to take responsibility when faults arose and added that ugly homes should not get planning permission.
He urged developers to improve the standard of building design and engage more with local communities when proposing projects to ease planning permission problems.
Speaking at the National House Building Council, Javid said the current system of four ombudsmen and redress providers resulted in “all kinds of issues and inconsistencies”.
As a result, the Department for Communities and Local Government (DCLG) will be consulting early in the New Year with a range of options to remedy the situation, including creating a new all-encompassing Housing Ombudsman.
This would be a “single, transparent and accountable body” with a remit covering the whole of the housing sector – including private and social landlords and the providers of new build homes.
Failure to admit fault
Taking aim at developers, Javid said: “What’s vital is that, when things do go wrong, those responsible admit there’s a problem and they get it fixed. Right now, that doesn’t always happen.
“Alongside the reports of faults with new build homes I see almost as many stories about the problems people face in getting them rectified.”
He added that it was clear the current redress system for buyers of new properties was not working properly, with “a confusing number of schemes in place and gaps in protection, particularly where the buyer has a problem with their home in the first two years”.
Javid continued: “I believe the time is right to go further, to look at what can be done to improve the means of securing redress right across the housing sector.
“Research in other sectors has shown that redress works more efficiently for consumers when there’s a single ombudsman in place.
“So, in the new year, we’re going to consult on this and see whether it’s right for the housing sector too.”
Ugly homes don’t deserve planning permission
The communities secretary also suggested builders should take greater care on property aesthetics, saying there was “room for improvement” in the standard of design.
He warned that failing to do so would mean continued opposition to housing developments, especially in rural areas.
“One of the single best ways to guarantee that a community will rise up against plans for any kind of development is to try and impose row upon row of identikit red-roofed boxes,” Javid said.
“To put it bluntly, ugly homes don’t get planning permission. And nor should they.”
He argued that building more homes quicker did not mean ignoring the attractiveness of developments.
“Quite the opposite, in fact. If you want people to quickly accept new homes in their area, they have to be homes that local people don’t mind looking at,” he continued.
“They have to be homes that people want to live in, and homes that people want to live next door to.
“All I’m saying is that engaging with the local community and giving them a greater influence over design will reap rewards for everyone, and it can work wonders in turning NIMBYs into YIMBYs,” he added.