Natalie Elphicke is a non-executive director of a leading building society and a published policy writer on housing and housing finance with Policy Exchange and the Centre for Policy Studies. She was the first national director of the new Conservative Policy Forum.
It must be a frustrating time for the Treasury. The most extensive
support of housing, home ownership and housebuilding in a generation – and yet
the number of new homes being built remains obstinately low and home ownership
rates have declined. First-Buy, new Right-to-Buy, Community Right-to-Build and Self-Build,
a £10billion housebuilding guarantee scheme, new Help-to-Buy and NewBuy, the Build
to Rent Fund, the affordable rent guarantee and the affordable homes programme,
Funding for Lending, the law changed to allow a new presumption for development,
the planned release of thousands of hectares of public land for housebuilding,
some on a ‘build now, pay later’ basis…and the New Homes Bonus for Councils. Some clever people have dreamt up some complex
and whizzy schemes, and made fit-for-purpose some old favourites. Yet Britain still
isn’t building. Perhaps it is time for something simple, something
tax-free, just to tip the balance. Perhaps it is time to unlock the
housebuilder in all of us.
The Taxpayer’s Homebuild
Why not allow every taxpayer to build one house for sale,
tax-free – provided that they do it between now and 2016, and provided that the
house is sold for no more than £250,000? The Taxpayer’s Homebuild could be
aimed at private homes for first time entrants, for a local homeless community,
for older people, for your son or your granddaughter, or anyone. The choice of who you want to build for, what
you want to build and who you want to sell to is yours.
We are a nation of homeowners and home improvers. Home
ownership matters. Many homeowners have built second homes abroad, in Spain or
France or Florida. Let’s harness that culture and that experience and
confidence in property with its equity and available cash. The opportunity to
earn on average £50,000 or £75,000 tax free.
That’s got to be a good incentive to get on with building.
How would it work?
Taxpayer’s HomeBuild could work as follows:
The taxpayer takes all the private sector risks of
development – site, design, planning, finance, build and sale. Once built, and
sold, the taxpayer pockets the profit, tax-free, provided the house has a sale
value of less than £250,000. Stamp duty is paid in the usual way by the
purchaser. One house per taxpayer, with a value up to £250,000.
We have thousands of hectares of public land. The
availability of that land to support the Taxpayer’s Homebuild programme would
help to prevent a land purchase bubble. In addition, you could expect commercial
sites to be sub-divided to provide opportunities for people to deliver Taxpayer’s
This could be more than just for individuals or couples. Friends
& Family HomeBuild Building Clubs using up to five individual allowances could
work like the earlier forms of building societies. Imagine if you could use
money to invest in your grandchildren’s new home, and that, sitting here now in
May or June, you could all be celebrating Christmas together in a brand new
family home. Imagine in your local
church group if you used your one person allowance together to put together
attractive housing for older people in your community.
How much would Taxpayer’s Homebuild and Homebuild Building Clubs cost the Treasury?
The average cost of tax foregone on capital gains tax is
likely to be around £15,000 tax per home built.
It could be as low as £10,000 per home. This makes this a very tax
attractive scheme compared to many others already launched.
If 100,000 homes were built under the scheme, at an average
sale price of £200,000, the GDP stimulus would be around £20billion or 1⅓ % GDP. The tax cost would be a notional cost of around
£1billion – £1.5billion of tax foregone, which is in line with, even a little
more cost effective than, the other schemes already announced for a similar sized
In practice the Treasury would benefit from the other taxes
on the extra economic activity. It is said that each £ spent on housebuilding
generates another £2 spend in the High Street.
The key advantage of the scheme is that it works with
Britons at their best – harnessing the home improving nation. Creating more
starter homes and home ownership. You get the tax benefit only by delivering
what is needed, and only by harnessing your own skills, money and time to make
it happen. If we can be generous in our tax breaks for Star Wars, why not be
generous to the hard-pressed British taxpayer?