In his Autumn Statement, the Chancellor, Philip Hammond, gave additional taxpayer subsidies to the biggest builders – Persimmon, Taylor Wimpey, Barratt and Berkeley Group – who have missed affordable housing targets while watching profits soar. He announced a grant of £1.4bn into the affordable homes programme and £1.7bn for developers building on public sector land. But two-thirds of this pot is said to be old money re-packaged from three pre-existing funds, including the build-to-rent fund set up by George Osborne in 2012.
The ‘big four’, who are all in the Home Builders Federation say that house building is a high risk business” and affordable housing targets are financially unviable. But the Bureau of Investigative Journalism (BIJ) found than they plan to pay out £6.6bn in extra shareholders’ dividends by 2021.
Eight directors working for major housebuilders together earned £230m in the past five years. Two chief executives, Tony Pidgley and Rob Perrins, of Berkeley, have taken £141m in pay and share sales since 2011. They have shares totalling £440m.
Meanwhile the country’s housing crisis escalates. The BIJ investigation highlights that as industry profits have ‘gone through the roof’, government statistics released in September show the number of households living in temporary accommodation in England increased 45% in the last six years to 73,120. Despite this, the number of affordable homes for rent or sale built fell to a 24-year low this year.
The big four built 50,000 houses in 2016, but have 450,000 empty building plots – ‘land banks’. The prices of their ‘aspirational’ housing have risen five times more than average wages in the last five years and the four biggest firms together made more than £2bn in pre-tax profits last year. Low supply and high demand has enabled housebuilders to charge substantial prices for the houses they sell – in some cases making an average profit of £127,000 per house according to the Bureau’s analysis.
How much the country gets in tax from these individuals and companies is called into question by Private Eye. Following a Freedom of Information request it was revealed – in great detail – that of £600m lent to five large property developers in the past three years under build-to-rent, a total of £167m – more than a quarter of all loans – went directly to companies with British names, based in the tax havens of Jersey and Guernsey, where, it comments, ‘any gains made are likely to escape tax’.
18 other blogs on the important subject of housing may be seen here: https://ourbirmingham.wordpress.com/housing-18-blogs/.