Ahead of the Spending Review, I wrote to George Osborne calling on him to scrap the mortgage tax subsidy for landlords and to use the money to nearly double the social housing grants budget in London.
I wrote to the Chancellor about a range of issues affecting London in advance of his Autumn Statement on 25 November. One important measure he can put in place to solve our housing crisis here is to scrap the tax relief which landlords can currently claim on mortgage interest. This subsidy amounts to £1.3 billion nationwide and £400 million of that a year should come to London, where 30 per cent of people who privately rent currently live.
The money would help restore the grants available for new social housing, which have been cut in recent years from around £140,000 per home to less than £40,000.
My letter says:
The provision of new affordable homes, even where planning agreements have been made, is currently at risk from cuts to these grants. In my own borough of Camden, the vast Kings Cross Central development has recently been allowed to cut social housing provision in the second phase, and the developers say that this is entirely due to housing associations and other registered social housing providers being unable to meet the terms of transfer in the original Section 106 agreement because of a reduction in grants available.
This scheme is potentially a sign of much worse to come. With many other Section 106 agreements city-wide depending upon affordable housing provision being taken up by housing associations, and grants reduced from around £140,000 per dwelling to less than £40,000 on average.
Using the proceeds from the cut in tax relief for landlords to restore the level of grant available will make a real difference to the viability of new social housing in cases like Kings Cross Central and could provide 16,000 additional truly affordable homes over the period of the next Mayoralty. I urge you to consider this measure and how it could go a long way to helping ensure that the workers London depends upon can afford to stay in the city.”
I told the Evening Standard:
“London is in the grip of a housing crisis caused by the kind of soaring price rises that the subsidy for private landlords fuels. The Chancellor took a step in the right direction when he restricted mortgage interest tax relief to the basic rate of income tax rather than the higher rate. He now has a chance to go further. Abolishing the subsidy by cutting mortgage tax relief completely would cool the housing market and ease the crisis, and the money gained would enable local authorities to provide more affordable housing. If he wants to do the right thing it’s a no-brainer.”
The letter also asks for more powers for London over rail services, business rates, planning rules on office-to-residential conversions, and rent controls, and for funds for walking and cycling to be prioritised over new roads.