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4th January 2005


Papalscope January 2005.


Homeless at Christmas?

Government with its usual opportunistic sense of timing finds that there is a shortage of housing. This shortage goes far deeper than their figures suggest. As it happens the blame is not entirely attributable to this Government, but in part dates back to the Thatcher Administration, and even further back than that.

In 1979 when the 'right to buy' was instituted. Expensively built Council Housing was sold off at subsidised prices. Subsequently it resells at market value. Privatised ownership fragmented the old Council Estate sites, so that now they are at best available for only piecemeal redevelopment. Some of the poorer quality buildings can be difficult to resell, and those who bought them 'leasehold', can find themselves saddled with the obligation to pay enormous bills for the refurbishment of their homes. Money which many can not afford to pay. Such debt together with accrued interest becomes a charge on an eventual resale. One is now given to understand that the 'Right to Purchase' is to be extended to Housing Association property. Here is another opportunity for Government to extend chaos in the housing market, with as little benefit as the rearrangement of those proverbial deck chairs on the Titanic.

There was of course too that Enfranchisement of Leaseholds Act brought in by Government. Around the turn of the 19th/20th Century speculative Builders built houses which they 'sold leasehold', at relatively cheaper prices on the basis that the actual building and the building site it stood on, would remain the property of the Vendor. The price the Leaseholding Tenant paid was really an up-front rental, which carried with it an annual ground rent of maybe as little as thirty shillings a year. This sum possibly a legal necessity to collect, lest the actual Owner-ship of the house might be lost in the acquisitive oblivion of time. Investors would buy and sell bundles of these freeholds, which increased in value as the prospect of recovering the real estate drew closer. By the same measure a new tenant might buy the tail end of such a lease at a relatively cheaper cost. This system gave many of modest means, the opportunity to enter the housing market for the first time, quite often in the most desirable residential areas.

It suddenly dawned on a Conservative Government that after an hundred years, all those leases would be falling in, and that Tenants would either have to negotiate new leases with their Freeholder, or move out. It was legislated that these tenants too would have a right to buy at a subsidised price. This subsidy coming not from the Tax payer, as was the case in The Great Council House sell off, but was to come from the pockets of anyone who had invested in such freeholds. This subsidy more likely than not represented a chosen lifetime investment. Now the only return on it was often a 'peppercorn one off payment' in recompense. There were reports that the Grosvenor Estate in London benefitted from a different arrangement. Another source of housing, was the Rental Market. At the outbreak of the Second World War there was a moratorium on the leasehold market that was not rescinded until 1957. This not only gave the sitting tenant security of tenure, but too the pre war rent was frozen. At that time one might be paying in the region of 200 per annum, (3.85d per week) for a country house standing in its own grounds. It was possible that a rent might include use of a gardener, Insurance, external maintenance and decoration, or even 'Council Rates'. You name it. Later on there was a 'Schedule Tax' introduced by Government, that required a tenant to deduct tax from the rent, before paying the balance due to the house owner. Low net rental received was often insufficient to cover a Landlord's expenditure on the property. In those times the Freeholder might have expected to benefit from selling his Freehold without Capital Gains Tax being charged. But such compensatory profit was soon taxed too. As also is the sometime exemption from paying Capital Gains tax,on a property bought for occupation by a dependent parent. Another disincentive to the availability of property.

'Schedule A' Tax?

All house owners paid that on the property they lived in. It was reasoned on the lines that if your house was worth say 3,000, then that three thousand pounds was money you could have put into the savings bank. Money one might have earned interest on, ' Schedule A' was a tax on the notional Interest/Income you had forgone, I think!

When in 1957. 'Small owners' regained their property; many sold up and fled the house letting market. Soon after other measures were enacted to restore security of tenure. Legislation weighted in favour of tenants. Many of who were inclined to scrape together a first month's rent, then just sit tight paying nothing more in rent, electricity, or gas etc. until evicted. It was the house owner who had to institute proceedings for repossession. Even then possession was restored reluctantly. Terms such as 'in six weeks' and 'would the judgement inconvenience the tenant more than the Landlord etc'. formed a part of such procedures. Tenants were unlikely to pay any of their outstanding debts, or Court costs etc.' after all they needed such cash for their down payment on their next rented property!

This is of course the Pantomime Season, and everyone likes to hiss at the villainous landlord as he does his thing. But one should remember that he was providing a Service, which Government in its wisdom has all but destroyed, at least so far as its availability to the 'Working Man' is concerned. The Conservative Party lost much support from their dispossessed voters.

Listed above are three actions, which have contributed to the current accommodation shortage. There are many more reasons for the problem, but most of them may be laid at the door of successive Governments Incompetence. I do recall that before the 1939 war there was a lot of poverty, even so at that time everyone was able to keep a roof over his family, without resort to means tested Housing Benefits which is more than can be said for many today.


There was a Court of Appeal judgement published on December 16th.2004 delivered in favour of a retired Major in receipt of Housing Benefit. The case brought by the Secretary of State for Work and Pensions, revolved around whether regular 280 a month he received from his son was to be included as a part of the Major's Income or not, when calculating Housing Benefit. (Apparently it wasn't). It is instructive that an Army Pension of maybe 11,844 and the basic State Pension, together possibly totalling over 15,000 per annum, can still qualify one for Housing Benefit. How many people have accumulated such an annual Pension? It is worth noting that if the aforementioned 280 per month forms no part of the Major's Income for the purpose stated; then any such similar payment would in like circumstance be deemed not to be a part of any other Claimants Income. Therefore anyone claiming means tested benefit might do well to ensure that such benefit is correctly re-calculated.

Is everyone aware that Housing Benefit, Community Charge Benefits could be available to them too? Or even that the 'single occupant' of a house is entitled to a discount on their Community Charge, or that if a house becomes entirely vacated at death then it is probably exempted from the Council Tax Charge, presumably for a limited period of time?

Enduring Power of Attorney If one is in fear of losing 'one's marbles' it is better not so to do, before making arrangements for management of all one's affairs. It is too late afterwards. Further more do check up what the level of professional charges will be for the eventual winding up of one's Estate. There seems to be something called a 'Responsibility Charge' which can easily run into thousands of pounds. We all know these things but are inclined to ignore them. John B. Pope. Tuesday, 04 January 2005





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