Terraced homes with an elevated viewpoint of the London skyline at Crystal Palace. (Photo: Richard Baker via Getty Images)
The Treasury was criticised for being out of touch with the magnitude of the problems the public are facing, after releasing a particular tweet about housing on Thursday.
The government department was attempting to promote its own Growth Plan (which includes last week’s controversial tax-cutting budget). Using a first-time buyer in London as an example, it claimed to show how much they would save in tax and energy savings when buying their first house.
The tweet claimed: “A typical first time buyer in London moving into a representative terraced house will save £11,250 on stamp duty and £1,050 on the household’s energy bills – and if they earn £30,000 almost an additional £400 on tax.
“This is around £12,700.”
This example does seem to miss out some rather crucial details though.
In 2021, according to Statista.com, the average terraced house price in London was £694,000.
And, using Compare The Market’s mortgage calculator, even if a buyer on a £30,000 a year salary had £500,000 to put down for a deposit, they would still not be able to afford the average terraced London house.
Compare The Market suggests, based on this salary and deposit, they could only buy a property worth up to £620,000 – with an £120,000 mortgage paid off over 23 years.
Even with the savings the Treasury suggests in its tweet, this is still a long way off the average price for this kind of property.
To make matters worse, this is all based on the average cost of a terraced house last year, before the cost of living crisis set in, Ofgem started lifting the energy price cap to new highs, and the value of the pound plummeted to record lows – which saw many mortgage deals withdrawn from the market.
The Bank of England has warned that it will be raising interest rates in the coming weeks too, as the pound continues to flounder.
It wasn’t long before Twitter came for the Treasury over its maths...
A *first-time buyer* on *£30k* buying a *terraced house* in *London* https://t.co/SiHPJ5CbPY
— Lucy Watson (@Lucywwatson) September 29, 2022
I think they’re assuming everyone has a spare half-million in savings, so only need a £100k mortgage for that £600k house.
— Prof Paul Bernal (@PaulbernalUK) September 30, 2022
Reminds me of marking A Level maths answers that were such gibberish it was difficult to know where to start. Used the expression "So bad it's not even wrong"
This from the Treasury is so bad it's not even wrong. https://t.co/pYL64NonFw
— Peter Smith (@Redpeter99) September 30, 2022
There are bad tweets and then there is this absolute rubbish from HM Treasury.
“If they earn £30,000” they won’t be buying a house in London now will they. https://t.co/i9Wwc2h4gW
— Jack Maidment (@jrmaidment) September 30, 2022
Good Lord. They really tweeted this. A terraced house in London on a salary of £30,000. https://t.co/dXAtfSaILE
— Ellie Cumbo (@EllieCumbo) September 30, 2022
In what parallel universe is it remotely possible for someone on £30k to afford a terraced house in London? https://t.co/NkLCIeljzo
— James M. Turner KC (@ShipBrief) September 30, 2022
Good to know that someone living in London on a £30,000 a year salary can save £11,250 in stamp duty on the £600,000 house they're buying.
Umm, hang on? https://t.co/dwinwsq7M8
— ianVisits (@ianvisits) September 30, 2022
When the treasury can't do basic math.. 🤦♀️
(see the replies) https://t.co/NdgexPaLAL
— Dr. Deepti Gurdasani (@dgurdasani1) September 30, 2022
Whoever signed this off needs to be fired. https://t.co/mtiRjHFwZM
— Jonn "My new book CONSPIRACY is out now!" Elledge (@JonnElledge) September 30, 2022
Dear out-of-touch treasury person who wrote this. If you earned £30k you could not afford a 'representative terraced house' in London. You could not afford a rabbit hutch in fucking Dagenham. https://t.co/ob2uHE2zmK
— John O’Farrell (@mrjohnofarrell) September 30, 2022
Great - anybody got a spare half a million? https://t.co/9PemnoDW9i
— Brian Moore (@brianmoore666) September 30, 2022
This just highlights how out of touch the Tories are.
1. £11,250 Stamp duty saving = £600k house price
2. They use someone on £30k salary.
3. 25-year mortgage of £600k @ 4% interest would cost £3167 p/mth - £38,000 p/yr.
4. Any savings wiped out by Tory economic chaos anyway https://t.co/ER3MOlT64x
— Ian Murray MP (@IanMurrayMP) September 30, 2022
This article originally appeared on HuffPost UK and has been updated.