A few days on from Budget 2017 and Phillip Hammond is still the Chancellor. And in contrast to his previous attempt, as yet there has been no sign of a major u-turn on any of the major aspects of his programme. Politically then, with the world seemingly collapsing daily, it seems like Wednesday was a good day for the
Housing was pre-briefed as one of the key topics of the Budget. But in terms of its impacts in the real world, what did the housing and planning sector make of Mr Hammond’s key
£15.3bn to boost supply to 300,000 per year
The Chancellor announced £15.3bn worth of new spending to try to raise annual housing supply to 300,000 by the mid-2020s. This cornucopia included £8bn of “financial guarantees to support private housebuilding and the purpose-built private rented sector”, another £2.7bn for the Housing Infrastructure Fund, a £630m small site fund, which the chancellor said would “unstick the delivery of 40,000 homes”, £400m for estate regeneration and £1.1bn “to unlock strategic sites including new settlements and urban regeneration schemes”.
In response to the announcements, Gavin Smart, deputy chief executive of the Chartered Institute of Housing, commented:
“We particularly welcome the government’s ambitious new target to deliver 300,000 new homes a year.
We have to make sure that any new funding supports the building of new homes that meet the varied needs of individuals and families across the UK. For many people social rents, which are much cheaper than private rents, remain the only truly affordable option and more must be done to support this crucial form of housing.”
Stewart Baseley, executive chairman of the Home Builders Federation, said:
“The measures announced today will assist by stimulating demand and helping broaden the supply base of new homes. But much more needs to be done, in particular with regards to the planning system, if the target is to be met.”
A number of those involved in the sector have criticised the Chancellor for focussing his investment on measures to boost the supply of private housing, and not providing funding to boost affordable housing numbers. Brendan Sarsfield, Chief Executive of Peabody housing association said:
“We’ve got to welcome the priority given to housing [but] affordability is an issue for a very high percentage of people, and by not focusing on it you’re excluding them from the solution. There’s quite a high percentage of young people who can’t access any housing market beyond a shared room at the moment and we need solutions for them.”
Abolition of Stamp Duty
One of the headline grabbers (perhaps motivated more by politics than anything else) in the Budget was the Chancellor’s announcement that stamp duty on properties worth up to £300,000 would be abolished immediately in England, Northern Ireland and Wales. According to the Halifax Building Society, the average first time buyer pays about £1,600 in stamp duty, so this announcement may make little difference to most would be buyers.
Mr Hammond said this change would benefit 95% of first time buyers. However, the Office for Budget Responsibility quickly threw doubt on this, saying the main beneficiaries would be those who already own a home. It also said it would lead to higher house prices and predicted it would only lead to an extra 3,500 first-time buyer purchases.
Increased Borrowing Caps for Councils
Local authorities criticised the Chancellor’s decision to only boost the borrowing cap imposed on councils by £1bn. The Local Government Association (LGA) said that to boost supply of housing to 300,000 each year, councils would once again have to be able to build themselves. A spokesman for the LGA commented that the Government should do away with the cap to enable councils to step up and deliver.
Lord Gary Porter, Chairman of the LGA, added that the last time the UK built more than 250,000 homes per year was the 1970s, when councils built more than 40% of the total.