Budget 2012: Housing round up and full reaction from the sector
Published by Julien Tremblin for 24dash.com in Housing and also in Central Government, Local Government
Chancellor sets date for next budget
Despite a strong focus on taxation, today’s Budget revealed a number of housing and benefits reforms aimed to “improve fairness”, “reward work” and encourage growth.
Here is what Chancellor George Osborne announced today, followed by reactions from the housing sector.
- The Government will consult later this year on the role real estate investment trusts (REITS) could play in social housing provision.
- Budget 2012 announces that there will be a cap on the additional costs of Universal Credit of up to £2.5 billion a year in the next spending review.
- HRA: The Government "forecasts that this reform will increase public borrowing more than originally estimated". If they do not change, then the Government "will take action" to address the increase in public debt.
- The Chancellor of the Exchequer said the government will support £150 million of tax increment financing to councils across the country.
- The £500 million Growing Places Fund will benefit from a £270 million boost.
- Thanks to lower spending than expected on the Afghan campaign, the Government has announced an extra £100 million to fund accommodation for armed forces and their families.
- The stamp duty land tax (SDLT) will be raised to 7% for all residential properties worth more than £2 million. For those bought through firms, the SDLT will rise to 15%.
- George Osborne re-announced the £150 million boost to the Get Britain Building fund.
- The Chancellor hailed the success of the NewBuy scheme – which sees housebuilders and Government paying guarantees to offer 95% mortgages on new homes – and the “reinvigorated Right-to-Buy”.
- George Osborne came back on the National Planning Policy Framework which will be published next week. He reaffirmed the presumption in favour of sustainable development but assured the framework will protect Britain’s “most precious environments”.
Welfare and taxation
- The threshold at which personal income will be taxed will rise by £1,100 from April 2013 to £9,205.
- Child benefits will be gradually withdrawn when the higher earner in a household earns more than £50,000 a year. When the highest earner gets over £60,000, all child benefits will be cut.
- The Government has announced it will have to cut benefits even more in the future. “If we maintain the same rate of reductions in departmental spending as we have done in this review, we would need to make savings in welfare of £10 billion by 2016,” said Mr Osborne.
The National Housing Federation's Chief executive David Orr said he was disappointed by the Government's failure to cut VAT to works to repair and maintain social housing and to improve energy efficiency in homes.
He said: "We welcome the Chancellor’s move to close the loophole that allowed wealthy individuals to buy properties through companies and avoid stamp duty. It meant people on high incomes could avoid paying tax on the purchase of expensive homes.
"However it is disappointing that the Chancellor has failed to put investment in housing at the forefront of driving forward economic growth in the UK.
"Supporting housing associations to maximise the investment they make in building and maintaining homes creates new jobs, saves the Government benefit payments, invests in local communities and boosts general economic activity.
"Every new home built creates 1.5 new jobs directly and up to four times as many in the wider economy. It also improves access to housing overall particularly for those on lower and middle incomes. Few other sectors can offer this potential with such short lead-in times and the prospect of so much growth directly benefiting local communities.
"Boosting the housing sector would be an easy win for the economy, for taxpayers and for families. And with 4.5 million people on waiting lists and one million children in overcrowded accommodation a big boost for fairness too."
Reacting on Twitter, housing minister Grant Shapps said: "The Budget puts housing [at the] centre stage of economic recovery [with the] extra £270m Growing Places Fund to help build the homes we need built."
Shelter’s chief executive Campbell Robb said: “Extra funding to boost house building is welcome, but at these levels will barely make a dent in our housing crisis.
“If the government is serious about getting Britain building, it needs to deliver serious investment to match. This would not only help the millions of hard-pressed families who face a daily struggle to meet their housing costs, but would support Britain’s economic recovery by creating jobs and growth.”
David Cowans, Chief Executive of Places for People, said: "We are in a housing drought, and are not building enough homes to keep pace with demand. If we are going to get Britain building again and deliver the 230,000 homes that are needed every year, then we need to look at new sources of private finance (such as REITS and bonds), to fund large scale development and infrastructure works.
"We know there is appetite from institutional investors, as we have been developing models with them which would allow us to build thousands of new homes, boost local economic growth and sustain jobs directly and indirectly in the supply chain.
"The planning system should play a greater role in growing the economy. Housing is central to future economic growth. It is one of the country's leading employers, with over 1.25 million people working in the sector and accounts for 3% of UK GDP. Each home built creates 1.5 direct full-time jobs and many more in the supply chain. Also there is an economic benefit of £3 additional GDP for every £1 spent on housebuilding.
"So if we are going to house the nation then we need a system that encourages housebuilding and the development of new places that are planned, have the infrastructure put in up front, and which are invested in and managed over the long-term.
"The NPPF will enable the construction sector to do this, and deliver new housing in a balanced and sustainable manner, while delivering on economic growth."
The Construction Products Association welcomed the Chancellor’s strong commitment to business in his Budget Statement but says it will not bring any significant short term benefit to a construction industry that is forecast to see output fall by 5% in 2012.
Chief Executive Michael Ankers, said: "The government clearly recognises the constraints on our economic growth imposed by the poor quality of our infrastructure and a planning system that is not fit for purpose. But we are still some way from seeing any benefit from the steps being taken to bring private finance into future road building and we await the details of the revolutionary planning reforms that the Chancellor referred to.
"We welcome the direction of travel set by this Budget, and the various announcements to support housing, rail investment, and development. But construction is facing a very difficult 12 to 18 months and these will not do much to change this. What we would have liked to see is some of the additional savings made on current spending reinvested in capital projects that will not only provide a more competitive business environment for all businesses, but also create jobs throughout the economy.
"It was particularly disappointing that the government once again failed to do anything to encourage investment in improving the energy investment in buildings, and the Budget seems to have been developed in a vacuum as far as their claims to be the ‘greenest government ever’ are concerned."
The Royal Institute of British Architects' Head of External Affairs Anna Scott-Marshall said:
“The 2012 Budget underlines the importance of new development and infrastructure in kick-starting growth in the economy. City Deals, the introduction of TIF and the expansion of Enterprise Zones could equip cities with the necessary tools to help them develop and grow.
“Whilst the RIBA welcomes the additional funding for the Get Britain Building scheme, we urge the Government to ensure that developers and developments selected for funding meet the highest quality credentials so homebuyers benefit as well as house builders.
“We look forward to seeing the details of the NPPF when it is published and comes into force next week”
Estate Agents Trevor Kent & Co talked of a "stamp duty bombshell" which will affect the whole housing market.
Trevor Kent said: “This misguided Coagulation of a Government, bereft of new ideas stuck in a mire of increasing old taxes, seems to think that taxing a home buyer £140,000 for the privilege of buying a £2m home will produce them bundles of cash to spend elsewhere and buy them votes from the approving less well off, come the election - it won’t!
“The Chancellor assured us today that off-shore and corporate envelope top level purchasers will be stopped from avoiding the Duty , but where’s the legislation to enable this policing change from ‘midnight tonight’ – not there. The only souls that will be paying 7% tomorrow will be the law-abiding middle class, billionaires will still be avoiding the tax on major property purchases for months, if not years."