2013 Budget: Housing sector reacts

Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Finance

The Chancellor's 2013 Budget has earned mixed reviews within the housing sector.

Boris Worrall, Director of Strategy & External Affairs at the Orbit Group, said: “The Help to Buy proposals look positive as they extend the range and flexibility of people to either get on the housing ladder, or trade up.

"And that should help to get the market moving. We know that FirstBuy is a success and it is popular with the public, developers and the lenders - Orbit HomeBuy agents have completed about 1,500 in the last year alone.

"So it is good to see more investment in these types of shared equity schemes, as well as mortgage guarantees given the difficulties many people have in getting finance. The Chancellor also mentioned 15,000 new homes, although whether those are affordable or not is not clear and there was a strong sense that this was primarily all about ownership and ‘getting the market moving’.

"Ultimately it was good to see housing investment featuring strongly, although it seems unlikely we saw a game-changer given the scale of the shortage we face.”

National Housing Federation chief executive David Orr said: “We welcome the Chancellor’s realisation that people around the country are struggling to buy their own homes, and the measures introduced today may help a number of them. But the danger is that if we don’t tackle the fact we’re still not building enough homes, we’ll just create another housing bubble that will continue to push house prices up and out of reach of the majority.

“Our housing market has long been weakened by the lack of new houses being built, which are forcing up rental and house prices – leaving millions of people struggling to get on the property ladder or pay their rent. The Government should be focusing on unlocking investment to build more new homes as a way of managing down the housing benefit bill and boosting the economy. We welcome the measures to support new supply but they are very small scale.

“And we still need the Government to help unlock land banks, free the small publicly owned derelict sites so we can build houses on them and give housing providers long-term certainty over how much income they can expect so they can start planning and building beyond 2015. With the impact of welfare reform still to be fully felt, we need reassurance and long-term commitment so we can play our part in raising the finance needed to build more homes.”

Charles Fraser, chief executive of St Mungo’s, said: "Homelessness is on the rise.  Investment in housebuilding is welcome but the Government must not lose sight of its pledge to support the most vulnerable members of society. Affordable and supported housing must be available for people moving on from rough sleeping."

Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: "The Help to Buy initiative should provide a significant boost for the housing market. Effectively, a Government-backed MIG (mortgage indemnity guarantee) will enable lenders to offer high loan-to-value mortgages while mitigating their risk. We have been calling for an extension of the MIG scheme for some years as something that would make a real difference to first-time buyers, and the fact that the Government is supporting £130bn of mortgages over three years is excellent news. From next year, lenders will be incentivised to make more mortgages available for those with deposits of between 5 and 20 per cent, which should result in cheaper mortgage rates even though the Government has said it won't be involved in the pricing. If lenders are serious about boosting their business levels, this is the perfect way of doing so and it should be of real assistance for first-time buyers in particular.

"The extension of interest-free equity loans to those who are not first-time buyers and on new-build properties worth up to £600,000 will enable many more people to move up the housing ladder. We welcome the news that this will be launched from next month as there really is no time to lose. This is a massive boost to house builders as well, which is good news for the economy. It is perhaps a shame that older homes were not included in the scheme as new-build properties don't appeal to everyone but someone buying an older property can still access the mortgage guarantee.

"Help to Buy will not be available to landlords, which is no surprise. There are enough first-time buyers and second steppers struggling to buy without the money available being snapped up by landlords. It is also not available to those requiring interest only, or those without a minimum deposit of 5 per cent, which is sensible. This is not reckless lending.

"The Budget really will help those who aspire to own their own home. We would welcome an extension of the 'successful' Funding for Lending Scheme, as mentioned by the Chancellor, as it is already making a difference to mortgage availability and pricing. Combined with these proposed measures, overall it was a very positive Budget for home ownership."

Jonathan Cox, partner in social housing at Anthony Collins Solicitors, said: “The Chancellor has announced further cuts to red tape for businesses, but there also needs to be an emphasis on cutting tape in the social arena. At a time when the country desperately needs to boost house building to meet the shortfall, unblocking rules to encourage pension funds to invest in social housing would be extremely worthwhile.

“At this stage the Government should be working out the detail of its welfare cuts in order to avoid further u-turns. Over the next few months there is going to be an increase in cases that highlight the extreme impact of the reforms, and these are likely to receive support from the courts as well as media attention. Responding to these challenges will cost the Government in money and time, so it would be wise to give the introduction of Universal Credit due attention.”

However, the Child Poverty action Group has said that the Chancellor's statement leaves the poorest families "abandoned on the frontline of austerity".

CEO Alison Garnham said: “The Chancellor described it as a budget for families with children looking to work hard and aspiring to get on, but most low income families have very few reasons to be cheerful and plenty to be fearful. Child poverty is set to increase by 600,000 children during the Coalition’s time in office, and there is nothing much in the Budget that will change this course.

“Raising the personal tax allowance does little good for the lowest paid million workers. Some don’t pay tax anyway, while others keep just 15p in every extra pound because their in-work benefits like housing benefit get withdrawn. Calls by family welfare campaigners to increase the housing benefit earnings disregard, so they get the same full gain as higher earners, have yet again fallen on deaf ears in the Treasury.

“It’s a great disappointment for struggling families that the majority of extra funds for childcare will be going to the wealthiest families. The real challenge is to make childcare affordable for those at the bottom end, so that there are strong incentives for second earners and single parents. That would do much more to help reduce child poverty, and it would help economic recovery too.

“The families facing the hardest struggle remain abandoned today on the frontline of austerity, which also means they don’t have the spending power businesses need to get back to growth and create new jobs. It would be far better for family welfare, business growth and reducing the deficit if families were at the frontline of economic stimulus – countries that took this approach when the economic crisis started have recovered much more strongly that the UK.”

Paul Parkinson, executive director at Futures Housing Group, said: “This year’s budget was dedicated to families who aspire to buy their own home, and we welcome the Chancellor’s commitment to investing in the UK housing market by doubling the affordable homes guarantee programme.

“With this budget coinciding with the National Housing Federation’s Shared Ownership Week (18-22 March), the government’s plans to support individuals who are on the fringes of being able to buy their own home is a positive move in making home ownership more affordable.

“Helping buyers by offering financial security will have a vital impact on addressing the waiting list for affordable rented homes, which recent figures* put at 116,439 for the East Midlands region.

“Backing the chain for selling new homes is good news for housebuilders and we look forward to working creatively with our partners to maximise the government’s investment as part of our overall goal of improving the number of desperately needed affordable homes.

“We welcome the news that the personal tax allowance will increase to £10,000 from April 2014, helping to protect and even improve household budgets for tenants in work and increasing the impact of our programme of training and job opportunities in the communities where we work.  The welfare of our customers who will be hit by the impending changes to benefits remains a primary concern.

“What we have not yet seen however is any detail to address local housing need through bringing empty homes back in to use, any help for those unable to work and indeed how the additional 2% government departmental saving cuts will affect those dependent of such services.  With this in mind, we look forward to learning more as the detail of the government’s plans come to light.”

Shelter’s chief executive Campbell Robb said: "This budget ignores business leaders, economists and even government ministers who've been calling for radical action to kick-start our economy by building more homes. Instead, the government has chosen to extend existing schemes which have so far have failed to deliver at any scale.

"House building is currently at the lowest levels for almost a century. This budget was a huge missed opportunity to build more homes and make sure our children will have a stable and affordable place of their own. Helping a small number of first time buyers today will do little to meet the aspirations of young families tomorrow.”

Commenting on this announcement, Dr. Diana Montgomery, chief executive of the Construction Products Association, said:  "We particularly note four proposals that the industry will find practical and immediately beneficial; first, the exemption next year of the ceramics, cement, steel, minerals and glass sectors from the Climate Change Levy; second, a new Employment Allowance which will largely help our SME manufacturing base; third, an increase to 10% in the rate of the above-the-line R&D credit together with a 10% tax on profits from patents; and lastly, a cut to the corporate tax rate ensuring the UK will enjoy the most competitive tax regime of any major economy in the world.

"We are encouraged that Government has combined these plans with a catalyst for potential home buyers in the form of the new “Help to Buy” programme, which could be a game-changer.  Nevertheless, last year we built only half of the number of homes we need, and the downward revision in economic growth only reinforces the need for these measures to boost construction and the economy."

Elspeth Mackenzie, chief executive of Watford-based Thrive Homes, said: "The Budget produced nothing that was not expected. However I see it as an opportunity missed by the government to improve the provision for social housing. While it is good to support increased home ownership, the measures announced by the Chancellor are not going to increase the supply of available housing. An extension of the right to buy that was alluded to could also further reduce the number of available properties if it goes ahead because these are not being replaced. However we welcome the measures to reduce employers' National Insurance contributions which is excellent for small business."

Dave Sheridan, Chief Executive of Keepmoat, said: "House building in the UK has been stuck in first gear for some time now, and the country is desperate for more new homes that can help people onto the property ladder.

"We welcome the measures outlined in the budget to increase the shared equity scheme and underpin mortgage lending, and it is this kind of investment that can jump start the sector.

"One of the major issues that has stalled the housing market has been access to finance for buyers, with people feeling stuck in their current homes or locked out of the market completely. These initiatives give a lifeline to thousands of families and young people that dream of owning their own property.

"Investment like this also creates a domino effect on the market. More confidence from buyers means we can build more homes, which means we can create more jobs in the communities we work.

"While an extra £3 billion for capital infrastructure projects is welcomed, we look forward to more details on how this will be spent in June.

"We have 3,500 staff across the UK that are building 2,500 new homes and refurbishing 120,000 more this year across more than 200 sites, so Keepmoat stands ready to deliver the new homes that the country, and the economy, desperately needs."

Brian Simpson, chief executive of Wirral Partnership Homes, said: “The actions announced in the Budget today may be too little too late for housing associations which have been struggling with the challenge of building without government grant for a number of years, as well as now managing the impact of welfare reform.

“The additional incentives and amendments to the Right to Buy and Preserved Right to Buy, will arguably increase the number of home owners at the expense of much needed social housing. Replacing this lost stock on a one for one basis as proposed is most unlikely, certainly outside London.

“The £10 billion of loan guarantees shows that the Government is willing to provide some level of support, however what the affordable and private rented sector needs is immediate capital in order to boost construction. For now, families across the country are still struggling to access the affordable housing that they desperately require, and immediate action needs to be taken to meet this need.”

Dr Chris Handy of the PlaceShapers Group said: “We welcomed last September’s housing stimulus package with its focus on driving growth through housing. We are also pleased to have been involved in working through the details of the government’s £10bn guarantee fund, which if moved quickly and together with the extra £300 million for affordable and empty homes, could make a real difference for social and market rented housing.

“Measures that will help prospective home owners and the possible boost to the housing market are welcome but the scale is too small. What was needed was significant stimulus to housing to meet the need shortfall and also a boost to consumer demand.

“Furthermore we’d ask for a proper review of the Housing Benefit pilots and a pause before any further cuts are made to the welfare budget. We’d welcome the government working with our members to fully understand the impact of the cuts at a local level.”

Adam Workman, partner at CT Investment Partners, which manages The North West Fund for Energy & Environmental, said: “While the Budget acknowledges support for both new-build and 15,000 affordable homes,there was no stipulation on how energy efficient these homes should be.

“Although the announcement is welcome there is a lost opportunity because these house will be around for the next 50 years, or more. Building better, more sustainable housing is key. This will drive down costs in the housing sector and provide better opportunities for first-time buyers struggling to get on the property ladder.”

Rebecca Mollart, director of policy at erosh, the national consortium of older people's housing providers, said: “We are pleased to see that the Government has pledged a commitment to helping people who want to plan and save for old age, and acknowledge that many are facing rising care costs.

“However, the social care funding reform will mean that many people will still be faced with the tough decision of having to sell their own home to pay for care costs, but the cap of £72,000 is lower and will be introduced sooner than expected along with a raise in the threshold for the means test for residential care to £118,000.

“We will not see these changes until April 2016 so the reform of social care is still a way off but it is a step in the right direction to see the Government accepting the recommendations of the Dilnot Report and acting on those to protect the needs of vulnerable older people.”

Geeta Nanda, CEO of Thames Valley Housing, said: “It is good to see housing featuring significantly in the Budget, as we all know that for every 100,000 homes built, GDP can be boosted by 1% and around 150,000 new jobs will be supported. This Budget was clearly a boost to home ownership and that is to be welcomed for the many people unable to buy due to mortgage restrictions. We were pleased to see that there was also a boost to the Build to Rent fund for market rent, with support for development finance for building new homes.

"The additional money for affordable housing up to 2015 is welcomed, although Housing Associations are still waiting on the promise of certainty beyond 2015. Unless that certainty comes quickly we will be facing a cliff edge for those who are unable to access home ownership or pay market rents. In order to ensure that this does not happen we need certainty quickly, as well as more efforts on releasing public land.

"What was not addressed in the Budget was the crisis that exists for the 1.8 million people on social housing waiting lists, and those who are being made homeless every day. We would like to have seen something on increasing the debt caps for local authorities, which would allow them to borrow to build more homes. This would help them to respond to the housing need that they still have a duty towards.”