Osborne's Budget: The key housing announcements and reaction
Published by Jon Land for 24dash.com in Housing and also in Central Government
Osborne's Budget: The key housing announcements and reaction
George Osborne today announced (or re-announced in some cases) a raft of measures designed to boost housing supply.
But in a Budget designed to court prospective Conservative voters ahead of next year's general election, there was little in it for the social housing sector.
Instead, we had the reannouncement of the 2020 extension to help to buy, the confirmation of the new garden city at Ebbsfleet and a £500 million Builders Finance Fund, which will provide loans to developers to unlock 15,000 housing units stalled due to difficulty in accessing finance.
There were also details of the new 'right to build', giving custom builders a right to a plot from councils, and a £150 million repayable fund to help provide up to 10,000 serviced plots for custom build. The government will also look to make the help to buy equity loan scheme available for custom build.
The government will also establish a £150 million fund to kick start the regeneration of large housing estates through repayable loans, helping to boost housing supply. Bids will shortly be invited from private sector developers, working with local authorities on estates that might be able to benefit. Following the Autumn Statement, expressions of interest have already been made through the Greater London Authority (GLA) relating to the Aylesbury Estate, Blackwall Reach and Grahame Park regeneration projects in London.
The government will work with the Mayor of London and the GLA to develop proposals for extending the Gospel Oak to Barking Line to Barking Riverside, and to ensure that any public investment unlocks the construction of up to 11,000 new homes.
It will also work with the GLA and the London Borough of Barnet to look at proposals for the Brent Cross regeneration scheme, subject to value for money and affordability.
In addition to the new garden city at Ebbsfleet, George Osborne announced that the government would publish a prospectus by Easter setting out how local authorities could develop their own locally-led proposals for new garden cities.
The government says it is also going to review the General Permitted Development Order to speed up the planning process, allowing permitted development rights for small-scale changes, prior approval rights for development requiring consideration of specific issues, and planning permissions only for the largest scale development. As part of this, the government will consult on specific change of use measures, including greater flexibilities for change to residential use, for example from warehouses and light industry structures, and allowing businesses greater flexibilities to expand facilities such as car parks and loading bays within existing boundaries, where there is little impact on local communities.
Responding to the Budget, Grainia Long, chief executive of the Chartered Institute of Housing (CIH), said: “Historically we know that small and medium sized builders have played a critical part in delivering new homes.
"We have been calling for government to introduce measures to support SME builders to increase the role they can play in addressing our national housing crisis. Following the credit crunch small builders have found it more difficult to access finance and government moves to help them get building by providing £500 million of support is welcome”.
“If we are going to build the number of homes that we need to solve the housing crisis, garden cities and other new developments are going to be a huge part of the mix.”
She added: “The Chancellor’s announcement of the Ebbsfleet garden city and developments in Barking, Riverside and Brent Cross is a welcome recognition of this. We hope this is start of things to come and that we will see more major announcements that will contribute to the supply of new homes.”
The CIH said the Chancellor’s decision to extend Support for Mortgage Interest payments is an important recognition that many homes owners will still be recovering from the effects of the recession and need continued government support to remain in their homes.
But Grainia Long added: "We are disappointed that the Chancellor did not choose to use the tax system to incentivise standards in the market rented sector. This sector is the fastest growing of all tenures it is vital that we take steps to ensure more consistent standards.
"For many people living in the market rented sector quality and standards are too often left too chance. Changing the tax system would reward landlords for doing the right thing, whilst not costing the government any additional money.”
NHBC's Chief Executive Mike Quinton, said: "We welcome today’s announcement which places the house building industry at the heart of the Budget.
“Although our statistics show that new home registration numbers went up by 28% in 2013 compared to the previous year, it is vital to recognise that the recovery is from a low base and numbers remain well below pre-recession levels.
“The Chancellor’s announcement to extend the Help to Buy scheme, which has already given the sector a welcome boost, until the end of the decade will give tens of thousands of people the opportunity to own their brand new home.
"Help to buy has given the UK house building industry a shot in the arm. The extension now provides much-needed certainty and confidence for it to plan for the future.”
Simon Rubinsohn, RICS Chief Economist, said: “A tight budget with little room for manoeuvre. Yet again, the Chancellor has failed to overhaul the stamp duty system, with wages well below inflation and rents rising rapidly for years, many have been struggling to save for a deposit, let alone meet a huge tax bill. Helping more buyers to enter at the lower end of the market would have resulted in more movement and transactions, freeing up stagnant property chains and bringing badly-needed housing onto the market.
“While plans for regeneration and new homes in Barking, Brent Cross and the new garden ‘city’ at Ebbsfleet - which is really just a garden village - will contribute a little housing in the South East. These numbers are a drop in the ocean and do nothing to help others in the UK. More importantly, they don’t deliver the mix of homes we need across society, from the private rented sector to affordable and social housing.
“RICS has long called for an investors’ prospectus for garden cities, which we welcome today. But we need a more ambitious approach than 15,000 homes at a time. To provide investors communities and developers with greater confidence, what we need is a proper political vision for garden cities and the wider economy.
“Meanwhile, the much trailed extension of help to buy to 2020 is not a game changer. While it provides certainty and clarity to the market, creating another 120,000 new build properties is still a modest target. We need over 230,000 just to meet current demand. Much more needs to be done.”
Dave Sheridan, CEO of national house builder, Keepmoat, said: “Help to buy has created a welcome stimulus to housing and made a positive economic impact on communities around the country by encouraging home ownership. As a specialist in high-quality entry-level housing, Keepmoat’s buyer profile fits perfectly with the purpose of help to buy, so we very much welcome the extension to 2020.
“Since its launch, we have sold a total of 998 houses through help to buy - with 751 of these homes sold to first-time buyers with an average age between 25-30, and an average sale price of £115,500.
“As a company, we are looking forward to one of our best ever years as we experience double digit growth in house construction. Over the 2014/15 financial year, Keepmoat plans to build more much needed new build houses – volumes will be up by 30 per cent this year to 2,000 homes.
“The extension of Help to Buy will give the house building industry more confidence to plan ahead for the next six years so we can now begin to think about hiring more staff to build more homes and investing in apprentices. As a result, we are looking to increase our number of apprentices by 50%, by employing at least another 100 apprentices over the next 12 months.”
Jon Williams, partner at PwC, said: "The Chancellor's announcement that £140m additional funding will be made available for immediate repairs to flood damaged defences is welcome, but does not plug the gap needed to ensure the UK is resilient to flooding in the medium term.
"Even after this additional funding, there is still an estimated £500m shortfall if we are to maintain flood defences to avoid in future the estimated £1bn of insured losses and further uninsured economic costs incurred as a result of this winters floods. This also ignores the additional investment that will be needed if we are to adapt to a changing climate.
"Given the current budgetary constraints, this funding in unlikely to only come from the public purse, and further ways to involve the private sector to build the infrastructure and manage flood risk, such as Flood Re, need to be developed.
"One issue that the UK will need to resolve is the tension between building houses on flood plains to relieve the housing shortage burden and the propensity of these new properties to be flooded. Currently the only incentive for these new properties to not be built is that they are not currently covered by Flood Re.
"The floods that the UK experienced over December 2013 to February this year would have been far worse if not for the investment in the past that the UK has made in its flood defences. For every £1 invested in flood defences, £8 in future flood damage is saved as well as significantly reducing the risk of loss of life from floods so the more that is invested, the lower the damage the flood will cause."
Liz Peace, chief executive of the British Property Federation, welcomed confirmation of the new garden city at Ebbsfleet in Kent. She said: "We have always supported the principle of new towns and garden cities, and believe that they have the potential - in the longer term - to contribute significantly to the desired housing figures.
"We support the introduction of an Urban Development Corporation. This would be a good opportunity to reconsider the exclusion of residential sites– and therefore Garden Cities or urban extensions - from the Nationally Significant Infrastructure Regime. We would like to see the NSIP regime extended to include residential, as currently large schemes with any element of housing (or retail) that have the greatest potential to stimulate growth lose out on the benefits of the regime.
"This ultimately leads to stalled development and is contradictory to the advocation of mixed-use schemes that is set out in the NPPF."