What the Autumn Budget means for housing
Chancellor Phillip Hammond has announced the government’s Autumn Budget, presenting: “A budget that shows the perseverance of the British people finally paying off.”
As local authorities called for more funding to end the housing crisis, and the Prime Minster told the country that “austerity is over”, we were expecting a budget which would boost the building of affordable and social housing in 2019/20 – and there was plenty for developers to get excited about.
Mr Hammond told Parliament: “We can't resolve the productivity challenge or deliver the high standards of living the British people deserve without fixing our housing market. In last year's Budget I launched a five-year, £44bn housing programme to deliver the biggest increase in housing supply since 1970 and I abolished Stamp Duty for First Time Buyers on properties up to £300,000.
"121,500 First Time Buyers have already benefited from our new relief and the number of First Time Buyers is at an 11-year high. Today I am extending this relief to all first time buyers of shared ownership properties valued up to £500k, and we'll make this relief retrospective so any first time buyer who has made a purchase since the last Budget will benefit.”
Public sector net borrowing is expected to drop even further and should fall to £19.8bn in 2023/24 – the lowest figure since 2004.
Mr Hammond also announced:
• A further £500m for the Housing Infrastructure Fund, to unlock a further 650,000 homes
• The next wave of strategic partnerships with nine Housing Associations to deliver 13,000 homes across England
• Up to £1bn of British Business Bank guarantees to support the revival of SME housebuilders
• Government support for the delivery of a further 19,000 London homes by improving the Docklands Light Railway with Housing Infrastructure Fund money
• Plans to simplify the process for conversion of commercial property into new homes.
Mr Hammond added: “Because we want to see parishes and neighbourhoods enabling more homes for sale to local people to buy, at prices they can afford, we're providing funding to empower up to 500 neighbourhoods to allocate or permission land for housing through the neighbourhood planning system, for sale at a discount to local people in perpetuity.”
He also said he was “grateful” to Oliver Letwin MP for his review of build-out rates which has now been published. He said MP Letwin found “the large housebuilders are not engaged in systematic speculative land-banking and makes several recommendations for reform of the planning system in respect of very large strategic housing sites”. The government are set to respond to this report in the New Year.
Kersten Muller, Head of Real Estate Tax at Grant Thornton UK LLP, said: “This year’s Budget was widely expected to include much-needed measures to help boost the supply of new homes in our country and we were not let down.
“A number of announcements were made from an additional £500m for the Housing Infrastructure Fund, extensions to stamp duty tax relief for shared equity purchases and new partnerships with English housing associations – all with an aim to get the country building.
“The investment did not stop there however, with a targeted fund to rejuvenate the high street and business rates relief introduced for smaller businesses. On top of that we saw a welcome extension to the Annual Investment Allowance to £1m and a new tax relief for eligible construction costs on structures and buildings of 2% per annum.
“We welcome these incentives as they demonstrate a longer term commitment to improving the UK as a destination for investment, a place to do business and for people to enjoy visiting. The guarantees to smaller house builders announced today are also welcome as they will help to encourage greater diversity in our new home offerings.”
As Brexit fears thwarted the housing market in 2018, there was more good news for homebuyers as the income tax cuts which were due to come into force by 2020-21 will be introduced in April 2019, raising the threshold of tax-free earnings to £12,500 and the 40% bracket to £50,000.
However, some felt the damage had already been done in terms of Brexit. Jason North, Associate Director and London Property Specialist at Barnes, one of the UK's leading property specialists, commented: “If, in a parallel universe, the EU referendum had not come about, this chancellor's budget would have been welcomed as an uplifting and forward thinking affair. Just for a while there, the shadow created by the lengthy frustrating and protracted negotiations of achieving Brexit was lifted and one was able to believe that we as a country can come together.
“Until Brexit is resolved however, whether hard, soft or otherwise, values will continue to stagnate and decline. That fence which people are sitting on is becoming dangerously overcrowded. This time of opportunity for buyers should be grasped with both hands."
Richard Hyams, founder and CEO of award-winning architecture practice Astudio, commented on the £500m increase in UK Housing Infrastructure Fund, saying: “Any investment to facilitate the creation of new homes is welcome, currently the industry is not delivering the number of homes required to prevent the cost of them rising above inflation, so the moves the chancellor has made are positive.
"The challenge is going to be how quickly the funds convert to families housed in the homes that this funding helps provide. This would be made swifter if the use of offsite manufacturing technologies were used to facilitate the rapid construction of these much-needed houses and flats.
"It is also encouraging the see that the funds are being focused towards parts of the industry currently better able to build affordable homes such as the housing associations. Historically, these businesses were established to enable the delivery of affordable homes for social rent or shared ownership. Raising the caps on these properties and providing stamp duty relief for first time buyers helps the squeezed middle get to own their own home."
"Now all we need to do is get manufacturing!”
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