The government is determined to fix the broken housing market and ensure that new generations are able to access the housing ladder.
This was the message from Philip Hammond when he delivered 2017’s Autumn Budget earlier today.
Whilst it was arguably the most anticipated area to be brought up by the Chancellor, housing was the final area to be focussed on, leaving even more time for industry predictions to grow.
Before outlining the plans for the sector, Hammond drew attention to the current height of house prices and the general decline in homeownership rates, especially within the younger generation.
Setting out the need to make housing more affordable on a long-term basis, Hammond stressed the aim to build more homes with a need to push on all fronts to reach the target of 300,000 per year.
When delivering the announcement, the Chancellor also stated that solving the housing challenge would take more than money, and tackling it would also take planning reform. The aim of this will be to boost availability of land as well as ensure that underused land is utilised.
He also commented on the need to act more quickly when planning permission is granted, laying out steps to remove exemptions from discharge rules and strengthen the Housing Delivery Test.
Building housing investment was also outlined as key for supporting the market, with Hammond stating that this would be used to intervene more actively in the land market.
As well as increasing the Housing Infrastructure Fund to invest in high-demand areas, building the supply of affordable homes was also highlighted, with the Budget confirming a further £2 billion to go toward this.
According to the Budget document, this would take the total budget for the Affordable Homes Programme to £9.1 billion to 2020-21. This, it is predicted, will provide at least 25,000 new affordable homes.
To support this, the government has also stated that it will provide £34 million to help ensure that there is a workforce to build these homes, scaling up innovative training models across the country.
Perhaps the most anticipated aspect of the Budget was in relation to Stamp Duty, with the numerous experts and academics from across the industry calling for reform in the run-up to the Autumn Statement.
In an announcement that was met with cheers, Philip Hammond confirmed the abolition of the tax for first-time buyers purchasing properties worth up to £300,000. He also stated that for first-time buyers looking to buy a home worth £500,000 or less, they will not be taxed on the first £300,000. This will come into effect from today.
The industry was quick to deliver their stances on the Budget, with thoughts being shared by estate agents, lenders and conveyancers.
Mark Hayward, Chief Executive, NAEA Propertymark focussed on the stamp duty reforms, stating: “The announcement today from the Government to abolish stamp duty for FTBs will have a positive impact on the market. It’s a smart move to ensure the dream of homeownership for young people can become a reality and will help buyers across the UK, including London and the South East where property prices are higher.
“We do however need to realise that this move will increase the demand for FTB properties and if we don’t have the supply it will push prices up. We have seen this in areas where Help to Buy is offered, as it attracts a great deal of interest from FTBs.
“In terms of the Government’s plans to build 300,000 new homes a year, it is yet another pledge to increase the number of new homes created. While we welcome this news, we have historically had these announcements from Government to accelerate housebuilding which has not been delivered. It is not a question of ‘how many’, it’s a question of ‘how’.”
Taking a similarly cautious approach to the stamp duty change was Aldermore’s Commercial Director of Mortgages, Charles McDowell. He stated: “We are pleased to see housing top of the agenda today, in particular the bold measure to abolish stamp duty for first time buyers on properties up to £300,000 and for the first £300,0000 on properties up to £500,000. This is very positive news for this segment of the market, who for too long have struggled with an overly complex and costly system. In fact, our recent research1 revealed that nearly four in 10 (39%) people believe a stamp duty freeze would help reignite a stagnating housing market, while three in 10 (30%) prospective first time buyers said they would accelerate their plans to buy a home if it was temporarily reduced.
“However, this change could be perceived as nothing more than a sticking plaster. The underlying issue remains that more affordable homes need to be built in the right places. The Government has promised the creation of 300,000 houses a year, this needs to be acted on. House building targets have been made and missed for quite some time. It begs the question: what is going to be different this time round? We look forward to seeing detailed plans as it’s extremely important the Government focuses on building the right housing, in the right places, supported by the right infrastructure, with SME house builders leading the charge.”
Praising the anticipated impact of the abolition was Doug Crawford. However, the CEO of My Home Move drew attention to the need to ensure that the expected rise in demand could be met with supply.
“The Chancellor has pledged to make the dream of home ownership a reality for all generations, and scrapping SDLT for first-time buyers will undoubtedly be welcomed whole-heartedly by those struggling to get onto the property ladder.
“However, Britain needs to build, and while a new funding package for UK property development is a stride in the right direction, it will only help tackle our housing crisis if it is invested in the right places. The UK has been scraping the bottom of the barrel for affordable housing stock over recent years and it is vital that increased investment is used wisely to tackle such depleted supply.
“My Home Move’s research has found that 57% of aspiring buyers remain confident about their chances of getting on the housing ladder. With many now due to see decreases in stamp duty it is now up to the UK’s housebuilders to ensure such healthy demand is met with healthy supply.”
Applauding the Chancellor’s Budget from a construction perspective was Chief Executive of the Federation of Master Builders, Brian Berry. He stated: “The Government has set itself a new target of building 300,000 new homes a year by the mid-2020s. And today the Chancellor has put small and medium-sized builders at the heart of ambitious plans to tackle the growing housing crisis. The Chancellor appears to be putting his money where his mouth is with the announcement of £44 billion of capital funding, loans and guarantees. In particular, a further £1.5 billion for the Home Building Fund to be targeted specifically at SME housebuilders can play a significant role in channelling crucial funding to this sector. A £630 million fund to prepare small sites for development and proposals to require councils to deliver more new housing supply from faster-to-build smaller sites will provide opportunities to boost small scale development.”
Taking a slightly more sceptical view was Benson Hersch. The CEO of the Association of Short Term Lenders stated: “The Chancellor’s announcement that the Government will facilitate the building of 300,000 new homes a year, is welcome but ultimately we have heard promise after promise from successive Governments on house building, to little effect. Without a significant increase in social housing this is a pipe dream, especially as current figures include permitted development (offices to flats for example) rather than ‘ground up’ building.
“For many, a house to call their own remains out of reach as the deposits required are still too high. Recent analysis undertaken by the ASTL of our membership shows that bridging loans are increasingly popular forms of finance for people looking to purchase their own homes. Such a trend demonstrates how alternative forms of finance are increasingly providing the solutions where Government should be and could be bridging the gap.”
Speaking from consumer group Homeowners Alliance was Paula Higgins. She praised the steps taken to cut Stamp Duty for first-time buyers, but questioned whether the abolition should be applied on a wider basis.
“Finally the government has taken some bold action on the housing crisis. Stamp Duty robs buyers of much needed cash at the worst possible time and it’s been obvious for years that something needed to be done about it. Back in 2013 we launched our campaign to abolish Stamp Duty for first timers on the back of our report Stamping on Aspiration and I’m delighted the government has finally seen sense and recognised just how unfair and damaging this tax is. Under the new proposal 80% of first time buyers will not pay any Stamp Duty.
“I would have liked to see more help for last time buyers too such as a Stamp Duty cut for downsizers. Freeing up larger family homes is essential for the fluidity of the market but there is currently no incentives to downsize and a lack of suitable properties to move too.
“Mr Hammond should also have addressed the Stamp Duty surcharge issue for buyers who purchase their next property before selling their current home. Under the new system introduced last year these buyers are forced to cough up the extra 3% and must then go through the arduous process of claiming it back. The fact that refunds are currently running at £10m a month shows how flawed this system is. It would make much more sense for the Duty to be collected six months or a year down the line if the property isn’t sold. Home movers should not be penalised for the sluggish market.
“While we obviously welcome the announcement that the government will build 300,000 new homes it’s worth remembering that the financial year 2016/17 was the first year since before the economic crisis that the government hit its housing target (of 200,000). It’s all very well acknowledging how many homes are needed but the government hardly has a good track record of achieving this.”
Commenting on the announcement of increased technological investment was Stephen Ward. The director of strategy at the Council for Licensed Conveyancers stated: “This will help regulators to develop innovative approaches aimed at getting new products and services to market. We hope this fund can be used to explore new ways of delivering regulated services that maintain consumer protection and support economic development. We’re working with conveyancers, lenders, government and others to support innovation in the home buying and selling process that will increase security and speed up transactions.”
