Chancellor Phillip Hammond made several announcements of increased funding for housing and construction in a Budget speech that contained more positive news than many had expected.
Key construction sector announcements included a removal of stamp duty for all first-time buyers of shared equity homes of up to £500,000. A further 500K would be put into the Housing Infrastructure Fund, designed to see 650,000 homes built from the total £5.5bn investment.
There was also announcement of a £675m Future High Streets fund to allow councils to turn under-used retail units in town centres into housing and workspace.
Re-announcements included confirming of guarantees of up to £1bn of bank loans for smaller housebuilders, and a removal of the borrowing restriction on local authorities for building homes.
There would also be a “new wave” of strategic partnerships with housing associations in England that would deliver 13,000 homes, said Hammond.
INDUSTRY REACTS
Industry reaction to the Budget announcement was largely favourable, though criticisms and questions remained.
Commenting on the Future High Streets fund, Brian Berry, chief executive of the FMB, said:
“It is important that the Chancellor has recognised the importance of investing in our high streets. It is estimated that as many as 300,000 to 400,000 new homes alone could be created by making use of empty spaces above shops on our high streets – spaces just waiting to be turned into residential accommodation. There is a pressing need to re-invent many of our town centres in light of changing patterns of retail and leisure. The Government should be applauded for its ambition to safeguard the life of our high streets.”
He added:
“Retail will always be an important element of vibrant high streets, but there is plenty we can do on a small scale to help convert unused and under-used space in to attractive residential units. This will both boost the supply of new homes and help breathe new life back into our high streets. What we must avoid is perfectly good space lying empty and achieving nothing in terms of boosting the local economy or housing individuals.”
Carl Dyer, head of planning at Irwin Mitchell, was also glad to see the proposals to build above shops, but noted its shortfalls:
“At last: a sensible planning proposal, albeit a modest one. Converting redundant shops to homes is a “win-win” proposition: assets which are no longer used can be converted to address a separate problem without putting pressure on green field land.
“All that said, this alone is not going to make a major difference to the housing supply figures. 2017 was a bad year for retailing, with nearly 6,000 shops closing. Not every vacant shop will be suitable or viable for housing use. Even if as many as half of the 2017 losses were to be converted, that would only be an extra 1 per cent towards the government’s 300,000 a year housing target.”
Hew Edgar, RICS head of policy, welcomed the “emphasis on the UK high street”, but raised concerns over the lack of mention of Brexit and reforms to the Permitted Development Rights (PDR) regime:
“It covered many bases, but this Budget did not quite live up to the Chancellor’s claim that it would prepare the UK “for every eventuality”. The Chancellor opted to look inward and tackle domestic issues, but there was very little mention of Brexit.
“Having undertaken research, RICS has concerns over further reforms to the PDR regime, which has already seen significant extensions. Reforming the planning system has been attractive to policymakers, however, caution must be taken to ensure quality of homes is not sacrificed for quantity and pace of delivery. In short, PDR extensions could ease the UK housing crisis, but bypassing regulations should be carefully considered if we want to keep the quality of new build homes to an acceptable standard. There is no reason why we can’t have both quality and quantity when it comes to new homes.”
Justin Gaze, head of residential development land at Knight Frank, said that the “much needed clarity” on Help to Buy was a positive from the Budget:
“No industry should be reliant on government assistance indefinitely,” he said, “so the decision by ministers to restrict the scheme to first time buyers with regional purchase price caps is a sensible one. Some 81 per cent of equity loans since 2013 have been taken out by first-time buyers.”
“However, added Gaze, “the ‘deposit gap’ that the Help to Buy equity loan scheme was established to overcome is still very much a problem. U.K. house prices are 37 per cent higher than when the scheme was introduced in 2013 and the mortgage market for those with only a 5 per cent deposit remains very thin. For prospective buyers, finding the funds for a deposit will remain the biggest barrier to home ownership.”
Melanie Leech, chief executive of the British Property Federation, welcomed the recommendations of the Letwin Review noted in the Budget, and in particular, “his focus on the need for a more diverse, multi- tenure approach to large sites.”
She said:
“The benefits will be three-fold, both helping to address market absorption rates and deliver homes quicker and help to create more sustainable places for different demographics and socio-economic backgrounds, fostering a greater sense of community. In addition, adding a tenure such as build to rent to a development site brings with it an investor with a long term interest.”
“The Review also recognised the skills crisis in which we find ourselves. Time is of the essence, and whilst we applaud the Government’s intention to take a few months to consider the response to the wider Review, this is an area in which we need urgent action to sure that we can hit the 300,000 target.”