Date: 23rd November 2017
Housing was heavily trailed as a centrepiece of yesterday’s budget. What are the highlights and did it live up to its billing?
Much has already been made of the 300,000 new homes a year target, which the budget tells us should be achieved by the end of this parliament (ie 2022). The number is far higher than the annual figure government household projections imply for the next 10 years (c. 220,000 a year England). For those of us involved in housing need assessment, it’s also well above the 266,000 a year the government’s new proposed methodology implies. It would be a level of housing delivery that studies have suggested could ease house price inflation.
Housing completions of 300,000 were last achieved in the UK in the early 1970s, with local authority house-building making a major contribution, but we have been through a long period when they very rarely exceeded 200,000 in a year. The budget rightly recognises there is no single solution to the challenge, outlining measures including extra funding, changes to planning and support for innovation and skills. A further £15.3 billion of funding adds up to a package of £44 billion in capital funding, loans and guarantees for the next 5 years.
However, those calling for a strong commitment to substantial new public sector house-building may be disappointed. Lifting of the borrowing cap for local authorities is limited to high demand areas for now, although the budget hints that the government will revisit the issue. Achieving a step change in housing delivery will require a combination of private sector development, new social housing, more PRS housing, new homes for older people and action to help more SME developers to build.
The removal of stamp duty for first time buyers purchasing homes valued at up to £300,000 has made headlines. There is no change for homes valued at over £500,000. The measure might ease the pain a little for some, but early reaction suggests its impacts are likely to be pretty limited. In some areas of the country, including London, there is only a minority of homes for sale at under £500,000. For many dependent on the private rented sector or needing affordable and social housing, home ownership will probably remain a distant prospect.
Amongst a raft of measures aimed at improving the planning system, the budget has restated its commitment to green belt protection. The emphasis is on urban development and brownfield, with a proposed consultation on measures to increase housing density. This doesn’t address the tricky question of how we plan ahead for and incentivise the freeing up of family homes in suburbs and outside our towns and cities that are crucial for a functional housing market.
One area of England – Oxford-Milton Keynes-Cambridge corridor – is particularly prominent in the budget’s housing and infrastructure measures. Reference to new settlements, Oxfordshire’s 100,000 housing growth deal and the need for strategic infrastructure investment to support growth reflect the focus on this area both as an economic driver and a way to ease pressure on London and the south east’s housing market.
So positive news for housing on a number of fronts. But in the face of downbeat economic growth forecasts, the test will be whether the budget does enough to start a process of sustained change in our housing markets.
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