Housebuilding barely grazed the headlines generated by today’s Budget, the first since Rishi Sunak handed the NHS a blank cheque in March 2020, just days before the country went into lockdown. As the country comes out the other side, it’s clear the Chancellor doesn’t see a need to tinker too much with the property market. Despite speculation that the Budget would be overwhelmingly green, climate change was barely given a nod either.
In case you blinked and missed it, here are the property highlights from today’s Budget.
- £5 billion earmarked to remove unsafe cladding from high-risk residential buildings, to be funded through a Residential Property Developers Tax levied on housebuilders with profits over £25m at a rate of 4%.
- A multi-year housing settlement totalling nearly £24 billion, the largest cash investment in a decade
- £11.5 billion of the settlement to build 180,000 new, affordable homes annually, 20% larger than the previous programme
- £65 million to ramp up England’s planning system, including digitisation that will make local plans easier to access and £9 million to help local authorities create 100 new urban “pocket parks” across UK
Compared to previous years, there was little speculation on housing prior to the Budget, and few surprises for the industry. So what do the experts make of it?
On planning…
Jo Cowen, CEO at Jo Cowen Architects said: “While we welcome investment into planning and regeneration, there is still a way to go when it comes to ensuring that every home that is built today is fit for tomorrow. Without investing in sustainability, new housing will continue to be made using the same inefficient, wasteful techniques that are in desperate need of change. If we’re serious about decarbonisation, we have to prioritise funding for greener materials, cleaner construction methods, and sustainable building features that genuinely target a net zero model.
“Decarbonisation is also about embracing nature, which means maximising green spaces particularly in urban areas. New pocket parks are a good start, but we need bigger, better, bolder thinking from the government if we’re to create a built environment that’s fit for the future and that means reorienting our cities to put people before cars.”
On affordable housing…
Sundeep Patel, Director of Sales at Together, said: “At first glance, the Chancellor’s £11.5bn commitment to the development of more affordable housing, as part of the £24bn multi-year housing settlement, isn’t to be sniffed at. With an additional £1.8 billion announced today, there are clearly attempts to solve the housing supply crisis.
“That said, we all know today is a bit of a smoke and mirrors game. It’s fair to challenge whether or not this funding will go far enough. Even with the national living wage set to increase, house prices and the strict mortgage lending criteria as set by the high street continues to limit the options available for aspiring first-time buyers. And while focussing on smaller brownfield sites for housing is a good first step, given the plethora of unused buildings, shopping centres and warehouses after the pandemic, it’s puzzling why the Government is yet to seize opportunities here too.”
John Goodall, CEO of Landbay, added: “In this budget the Chancellor seems to have rolled back the years of austerity with yet another spending spree. We will need to see if tax receipts really do cover this if the Chancellor is to meet his goal that every day spending is to be paid for through taxation.
“The £11.5billion investment in 180,000 new affordable homes will be helpful – if they actually get built. The government is woefully short in its target to build 300,000 new homes a year so we need to see the detail of exactly how that is to be achieved.
“The investment relief to encourage businesses to adopt green technologies will be a welcome help limited company landlords to achieve the required EPC rating of C or above which will be required to rent their properties out from 2025.”
On £24bn committed to new homes…
Dean Markall, Sales & Marketing Director at Martin Grant Homes, said: “It is welcome news to the housebuilding industry that the Chancellor has committed a multi-year investment of nearly £24 billion to build new homes, with additional funding to unlock the potential of brownfield land. We know that there is an acute shortage of housing in the UK, and this commitment will allow housing providers to deliver quality new homes and work to a rebalance supply and demand.
“Whilst the Chancellor glossed over the climate crisis in today’s speech, his commitment to new homes is a firm nod to the value that new homes bring to the UK – not least due to their sustainability credentials. Let’s start with the simple fact that a new home is far more sustainable than its older counterparts. They are far better insulated than any other property and are therefore economic to run, and the new homes industry already has to meet high standards of sustainability. This will only continue as the government brings in further requirements for housebuilders to get up to scratch.”
On brownfield land…
Paul Smith, MD of The Strategic Land Group, said: “The extra costs associated with delivering new homes on many brownfield sites often result in wider infrastructure improvements – like news schools and parks – being sacrificed to make development financially viable. And while it’s welcome to hear that the government is taking steps to help fund housebuilding on brownfield sites, the biggest obstacle is the planning system.
“The unpredictability and high costs that characterise the current planning system are a barrier to schemes being brought forward of all types, but especially brownfield sites – the smaller uplift from existing use to residential development value, combined with a reluctance from many councils to allow sites to be redeveloped unless they have been vacant for a number of years means that it simply isn’t worth the risk and expense to apply for planning permission for new homes; even on brownfield sites that are perfectly suitable.
“We’re very unlikely to see new homes built on brownfield sites in greater numbers without meaningful changes to the planning system – the economic benefit that would produce for the country dwarfs every other announcement made in today’s Budget.”
In summary…
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “This Budget could be regarded as a reprieve for the housing industry as many feared they would be clobbered one way or another, whether that was through higher capital gains tax or other measures which would have an impact on activity. When you don’t see much of anything, it is effectively the Chancellor saying he is happy with the way the market is operating at the moment and doesn’t wish to rock the boat.
“Perhaps some measures aimed at first-time buyers would have been welcome. But by not introducing further controls or obligations on landlords, that has made it easier for people to save as it means rents, which are already going up, are less likely to rise further still.
“We would have liked to see more help on supply, although we need to see more detail as to what he announced. Supply helps to keep prices and rents under control when it is more in balance with demand. The aim should be to keep the market moving and affordable supply, in particular, increasing.
“With cladding, the £5bn fund is a step in the right direction but nowhere near the sums mentioned as being realistic to resolve the problem. A proper assessment of what’s involved is required, as well as enough tools to do the job in terms of engineers and surveyors and robust checking. Why should anyone be stuck in something un-mortgageable, particularly those blocks with very limited amounts of cladding? They have been tarred with the same brush as those blocks with extensive issues.
“More help with regards to energy efficiency would have been welcome considering this is such a big target for the government at the moment. Good EPC ratings are still not a high enough priority for aspiring or existing homeowners but tax breaks might increase energy efficiency and retro-fitting supported by green mortgages and more generous green homes grants. However, it’s important to not reduce the value or saleability of older, unmodernised properties or discourage their improvement.’
Adam Forshaw at ONP added: “It was a welcome relief that there was nothing in today’s budget which will fundamentally affect the housing market. It will give us a chance to re-group as an industry and clear through our unprecedented pipelines and gain stability back in the market. The £11.5bn for 180,000 more affordable homes is very welcome and will help to add fresh life to the property industry by creating new, affordable stock. Ambitious targets have been set and we look forward to the government delivering on them.”
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