During his Autumn statement, the Chancellor said: "The funds we raise will help building the new homes. So this Spending Review delivers:
A doubling of the housing budget.
400,000 new homes; with extra support for London.
Estates regenerated.
Right to Buy rolled-out.
Paid for by a tax on buy-to-lets and second homes.
Delivered by a government committed to helping working people who want to buy their own home.
For we are the builders."
This is how the industry reacted:
Matt Hutchinson, director of flatshare site SpareRoom.co.uk, had this to say: “The Chancellor thinks we’re in the middle of a home ownership crisis. We're not, we're in the middle of a housing crisis.
The Tories’ one-track focus on home ownership as the only solution for the UK’s housing crisis never wavers. Turning generation rent into generation buy – enabling home ownership – is just one solution to multiple problems renters face. Helping a select few buy homes doesn't fix the wider affordability crisis.
What about making sure generation rent can afford to pay their rent, for one? This would benefit renters who don’t want to buy as well as boosting the savings of those who do.”
Graham Davidson, managing director of Sequre Property Investment, comments: “The Chancellor has made his position explicitly clear; we are here to build homes and the North in particular is here to do business. The Northern economy is already gathering pace and the confirmation of investment in HS2 and HS3, creating better links between London, Manchester and other key Northern cities will ensure that the new homes and businesses in these areas are properly serviced.”
The nod towards protection of arts spending, for projects such as the Manchester HOME arts centre is also positive, as it is well documented that arts and culture are one of the key drivers for wider positive regeneration.”
We welcome the announcement of investment in starter homes, which will help boost activity across all levels of the market, but this is the third time that this phrase has been mentioned and time will tell if it comes to fruition, as we know that developers are already facing a critical skills and materials shortage.”
We await to see the final details, including the thresholds, of the new three percent stamp duty on second homes and buy-to-let properties.”
Paul Smith, CEO at haart estate agents, comments: “The announcements around housing by George Osborne in today’s Autumn Statement are certainly a step in the right direction. Housing is now clearly at the top of the Government’s agenda with issues around affordability and stock levels now affecting all parts of the country.
Our research shows that national prices have risen by 10.5% annually while the number of new properties for sale has dropped by 10.1% in the same period. While many first-time buyers will applaud this initiative to discount starter homes, I fear these properties will still remain largely unaffordable to many, especially in London where the average price of a property is now in excess of £500,000.
Turning ‘Generation Rent’ into ‘Generation Buy’ won’t be like waving a magic wand unfortunately. A boost in the level of starter homes is long-awaited and much needed but it is important that the homes built are genuinely affordable. A further way the Government could increase the supply of starter homes would be to introduce a form of land relief, encouraging house builders to up their level of activity.
It’s not just the number of starter homes that are in short supply, but also family homes. A stamp duty payment deferral policy for new homes across the next Parliament would encourage more building across all price ranges. We also desperately need initiatives to counter the high cost of moving such as reductions in stamp duty for retirees, allowing them to downsize.”
Alison Platt, Chief Executive of Countrywide plc, said: “The announcement of the Chancellor’s housebuilding ambitions are a welcome step forward in the process of redressing the chronic housing shortage we face today. Expanding the starter homes programme to include shared ownership will see more options for struggling first time buyers.
The proposed changes to the planning process will lower the height of the hurdle that planning presents for developers, we think this will help get more homes built, which is what we need.
While pursuing home ownership is certainly part of the route to a healthier housing market, the government needs to recognise the tide of structural changes fuelling the growth of the private rented sector. The growing private rented sector needs support, with incentives for creating quality stock and effective regulation to encourage great landlords.”
Simon Checkley, Managing Director of Private Finance, comments: "One of the most welcome developments from this year’s Autumn Statement is the Chancellor’s decision to provide 400,000 new homes which will go a long way to address the UK’s urgent need for more affordable housing. The Chancellor has quite rightly made housing ‘a priority’ in this year’s Statement and by declaring his intention to provide a further £7bn for housebuilding, he has demonstrated a genuine commitment to addressing this issue at its core.
The Government has declared its support of housebuilders in delivering these initiatives with additional funding as well as the extension of policies such as Help to Buy which will ensure that demand remains strong. Buyer demand will also be supported by underlying economic factors at play, such as the fact that GDP growth has been significant and stands among the strongest in the G7 since the last Statement. Unemployment is greatly reduced and wage growth is not only sustained but also looks set to rise further across the country in the foreseeable future.
In addition to the building of new homes, supply will be further maintained by the fact that local councils will be incentivised by new powers to retain assets from the sale of residential property to spend on other vital public services. A combination of all of these factors paint a very sunny picture for the future of our housing market and mean that following today’s announcement, we can all look forward to enjoying a buoyant market that ensures supply finally keeps apace of ongoing and pent up demand."
Richard Pike, Phoebus Software sales and marketing director, commented: “The Chancellor has today allayed many fears, but also raised a few questions, along with many eyebrows. The fact that the Office for Budget Responsibility has revised down it forecast for public spending has given Mr Osbourne the leeway to drop his intended tax credit cuts and shut the door in the face of critics, and the opposition party, who were expecting further cuts to NHS and police budgets.
As far as our industry is concerned the Chancellor reinforced his commitment of a major house building programme, increasing the pre-election promise of 200,000 homes by 2020 to 400,000 by the end of the decade. This is of course good news, especially when the focus on is on building starter homes. Mr Obsbourne’s mantra throughout this review was ‘we are the builders’, an evolution from ‘get Britain building’ but one with the same message.
The question is not one of where, there is plenty of land especially now that the government is releasing more public land, but how? Since the financial crisis there have been two main reasons why we have not hit our building targets – skills and materials. These are problems that, with only five years until the end of the decade, need to be addressed if we are ever to meet this ambitious target.
The intention of the government is to see more people owning their own home, a very noble enterprise, and the increase in new housing is a good start. However, this is a long term plan and as it stands, with house prices increasing and affordability a major issue in many areas of the country, the current generation is still reliant on rental properties. The new stamp duty increase for buy-to-let is the second blow for landlords this year, and it remains to be seen whether this will give more people the opportunity to buy or if it will just push up rental costs?”
Rob Clifford, Executive Director at property services provider, Shepherd Direct had this to say: "Clearly the major issue confronting the UK housing market is lack of supply at present and therefore it is very positive to see the Government upping its commitment to getting more homes built, especially of the affordable variety. The Help to Buy scheme has been an undoubted success since launch and therefore the expansion of Help to Buy: shared ownership should boost this important part of the market. The commitment to build 400,000 'affordable homes' will make a huge difference if these figures can be achieved, however we have to ensure the land is available and that house builders across the country have the resources in order to make this happen. Unfortunately, this can be a slow process and, even with a strong tail wind, there could be major issues with getting these types of homes and developments built within the timescale the Government wants.
Of course, the housing market is not just one of home-ownership. Even with 'affordable options' and discounts provided to purchase, there will still be many individuals who are unable and or simply unwilling to purchase. This is where the private rental sector also needs to be supported and we are heavily involved in a project where we let and manage up to 6,000 new-build rental homes currently being built. There is a balance that needs to be achieved between home-ownership and delivery of quality private rental homes and it is positive to see the Government willing to support both sides of this housing coin.
As with all these schemes and announcements, the proof of the pudding will be in the eating, and if these targets can be achieved then the UK housing market will be going some way to filling the gap that exists. Increasing supply remains key if we are going to have a UK housing market fit for purpose and therefore I suspect this type of commitment will need to be grown and developed over the years ahead if we are going to keep up with demand."
Matt Pullen, Managing Director of AkzoNobel UK, makers of Dulux paint, said: “The Chancellor is right to focus on the urgent need for more affordable homes. We welcome today's measures which will offer real help to stimulate UK housebuilding. To deliver on the Government's ambitions for 400,000 affordable new homes, government and industry need to come together to tackle the skills shortage in construction.
We’re doing our bit with the Dulux Academy, which will train more than 3,000 painters and decorators a year. We now need training to find the workers and deliver the right skills for the rest of the sector.”
Trevor Ivory, Planning partner at DLA Piper commented: "It is good to see that increasingly the building of new homes remains at the heart of Government policy. While this Government's reforms to the planning system have begun to address some of the barriers to delivery, many in the industry have long argued that much more public investment is needed if we are to achieve the numbers of new homes the country needs and so today's announcement will be widely welcomed.
The focus on providing affordable housing to buy rather than rent reflects the Prime Minister's comments in his speech to the Conservative Party conference a few weeks ago and is a fundamental change from the more traditional focus on affordable rented housing. It is likely to cause real issues for housing associations and also leaves the Government open to the charge that it is not doing enough to help those for whom buying a home is out of reach, even with support.
Further clarity is needed on how Starter Homes will relate to other forms of affordable housing provision. The inclusion of a legal requirement to provide Starter Homes in the Housing and Planning Bill has created a great deal of uncertainty about what this means for other forms of affordable housing that only have policy rather than legal support. The Government needs to be much clearer about whether it wants Starter Homes provided in place of other forms of affordable housing or as an additional requirement on house builders. If it is the former then housing charities and local authorities will cry foul. If it is the latter then the initiative risks jeopardising the viability of development at a time when the market is only just recovering in many parts of the country."
Jonathan Northey, Real Estate partner at DLA Piper, commented: "The Chancellor's commitment to promote measures to tackle the UK's housing crisis is positive and any assistance to substantially increase supply is to be welcomed. This announcement has finally shown how the Government proposes to make a large difference to the market and it will be very interesting to assess the details behind the headlines."
One initial concern is how the 400,000 homes are to be procured. Any developer will tell you at the moment that the capacity in the construction market simply isn't there. So this injection of starter homes can only increase this problem. The changes may attract new entrants from outside the UK, but this takes time and will only solve part of the issue."
There is a risk that these measures could drive up already high land prices and make development even more costly in the long-term. Unless the starter homes initiative is accompanied by measures to assist supply, such as a much needed review of the green belt and a big further influx of public land then there just doesn't seem to be the space to put these homes on the existing land available."
CEO and Founder of Property Partner, Daniel Gandesha said: “Britain does face a housing crisis but home ownership is not the only concern - there is a chronic shortage of rental stock that must also urgently be addressed.
Raising the stamp duty for buy-to-let landlords is not the answer – it’s a blunt tool and fails to take into account the millions of Britons who need affordable homes to rent. The Chancellor should work with industry to deliver innovation to the sector, to back small builders and to support a responsible and sustainable buy-to-let market.”
Stuart Law, CEO at Assetz for Investors, comments: “It is foolish to see the announcement of the London Help to Buy scheme with 40% interest free loans as this creates further upward price pressure on the capital when in fact subsidies should be being removed not added to this location. When the price reversal comes in London this will leave many in negative equity as a direct result of this policy and having to take on even more debt as a result of the further upward impetus on prices this policy will have in London. It is time for investors to leave the capital and invest in safer locations around the UK.
Secondly with the announcement of the new 3% stamp duty premium for Buy-to-Let purchases from April next year, Buy-to-Let investors have been robbed a second time (following the new ‘tenant tax’ or tax on Buy-to-Let mortgage interest payments for higher rate tax payers) yet are providing something invaluable; homes for rent when saving for a deposit and home ownership is increasingly out of reach of many. It must also be remembered that, although the bias in the UK is toward property ownership, renting is the desired lifestyle choice for many who want to live in the most desirable areas, near their place of work and have the flexibility to move on without the restrictions ownership can bring.
The Buy-to-Let investor should not be blamed for house price rises, rather, this is down to the chronic shortage of housebuilding in this country which is compounded by population growth. We would therefore advise caution against penalising this group of investors when actually other policy areas hold the key to unlock the solution.”
Mark Posniak, Managing Director at Dragonfly Property Finance, said: “For the current Government, it’s very clear that we are first and foremost a nation of property owners rather than a nation of landlords.
The stamp duty announcement is a major body blow to anyone who considers bricks and mortar to be a much safer bet for their retirement income than stockmarkets. As it becomes harder and harder for young people and families to get onto the property ladder, we now have a loud and clear message from the Government: there needs to be more balance.
It is important that the Government strikes the right balance between helping people to get onto the property ladder and not removing what many landlords consider to be their retirement nest eggs.
While overseas landlords are arguably the real target here, UK landlords will feel the exact same pain."
Luke Jooste, Head of Real Estate Finance at Funding Circle, had this to say: “It’s promising to see government prioritise housebuilding in the Autumn Statement and in particular getting more funding into the system. As part of this, it’s critical that government does not forget small developers. They are the bedrock of a healthy market, yet their market share has fallen from two-thirds in 1988 to just over a quarter in 2013. Small developers have struggled to access finance from high street banks due to capital requirements and legacy issues from the financial crisis – and to get Britain building, this needs to change quickly. Small developers are often unaware of non-bank options now available to them, including online marketplaces, which can deliver the same level of credit assessment in weeks rather than months.”
Brian Berry, Chief Executive of the FMB, said: “Faced with some difficult decisions regarding public spending cuts, today the Chancellor was right to ‘choose housing’ by prioritising investment in new affordable homes. The Government has confirmed plans to build 200,000 starter homes with 20% discounts for under-40s, 135,000 shared ownership homes, 10,000 rent-to-buy homes and 8,000 specialist properties for the elderly and disabled. This amounts to a £7bn public investment in new homes – a concerted effort to give aspirational home owners a helping hand onto the housing ladder.
Nevertheless, ‘George the Builder’ will need a new generation of ‘real’ builders to make his vision for housing a reality. We’re already seeing housing developments starting to stall because the cost of hiring skilled tradespeople is threatening to make some sites simply unviable. Unless we see a massive uplift in apprenticeship training in our industry, there won’t be enough pairs of hands to deliver more housing on this scale. That’s why we’re keen for the Government to tread carefully when applying the new proposed Apprenticeship Levy to the construction industry.
The Chancellor clearly recognises that the crisis of home ownership is inextricably linked to a crisis in house building. We therefore hope that in order to address both, the Government will do everything it can to increase house building capacity. SME developers will have an important role to play in delivering the smaller scale sites across the country. The last time we built in excess of 200,000 homes in one year was in the late 1980s when two-thirds of all homes were built by small developers.
SME house builders now only build little over one quarter of all new homes which points to another serious capacity issue – we need more small house builders to enter the market and also for SME house builders to crank up their delivery of new homes in order to build the Chancellors 400,000 new affordable homes.”
