Chancellor Philip Hammond ensured housing was at the centre of his budget with planning, investment and first time buyer stamp duty relief at the heart of series of proposed reforms. However, a far worse than expected summary of economic prospects overshadowed the announcements.
Hammond announced a series of proposals to increase housing supply up to 300,000 a year, cementing the Government’s White Paper promise to “fix the broken housing market”. This figure had already been hinted at by Secretary of State Sajid Javid recently.
Current figures reflect that housing supply has already increased by 1.1 million since 2010(1), which is up from 137,000 in 2010, and includes over 300,000 affordable homes. Last year’s the country built 217,000 homes, which is above the Government’s commitment to build 200,000 homes a year.
£15.3 billion of new financial support for housing was also announced over a five year period, resulting in a total of £44 billion.
This investment is to be supported by significant planning reform that will help bring forward more land for housing. This is in addition to a £204 million fund for innovation and training in construction.
Hammond also revised Stamp Duty Land Tax (SDLT) for first time buyers, raising the threshold to £300,000 on homes below £500,000.
Hammond announced consultations to support planning reform and increase land supply. These will consider taking land out of plans if it has no possibility of gaining planning permission in the first place; intervening where Local Plans have not been created, and the possibility of first-time buyer/affordable rent sites being granted permission, even if they are outside the local plan.
There will also be a focus on boosting housing density in urban areas. This will review minimum densities, greater compulsory purchase powers as well as considering increased conversion opportunities for under-performing commercial space.
There was also a commitment to planning permissions being built out faster, with a review of build outs. This would be bolstered by the establishment of a register for residential planning permissions.
Significantly for custom build homes, local authorities are expected to bring forward 20% of their housing supply for small sites, as well as promoting diversity and Small- and Medium-Enterprise (SME) construction firms.
Developer contributions for CIL based around land value uplift were also included. A consultation by DCLG is proposed to respond to the CIL Review.
A £1.1 billion Land Assembly Fund funded by the NPIF will be created to support the HCA to encourage private developers as they bring on strategic sites, including urban regeneration and new settlements.
Five new Garden Towns were also announced in the budget, while the Housing Infrastructure Fund was boosted with a £2.7 billion cash commitment, bringing the total fund to £5 billion.
In addition, the Cambridge-Milton Keynes-Oxford corridor was singled out for growth in the south-east, with an acknowledgement of the local high-pressure housing need in the area.
Small sites benefited from a £630 million boost for infrastructure and remediation, to speed up the building of homes on stalled and small sites through funding on-site infrastructure and land remediation.
The Home Building Fund is to get a further £1.5 billion of funding, and affordable housing was given a £2 billion fund boost, bringing the Affordable Homes Programme to £9.1 billion, the equivalent of 25,000 social rent homes. This is good news for the Home Building fund as it’s a key source of finance for custom build and SMEs.
Hammond also promised to lift the Housing Revenue Account borrowing cap for councils in areas of high affordability pressure. This will enable more councils to increase the amount of homes they deliver. This will be based on a system of bidding for increases in caps between 2019-20, up to a total of £1 billion by the end of 2021-22. There is also a £400 million loan fund for estate regeneration, to revitalise outdated estates and create new housing opportunities.
Hammond also addressed the construction skills gap, with a commitment to work with industry by providing £34 million to scale up innovative training models, among other proposed measures.
Speaking about the economy in general, official growth forecasts were revised for the next five years due to weaker growth than expected, partially connected to issues surrounding Brexit. However, the issue of housing has been strongly linked with prosperity, and much of the focus on housing centres on getting homes built around key areas of industry and commerce to help boost productivity.
After 10 years of stagnation the announcements of poorer-than-expected growth makes for gloomy reading for most of the UK. But the chancellor has demonstrated a commitment to change in the level of investment proposed, especially for housing.
While not all referring completely to new builds, the proposals put forward represent an increase of 50% from the previous Government target of 200,000 homes a year, underpinned by real investment. For the custom build homes sector, it’s key that it works collaboratively to exploit the opportunities tucked away in the Budget, from small sites to greater Home Building Fund support.