Chancellor gives housing £44bn commitment in the latest budget
Chancellor Philip Hammond put housing at the very heart of his budget with investment, planning and stamp duty relief for first time buyers as central pillars of a raft of reforms. But the announcements were overshadowed by a far worse than expected overview of the UK’s economic prospects.
Building on its White Paper pledge to “fix the broken housing market,” Hammond announced a series of measures that will raise housing supply to 300,000 a year, a figure previously hinted at by Secretary of State Sajid Javid recently.
Existing figures show that housing supply has increased by 1.1 million since 2010(1) –up from 137,000 in 2010, including over 300,000 affordable homes. Last year’s figure of 217,000 homes meant that Government met its commitment to build 200,000 homes a year for the first time.
Hammond announced £15.3 billion of new financial support for housing over the next five years in the budget, bringing together a total of £44 billion over this period.
This will be supported by reform in the planning sector that will make more land available for housing, together with a £204 million fund to promote innovation and training in the sector.
In addition, he revised Stamp Duty Land Tax (SDLT) for first time buyers, raising the liability threshold to £300,000. However, this is only applicable on homes below the £500,000 value threshold.
Budget – planning reform
Consultations were announced by Hammond that will contribute to planning reform and boost land supply. These will look at removing land from plans where there is no prospect of planning application to be made; intervention in the case where Local Plans have failed to be produced; and the prospect of first-time buyer/affordable rent sites being permissioned even when they are outside the local plan.
There will also be a key drive on increasing housing density in urban areas. These include looking at minimum densities, increased compulsory purchase powers, and conversion opportunities for empty or under-utilised commercial space.
Also in the budget was a commitment to ensuring that planning permissions are built out faster, supported by a review of build outs and the implementation of a register for residential planning permissions.
Importantly for custom build homes, local authorities are expected to bring forward 20% of their housing supply for small sites, promoting diversity and Small- and Medium-Enterprise (SME) construction companies.
Developer contributions for CIL based around land value uplift were also included, with a commitment to a consultation by DCLG to respond to the CIL Review.
Budget – housing investment
A new £1.1 billion Land Assembly Fund will be established, funded by the NPIF, to enable the HCA to work alongside private developers to bring on strategic sites, including new settlements and urban regeneration.
Hammond also announced five new Garden Towns in the budget, and an increase to the Housing Infrastructure Fund, with a further £2.7 billion, bringing total investment in the fund to £5 billion.
The south-east also got a special mention due to the high-pressure housing need in the area, with a particular focus on the Cambridge-Milton Keynes-Oxford corridor.
£630 million was allocated for small sites for infrastructure and remediation, to help accelerate the building of homes on small, stalled sites through funding on-site infrastructure and land remediation.
The Home Building Fund, a key source of finance for custom build and SMEs, is to get a further £1.5 billion of funding, while affordable housing had its £2 billion funding boost confirmed, bringing the total for the Affordable Homes Programme to £9.1 billion, which is expected to create 25,000 social rent homes.
Hammond also committed to lifting the Housing Revenue Account borrowing caps for councils in areas of high affordability pressure to enable them to build more council homes. 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 will also be £400 million of loan funding for estate regeneration, to transform old estates and provide new homes as part of these opportunities.
Finally, Hammond also addressed the construction skills gap, with a promise 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.
