Philip Hammond delivered his final Budget before Brexit on Monday and it provided a great opportunity for him to help steady an increasingly jittery housing market. Sadly, and not for the first time he failed rather miserably to address the real issues and instead offered up a rather damp squib of a Budget where housing is concerned.
Of course there were the usual headline grabbing giveaways – £2.8 billion in income tax cuts, which will no doubt have appeased the Tory faithful, but despite a plethora of property market experts offering up some innovative ideas and great advice to the Chancellor prior to the Budget, sadly none of those measures were adopted.
Unfortunately, this Government has demonstrated on numerous occasions, that despite the rhetoric, housing doesn’t figure greatly on their list of priorities. The ever-revolving door of housing ministers, 15 or 16 in the last 20 years! Is testament to that! Nobody stays in the role long enough to establish a coherent, long term strategy!
So, what did Philip Hammond do in this Budget for housing? Precious Little is the answer. There was the usual smoke and mirrors and several things in the small print at the end of his speech, that if we drill down is where the real detail was.
One of the biggest headlines trumpeted by Mr Hammond was the introduction of retrospective stamp duty relief (back to November 2017) on shared ownership properties for first time buyers. This sounds great and any positive measures are very welcome, but in reality, shared ownership represents less than 1% of all housing transactions, therefore this measure doesn’t really even scratch the surface of the problem of a lack of affordable homes for young people desperate to get a foot on the property ladder.
Help to Buy
The extension of Help to Buy, another ill-conceived policy which hasn’t really helped as many of those as it was originally designed too, will now continue until 2023. In addition, the price cap for eligible homes for the scheme has changed. This will now be set at 1.5 the average forecast first time buyer price in an area to reflect regional variations in house prices. In London the maximum price will be £600k! whilst in the North East, this will be £186,100. Recent data shows that over 1/3 of households using help to buy are earning over £50,000 and up sizers have even been found to be using it!
The Chancellor also announced a further £500m to help with an additional 650,000 homes. Sounds wonderful but given the Government have failed to meet any of their annual new home targets for over 10 years, this would seem another rather fanciful as opposed to realistic notion.
Council building cap removed
The lifting of the cap on local authorities on the money that can be borrowed for the provision of more council houses could be a significant game changer. However, it is alright having the money, but historically councils do not have the skills or resources to build and with consistent delays with planning applications, there will not be the mass build needed or expected. Personally, I believe there needs to be a radical review of council house policy. More properties need to be built in better areas, off much higher quality and more low rise than high rise buildings. The awful Grenfell disaster ought to be more than sufficient reason, otherwise these estates just become nothing more than depressing slums with resident’s feelings of little hope for the future and that is not what should be happening to British citizens in the twenty first century.
There were other things mentioned at the end of the Budget speech including a number of consultations, including one on planning reform to encourage more new homes on Britain’s high streets, which seemed a little bizarre! But could include what would be a major expansion of permitted development rights and the Letwin review to speed up build out rated with new planning rules requiring greater diversity of tenure and types of homes, plus new powers for local authorities to drive development. However, the Chancellor and his good friend Oliver Letwin shot themselves in the foot by and I am being choice with my words here when they both naively claimed there was no evidence of large developer’s land banking! Really!?
Private Landlords were given their annual kicking with further tax changes announced from 2020 over capital gains allowances, which will now be only available to homes where landlords live in the properties with the tenant! And there will be a consultation in January on a stamp duty levy of 1% on none UK residents buying homes in England and Northern Ireland. It is estimated that around 13% of all new build homes in the capital have been bought by none UK residents.
So, there we have it folks, a bit of a let down for home buyers, sellers and landlords with a cobbled together Budget of little substance where housing is concerned.
My own view is the country needs a massive review of stamp duty, personally I think sellers and not buyers should pay this anyway. Planning laws need to be simplified and applications speeded up and large developers incentivised or even strong armed into building more, but also more creative and diverse schemes that will include more affordable housing. I would also like to have seen the Government taking the lead on encouraging local authorities to provide more secure short term and permanent accommodation to ease the homelessness crisis that is engulfing many of our towns and cities, which is a shameful indictment on society in 2018.