The Chancellor of the Exchequer, Philip Hammond, delivered his Autumn Budget on 22nd November 2017, with key points relating to the property sector. The key points as announced by the Chancellor are:
Benefits and Wages
Changes to universal credit will include the payment of housing benefit for a further two weeks for new claimants.
Areas where rent is rising fastest will receive increased targeted affordability funding of £125m over two years, benefiting 140,000 people.
The National Living Wage is to be increased by 4.4% to £7.83 from April 2018 giving younger and poorer full-time workers a £600 pay increase.
Staircase tax – will extend the £1,000 discount for small pubs with a rateable value of less than £100,000 to March 2019.
Business rate revaluation periods will reduce to every three years after next revaluation.
Kensington & Chelsea Council will be provided with a further £28m to support victims of the Grenfell fire including counselling services and mental health support, and for regeneration of the surrounding area.
Local Authorities and Housing Associations across the country must urgently identify safety works and are invited to contact the government immediately if they cannot access funding for essential fire safety work.
Local Authorities will be given the power to charge 100% council tax premium on empty properties.
There will be consultation on barriers to long term tenancies.
An investment of £28m will be made to tackle rough sleeping in three new housing regions (Liverpool, Manchester, West Midlands) and a Homelessness Taskforce will be established to halve homelessness by 2022 and eliminate it by 2027.
My Hammond said that the government will invest in infrastructure, skills, research and development which he said are key to deliver a stronger, fairer, more balanced economy with an assurance of economic security to the next generation.
House prices are increasingly out of reach, it takes too long to save for a deposit, and too high a proportion of income goes on rents. Home ownership amongst 25-34 year olds has reduced from 59% to 38% over 13 years, he says. Successive governments have failed to deliver enough homes over decades.
The Chancellor’s message to the next generation of home owners is that getting on the housing ladder is ‘not just a dream’ but ‘a reality for your future’. The Help to Buy Scheme has helped 320,000 people buy homes. There has been a 1.1 million increase in the supply of homes since 2010 (including 350,000 affordable homes). House building at its highest level since the crash, with 279,000 added last year.
He said more was needed to better improve affordability – including an increase in the supply of land for new homes. Just providing more money would simply inflate prices and make matters worse. Supporting the growth of the SME house building sector will remain dependent on the major national house builders that dominate the industry. If we don’t train the construction workers of tomorrow, generating planning permissions will not turn them into homes. Solving the challenge needs money, planning reform, and intervention.
The Chancellor commited to spending a minimum of £44 billion to cover capital funding, loans and guarantees to support house building over the next five years and to boost the supply of skills, resources and building land. Creating financial incentives was necessary to deliver 300,000 net additional homes a year on average by mid-2020.
New £1.7 billion Transforming Cities Fund for local transport investment.
New money for Homebuilders Fund to support SME housebuilding.
£630 million Small Sites Fund to unstick the delivery of 40,000 homes.
An extra £2.7 billion to more than double the Housing Infrastructure Fund.
£400 million more for housing estate regeneration.
£1.1 billion fund to unlock strategic sites, including new settlements and urban regeneration schemes.
Lifting of HRA caps for councils in high demand areas, to get them building again.
£8 billion new financial guarantees to support private housebuilding and the purpose-built private rented sector.
An additional £34 million to develop workforce construction skills
Solving the housing challenge would take more than money, the Chancellor said, looking at planning reform, which should focus on urban areas, where people want to live and where most jobs are created.
He announced a review of the significant gap between planning permissions being granted and the number of homes built (including, in London alone, 270,000 unbuilt residential planning permissions). An urgent review will deliver an interim report by next spring’s economic statement. Land found to be held for commercial rather than technical reasons, will be subject to direct intervention and compulsory purchase powers will be used to change incentives to ensure that land is available for development.
Make the best use of urban land, while still protecting the Green Belt.
The building of high quality, high density homes in city centres and around major transport hubs.
The Homes and Communities Agency will expand to become ‘Homes England’ with a clear remit to facilitate the delivery of sufficient homes where they are most needed to delivery sustained improvement in housing affordability.
Long term measures will include the use of new town development corporations to create five new garden towns in areas of demand pressure, delivered through public-private partnerships designed to attract long-term capital investment from around the world.
Up to one million homes to be built with road and rail infrastructures to support them in the Cambridge-Milton Keynes-Oxford Corridor by 2050. A housing deal has been agreed with Oxfordshire to deliver 100,000 homes by 2031.
First Time Buyers
Additional £10 billion fund to help young people with a Help to Buy equity loan for deposit.
Stamp duty will be abolished from midnight for all first-time buyers on the first £300,000 on properties valued up to £500,000. This will mean an effective reduction of £5,000 that will benefit 95% of first time buyers and no stamp duty for 80% of first time buyers.
The reduction will be applied to homes in England, Wales and Northern Ireland – although the Welsh government is yet to decide where stamp duty will continue in April 2018. In Scotland, the change is subject to the Scottish government’s agreement.
The Chancellor wants to ensure councils in high-demand areas permit more homes for local first-time buyers and affordable rents.
A detailed analysis of the Chancellor’s Budget and how it will affect the property market, written by the editor of www.PropertySurveying.co.uk newsletter (who is a property expert and chartered surveyor), is being prepared for publication and will follow shortly.