In the Budget and Spending Review today, Chancellor of the Exchequer Rishi Sunak (pictured) confirmed that there would be a £24bn multi-year settlement for housing, £11.5bn of which would be used to build a target of 180,000 affordable homes.
He reiterated the government’s commitment to £5bn in grant funding for cladding remediation and said that this would be partially funded by a residential property developer tax.
He also announced that there would be £65m investment to improve planning regime with a new digital system. There is also £65m funding for those in rental debt.
Many of these announcements had already been announced over the past year, and housing only appeared four times in his roughly hour-long address.
Government funding for affordable homes falls short
Industry figures said the funding announced was a step in the right direction, but still fell short of what was needed to address the housing shortage, especially when it came to affordable housing.
Propertymark’s policy and campaigns manager Timothy Douglas said that whilst there was some “good news” from the announcements today it “leaves a lot to be desired”.
He said the previously announced £65m funding for rental debt provided some support but the “devil is in the detail”.
He explained: “Almost four million low-income households are in arrears with their household bills, yet this money will be targeted at those who are most at risk of homelessness, excluding a significant number of others from help.”
He added that the £1.8bn fund in brownfield sites and £11.5bn for affordable homes but noted that the latter was not new money and only 32,000 of the 180,000 would be social rented housing, which is a third of what is needed.
This was echoed by Landbay’s chief executive John Goodall who said that the £11.5bn investment to build 180,000 new homes would be “helpful, if they actually get built”.
He said: “The government is woefully short in its target to build 300,000 new homes a year, so we need to see the detail of exactly how that is to be achieved.”
Steve Collins, chief executive of affordable housing provider Rentplus, said: “Any new investment in housing is to be welcomed but the current funding is still well short of what is needed to provide the affordable housing required to meet demand.
“Given the chancellor’s wish to control spending, the only way to deliver the number of new affordable homes needed is through a significant injection of institutional funding. Privately funded housing providers are already stepping in to fill this gap but there is the potential for many more millions to be invested.”
He added that Homes England and National Housing Federation have both called for further institutional investment in social housing and this should be supported by the government being clearer on alternatives to Help to Buy and shared ownership.
Richard Pike, Phoebus Software sales and marketing director, said: “This was never going to be a budget that really tackles our housing shortage, the Chancellor had much bigger fish to fry after the pandemic.
“There was the usual nod with the announcement of further investment to help development on brownfield sites, which acknowledged the fact that we are woefully behind the government’s target to build 300,000 new homes per year. While the £24bn multi-year settlement sounded good, when spoken out loud, we will need to see exactly how that money is to be carved up and over how many years.”
John Phillips, national operations director at Just Mortgages, said the budget had been “light on news for the property sector”, and added the benefit of funds for affordable housing and brownfield sites would not be felt for years.
Missed opportunity for stamp duty and court system reform
Industry figures had also been hoping for some comment around stamp duty, with the tax holiday fuelling property prices and a boom for the sector earlier over the past 12 months, and some calling for reform.
Douglas said: “The UK government has also missed a golden opportunity to reshape an outdated stamp duty land tax system to reflect rising house prices and remove some of the market distortions it causes.
“It is further disappointing there is no reform of the court system to deal with the volume of possession hearings – an estimated 62,000 just in England and Wales alone – or proper funding for landlords so that calls for energy-efficiency improvements on an older private-rented stock are financially viable, and not just hot air.”
Phillips disagreed and said a lack of action on stamp duty was a positive for the sector.
He said said: “While some may have been calling for a review of stamp duty, the lack of action is actually a positive for the market. Last year transactions were artificially inflated by the tax savings and the pandemic, and since stamp duty has returned, the urgency has dropped, but demand has remained.”
He added that the state of the mortgage market would become clearer in the coming months, but there were “positive signals” from lenders with the return of high loan to value (LTV), especially 95 per cent LTV products which showed lenders did not feel a “price-crash is imminent”.
“The imbalance of buyers and sellers backs this position up. There are still over 10 buyers for every one property listed, and although a sizeable sum has been allocated for new homes, these will take years to build and in the meantime, prices will continue to rise.
“The chancellor’s latest budget may have been light on news for those in the mortgage market, but in this instance, no news is good news.”