The series of measures to address the UK housing market introduced by Chancellor George Osborne in yesterday's Autumn Statement – including billions of pounds to provide hundreds of thousands of new homes – have provoked a great deal of response from the industry.
With a combination of previously mooted initiatives and some new proposals, the Chancellor’s speech has earned him the nickname “George the Builder” in some quarters. His plans for the next five years, which double the housing budget to £2bn a year, include providing the nation's housebuilders with £2.3bn to provide 400,000 new starter homes at a discounted price, further funding for 135,000 new Shared Ownership homes and yet more money for homes specifically designed for the elderly and those with disabilities.
In addition, Osborne will introduce Help to Buy London, a targeted variation on the popular shared equity scheme that will provide the capital's homebuyers with an equity loan of up to 40% of the purchase price and he has relaxed the eligibility criteria for Shared Ownership. He has also extended the Right To Buy scheme to housing association homes.
Buy-to-let investors will have been shocked by his introduction of a 3% levy on stamp duty (SDLT) above the standard rate on all investment purchases from April 2016 – a move which is expected to create a surge in investor buying in the next few months.
Property industry figures continue to respond to the Chancellor’s moves:
Bob Weston, CEO at Weston Homes: “We are delighted that the government plans to assist with the shortage of housing in London with £1 billion investment. The new Help to buy incentive, which allows first-time buyers to pay a 5% deposit and receive a 40% government loan for their new home, will provide a huge boost to the housing market and the 20% discount on starter homes will assist housebuilders in the construction of 400,000 new homes in greater London and the home counties.
“The demand for high-quality housing and lack of supply is an issue which is now being addressed by the government. However, there is still much needed support required for apprenticeships and training schemes which will encourage young people to have a career in construction and provide skilled workers, tradesmen and directors to the housebuilding industry. This is imperative in order to meet the governments criteria to build 400,000 new homes by 2020.”
Alan Brown, chief executive of CALA Group: “We welcome the housing legislation in this afternoon’s Autumn Statement, which clearly is positive for CALA and the wider market. The government has consistently demonstrated its commitment to solve the housing crisis and the additional measures announced by the Chancellor today will go further towards achieving this aim while benefitting the overall UK economy.”
Sales and marketing director for Fairview New Homes, Jim Holliday: “The announcement of the London Help to Buy scheme is a significant boost for people living in the Capital. Help to Buy has driven aspiration to own a home. The scheme is already directly responsible for 30% of our sales in London and this proportion will now grow further. The 40% equity loan will help even more people to access the housing market, which in turn will generate increased investment in infrastructure.”
Andy Martin, senior partner at Strutt & Parker: “The introduction of this new tax is yet another limiter to the buy-to-let market, in addition to the ones we saw on landlords in the July 2015 summer budget – and has the potential to weaken this element of the market from April 2016 when it comes into effect.
“The fundamental issue of London’s growing population and limited housebuilding has not really been tackled head-on by these new measures. In fact, many new build development schemes have only got off the ground because of the willingness of investors – whether domestic or overseas – to buy off-plan and effectively forward-fund these schemes.”
Steve Errington, CEO of Story Homes: “With the government’s budget for new build homes doubling to £2bn, we’re confident that more buyers will be able to take their first step onto the property ladder. What’s more, the provision of 400,000 new starter homes will help to provide more houses for first-time buyers – who are the lifeblood of the housing market.
Ian Westerling, managing director, Humberts: “The announcement that from April 2016, buy-to-let landlords and second home buyers in England and Wales will have to pay a 3% surcharge on each stamp duty band is a punch in the stomach to these groups but we don’t expect it to dampen transaction numbers in the long run. In the short term we expect to see more activity from these groups as they seek to beat the April deadline for the extra charges. Thereafter, while it’s a wholly unwelcome tax.”
Adam Phelps, head of land and new homes, Humberts: “The government’s commitment to address the dire housing shortage in this country is clear and we welcome the measures announced today to encourage an increase in supply. Whilst much is made of housing prices and shortages in our capital, other regions across the UK are feeling the pressure too.
'We are pleased to see there will be 8,000 specialist homes for older people and people with disabilities. Given the South West is host to the highest proportion of older people than any other region in England and sees the highest rate of migration from other regions in England, we would hope that the geographic distribution of these homes is appropriately allocated."
Chris Endsor, chief executive of Miller Homes: “We are pleased that housing remains a key priority for the Chancellor and we welcome the measures announced which continue to support the aspirations of those seeking to achieve homeownership.
“Creating additional means by which people can realise these dreams, such as the Starter Home initiative and Help to Buy Shared Ownership scheme, is important, however having a robust planning system which supports the supply side efficiently to meet this demand is critical. We therefore applaud the announcement that there will be further reforms to the planning system and increased availability of more land for housing.”
Robert Fraser, managing director of Fraser & Co: “By raising Stamp Duty Land Tax by 3% for buy-to-let properties and second homes he is taking a firm position against companies and individuals looking to contribute to our thriving city. The negative connotations are plain for all to see, with higher stamp duty rates that will continue to discourage movement and investment within the property market. Foreign investment, which has played a significant part in London’s economic growth, will continue to be compromised with such high rates of stamp duty.”
Karl Hick, CEO of development and housebuilding group Larkfleet: “This all sounds like positive news which the housebuilding industry should welcome. But it is very similar to announcements that have been made in the past – worthy sentiments which have had little or no practical effect.
“Unless the government finds ways to get the money to small and medium-sized housebuilders there will be no real impact on the delivery of new homes. The rules and bureaucracy of previous schemes have proved impossible for smaller firms to penetrate and they have simply not been able to get the money they need to support development.”
Vic Chhabria, managing director of Rescorp: "The additional 3% stamp duty to be levied on buy- to-let mortgages is yet another grenade thrown at the property market. Transactions have already been hit hard at the upper level of the market however this is a blow to the occasional or first-time property investor. So in essence, what the government are saying is that if you want to buy property, and no matter at what level, you need to pay the piper and do so royally."
Brendan Cox, managing director of Waterfords: “Naturally, anything which supports people getting onto the housing ladder is great for the market and the economy. However, the market needs action now, and I am struggling to see how this will solve any problems in the short term with stock. Yes, this will encourage a greater number of first-time buyers, who are essentially the life-blood of the market, but they will be buying new homes, therefore that’s where the chain ends. There will be no domino effect further up the market unless incentives are offered to buy re-sale properties.
Richard Sexton, director of e.surv chartered surveyors: “Reversing the housing deficit will be no easy task – with widely-affordable homes still a pipedream for many parts of the country. First-time buyers have felt the chill for far too long, sidelined by developers, housing associations – and until recent years, the government. With promises of a building boost, and a leg-up over landlords due to stamp duty changes, their fortunes are set to improve further. There is a particular problem in London, so it is promising that the Chancellor has acknowledged this with the introduction of Help to Buy London. “
Trevor Abrahmsohn, Glentree International: “The building of 400,000 new homes by 2020 is a laudable pursuit as is the doubling of the housing budget to £2bn towards the building of more homes. Even extending the Right to Buy scheme is a very good thing for first-time buyers who are not able to go to the ‘Bank of Mum and Dad’ for the deposit. The London Help to Buy initiative is a positive for the capital and must be heartwarming to those on the lowest rung of the property ladder who qualify. Extending loans to small builders is much needed as is releasing more public land for development of new homes.”
Jon Over, managing director at Goldstone Homes: "It's going to put huge added pressure on already overstretched planning departments, causing backlogs and time delays. The demand for property is absolutely there from buyers but it's the availability of land which is going to be the issue."
James Bailey, the chief executive of Henry and James estate agents: “The fact is, everything has a knock-on effect, and what the Chancellor has done, at last, is to create a flow, and that is the important thing. It will give help not just to the 20-year-olds, but to the 30- and 40-year-olds who haven't been able to get onto the first rung of the housing ladder.”
Simon Craven, director at Tower8: “’We are the builders' – this was the Chancellor’s catchphrase of the day. A striking image and one which the government is keen to rally behind and there were some striking policies to match this ambition.
“Further funding for a skilled workforce is required if the construction industry is to match the potential projects that the Chancellor is so keen to encourage. Pressure on the construction industry comes from project costs – staffing, materials inflation and other key factors that affect delivery. He has left many of the problems of supply side and skills to the private sector to resolve – a potentially exciting move. But the grey area occurs where the private sector works with local authorities, planners and education, and divergent goals between these parties mean that the progress required is simply not made.
Kate Smith, regulatory strategy manager at Aegon: “As the latest ONS data highlights, almost 45% of us see a property as the best retirement investment, followed by a quarter who think it’s a pension. Today’s news that buy-to-let properties will incur additional stamp duty will reduce its attractiveness for retirement planning. The announcement highlights how all investments come with costs and as with so many things in life, it’s better not to put all your eggs in one basket.”
Ray Withers, CEO of specialist property investment company Property Frontiers: “What we’re seeing with this government is a genuine, long-term commitment to building new homes that seems to have some serious substance to it. There’s more to the pledge than just political wrangling to get good headlines. Housebuilding starts were up 31% in Q1 2015, compared with the quarter before and completions were up by 10%. The figures show that the government’s approach is paying off. There’s still an awfully long way to go, but this is a positive start.
“Even if the numbers of new homes included in the Autumn Statement aren’t achieved within the desired timescale, a near £7 billion injection into the housing market is excellent news. It signals a strong commitment to government finally tackling the housing crisis in a realistic and sustainable manner.”
Barratt Homes sales director Andrea Pilgrim: “These latest measures are set to make it even easier for people in Swindon to get onto the housing ladder. Coupled with the announcement of the new Help to Buy ISA and low interest and mortgage rates, it seems 2016 is looking bright for those looking to buy their first home.”
David Pringle, director of NOMA: "The announcement of further powers for northern cities is a welcome move from the Chancellor. Giving northern cities more power over their futures will be central to shaping cohesive and thriving business destinations.
“Manchester is a leading example of the power of devolution. Investment in valuable transport links, such as HS2 and the Ordsall Chord, is laying the foundations for a well-connected and flourishing city. On top of this, devolved planning powers have allowed a new land commission to earmark public land for necessary development, making Manchester an attractive landmark for long-term institutional investment."
Andrew Bridges, managing director of Stirling Ackroyd: “Today may have no net effect at all on the supply of new homes. This 400,000 figure might simply slip within the UK totals already expected – unless the government announces real plans to ensure more planning approvals are granted overall. The crunch is sharpest in London, as recognised by the Chancellor. But again, no answers have been given about where new builds in London will actually go.
“The exceptional nature of housing in London is starting to get the attention it deserves. London Help to Buy will help those buying a property up to £600,000, providing overdue and vital support for people trying to get on the ladder. But a third of London’s postal districts already have higher average prices than this, meaning buyers will soon find themselves ineligible for the scheme and squeezed out of many areas.
Martin Bellinger, chief operating officer at Essential Living: “Housing needs to be less of a political football and more about coherent long-term policies that deal with the actual issues. Starter homes are all very well intentioned, but anyone on the ground knows that even with a 25% discount, buying a house for many still won’t be affordable and, even if it were, the chances are these won’t be the sorts of places we want to live. Similarly, grants for Shared Ownership are more tinkering around the edges.
Adrian Gill, director of Reeds Rains and Your Move estate agents: “Once again, the Chancellor is using housing as his prize pony – and his latest trick of a London Help to Buy scheme should be extremely well received. The Chancellor will always faces a delicate balancing act between various different camps, and he’s clearly chosen to champion homeownership – but many others may lose out as a result.
“In addition, there is a lot of detail missing. You can’t buy homes until they’re built. Osborne may be tackling planning, but lack of available land remains an issue, and converting prisons will not go far enough to fill the void.”
Shirley Humphrey, director at Harrods Estates: "We all welcome the Chancellor’s initiatives to create a level playing-field between owner-occupiers and investors and the plans to implement the long overdue new Help to Buy initiative, which will help first-time buyers get a foot on the Greater London property ladder.
"However the knock-on effects in Prime Central London of the additional SDLT charge for second homes and buy-to-let, just announced, may have unintended consequences where high prices mean most pied-à-terre properties are already in the highest bands.
"For buyers, this is an incentive to get off the fence and take advantage of current SDLT rates, before they go up, bringing the UK into line with many other jurisdictions.”
Ian Hessay managing director at Linden Homes North: “The Autumn Statement indicates positive advances and an ongoing commitment to the longer-term future of housebuilding. George Osborne’s announcement gives us reassurance that the government is wholly committed to driving the delivery of much needed homes to people across the country. It is also encouraging to hear about new reforms to planning and freeing up of land for housebuilding; all of which will hopefully unlock new sites for development. We look forward to hearing more detail on these plans in due course.”
Ed Heaton, from buying agent Heaton & Partners: “There will be an inevitable rush of people trying to secure buy-to-let properties before next April, although, this has to be in the context that the changes to the tax review have already made buy-to-lets a less attractive proposition to those with mortgages. It is as if the Chancellor is trying to help control house prices but, in doing so, is going to create an ever shrinking housing stock for rental.
“In terms of second homes, the devil will be in the detail to some extent. For example, someone who buys a new home, without having sold their existing one first, may be liable to the 3 % surcharge. Even if there is an allowance for some cross over, what happens if the property they have bought needs extensive building work, so that they cannot move in for a year? Also, what happens if you own a share in a small holiday home in Cornwall, and then buy a large house as your principle private residence in London or the South East? Will this be classified as a second home? I suspect this new legislation will either be punitive or there will be plenty of loopholes for those who wish to play around with their elected principal private residence.”