Leading figures from the profession have welcomed the increased investment in housing and infrastructure, but have warned that the chancellor’s Autumn Statement does not go far enough
Chancellor Philip Hammond announced a number of measures in the Autumn Statement today (23 November), including investing £1.4 billion to build 40,000 new affordable homes.
In the government’s first major fiscal announcement since the Brexit vote, Hammond also said that £2.3 billion would be used for a Housing Infrastructure Fund, which would support the construction of up to 100,000 new homes, with £1.1 billion invested in upgrading local roads and public transport.
While Robert Kerr, director of Adam Architecture, welcomed the Housing Infrastructure Fund, he said it was ‘not really sufficient’ to meet the aims it sets out.
‘The commitment to invest £2.3 billion for 100,000 homes equates to just £23,000 a new home,’ he said. ‘In the south of England it is questionable if this will really be sufficient to get the number of homes suggested built.’
Meanwhile, John Assael of Assael Architecture said that the chancellor needed to shift the Conservative Party’s focus on home ownership to other tenures including build-to-rent, and also acknowledge that the government’s lack of financial support for affordable housing was responsible for the shortage of homes generally.
He said that private housing for sale had had a ‘reasonably resilient track record’ while the building of public housing had ‘fallen off the cliff by comparison’.
Assael added: ‘In my view it’s all hot air with very little evidence either of significant, deliverable, public money being allocated to public housing or for new policies to address planning constraints and delays, green belt and public sector release of land and financial incentives.’
Alex Ely, principal at Mae Architects, applauded the increased investment in infrastructure, but added: ‘Infrastructure needs to go beyond just roads and utilities and look at sustainable forms of transport as well as the social infrastructure that helps make places’.
Mark Middleton, managing partner at Grimshaw’s London office, said the commitment to developing the country’s infrastructure was ‘promising’ especially in light of the EU referendum vote.
‘It looks like we’ll all need to tighten our belts for the next few years ready for some unpredictability as we leave the European Union,’ he said. ‘However there’s light at the end of the tunnel for practices who have made infrastructure and transport a cornerstone of their portfolio. Interesting times ahead.’
The chancellor also announced a £3.15 billion investment in London to build 90,000 affordable homes, a move welcomed by Peabody chief executive Stephen Howlett and London mayor Sadiq Khan.
Khan said: ’The record-breaking affordable housing settlement means we can get on with the hard slog of building new genuinely affordable homes, but it won’t happen overnight – fixing the housing crisis will be a marathon and not a sprint.’
The chancellor’s approach on investment into the wider economy was welcomed by Andrew Tate, who said it was a change from former chancellor George Osborne’s focus on deficit reduction.
‘Hopefully this will provide a much-needed boost to confidence in the market and encourage decision-making in the wake of Brexit,’ Tate said. ‘But we have heard all this before, there have been similar grand proclamations of investment. We hope this one will materialise and make a genuine impact to the housing supply.’
John Assael, chairman, Assael Architecture
‘There seems to be a consensus that the provision of new housing is one of the most important issues facing this country, especially in London and the South East. The chancellor needs to acknowledge that the decline in government financial support for affordable housing is the major reason for the decline in new housing generally, as private housing for sale has had a reasonably resilient track record to deliver between 100,000 and 200,000 homes per annum over the past 20 years; the provision of public housing has fallen off the cliff by comparison, with most of it provided by private housebuilders anyway, in the form of a Section 106 tax.
‘He also needs to shift away from the usual Conservatives’ obsession with home ownership, towards other tenures including build-to-rent; the housing crisis needs a more flexible approach otherwise there is no prospect of achieving his targets. In my view it’s all hot air (again) with very little evidence either of significant, deliverable, public money being allocated to public housing or for new policies to address planning constraints and delays, green belt and public sector release of land and financial incentives.’
Alex Ely, principal, Mae
‘The focus on investing in infrastructure is welcome. Government can play a key role in enabling the development of housing just as much as it can in delivering affordable housing itself. One of the biggest barriers to housing suppliers increasing production is the upfront investment cost of infrastructure they usually have to bear. Government investment will help unlock sites that would not otherwise be delivered by market forces alone.
‘However, infrastructure needs to go beyond just roads and utilities and look at sustainable forms of transport as well as the social infrastructure that helps make places and I look forward to seeing the detail behind the chancellor’s announcement.
Robbie Kerr, director, ADAM Architecture
‘The National Productivity Infrastructure Fund is a positive step to provide continued momentum and confidence to the broader construction industry, which will help draw the country’s economy together and ensure that the benefits are felt across the country.
‘The Housing Infrastructure fund is something, but perhaps is not really sufficient to meet the admirable aims it sets out to achieve. This is an area that needs urgent attention or will face longer-term challenges and issues from the next generation. The commitment to invest £2.3 billion for 100,000 homes equates to just £23,000 a new home. A similar shortfall in the reality of what is actually needed lies in the amount for affordable homes, which will subsidise to the effect of £35,000 per affordable home. In the south of England it is questionable if this will really be sufficient to get the number of homes suggested built.
‘Finally the individual buildings: the details of the funding for Wentworth Woodhouse will help a house that has suffered dramatically at the hands of state-run businesses, which can now have fresh impetus for its restoration and make a significant contribution to the estimated costs of the repairs.’
Andrew Tate, director, TateHindle
’We are heartened by the long overdue increase in investment in infrastructure and housing announced in the chancellor’s Autumn statement. In particular the emphasis on affordable housing as the shortage becomes ever more acute throughout the UK.
Philip Hammond’s approach is a welcome change to his predecessor George Osborne who concentrated on deficit reduction rather than investment in the wider economy. Hopefully this will provide a much needed boost to confidence in the market and encourage decision making in the wake of Brexit. But we have heard all this before, there have been similar grand proclamations of investment – we hope this one will materialise and make a genuine impact to the housing supply.’
Mark Middleton, managing partner, Grimshaw’s London office
‘The statement delivers good news for the north of England, perhaps following Osborne’s legacy. Providing relief for the housing crisis will be welcome although the figures stated look a little underwhelming. The commitment to developing the country’s infrastructure and transport networks is promising, as it’s clear we need to improve the supply chain both within the UK and further afield.
It looks like we’ll all need to tighten our belts for the next few years, ready for some unpredictability as we leave the European Union, however there’s light at the end of the tunnel for practices who have made infrastructure and transport a cornerstone of their portfolio. Interesting times ahead.’
Alan Shingler, partner, Sheppard Robson
‘I support the ambition to deliver more affordable homes, and modern methods of construction could help tackle this. Not only does this give environmental benefits, but may also close the gap on affordability as well as increasing the speed of supply at a time when we are anticipating a shortage of skills and labour.’
Stephen Howlett, chief executive, Peabody
‘With Peabody’s ability to raise £11 in private capital for every £1 of government investment received, we are in a strong position to help deliver a step change in housing supply in London. Increasing supply across all tenures is the best way to correct the market and ensure genuine affordable homes for many more people. We welcome the £3 billion devolution of funds to London for 90,000 affordable homes, and are keen to hear more detail on the £2.3 billion housing infrastructure fund as well as the additional capital investment announced by the chancellor.
‘We are encouraged by the commitment to boost productivity and infrastructure, particularly in improving transport connectivity and digital networks. Increasing the minimum wage and supporting people on universal credit will also be of benefit in supporting people into work and to those on lower incomes. There is more to do and we look forward to the reforms which will be set out in the forthcoming housing white paper.’
Martin Wright, managing director, AHR
’Great news on infrastructure and housing investment. But, the devil’s in the detail and we are looking forward to seeing the full scope. The housing white paper should provide some answers - let’s hope it’s worth the wait.’
Melanie Leech, chief executive, the British Property Federation
‘This budget’s hidden gem is the spending on infrastructure to help bring forward housing sites. Infrastructure spending is housing delivery’s silver bullet and the considerable commitment to invest about £2 billion a year is therefore very welcome. The £1.7 billion for accelerated construction on public land will also help upscale the modular construction sector, meaning a more efficient industry and the faster delivery of homes.
‘We are also looking forward to the housing white paper and the policies that government is working on. We desperately need far more homes and the build-to-rent sector is there to support government meet that objective. Most large-scale build-to-rent landlords do not charge tenants fees and therefore they will not be particularly perturbed by the chancellor’s announcement, but what is banned and how it works in practice will need carefully working through.
’A big disappointment is the continued stamp duty surcharge on institutional build-to-rent housing’
‘One big disappointment is the continued stamp duty surcharge on institutional build-to-rent housing, which sends out the wrong signals when those institutions are willing to invest billions on the new homes that we need.
‘We also remain concerned that the proposals to restrict tax relief on interest costs and reform the loss relief rules will inadvertently hinder investment in real estate and infrastructure, even where no tax avoidance is taking place. We are disappointed that the government is going ahead with implementation in April 2017.’
Stephen Radley, director of policy, Construction Industry Training Board
’Today’s announcements offer more certainty for the pipeline of work ahead, not just nationally but at a regional and local level in infrastructure and housing.
‘This will help to boost business confidence following the uncertainties thrown up by Brexit. The local and regional investment should help bring more small firms into the supply chain, where much of the training takes place.
‘With action on several fronts to boost homebuilding, it’s vital that we have the workforce in place to deliver the extra homes. That’s why CITB has joined forces with the Home Building Federation to set up the Homes Building Skills Partnership to support businesses across the UK to address their training and recruitment needs.’
Nick Roberts, chief executive officer, Atkins’ UK and Europe
’The chancellor has placed economic growth and quality of life at the heart of his infrastructure decisions. Being clear on these outcomes means that our most pressing needs around housing, roads, railways and digital networks feature at the top of the priority list, and the government can borrow a sensible amount of money to fund the improvements with a high degree of confidence that they will get a good return on their investments.
’I welcome the Autumn statement recognising the interdependencies between different types of infrastructure. The new £2.3 billion fund focusing on the link between housing and local infrastructure will help unlock valuable public land whilst ensuring local communities can cope with growing populations. And the commitment to become a world leader in fibre and 5G digital networks will not only make a difference to businesses and consumers in their everyday lives, it will also help enable the more technology-enabled infrastructure, such as a digital signalling and connected and autonomous vehicles, which will form a key part of our future.’
Jeremy Blackburn, RICS Head of Policy
‘Philip Hammond is something of a political novelty;, he is a chancellor who listens. We haven’t yet seen him pictured in a hard hat, but he clearly understands the housing sector better than his predecessors.
‘We warned the Treasury that the UK is facing a critical rental shortfall of 1.8 million homes. That tells us that for all the rhetoric, David Cameron and George Osborne’s starter homes strategy failed to get off the ground. The private rented sector became a scapegoat under the previous chancellor, and because of that it suffered.
‘Yet with increasingly unaffordable house prices, the majority of British households will be relying on the rental sector in the future. Now it seems that Hammond will drive an affordable rental agenda and can get Britain building in a way that benefits a cross section of society, not just the fortunate few.’
Rob Weaver, director of investments, Property Partner
‘The severe shortage of affordable housing is a critical threat to UK productivity and digging deeper into treasury coffers is a welcome step towards resolving the broken market.
‘Targeted funds for affordable homes, and across a “wider range of housing”, shows a sage commitment to service all tenure types – both rental and homeownership.
‘What’s more, today’s added boost to infrastructure will reduce the burden on current hotspots, with improved transports links allowing increased mobility for workers. It’ll open up new areas of the country and potentially help close the gap in regional inequality.’
Michael Thirkettle, chief executive of interdisciplinary international construction and property consultancy McBains Cooper
‘This provides some good news regarding the government’s commitment to spend on social and economic infrastructure, in particular the £1.4 billion aimed at delivering 40,000 new affordable homes in England, £2.3 billion housing infrastructure fund to help provide 100,000 new homes in high-demand areas and £3.15 billion for London as its share of the national affordable housing funding to deliver over 90,000 homes. For years successive governments have announced ambitious house building targets which are never met.
’We are disappointed that there was no announcement to streamline the planning process or free up land on the greenbelt – much of which is derelict land rather than areas of beauty – as that would also help the shortage of land.
’We were also disappointed not to see further investments in training and apprenticeships in the UK construction industry, as we will need to train and retrain UK people in readiness for any restrictions in the supply of skilled foreign workers following Brexit.’
Julie Hirigoyen, chief executive, UK-GBC
‘If the government is serious about delivering “a housing market that works for everyone”, new homes must be built to higher energy efficiency standards, to prevent us having to retrofit them in the future. The government must also do more to support energy efficiency measures in existing homes, making them cheaper to heat and healthier to live in.
‘The chancellor’s focus on R&D and productivity is also welcome; low-carbon technologies are the ultimate “disruptive technology” and there are clear economic opportunities for the UK to position itself as a global market leader. High-quality, sustainable buildings can also improve the productivity of the organisations that work in them.’
Terrie Alafat, chief executive, Chartered Institute of Housing
‘The extra investment to support the building of 40,000 new affordable homes and the greater flexibility in funding for housing providers to build homes of all tenures, both of which we had asked for, are particularly welcome. It is also pleasing to see large-scale investment in infrastructure to support new house building.
‘We would, however, have liked to see more to support people who need housing the most, with more funding diverted specifically to support social rents, and a strategic rethink on welfare measures that we believe make housing inaccessible to a significant number of individuals and families.’
Trudi Elliott, chief executive, Royal Town Planning Institute
‘The RTPI has consistently argued that housing and infrastructure need to go hand in hand, and that planners are well positioned to realise the government’s vision of creating more productive communities throughout the country. We welcome the chancellor’s infrastructure-led investment to boosting productivity and unlocking housing, and the shift of the housing strategy to include different tenures and more affordable housing. It is overdue and we need it urgently.
‘The key to ensuring that the significant investment he announced today in national, regional and local infrastructure will really benefit communities and business, is to value and use the vast expertise of planners in this country to plan in a strategic and holistic way.
‘Devolution plays a key role in incentivising a whole wider range of issues within planning and development. The announcements today that give greater incentives for city regions and counties to co-operate in meeting housing need across their areas, as well as additional support for LEPs to help unlock more housing, are in the right direction and need to be rolled out across more areas.’
Bill Price, property director, WSP | Parsons Brinckerhoff
‘Housing remains high on the agenda in terms of both rhetoric and some new measures to back it up. With affordable housing at record lows and a focus on the JAMs (just about managing), new funding here is a sensible and much-needed policy. The concern is that governments are judged solely on the number of houses built.
‘Therefore it is really encouraging to see the chancellor make the direct connection between housing and infrastructure. If underutilised public land or even transport corridors around stations can be used for housing or other development, that would align well with the needs of the sector. That’s why announcements on regional rail, roads and even broadband are just as important victories for the property market. Our sector is suffering from a lack of confidence, not cash. This new public sector investment will play a part in kick-starting the levels of property construction we need to see.’
Keith Aldi, chief executive, Brick Development Association
‘For the construction industry, what is important is that Hammond breathes life into a turbulent sector. The BDA welcomes the news that major infrastructure investment will continue. We are also happy to see that Hammond is addressing the issue of affordability in the interim period, and not simply waiting for supply to balance demand. We are hoping that continued, long-term investment will help to aid the chronic housing crisis. However, the focus must be on quality houses that are sustainable as opposed to cheaper houses in greater density.’
Labour’s London Assembly housing spokesperson Tom Copley
’This is a huge victory for the mayor, who has secured the biggest ever affordable house building settlement for London from the government. He has lobbied extensively for more money for affordable homes, whilst his predecessor allowed the housing crisis to become entrenched.
‘The move to funding affordable rent as well as shared ownership is a welcome recognition from government that their failed Starter Homes policy was neither affordable nor fit for purpose in the capital. London needs genuinely affordable homes, and we now need an assurance that a significant number of these homes will be pegged at the social rent level London needs most acutely.
‘If the government are really serious about tackling the housing crisis, this money needs to be followed by far greater powers over housing and planning for London. Most importantly we need a lift on council borrowing restrictions to allow them to build more new council housing, and “use it or lose it” powers for the mayor to wield when developers have planning permission but don’t build the homes.’
Richard Laming, head of economics, Turley
‘While the government has restated its commitment to getting Britain building, the Autumn Statement remains light on the detail of how this will be done. The commitments to 40,000 new affordable homes and the Housing Infrastructure Fund falls far short of what is required to significantly boost the supply of land to address the housing crisis.
‘The government’s response to reform planning will be a key part of the solution in terms of releasing more land. The chancellor promised a Housing Paper “in due course”. It is our view that this is more urgent than the chancellor appears to think it is. The housing white paper needs to quickly leave Mr Barwell’s in-tray and start to help to address the nation’s housing challenge.’
Robin Paterson, joint chairman and chief executive, United Kingdom Sotheby’s International Realty
‘It is disappointing the chancellor did not take this opportunity to correct the stamp duty woes in the second-home market. Osborne suggested these changes in a different climate, one unaffected by the global uncertainty 2016 has seen. While some correction to pricing was needed, these corrections have certainly taken place and a kick-start to the middle and high end London market is now necessary. Stagnation at any end of the housing ladder is not good for the economy, suffocating the top end has consequences for the lower and vice versa.
‘At the very least, the chancellor should have reduced second-home stamp duty on buy-to-let properties and kept the rates as they are for those with multiple homes they use as residences. These landlords are providing much needed rental accommodation, especially in densely populated cities such as London and Manchester. The more the government picks on the landlord, the more rental prices will increase and home ownership will continue to decline.’
Henry Smith, chief executive of Aitch Group
‘I welcome Philip Hammond’s announcement that the government will double annual spend on housing as it finally takes action to help address a chronic shortage of homes.
‘I believe it has been a missed opportunity for the government to not take action on stamp duty in today’s Autumn Statement. The existing set-up is having a detrimental impact on the housing market, especially for family homes in London and the home counties. We are in the middle of a housing shortage which requires investment, and this tax change is estimated to have already cost our economy nearly £1 billion due to a a reduction in the number of people selling homes. This has also had knock-on effect on services, reducing the demand for decorators, removal firms and building material suppliers.’
Martin Skinner, chief executive of Inspired Homes
‘I am pleased that the government is recognising the need for housing with the announcement of £2.3 billion housing infrastructure fund for up to 100,000 new homes and an additional £1.4 billion towards 40,000 new affordable homes. Real steps are needed to address the longstanding shortage of homes in the UK, and the government has now taken measures to inject some confidence into the industry in order to support the next generation of homeowners.
‘It is vitally important that these new measures quickly filter to homebuilders so we can begin work. Young people who are currently locked out of the buying market, especially in London, will only see this as a step in the right direction when new affordable homes are actually created.’
Johnny Caddick, managing director of Moda Living
’Delivering the infrastructure necessary to support new homes will be crucial to boosting supply, so while the promised £1.3bn for shovel-ready projects like road improvements will help boost productivity and create jobs in the short-term, they are unlikely to have the transformative effect on residential development Crossrail has had.
’To create the Northern Powerhouse or Midlands Engine, agglomeration to help achieve scale is critical, and that means investing in cross-country and inter-city transport beyond HS2. Theresa May has made rebalancing the economy away from London a top priority, and that requires for genuine counter-weights to the capital to emerge, so we need to see more projects like HS3 for the North and elsewhere.’
Robert Sloss, chief executive officer of HUB
’We develop a wide range of housing products across all ranges of affordability, so any extra money the government commits to this sector is welcome. It is also encouraging to see the government focusing on infrastructure as a means to helping the private sector to build more homes.
’The kind of areas we work in, zones 3-6 in London, have historically been some of the worst affected by a lack of infrastructure. We wouldn’t be able to build in places like Hayes and Abbey Wood, if it wasn’t for Crossrail coming. Looking more widely at Thamesmead, the lack of transport infrastructure has been holding up residential development there for decades.
’Of course we look forward to seeing more detail on all of this in the upcoming White Paper, as well as hopefully a positive focus on stimulating more PRS development.’
Shedkm model of abbey wood scheme
Mark Farmer, chief executive of Cast Consultancy
‘It is good to see new housing and infrastructure receiving the focus so desperately needed in the Autumn Statement. It is particularly pleasing to see the increased commitment to the National Affordable Homes Programme, which is a specific recommendation of my recently published government review of the construction market. A tenure-diverse housing market including affordable rent and shared ownership is crucial to underpinning more stable long-term demand in construction and also can act as a catalyst for investment in innovation in house-building, which ultimately will reduce delivery costs. I now await the housing white paper with interest to understand how some of these broader issues are addressed in connection with the Chancellor’s announcements today.
‘While I also welcome the government prioritising large infrastructure projects, such as Heathrow’s third runway, there are still major issues with how these major projects will be physically delivered as I suspect we are about to experience at Hinkley Point. We ultimately require a construction industry that is modern, dynamic and much more productive so we can deliver all of these built assets with constrained resources.’