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Budget 2015 reaction: ‘We still lack a coherent vision for solving the housing crisis’

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The industry has reacted to chancellor George Osborne’s ‘mixed-bag’ budget announcement with criticism that it fails to deliver on housing

Steve Sanham, development director, HUB
‘This is another budget stoking demand in an already bloated housing market. Encouraging people into further debt in order to buy overpriced homes, even after a ‘discount’, cannot be the answer to the housing crisis. 

‘Ultimately, buyers want to buy in the open market at a sensible price - not in some artificially suppressed and relatively small ‘submarket’. Deregulating the planning system, releasing public land at sensible prices for housing development, and being flexible about the types of and deliverers of affordable housing should be the priorities if we want to create a balanced and resilient housing market.’

Mark Naysmith, UK COO and MD for transportation, infrastructure and property, WSP | Parsons Brinckerhoff
‘This has been a mixed bag for the construction industry. The start of a new Parliament is a significant opportunity for the government to present an ambitious programme to take the UK forward. On the one hand we welcome the priority that has been given to essential infrastructure funding and apprenticeships. It’s great to see more attention for tackling the skills shortage, so that industry and the supply chain have the capacity to deliver on projects. On the other hand we still lack a coherent vision for how we are going to build our way out of a housing crisis. The stakes are high. The nation’s need for new housing and infrastructure remains urgent and we should already be looking beyond where Crossrail 2 and HS3 might go, and how this will drive associated developments.’

John Alker, director of policy and communications, UK Green Building Council
‘George Osborne promised a Budget that would be bold in delivering infrastructure. Yet energy efficiency, which should be seen as one of the UK’s biggest infrastructure priorities, failed to even get a look in.  

‘Energy efficiency is an economic no brainer – cutting bills for households, creating jobs and growth, and improving our energy security. Government’s failure to support this industry at a time when uncertainty about the future of ECO and Green Deal is rife, represents a major missed opportunity for the economy.  

‘We welcome the review of the landscape for business energy efficiency – however, this must be about smarter regulation, rather than an ideological slashing of perceived red tape.’

Anthony Lee, senior director, BNP Paribas Real Estate
‘The government’s plans to reduce rents paid by tenants will have an adverse impact on both housing associations and developers. 

‘Social housing rents have – until now – increased annually by RPI plus 0.5 per cent per annum, underpinning housing associations’ business plans and making social housing an attractive investment proposition.  This announcement is likely to undermine housing association finances and risks making bond issues less attractive. 

‘There is also likely to be an adverse impact on the viability of new developments. The rent reduction will reduce the amount housing associations can pay developers for the affordable housing element in their schemes. This will put pressure on viability and ultimately reduce the overall percentage that schemes can provide.’ 

David Orr, chief executive, National Housing Federation
‘Housing associations share the government’s vision of homes as a foundation for getting on in life. Like this government, we want to see more homes built, more people working and more families with a home of their own. And like this government we want to help people off the merry-go-round of benefits, ensure that hard work pays and reduce the benefit bill.

‘Given changes to working age benefits, a cut in rents over the next four years will be a real help for some tenants, but will massively constrain housing associations’ ability to meet the shared ambition of themselves and government to drive housing growth and new jobs. At the very least 27,000 new homes will not now be built, though that figure could be much higher. The right to buy for housing association tenants further compounds this.’

Iain McIlwee, chief executive, British Woodworking Federation
‘This is a complex Budget for businesses in our sector, the true impact of which probably won’t be known for a while.

‘There was a very positive announcement earlier this week about the Housing Growth Partnership initiative to bring in added support for small builders. The Government’s continued commitment in this Budget to new home building and infrastructure is also very welcome.

‘But our concern is that it may, on closer scrutiny, turn out to be a Budget of indirect and hidden costs to the construction industry, the very engine of growth the Chancellor is depending on most.

‘Like others, we have serious concerns about the future security of income for housing associations and their likely ability to maintain their development or refurbishment programmes. Affordable housing is already on its knees. Planning reforms to be announced on Friday will need to reduce development costs significantly to give us any chance of a sustainable social housing sector in the future.

‘Changes to the tax breaks for private landlords are less than expected, but could also impact on the funds available for domestic RMI work (home repair, maintenance and improvement), which is so essential to the refurbishment to our ageing housing stock.

‘And looking at the direct impact on SMEs in the construction supply chain, while an increase in the minimum wage for the lowest paid is welcome, we cannot ignore the fact that such increases have a knock-on effect throughout a business, creating inflation in a firm’s total wage bill. Our latest State of Trade survey among Britain’s joinery manufacturing firms already reveals that 73% of respondents had seen a sharp increase in labour costs, and this is fast becoming a constraint on business. Wage inflation and other increases in the cost of doing business, such as the IPT increase, will need to be properly offset by the cuts in Corporation Tax and increases in employment allowances.’

Simon Hay, CEO of the Brick Development Association
‘The BDA supports an increase in apprentices to combat future skills shortages both in our industry and the wider on site construction industry. Over the next five years approximately 200,000 new construction jobs are to be created, however, we must not forget that almost twice this number will leave the sector, making schemes such as the levy crucial to attract future construction workers. It must be assured in the details that we are not however disadvantaged against continental competition, we will certainly be monitoring the outcome of the proposed levy with great interest.’


Budget 2015 reaction: ‘We still lack a coherent vision for solving the housing crisis’

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Readers' comments (1)

  • So long as 75% of homes built in London are sold off plans abroad, mainly in the Middle East, often to be left empty or used as pied de terre, as long as buy-to-let landlords are subsidised by tax relief on their mortgages, set against profit and by housing benefit to allow essential workers to afford their crippling rents, there will be no solution to the housing crisis.

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