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Reaction: industry divided over Hammond’s Budget

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Industry experts have welcomed Philip Hammond’s ‘radical’ housing budget, but warned the planned increase to 300,000 new homes a year will not arrive soon enough

RIBA president Ben Derbyshire praised the chancellor’s ‘radical action to address the housing crisis’ which will see a total of £44 billion – comprising £15.3 billion of new financial support – committed to housebuilding over the next five years through direct capital, funding loans and guarantees.

But he said: ‘It will be years before many of these initiatives lead to new homes being built, so we urge the chancellor to reconsider some of the restrictions – particularly the delay in lifting affordable housing borrowing caps for councils until 2019-20.’

RICS parliamentary and public affairs manager Lewis Johnston said the undersupply of new homes could continue for up to eight years before Hammond’s target of 300,000 dwellings-a-year is achieved.

‘While the chancellor is right to say there is “no single magic bullet” to increase housing supply, it requires a lot more than the proposals he has put forward, which amount to a series of marginal and delayed “nudges” at a time when housing supply needs an almighty immediate shove,’ he said.

Alan Wright, partner at bptw partnership also raised concerns over the delivery method, which failed to include a direct role for the government in commissioning new homes.

‘The announcement that £44 billion will be made available to housebuilders through capital funding loans and guarantees sounds like a grand gesture, but falls well short of spending money to deliver new homes,’ he said.

‘It is unclear how this will work or whether a solution based on borrowing will actually do anything to make housing more affordable or accessible for those who need it the most.’

Meanwhile, Sadie Morgan, commissioner at the National Infrastructure Commission (NIC) welcomed the government’s commitment to the Cambridge-Milton Keynes-Oxford Growth Arc which she claimed could deliver one million new homes in the area by 2050.

‘Architects have a significant role to play in shaping the future of our built environment, as well as in the planning and delivery of these new homes,’ she said. ‘We need to be on the front foot, setting the agenda not reacting to it. This investment is a great opportunity. Let’s not miss it.’

Assael Architecture director Félicie Krikler said the housing boost was ‘long overdue’ but argued that reform of land pricing was crucial to delivering any long-term solution to the UK’s housing woes.

She said: ‘While the planning reforms may help speed up planning and prevent land-banking, the inflated price of land is causing development costs to spiral out of control. If this issue is not addressed, Britain’s housing crisis will only worsen and wider economic growth will be stunted.’

Coffey Architects associate George Morgan called on the government to urgently rethink land compensation and create enhanced compulsory purchase powers allowing local authorities to purchase sites at existing use value.

He said: ‘Expanded CPO powers with fairer compensation would mean the public sector could lead, fund and service development at the scale we need. The proposed Oxford-Cambridge developments could pay for themselves.’

Alex Ely, principal at Mæ, agreed and called for a national spatial strategy to assist development corporations in the planning, assembly and delivery of new settlements.

‘The budget has some tantalising messages in it,’ he said, ‘but it is time for a new model of house-building in the UK. It is time for local authorities to flourish again as providers of affordable housing. It is time for us to develop a housing market based on personal sufficiency and public luxury. It is time we invested in the commons economy.’

Planning consultant Peter Stewart predicted the movement towards more proactive policies in the budget could lead to greater government intervention in the failing housing market over the coming years.

‘Mention in the Budget of development corporations to deliver new towns, and greater use of compulsory purchase for land assembly, suggests more of an appetite for interventionist measures than we had been led to expect, which is good,’ he said.

David Birkbeck, chief executive of Design for Homes, welcomed the return to local authority house-building but warned that last year’s local elections, which saw the Conservatives win seats from Labour, the Lib-Dems and UKIP, could see plans for new homes in high-value areas put on hold.

‘Only a raft of measures will make a real impact,’ he said. ‘Is this a big enough raft? Possibly.’ 

Industry reaction

Félicie Krikler, director, Assael Architecture

The additional £400 million of funding for estate regeneration and £34 million for re-skilling the construction workforce is welcome but long overdue. More must be done to address the undersupply of homes in high demand areas, such as London, where estate regeneration will play a vital role. While the planning reforms may help speed up planning and prevent land banking, the inflated price of land is causing development costs to spiral out of control. If this issue is not addressed, Britain’s housing crisis will only worsen and wider economic growth will be stunted.

Dave Birkbeck, Design for Homes

It’s great that the 7-year hunt for alternatives to councils building again is over - the focus on custom-build means we’ve had a few hundred great homes built when we needed tens of thousands of good council ones. Now they should come. The land banking inquiry will be inconclusive - some bank long, some don’t – and it’s a diversion from a more worry threat that councils that went to Tory control in the May elections are dumping core strategies that propose new homes in Tory wards (where higher land values pay for appropriate planning gain and demand assures that homes will actually get built). Only a raft of measures will make a real impact. Is this a big enough raft? Possibly.

Sian Berry, London Assembly member and chair of the London Assembly Housing Committee

The London Assembly Housing Committee welcomes the chancellor’s decision to lift the borrowing cap on local authorities. The committee has called for this change for years, to stimulate investment in council housing.

Our 2013 report Right to Build: What’s Stopping Councils from Building more Housing? found that lifting the cap would allow the boroughs to take a more strategic approach to their housing businesses and drive greater efficiencies through their operations.

It was clear that in a severe housing shortage, placing artificial caps on council borrowing to build homes was harming efforts to help people find lower cost homes. We urge the government to apply these new rules to all London councils so that they and the Mayor can get on helping to solve the housing crisis.

Rory Bergin, partner, Sustainable Futures, HTA

We welcome the changes to the local authority borrowing cap as we are not going to get to 300,000 new homes per year without them. It is also good to see homelessness being mentioned as an issue, even if the action looks small. The promised growth in the Cambridge Oxford corridor sounds good but we have heard ‘garden towns’ being pledged many, many times already. There is so far no mention of offsite or productivity but the devil may be in the detail. Changes to stamp duty for first-time buyers is positive but home ownership is still being flogged as the only model when it is still going to be impossible for many young people in the South East even after the changes.

Alan Wright, partner, bptw partnership

Much as we welcome the stamp duty changes for first-time buyers and accept that there’s no single magic bullet that will increase housing supply, it is hugely disappointing that the Budget does so little to address inequality in Britain. With outgoings including higher interest rates on student loans and rental costs that for many continue to exceed the cost of a mortgage, the vast majority of young people are trapped by an inability to save for a deposit on a home while covering their day-to-day living costs, and yet again the opportunity for a radical solution that would enable many more people to enter the housing market been missed.

We support the push for higher density in town centres and around transport hubs, as well as the proposal for new towns which will go some way to providing more homes. The announcement that £44bn will be made available to housebuilders through capital funding loans and guarantees sounds like a grand gesture but falls well short of spending money to deliver new homes. It is unclear how this will work or whether a solution based on borrowing will actually do anything to make housing more affordable or accessible for those who need it the most.

Russell Curtis, director at RCKa Architects

Disappointing. Yet more tinkering and not enough structural reform to properly address the affordability crisis. Scrapping stamp duty will do nothing but raise prices and will be largely redundant in London anyway, whilst a 100% Council tax premium on empty homes is little more than an insult to those who can’t afford their own homes. The prospect of planning reform is welcome, but quite how translates to the local level will be interesting to see. It’s right, of course, that there’s no ‘silver bullet’ to solve the housing crisis; but this isn’t even loading the gun.

Russell Brown, founding partner at Hawkins\Brown

Like much of the Government’s thinking, each issue is addressed by the budget in isolation, and solely in monetary terms. Surely rough sleeping is an issue that is a result of poor mental health, abusive family relationships or unemployment as much as a housing shortage. And housing, and house ownership, seems to get tied up with issues of personal investment and savings for old age and personal independence, as much as the supply of homes for first time buyers. Surely we should be able to develop a better rental housing offer that really suit a whole range of different lifestyles, incomes and personal timescales. The government should be focusing on providing a better society for people to live in with opportunities for all, not just worrying about whether they can own a slice of real estate.

Craig Casci, GRID architects

A thankless task for a chancellor who is supposed to be steering us through choppy waters as we are being washed over a cliff.

On the face of it there is some stimulus for building and for buying though there needs to be prudence in encouraging the take up of very larger mortgages at a time when interest rates will only be going up. We already have a large property owning populace and a large percentage of outright owners. This stimulus is aimed at the first time buyers who have not experienced the 15% interest rates yet it only takes a few percentage rise to dramatically change repayments. This won’t help supply of course but it could help demand to the need.

Much of the stimulus is without detail but empty properties and homelessness need more attention and on the surface that has been done. However proving that ‘land banking’ is for financial reasons and can be compulsorily purchased (how many years will that take?) or that delays in implementing planning consents are for financial gain reasons (and not, say, negative viability), or indeed that a domestic property is actually empty is difficult and we may be dealing with this again in five years.

Generally timescales are too generous, but we are dealing with politicians and the only quick action they may experience is their demise. To halve rough sleeping in five years when it should be obliterated now, within the rights of the individual, contributes to the national disgrace. Not that the rest of Europe are covering themselves in glory on this matter.

A review to speed up planning permission looks like a very slow and painful assessment on what we already know – hand out more planning consents for brownfield sites that reach affordable housing targets and/or a menu of public benefits. Perhaps taking vote-hungry councillors out of the mix will help, and avoid the endless judicial reviews and challenges.

Training, appreciation and development of building industry skills are long overdue having been considered a priority in preparation for the 2012 Olympics, when announced in 2005. Labour’s approach at that time was to lean on eastern Europe and it cannot be said that was unsuccessful – if a little unsustainable.

David Green, Belsize Architects

The budget measures relating to housing are all welcome, but only as far as the small distance they go. No matter how much money the government has come up with for housing, the real amount of which remains wholly opaque but seems very little, they still have to render the ’affordable housing’ tag meaningful. Release of commercial land banks is good as is pressure to develop unused permissions, but there is nothing to guarantee that the land will be developed in a way which truly delivers housing which is affordable. The headline cut in stamp duty may or may not make existing houses a bit cheaper, but it does nothing at all to increase supply at the right price, which is what really counts.

Mike Jamieson, design director, TateHindle

While the initiatives announced today fall short of the radical solution required to fix the dire state of the UK’s housing supply, we welcome the government’s ambition to build 300,000 homes a year by the mid-2020s and, in turn, its renewed interest in constructing council housing by lifting HRA caps in high demand areas. This is long overdue and essential to increasing starts on site. This, coupled with assistance for SMEs through the Home Builders Fund and abolishing stamp duty for first-time buyers on properties up to £300K offer some hope to the housing sector. The measures outlined by the chancellor are generally positive, but could have been further improved if councils were empowered to compulsorily purchase land at fair market value and spend £10 billion on social housing rather than Help to Buy, which has supported property value increases. It will be interesting to see if the chancellor’s threat to compulsorily purchase land if housebuilders don’t build on it will have any real impact and deter land banking.

Henry Pipe, senior partner, Max Fordham

Of course we welcome the chancellor’s initiatives to tackle the housing crisis. Anything which gives the construction industry an opportunity to plan ahead and move beyond the needlessly self-inflicted political uncertainty of the last 18 months is positive. But we have heard commitments to house building before. What matters now is what steps the government is prepared to take to ensure that this is delivered, and that it provides the right sort of housing in the right places.

Nick Roberts, chief executive officer for UK & Europe, Atkins

Through this Budget the chancellor has put digital and technology at the heart of the British economy, helping maintain our position at the forefront of the technological revolution and providing a solid platform to build future growth. From the trials in mobile and digital connectivity on the Transpennine route and investment in AI and 5G technology, to the evolution of our road transport from internal combustion to electric to fully autonomous, the Government is driving the infrastructure that secures our digitally-enabled future. Furthermore, the acknowledgement that we simply have to invest in providing the country’s workforce with the digital skills needed to make the most of these opportunities is a significant step forward and should be welcomed.

In addition to digital revolution, the chancellor also recognised the value of traditional infrastructure. The commitments around building more housing, freeing up much-needed land and reforming planning regulations are positive developments, as are ongoing commitments to the big transport projects that connect our great towns, cities, communities and businesses. Underpinning these are further steps towards meaningful devolution which allow local authorities to deliver the local infrastructure projects to meet local needs.

Brian Berry, chief executive, FMB

The government has set itself a new target of building 300,000 new homes a year by the mid-2020s. And today the chancellor has put small and medium-sized builders at the heart of ambitious plans to tackle the growing housing crisis. The chancellor appears to be putting his money where his mouth is with the announcement of £44 billion of capital funding, loans and guarantees. In particular, a further £1.5 billion for the Home Building Fund to be targeted specifically at SME housebuilders can play a significant role in channelling crucial funding to this sector. A £630 million fund to prepare small sites for development and proposals to require councils to deliver more new housing supply from faster-to-build smaller sites will provide opportunities to boost small-scale development.

A second major challenge to getting new homes built is the skills crisis we face. In the long run, the only real solution to chronic skills shortages will be a major increase in the training of new entrants into our industry. We are therefore pleased to hear the chancellor has today committed extra resourcing to training for construction skills. With Brexit round the corner, the next few years will bring unprecedented challenges to the construction sector. The government will need to make sure that the sector continues to have access to skilled EU workers, but we are pleased that the chancellor has today listened to the needs of SME builders

Ian Fletcher, director of real estate policy, British Property Federation

The housing crisis didn’t happen overnight and won’t be solved in a day. We welcome the commitment from the chancellor today to long-term solutions and actions that seek to take that commitment forward. What excites us is the commitment to infrastructure, the opportunities that places like Oxford-MK-Cambridge will provide, and the more flexible use of government support through measures like guarantees, to support housing delivery.

The new ‘Homes England’ will have a central role in increasing delivery and it is vital it gets the support of public and private sectors if all our aspirations are to be met. We have promoted three-year tenancies in the Build-to-Rent sector and will, therefore, be engaging positively in providing tenants with that choice via the promised consultation.

We are pleased that the government accepts that the housing challenge is now at the top of its agenda and has announced several measures that should help speed up the planning process. However, in order for these measures to be successful, planning departments need to be adequately resourced or we will end up in the same situation we currently find ourselves in. We look forward to hearing what the secretary of state for the Department of Communities and Local Government has to say in the coming days and are ready to work with the government on all proposals that come forward.

Mark Sitch, senior partner at Barton Willmore

While perhaps lacking in bells and whistles, it’s encouraging to see in this Budget the Government’s strong recognition that investment to support the success of our regions is crucial to supporting the overall economy. Infrastructure plays a huge role whether it is roads, rail or digital capacity and this Budget is a step in the right direction towards achieving what is required, as well as boosting confidence in the market place.

Further devolution deals – as announced for the West Midlands – present real opportunities to deliver the housing and economic growth the Government wants to see. It’s now a case of seeing this ambition being met with positive planning allocations in Local Plans and decisions locally.

We won’t know the outcome of the planning review until next year – and previous conclusions into the issue of land banking have found no evidence that this is the case. This may simply act as a distraction, at a time when reaching the Chancellor’s 300,000 annual housebuilding target is dependent on the industry pulling together. New support for SMEs is just one piece of the puzzle, and local authorities have a vital place in this too which should not be overlooked.

On the demand side, the Chancellor has underscored his commitment to Help to Buy and giving a leg up to first-time buyers via stamp duty exemptions. But it’s on the supply side where our ability to solve this housing crisis will be determined.

Sadiq Khan, Mayor of London

This is the most anti-London Budget in a generation, from a government that has shown contempt for Londoners. Hammering London in this way will not encourage growth elsewhere in the UK. The government’s most astonishing failure today is on housing – today’s measures will not even paper over the cracks. The chancellor did not announce a penny of extra grant for affordable housing in London – even though we know the current spending is less than a fifth of what we need. Everyone knows we need councils to be able to build more, but there was no commitment that any councils in London will be given the powers to do so. This government is all talk and no action on housing.

Martin Walshe, head of new homes at Cheffins

Scrapping stamp duty for first-time buyers up to £300,000 is a welcome move for those struggling to get onto the housing ladder. Any help we can give to first-time buyers to alleviate the burden of finding high deposits as well as footing the bills for all other moving costs should be considered. The issue in the main, however, is the actual pricing of homes coupled with the severe lack of affordable property and unfortunately cutting stamp duty cannot help that.

It is clear that stamp duty is a golden goose for government and of course there is going to be an unwillingness to cut stamp duty receipts too much, however, the suggestion that profits will be used to help fund affordable housing and boost schemes such as help to buy cannot be argued with. Stamp duty has affected all sectors of the market and has caused transactions to fall across the board. Probably the most noticeable effect has been on the middle and prime markets and this ought/has been/should be addressed if Philip Hammond wants to kick-start the housing market. Increased activity in the upper and middle markets ought to have a knock-on effect, increasing transactions and freeing up property at all price points.

From a Cambridge perspective, there are currently over 68,000 homes in the pipeline for the region within a 20-mile radius of the city. However, we are suffering with an affordability issue. As a city we are providing above average numbers of new properties but the majority of these are not in affordable price brackets for our younger generations. We have seen a plethora of high-value new homes in the largest edge-of-city developments, however these are now seeing reducing prices as demand is not reaching the levels of supply from previous years.

The proposed underground line is said to bring the potential for around 50,000 new homes along the corridor into the city centre. This would open up villages south and east of Cambridge, such as Teversham, Fulbourn, Bottisham, Linton and so on and would make these locations increasingly desirable. Towns such as Newmarket and Haverhill would also benefit hugely as the new line could hopefully improve accessibility from those locations into the city centre. This will have a knock-on effect on house prices in these areas which have always been priced at lower levels than Cambridge.

Jean-Marc Vandevivere, chief executive, Platform

A stamp duty cut for first-time buyers is understandable politically and the reality is it’s unlikely to hit the treasury’s coffers too hard. But the fact is, while maybe stimulating the lower end of the ‘for sale’ market, it won’t encourage the building of new housing and will only really benefit those wealthy enough to be able to save for a deposit. Instead, the chancellor should have reversed the stamp duty surcharge for institutional investors. It would have made fewer headlines, but would have built more homes.

Tim Wood, principal, Forge Architects

I fear that the budget only scratches the surface of the housing provision issue. Use it or lose it laws need to be adopted with fast track Compulsory Purchase of underused land. Not for profit house building agencies set up to build on CPO’d land with fast track planning advantages.

Viability policies should be scrapped. 35 per cent affordable means 35 per cent. Government and Councils to make planning policy. Development control to be privatised. In high land value areas, affordable rents should be affordable (not 80 per cent). Tax breaks for off site modular construction.

 

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