The budget that added a little hope to the housing sector

It was 12:30pm and a fairly standard Wednesday and we were all sitting huddled around our televisions, laptops, smart phones or simply listening via the old fashioned wireless waiting for the final budget of the current Chancellor. Now I’m not one to comment on politics and who will or won’t be in power come the summer but there was one or two things that made my ears prick up.

So the budget 2015 sought to tackle the housing shortage, not just in the capital but wider into the regions, via a number of initiatives:

1. Help to Buy ISAs for first-time buyers at first was a little strange to me until you hear a little more the detail. You put a little money away and the government gives you an extra 25%. Compare that to your current savings accounts or even ISA and it makes you cry with joy over such a lucrative rate and sadness that your other savings are withering away! It will help those struggling to find the new higher deposits required but a big hope of mine is that house prices don’t rise on the knowledge that people will have more savings. This helps tackle raising the money but not really the shortage of properties.
    
2. Housing Investment with the creation of 20 new housing zones and investment to tackle the housing shortage in the capital (maybe he missed the housing shortage in the regions?). This will contribute to the housing shortage in a roundabout way. So 20 areas across the country have been selected as the first Housing Zones, Chancellor George Osborne announced in the Budget, with the government planning to work with a further eight councils to deliver up to 45,000 new homes on brownfield land. But what does “housing zone” mean? Well the site will benefit from a share of up to £200 million recoverable investment from government, cheaper borrowing from the Public Works Loan Board, and priority access to expert planning and technical support from the ATLAS service run by the Homes and Communities Agency. Sounds good doesn’t it. But let’s not forget this country needs more than 45,000 houses to address the shortage!
    
3. Business rate changes will see some councils keep up to 100% of the revenue from business rates. This brings a bit more power back locally and certainly helps the “Northern Powerhouse” case. This retention will allow economic development, if used correctly, and allow local people to spend local taxes ultimately empowering the regions. The review paper shows that the Government is now talking about property “usage” rather than “occupation”. The rate reliefs introduced can be used creatively, assisting business start-ups and promoting economic growth.

Overall the budget delivered a little to help the house-building across the United Kingdom. The detail is still required to really appreciate the changes but let’s hope the new found changes don’t have an adverse impact on housing prices. The big question I still have is how the significant housing shortage is addressed. The plans in place aid the industry but don’t go far enough

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee

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