Good and bad news from the Autumn Spending Review

So another week, another update from the Chancellor with the overall aim remaining to same, a small budget surplus by 2019/2020 which means continued fiscal tightening. The announcement of a significant increase in spending on housebuilding was very welcome in countering chronic shortages of housing supply. So tick – good news! The government’s proposed planning reforms should also have a positive effect in this area too. So let’s take a little look:

• There will be an additional £2bn per annum in the ‘Help to Buy’ scheme to fund 400,000 new domestic properties, aimed largely at first time buyers and renters. I must admit, “we are the builders” makes me cringe. I’ve said before the scheme to an extent is beneficial though there needs to be caution at a scheme that is creating a large demand and with such a limited supply means only one thing – price increases!
• Further changes to ‘Help to Buy’ to help Londoners, with an interest free loan of up to 40%, and a shared ownership scheme to deliver 135,000 all sounds good but seeing is believing if they actually deliver on this scale.
• A removal of red tape to allow the private sector to build more houses didn’t really give sufficient information as to whether this is good or bad – we want more support for SMEs in the sector, not making it easier for national builders to continue their dominance. By simply releasing public land for 160,000 homes and small builder loans could help the SME sector.
• The release of public sector land is always to be welcomed, and it is good to see this taking place. The homes that are brought forward on these sites must be serviced with sufficient infrastructure and will ideally have homes for sale and for rent, to ensure that they contribute to mixed, vibrant communities.
• The local authority planning department remains low on resource and this will continue to be a big obstacle for development – maybe the government should listen to what the private sector is saying about helping plug the funding gap.
• And if the above isn’t enough, you could soon be buying a house built on a former prison site!

For me though it was the big news for the green construction sector with the announcement that  the renewable heat incentive subsidy would be “reformed” to save £700m, while the energy company obligation will be replaced with a new scheme that will save £30 off the bills of energy customers.

A commitment for 400,000 new homes is very welcome – there is a demand so we need a supply, however it is vital that the construction industry as a whole continues to address skills shortages. There is a rapidly ageing workforce and therefore there needs to be a greater investment in skills and training

In conclusion the majority of changes are welcomed and there has been some good steps made to increase benefit housebuilding but it will take a long time to make up for the relatively low rates of housebuilding seen in the UK over the past two decades, so don’t think this will be enough to stem the rise in ‘generation rent’ over the next five years.

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