Autumn Statement: Billions announced to boost new home building by UK Chancellor
The UK Government has announced billions of pounds of new funding to boost the building of new homes and will encourage a wider spread of home types to buy and rent.
Delivering his autumn statement, Chancellor Philip Hammond announced a £2.3 billion housing infrastructure plan to support the construction of 100,000 new homes in areas of high need.
Hammond also announced a £1.4 billion cash injection which will help build 40,000 new affordable homes in places where first time buyers are being prices out of the housing market.
London’s Affordable Homes Programme will get a boost. Currently sitting at £1.07 billion until 2018 it will rise to £3.15 billion between now and 2021.
Restrictions will be relaxed on how existing affordable housing funding can be used and there will be a new Housing White paper that aims to address what the Chancellor described as the ‘urgent challenges’ in the housing sector.
He said that housing providers will now be able to deliver a wide range of products including affordable rent, Shared Ownership and Rent to Buy to support people in different circumstance and at different stages of their lives, including renters struggling to save for a deposit, helping to reduce pressures on household budgets.
Right to Buy
There will also be a large scale regional pilot of Right to Buy for Housing Association tenants and the Chancellor confirmed his support for home ownership through the Help to Buy Equity Loan scheme and the Help to Buy ISA with the aim of doubling, in real terms, annual capital spending on housing over the course of the current Parliament. Hammond also promise to tackle to long term challenge of lack of land supply for home building.
The news was welcomed by the National Association of Estate Agents (NAEA) but it warned that 40,000 new homes is still painfully short of the number of affordable homes needed to solve the housing crisis and get first time buyers on the housing ladder.
‘We hope that the Government will announce an intent to do much more when it releases the housing White Paper. It is vital that the Government uses this to signal a radical rethink in its housing strategy and consider measures such as building homes on unused green belt land to really kick start the house building boom we badly need,’ said NAEA managing director Mark Hayward.
According to Frank Pennal, chief executive of Close Brother’s property division, the announcement will be welcomed by small house builders across the UK as they look for relief amid their struggle to overcome the challenges of the current planning system, industry skills shortages and uncertainty over how Brexit negotiations will impact their business.
‘SME house builders will play a critical role in making up the existing new build shortfall each year in the UK, which currently stands at 80,000 short of the quarter of a million target. Today’s announcement, together with the £3 billion Home Builders Fund introduced earlier this year, should help accelerate construction and remove some of the hurdles faced by smaller house builders, allowing them to unlock their potential and contribute to vital UK housing development,’ he said.
But there will be a lot of questions over how the money will be used, according to Rajiv Nathwani, director of Quivira Capital. Small developers will want to know when they will be able to get access to the funding and he pointed out it will take time for this to translate into land buying, planning and then construction.
‘These are all areas that needs addressing from the Government to put confidence back into small developers to move forward and start creating homes for a generation that desperately needs it. We saw the initial boost in funds last year when the Government gave a £100 million to support small developers. However with the complexities, red tape of planning laws, lending and local council bureaucracy, small developers are hardest hit when it comes to securing bricks and mortar projects,’ he explained.
Martin Skinner, chief executive officer of Inspired Homes, called for the funding to be released as soon as possible. ‘It is vitally important that these new measures quickly filter to home builders 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,’ he said.
Henry Smith, chief executive officer of the Aitch Group agreed. ‘It is important that the fund can quickly translate into unlocking land through purchases. Unfortunately it is sometimes so difficult to access these funds, that by the time they are available, the opportunity is missed. Hopefully this announcement will help create new homes for a generation that desperately needs them,’ he said.