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Will Hammond's £44bn handout solve the housing crisis?

Chancellor Philip Hammond has pledged billions to get more homes built and more people onto the property ladder.

 
Will Hammond's £44bn handout solve the housing crisis?
 

The government has used the Budget to announce a raft of measures worth £44 billion to tackle a lack of affordable housing.

High rents combined with the need for an increasingly inflated deposit has put home-ownership out of reach for many young people.

The number of 25-to-34 year olds owning their own home has fallen from 59% to 38% over the past 13 years as housing supply has failed to keep pace with demand. In October, the price of an average home was £211,085, according to Halifax, an increase of 2.5% on the year before.

Prime minister Theresa May last week vowed to take ‘personal charge’ of ‘fixing this problem’ by allowing housing association debt to be taken ‘off the books’, letting them borrow millions for more housebuilding.

Building on May’s plans, chancellor Philip Hammond used his Budget speech to abolish stamp duty for first-time buyers but he went further, announcing he would help fix the problem by ‘choosing to build’.

‘We send a message to the next generation that getting on the housing ladder is not just a dream of your parents’ past, but a reality for your future,’ he said.

Hammond (pictured) noted the 320,000 people who have bought a home under the government’s Help to Buy scheme and the building of 1.1 million homes since 2010, with 217,000 net additional homes built last year, but he said ‘we need to do better still if we are to see affordability improve’.

Property pledge

Hammond said there was ‘no single magic bullet’ to solving the housing crisis and put forward a £44 billion package of capital funding, loans and guarantees, providing incentives to deliver 300,000 net additional homes a year on average by the mid-2020s.

Under the package, Hammond has pledged:

·         £630 million for the ‘home builders fund’ which lends to small and medium housebuilders, in an effort to ‘unstick’ the building of 40,000 homes;

·         £2.7 billion for the ‘housing infrastructure fund’, which allows local authorities to bid for funding for infrastructure projects that support housing;

·         £400 million for estate regeneration;

·         £1.1 billion to ‘unlock strategic sites’ and fund urban regeneration schemes;

·         A lifting of ‘housing revenue account’ caps, which limits the amount councils can borrow against their housing assets, for councils in high-demand areas;

·         £8 billion of financial guarantees to ‘support private housebuilding’ and purpose-build private rented accommodation;

·         £34 million to develop construction skills across the country to ensure enough workers to build the planned increase in homes;

·         Funding for infrastructure to support 1 million homes in the Cambridge-Milton Keynes-Oxford corridor by 2050;

·         Funding for a housing deal with Oxfordshire to deliver 100,000 homes by 2031.

The chancellor also set out a plan for planning reform that would give local authorities the power to issue compulsory purchase orders on land that has planning permission but is unbuilt if it has cause to believe it is being held on to in the hope of the price rising.

Homes that are allowed to sit empty also came under scrutiny, with councils given power to impose a 100% council tax premium on those properties that are allowed to sit empty. Charity Empty Homes UK estimates that over 200,000 homes in the UK have sat empty for over six months.

To oversee the raft of changes around housing, the Homes and Communities Agency will expand to become Homes England, which Hammond said would ‘bring together money, expertise, and planning and compulsory purchase powers’ to deliver new homes ‘where they are most needed’ and with a ‘sustained improvement in affordability’.

‘This is our plan to deliver on the pledge we have made to the next generation,’ said Hammond.

‘That the dream of home-ownership will become a reality in this country once again.’

Too complex, too late

RICS parliamentary and public affairs manager Lewis Johnston said Hammond had previously set out a plan to build 300,000 homes a year but his ‘announcements don’t match up to that ambition’.

While he said the £44 billion package ‘seems positive’ it does not ‘represent the kind of comprehensive strategy we need, nor is it clear how much of this figure is made up of previously announced policies’.

Johnston said most of the announced policies would only come in to play in 2019/20 and the pledge to build 300,000 homes a year would not happen for ‘at least eight years’.

Blane Perrotton, managing director of surveyors Naismiths, said he wondered if ‘simple would have been more effective’ when it came to a housing plan.

‘The more measures, guarantees and capital funding initiatives there are, the harder it can be to track progress and see concrete results,’ he said. 

1 comment so far. Why not have your say?

Sage

Nov 22, 2017 at 18:01

Unless there is a dramatic fall in house prices, particularly in London and the south east, I do not see how the younger generation are going to be able to afford to buy a property.

A young couple with a healthy deposit of £ 50,000, difficult to achieve whilst renting, and an income of £ 50,000pa borrowing 4 times income will still struggle to find a suitable property, if at all.

Competition from buy-to-let investors, the tax reliefs are still attractive, and overseas investors will ensure that home ownership is still out of reach for most of our young people.

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