Philip Hammond updated MPs during his Spring Statement today about the government’s progress towards building more homes in the UK and revealed where and how part of the £44 billion committed to the effort is now being spent.
This includes £4.1 billion being distributed to 44 “forward thinking” local authorities via the government’s Housing Infrastructure Fund to help build more homes, and that £220 million is to be spent on supporting small house builders.
Also, London is to have £1.67 billion to spend on 27,000 additional affordable homes by 2020/21.
First time buyers
The Chancellor also said that 60,000 first time buyers had been helped on to the property ladder so far by his Stamp Duty changes in last year’s Autumn Budget, which abolished the duty for homes bought by first timers under £300,000.
Philip Hammond also referred to the work of Oliver Letwin MP, who is leading a government investigation into why it takes so long for homes to be built.
House building delays
In a letter deposited in the Commons Library, he reveals that his initial investigations blames the ‘build out’ stage rather than land banking, which many affordable homes campaigners believe is the real culprit.
Instead, Letwin says limited availability of skilled labour, building supplies and capital plus poor logistics, uncooperative utility companies, the challenges of sorting out contaminated land and the slow provision of local transport infrastructure may be to blame.
Letwin also suggests that many new homes are not released for sale even though they have been completed for fear of over-supplying the market and reducing prices, and giving competitor developers in the area a chance to compete on price and housing size or style.
He also questions whether large sites, which enable developers to control local markets for new-builds, are as good for the housing market as small sites developed by small and medium-size builders.
‘Missed a trick’ – Cater Jonas
“It is encouraging to hear in the Spring Statement that 60,000 first time buyers have benefited from the Stamp Duty relief announced in the autumn; however, this hasn’t as yet had a positive effect on transaction volumes, which is what the market needs,” says Rory O’Neill, Head of Residential, Carter Jonas (pictured, left).
“More needs to be done to alleviate the exorbitant costs of buying a property in order to restore market balance. We continue to question where the support lies for second-steppers – many of whom are desperate to graduate out of their starter home and into a grown-up property.
“They constitute the increasingly squeezed middle class, and we hope that a proportion of the much-needed new homes that Hammond continues to pledge will be adequately sized and ring-fenced for these forgotten home-owners looking to secure enough space in which to bring up a family.
“The Chancellor has potentially missed a trick in failing to incentivise empty-nesters and prospective downsizers, many of whom retain their four and five-bedroom homes without filling them, at the expense of the second-steppers’ ability to upsize. While the supply of new homes needs to be increased, we also need to better allocate the homes already in existence.”
‘Positive news’ – Kay & Co
“So, we spring into the house buying season with no significant setbacks from the government,” says Martin Bikhit (pictured, right), Managing Director of Kay & Co.
“This is positive news for both buyers, sellers and the industry as a whole. Economic conditions are showing some improvement, and the sun usually brings the buyers out, so we are ready to greet the season with optimism.
“Philip Hammond promised no red box, no official document, no spending increases, no tax changes. No other economy makes hundreds of tax changes twice a year, and neither should we, he said. For once, a politician is sticking to his word.”