Housing was a much-anticipated point on the agenda, as Philip Hammond announced the budget for 2017. Following the earlier revelation of plans to build 300,000 new homes a year, many were keen to hear how this could be delivered, and some even took to Twitter to express their scepticism – given that this figure hasn’t peaked beyond 225,000 in the last decade.
Fragmented land will be assembled into “ready-to-go” sites for developers
One of the most innovative propositions was the £1.1bn Land Assembly Fund, which will assemble fragmented pieces of land into “ready-to-go” sites for developers – and help to make good use of the less attractive pockets of land already available.
This initiative will be supported by a variety of other measures including; a £1.5bn boost to the existing £3bn Home Building Fund for loans to SME housebuilders, a £630m of grant funding for remediation and infrastructure works on small and stalled sites, and a new consultation into speeding up the planning process. In a further move, housing associations will be reclassified as private bodies to allow their £70bn debt to be removed from the government’s balance sheet and for more affordable homes to be built.
Initiatives were also announced to help free up existing housing stock, including new legislation to give local authorities the power to charge a 100% council tax premium on empty properties – in a bid to encourage empty properties to be sold on and not left vacant when so many people need them.
Abolishing Stamp Duty would be a great help – if first-time buyers didn’t also need a large deposit
While no one was expecting a “single magic bullet” to the housing crisis, one of the biggest surprises was the confirmation of the abolishment of Stamp Duty for first-time buyers. This is intended to benefit approximately 80% of first-time buyers purchasing properties worth up to £300,000 – as they will no longer need to find the additional funds needed to pay tax. This will also apply to the first £300,000 of the purchase price of properties up to £500,000.
This is a great idea in principle and would certainly be a boost to first-time buyers… If Stamp Duty was the only cost attached to buying their first home. The harsh reality is that the deposit is the biggest barrier to those hoping to get their foot on the property ladder – and the latest Budget announcement does little to change this.
With figures from the Office of National Statistics (ONS) confirming that the average deposit for a first-time buyer is £49,639, even a £5,000 Stamp Duty saving against a £300,000 property is a small consolation.
This WILL be a boost to those “almost there” with saving their deposit
First-time buyers who are “almost there” with saving their deposit will benefit the most from this new initiative, as this decrease in the overall cost might encourage them to kick-start the house buying process a few months sooner than planned.
It will also be a pleasant surprise for those due to complete in the next few days, who will be able to put that bit more towards furnishing their new homes. However, for those still faced with the mammoth task of raising the thousands of pounds needed to get their deposit together, the small discount is likely to do little to support their cause.
It is reassuring to see the housing crisis high on the government’s agenda
Despite the mixed reviews, it is reassuring to see the housing crisis high on the government’s agenda and some new practical ideas for bringing positive change to the market in the immediate future – only time will tell how well these ideas will fare in the months ahead.