Alastair Woodgate of leading Chartered Surveyors Rumball Sedgwick asks whether the Chancellor’s proposals are likely to bring any real change in the housing market.
“The UK is facing a major housing affordability crisis with a generation finding itself priced out of the market: average house prices in the UK are now eight times that of average incomes, 20 times in St Albans. In the run up to last week’s Budget, Phillip Hammond, Chancellor of the Exchequer, promised a concerted effort from the Government to meet the need for more homes by delivering 300,000 homes a year: but did the announcements match up to that ambition?
The Budget included a series of proposals designed to help the housing sector. The headline was the immediate abolition of Stamp Duty Land Tax for first time buyers on properties up to £300,000 – a big step in the right direction in helping thousands of people afford their first homes. On a home worth up to £300,000 (very few in St Albans), you’ll pay no stamp duty – a saving of £5,000 – and for a home costing £500,000 (the ceiling figure) you’ll pay £10,000 instead of £15,000, again a saving of £5,000.
But will this and the other proposals announced, really bring about change, or are they little more than rhetoric?
If the abolition of Stamp Duty was also extended to those wanting to trade down, might that help free up family homes for people that need them most?
Scrapping Stamp Duty for first-time buyers may stimulate activity but it won’t encourage the building of new housing. Indeed, it may just result in house prices increasing, as money that would have gone to the Treasury goes to the seller instead. First-time-buyers should think about acting quickly before the extra demand it creates pushes up prices.
The £44 billion package of housing support seems positive, but it’s actually just £15bn of new money over the next five years, or just £3bn a year. Within that, £400m for estate regeneration sounds impressive but might tackle little more than 40 estates across the whole country. And the 300,000 new homes will only come on stream by the mid-2020s. So how do we tackle the housing crisis in the meantime?
Perhaps the most important announcement was the lifting of the ‘Housing Revenue Account Cap’ in high demand areas such as ours, giving local authorities the freedom to borrow to build council housing. Well built, affordable council homes might, in part, help address the shortfall. Measures to provide extra support for small building firms and to speed up developments where planning permission has been granted could also help increase the supply of new homes.
But while there are some positive aspects, it doesn’t really amount to a comprehensive strategy to stimulate housing supply. Building new homes is crucial to help ease demand but overall the Chancellor’s proposals seem too small to have any significant impact on the challenge we face.”