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Budget 2017 – The impact on housing
November 22, 2017Article by Ray Withers
Chancellor unlocks dream of home ownership to thousands
Big news in today’s budget – there was a big emphasis on housing and it was heart of the Philip Hammond 2017 budget. Hammond’s white rabbit was the dramatic reforms to stamp duty to first time buyers who are purchasing properties up to £300,000 meaning no stamp duty will be paid from today onwards – a saving of up to 5%. This is likely to have a dramatic impact in certain areas of the UK where homes are more affordable (especially the north), and could help potentially push up prices in the short term. The Chancellor stated that 80% of first time buyers will pay no stamp duty and 95% of first-time buyers who pay stamp duty will benefit.
It’s a punchy reform and will have impact on take-up and ease pressure on the bank of mum and dad for many. However, I think unaffordability is the key problem in many areas such as the South East so it’s likely to have less of an impact on areas of very high prices as there is no stamp relief for those buying properties over £500,000.
Further good news is that the government will permit more homes for first time buyers and put in an additional £10bn in Help to Buy.
More positive news for the market
I was pleased to hear that the government is investing an additional £15.3 billion new financial support for house building over the next five years (taking the total to at least £44 billion). In particular to support SME housebuilders like us and our partners and to support infrastructure. This is targeted to bring 300,000 houses a year by mid 2020s, an amount not achieved since 1970!
That’s a big step from where we are now but I’m not sure it will have a dramatic effect on affordability and in fact, may help push up housing prices as a whole. However, I think it’s a step in the right direction and as there is no single magic bullet.
Staff have been asking this morning why the government can’t just pour more money in and I have been explaining that it’s not that simple: If you put more money in without fixing the other elements of supply, you will simply create more house price inflation, which in turn is likely to make the problem worse, not better.
Importantly, the focus of spend will be on urban regeneration in city centres and around major transport hubs – this is where we have been focusing for the past few years as we feel these are the areas that need housing as we will continue to focus on areas of fundamental under supply and try and preserve green belt/protected land – a good thing.
Closer to home, a million homes to be built by 2050 in the Milton Keynes to Oxford corridor and in our home county, Oxfordshire. There are plans to bring 100,000 homes by 2021 – all good news and I was pleased to hear that the Chancellor is trying to reduce the gap between the number of planning applications granted and actual homes built – in my opinion, largely big developers holding out for commercial reasons. I think this will be a positive and does need to be addressed so that smaller (SME) builders who are pushing to get started immediately could be prioritised and supply brought into areas when needed quicker.
Outside of the property market, the consensus was actually pretty positive
Unemployment is also at its lowest rate since 1975 – there are over 32 million people in work. The UK economy is forecast to grow by 1.5% in 2017 and finally, its good to know our drinks bill for Christmas won’t be going up and duty on beer, wine, cider and spirits will be frozen!
We will be monitoring the situation and impact so watch this space for up-to-date opinion.
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