With Brexit dominating all the headlines at the moment, it’s perhaps little surprise that this year’s Spring Statement rather flew under the radar.
The second biggest fiscal event of the year – and effectively a mini-Budget – the Spring Statement allows the Chancellor to lay out the state of the nation’s finances and any forward funding pledges for areas such as tech and the new economy, the environment and infrastructure.
But what did Philip Hammond’s latest address
say about housing? Given the distractions of Brexit, it was a low-key Spring Statement from a housing perspective. That said, some interesting and important announcements were still made.
Housing relegated to the bench
In recent years, the property industry has become used to big housing announcements being made in the government’s major fiscal events – from the announcement of a ban on tenant fees, to the scrapping of stamp duty for nearly all first-time buyers and the introduction of the extra 3% stamp duty surcharge.
This time, however, there was no headline-grabbing proposal, measure or pledge. Instead, the government laid out what it had done in recent years to boost home ownership.
This included the aforementioned abolition of stamp duty for first-time buyers
, which Hammond says has helped 240,000 people onto the property ladder since it was announced in November 2017. He said this measure has helped to restore the number of first-time buyers to above 50% for the ‘first time in a generation’.
We’ve actually found from our own data on reallymoving that there has been an increase in first time buyers – in February 57% of our users were buying their first home. That’s the highest it’s ever been. However, we can’t necessarily say that’s down to the Stamp Duty exemption.
Hammond also said 220,000 additional homes were delivered in 2018, the highest number built in all but one of the last 31 years. There was also a reiteration of the government’s pledge, first made in the autumn Budget 2017, for a five-year, £44 billion housing programme to increase housing supply to 300,000 new homes a year by the mid-2020s.
There were a number of new announcements, too, with a pledge of £717 million from the £5.5 billion Housing Infrastructure Fund
to unlock up to 37,000 homes at sites including Old Oak Common in London and the Oxford-Cambridge Arc.
Additionally, as part of the Affordable Homes Guarantee Scheme, the government said it will guarantee up to £3 billion of borrowing by housing associations in England to support delivery of about 30,000 affordable homes, while the £1 billion Enable Build SME guarantee fund first announced at the last Budget will be launched next month.
Homes in the sky
Planning and environmental proposals (in relation to housing) formed a fairly key part of Hammond’s speech. The biggest announcement was of the Future Homes Standard
, which will end fossil fuel heating systems in all new homes by 2025.
Reforms will also be made to planning guidance to allow the upwards extension of existing buildings to create new homes and enable more change of use between premises. As well as this, the planning guidance will be altered to ensure the number of property types on development sites are broadened.
From an environmental viewpoint, Hammond revealed the government’s plans to increase the use of green gas in the National Grid to reduce the dependence on natural gas to heat homes, as well as initiatives to offer greater protections to wildlife during the planning process.
An unimpressed industry
Overall, the Spring Statement contained no major housing announcements or pledges, which left the industry to vent its frustration.
Marc von Grundherr, director of Benham & Reeves, said the Chancellor’s statement was ‘predictably compiled of regurgitated rhetoric and slightly misleading claims where the property market is concerned’.
He said: “Of the 220,000 new homes delivered last year, around 10 per cent were, in fact, refurbs not new builds and we remain light years away from the government’s magic target of 300,000.”
“Help to Buy is arguably the poisoned chalice that has seen prices continue to inflate due to the uplift in demand it has fuelled, while new stock delivery remains inadequate,” he continued.
“This playing field may be re-levelled should we see the £3 billion affordable homes initiative bring the expected 30,000 additional homes - but as is often the case, these cash promises rarely provide a notable return.”
Paul Smith of estate agent Haart was equally scathing, calling the statement a ‘slap in the face for the industry’, while Jeremy Leaf, a north London estate agent and a former RICS residential chairman, was left disappointed that there was no mention of the private rented sector.
This disappointment was matched by PropTech entrepreneur Neil Cobbold, the chief operating officer of PayProp UK, who said Hammond should have found space for the lettings market.
"The idea of introducing Capital Gains Tax relief for landlords selling to first-time buyers – first circulated ahead of the 2018 Budget – would have provided investors with a much-needed reprieve while further boosting the first-time buyer market,” he said.
Patrick Gower, Knight Frank’s residential research associate, was one of the only positive voices in a sea of negativity.
“The £3 billion allocated to the Affordable Homes Guarantees Programme will enable affordable housing providers to boost their output by reducing their cost of borrowing,” he said.
“The funding is welcome, because the government must look to a diverse range of housing providers if its ambitious target of 300,000 additional homes every year is to be met.”
PRS receives no acknowledgement
Despite its central role in recent fiscal events, the private rented sector received no mention in the Chancellor’s latest address.
Although some people will be pleased with that, following a barrage of new legislation in recent years, others will be frustrated and disappointed with Hammond’s refusal to give landlords some help or much-needed tax breaks.
Richard Lambert, chief executive of the National Landlords Association, reflected this when calling the Spring Statement a mixed bag for landlords.
“The Spring Statement does nothing to relieve the pressure on landlords from increased taxation or the costs of complying with new regulations. We should be relieved that the Chancellor hasn’t used the statement to add to those pressures. In the current political climate, that’s probably the best we can hope for,” he said.
What impact is Brexit having?
Philip Hammond used his speech to again point out the risks of a no-deal or disorderly Brexit. However, the current impasse is providing downsides as well.
All recent evidence points to Brexit uncertainty having an effect on the sales market, with buyers and sellers both employing a wait-and-see approach until the political situation is clearer.
Currently, there seems to be permanent turmoil, but the most likely turn of events at present is a delay of some kind to Brexit day
Everything is now up in the air, with a number of possible outcomes on the table. This includes a second referendum, the revoking of Article 50, Theresa May’s twice-defeated Brexit deal somehow squeezing through the House of Commons or even another general election.
However, the probable extension to the Brexit process would at least provide some clarity and certainty in the short to medium term, which could in turn offer a boost to the property market as buyers and sellers feel more confident to take decisive steps.