The Budget 2017: a view from CBRE Residential
Chancellor Philip Hammond has delivered his second Budget, where housing reforms takes centre stage.
Jennet Siebrits, Head of Residential Research, CBRE UK:
“Chancellor Phillip Hammond has again committed to providing funds geared towards driving housebuilding, housing infrastructure and increasing new homes supply.
Today, the Chancellor pledged a further £15.3bn in to housing initiatives over the next five years. This includes an additional £1.5bn towards the Home Building Fund aimed at supporting SME’s, a further £2.7bn towards housing infrastructure, £400m towards estate regeneration, and £34m for training initiatives to increase construction worker numbers. The latter is imperative to not only drive housing supply, but also for boosting local economies.
His biggest announcement however was a welcome abolition of the Stamp Duty tax for all first-time buyers purchasing a property up to £300,000, and on the first £300,000 for purchases up to £500,000.
Whilst this measure makes positive headlines, and will enable more first time buyers to get in to new homes, the reality is that this policy change will have different impacts across the UK. It will be clearly more effective in regional centers where average house prices are more aligned with national averages and wage growth.
The tax relief is likely to have a more marginal impact on first time buyers in the capital, with an average London property costing £481,556 (based on Land Registry HPI). To ensure it doesn't just translate to higher prices, housebuilders will need to deliver quality housing to match the demand. The proposed new policy on promoting minimum city centre housing densities may well assist on this.
The Chancellor addressed issues around planning and land supply. A £1.1bn fund has been put in place to “unlock strategic sites” for regeneration and housing supply, including new settlements and ‘garden towns’. This initiative sounds promising, but to create viable regeneration projects at a pace that enables us to really challenge the housing shortage, housing developers and planning associations must be fully collaborative. This will bring new homes forward at a faster rate, allowing us to go one step further that the Government’s promise of an average of 300,000 new homes developed per year by the mid 2020’s.
Hopefully this fund, combined with ongoing infrastructure investment, will continue to help provide better roads and transport links for those sites that are currently inaccessible and unviable for large scale housing development.”