The Chancellor Philip Hammond has today delivered a ‘budget for builders’ that should allow small builders to deliver more of the new homes Britain so badly needs, says the Federation of Master Builders (FMB).
Housing was at the centre of Philip Hammond’s autumn budget speech this month. The chancellor revealed plans to commit a total of at least £44 billion of capital funding, loans and guarantees over the next five years to ‘support the housing market to boost the supply of skills, resources, and building land and to create the financial incentives necessary to deliver 300,000 net additional homes a year on average by the mid-2020s’.
Commenting on the Budget 2017, Brian Berry Chief Executive of the FMB said “The Government has set itself a new target of building 300,000 new homes a year by the mid-2020s. And today the Chancellor has put small and medium-sized builders at the heart of ambitious plans to tackle the growing housing crisis. The Chancellor appears to be putting his money where his mouth is with the announcement of £44 billion of capital funding, loans and guarantees. In particular, a further £1.5 billion for the Home Building Fund to be targeted specifically at SME housebuilders can play a significant role in channelling crucial funding to this sector. A £630 fund to prepare small sites for development and proposals to require councils to deliver more new housing supply from faster-to-build smaller sites will provide opportunities to boost small scale development.”
Berry continued: “A second major challenge to getting new homes built is the skills crisis we face. In the long run, the only real solution to chronic skills shortages will be a major increase in the training of new entrants into our industry. We are therefore pleased to hear the Chancellor has today committed extra resourcing to training for construction skills. With Brexit round the corner the next few years will bring unprecedented challenges to the construction sector. The Government will need to make sure that the sector continues to have access to skilled EU workers, but we are pleased that the Chancellor has today listened to the needs of SME builders”.
Stamp duty is to be abolished for first-time buyers on properties up to £300,000. This represents a cut for 80% of first-time buyers. And those spending between £300,000 and £500,000 on their first home will save £5,000 in stamp duty. The controversial help-to-buy scheme is also to be extended despite widespread concern that it contributes to ballooning house prices. The budget confirmed that an extra £10bn will go into the scheme to extend it to 2021, a measure previously announced in October.
David Thomas, chief executive of house-builder Barratt Developments, said: “We welcome the government’s continued focus on housing, the stamp duty cut will help more young families get a foot on the property ladder and further planning reform is vital to increasing housing supply – overall this is a positive budget putting housing front and centre where it belongs.”
Shares in house-building companies fell after Hammond failed to announce the ambitious programme the markets had anticipated. The chancellor said he planned to commit £44bn in capital funding, loans and guarantees to support the UK housing market. He claimed this would help deliver 300,000 new homes a year. And small building firms would get a share of £1.5bn for new homes. But planning reform was punted into the long grass again. Hammond announced a review by Oliver Letwin on how to close the gap between planning permissions being granted and houses being built.
Tom Shaw, director of consulting engineer firm Ramboll, said: “There were a number of new positive measures announced for housing in the budget, but what was disappointing was the lack of specifics that would encourage the construction industry to embrace offsite techniques. Increasing housing supply to 300,000 per year requires offsite construction methods – without it we have no chance of meeting these targets by 2025.”
However, supporting documents released later revealed the extend of the government’s commitment to promoting offsite construction: “The government will use its purchasing power to drive adoption of modern methods of construction, such as offsite manufacturing. Building on progress made to date, the Department for Transport, the Department of Health, the Department for Education, the Ministry of Justice, and the Ministry of Defence will adopt a presumption in favour of offsite construction by 2019 across suitable capital programmes, where it represents best value for money.”
Time will tell as to whether the new policies have a positive impact on the construction industry.