What does the Spring Statement mean for Property?
The Spring Statement of 2019 was delivered by Chancellor Philip Hammond in the House of Commons earlier in the month and we've gone through it and have highlighted the points that are likely to impact housing in the United Kingdom, so if you're a first-time buyer, property investor, landlord, tenant or homeowner, this article is going to provide a lot of value to you.
Funding announced for 37'000 new homes
Of the £5.5billion Housing Infrastructure Fund, the Chancellor has announced plans to use £717million assist new-build developers in building 37'000 new homes at sites in London, Cambridge, Didcot and Cheshire with money from the fund being given to local authorities to be used as grants.
The money is to be used to provide the infrastructure that developers require in order to obtain planning permission, rather than grants for actually building properties. So, the funds will be used for roads, street lighting, broadband, sanitation, drainage and sewage facilities.
It'll be a while before new-build homes are available to buy or rent as a result of the funds announced by the chancellor as the money is to be used at the very start of the development process, likely before planning permission has even been applied for.
Finance support for 30'000 new affordable homes
Hammond guarantees up to £3billion of funds available to lend to housing associations in England to support the construction and delivery of approximately 30'000 affordable new homes. The money is available via the Affordable Homes Guarantee Scheme and should enable social and affordable housing providers to boost their productivity and output as a result of lower borrowing costs, this means the provision of new homes will be cheaper for developers but whether this reduced cost will be reflected in the cost buyers pay for their home remains to be seen.
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Either way, this is good news for the affordable housing sector and the scheme will help to achieve the government's target of building 300'000 new homes in the UK per year. However, it's only going to be a small fraction of the target that will be met as a result of this lending scheme.
Lending scheme for small builders to launch
Philip Hammond has confirmed the scheme to support small house builders will go live next month. The lending scheme was previously announced in last year's budget with little information about when the scheme will be launched. The Government is providing £1billion of guaranteed finance under the scheme to support lending to small to medium-sized enterprises in the construction industry who are building new homes.
The funds will be delivered through the British Business Bank, a state-owned economic development bank established by the UK Government, and it's hoped that the scheme will help to boost the overall housing supply by enabling smaller sites to be developed by smaller house builders that would likely be overlooked by larger property developers. This means obtaining a loan to build homes may become easier for smaller construction and new-homes firms.
Planning Permission Reform
Plans to introduce new planning guidelines were announced by the Government in the Spring Statement 2019 with new guidelines being introduced in the coming months to support the diversification of larger sites.
A report by Sir Oliver Letwin concluded that greater differentiation in type of homes being built would increase overall building rates, and it makes sense; where a developer is building the exact shaped property which is suited to a limited type of buyers, it alienates other buyers whilst diversifying the types and tenures of housing being delivered on these sites may increase building rates, especially if we consider the speed in which smaller homes can be built compared to larger homes.
The reforms will allow for a greater change of use between premises and there'll be new permitted development rights for existing buildings to be extended upwards to create new homes; funnily enough, we predicted this to be the case earlier last year.
A green paper is due to be published in the coming weeks detailing the proposed improvements to accelerate the planning application process.
Oxford-Cambridge Arc New Homes Scheme
£445million is being awarded from the Housing Infrastructure Fund to build 22'000 new homes in the Oxford-Cambridge Arc and further details are currently unknown; according to Zoopla, it is expected to be spent on providing infrastructure that will enable developers to obtain planning permission, as we already know is the case for the funding announcement for 37'000 new homes.
Zoopla said "Housing affordability pressures in the Oxford-Cambridge Arc have intensified in recent years as the output of new homes has failed to keep pace with the creation of new jobs," and they hope pressure to meet the growing demand for affordable homes in the Arc will be eased; the government have already committed to building one million new homes in the Oxford-Cambridge Arc by 2050.
What do you think about the Spring Budget 2019? Let us know in the comments below!
Phil Spencer's Buying Tips: Supercharge Your Property Search
Zoopla have uploaded a video to YouTube featuring Channel 4's Phil Spencer, the face of many fantastic property programmes including 'Love It Or List It', 'Location, Location, Location' and, of course, 'Phil Spencer: Secret Agent', and he has these tips for supercharging your property search.