Budget was ‘missed opportunity’ for housing
George Osborne has missed a ‘golden opportunity’ to boost house building by failing to lift local authority borrowing caps in yesterday’s Budget, council leaders have warned.
The Local Government Association said lifting the borrowing caps imposed as part of the move to self-financing last April would have allowed councils to build 60,000 homes over five years.
Mike Jones, chairman of the LGA’s environment and housing board, said: ‘The appetite of local authorities to build homes, create jobs and boost growth continues to be stifled because of a Treasury-imposed housing borrowing cap which councils, developers and even the markets agree is unnecessary.’
A range of housing and property groups had urged the chancellor to lift the caps in the Budget, including the National Housing Federation, Chartered Institute of Housing, and British Property Federation.
Grainia Long, chief executive of the CIH, said: ‘We are disappointed that the chancellor has missed the opportunity to lift local authority borrowing caps so they can invest more in developing new homes.
‘CIH will continue to press for borrowing caps to be lifted. We believe that with house building at its lowest level since the Second World War the government needs to invest directly in new homes on a bigger scale.’
The Budget included £4.5 billion of funding for housing, but only £225 million is to be spent on building affordable homes. Extensions to existing low-cost homeownership schemes take up £3.5 billion, and £800 million has been added to a loan scheme that supports private rented sector developments.
As anticipated, the chancellor also announced an increase in right to buy discounts in London - from a maximum of £75,000 to £100,000 - and also reduced the qualifying period from five years to three.
Mr Jones said this was ‘the wrong thing to do’.
‘Council leaders remain concerned that the centralised £75,000 cap introduced last year may leave some areas unable to afford to replace the homes that are sold off,’ he said. ‘It is unwise of government to reduce the eligibility criteria before it has even assessed the impact of the original policy.’
The government has insisted homes sold through the right to buy will be replaced with more affordable housing on a one for one basis, but Mr Jones said the government is putting councils in an ‘impossible situation’ but setting discounts centrally, and dictating how right to buy revenue is spent.
More Budget reaction
‘The danger is that if we don’t tackle the fact we’re still not building enough homes, we’ll just create another housing bubble that will continue to push house prices up and out of reach of the majority.’ David Orr, chief executive, National Housing Federation
‘The significant support for homeownership and construction through Help to buy and the mortgage guarantee scheme is welcome recognition of the central role housing can play in powering our economic recovery. However, government will need to monitor the impact of these policies carefully to ensure that they are increasing new house building rather than simply stoking up house prices.’ Grainia Long, chief executive, Chartered Institute of Housing
‘The chancellor faced a test: he needed to boost households incomes and help cut the cost of essentials. Neither were forthcoming and this Budget failed to do enough for low-income households.’ Julia Unwin, chief executive of the Joseph Rowntree Foundation
‘Extending newbuy to the second hand market should create churn in the market place and drive up sales across the board – including for new homes. We do though need to ensure a level playing field across the whole market.’ Stewart Baseley, executive chairman. Home Builders Federation
‘The help to buy package is aimed at stimulating the underperforming mortgage market, which could provide a boost to all firms involved in house building, renovation and repair. But changes to the firstbuy scheme will be of limited assistance if it remains too costly and complex for smaller developers, who deliver a third of all new homes.’ Brian Berry, chief executive, Federation of Master Builders
‘It’s encouraging the government’s confidence in build to rent has been reciprocated and we are delighted to see that the equity funding was heavily oversubscribed. Working in partnership with government the sector should deliver an exciting and quality array of homes for renters.’ Ian Fletcher, director of policy, British Property Federation
Also in: Budget 2013