Private and social renting lose out in housing’s £1 billion Budget
Chancellor gambles on developers and buyers
The government has taken a £1 billion gamble on helping struggling developers and first-time buyers at the expense of demands for major funding boosts to private and social rented sectors.
Chancellor Alistair Darling said £400 million of the cash would be spent trying to get stalled housing schemes off the ground and an £80 million extension of its homebuy direct scheme, which gives first-time buyers equity loans on new developers’ homes.
But just £100 million was set aside to improve the energy efficiency of existing social homes (see opposite). Pundits had been predicting the launch of a much bigger programme to retrofit social stock.
And councils received £100 million to build new energy efficient homes.
Richard Capie, director of policy at the Chartered Institute of Housing, said: ‘Part of our concern is that we seem to be continuing to have an overwhelming focus on homeownership and seem to be intent on repairing a system that was broken in the first place.’
The National Housing Federation had called for £6.35 billion to be set aside to build 100,000 new social homes (see box, right).
David Orr, chief executive of the NHF, said: ‘We now fear that because the government has failed to back a comprehensive house building programme, the number of homes delivered this financial year will slump to an 88-year low of 70,000, while the number of people on social housing waiting lists will simply soar.’
The Existing Homes Alliance had been hoping for a multibillion pound programme of retrofitting for UK homes. Nicholas Doyle, founding member of the alliance and head of sustainability at Places for People, said that receiving just £100 million for efficiency improvements was ‘a massive blow in meeting carbon reduction targets’.
And there was no mention in the Budget about how large-scale institutional investors could be tempted to invest in the sector. The British Property Federation had been in discussions with the government about freeing up the current rules governing real estate investment trusts.
BPF chief executive Liz Peace said the Budget had ignored REITs and that much of it ‘defied logic’. But she was pleased that the community infrastructure levy would be delayed until next year.
The Home Builders’ Federation seemed happiest with the Treasury’s housing announcements. HBF chair Stewart Baseley said the organisation was ‘delighted’ that cash had been made available to unlock mothballed sites.
You can always get what you want
| Body | What it wanted | What it got |
|---|---|---|
| 2020 Group | £6.3 billion for 100,000 homes over next two years | £400 million to kick-start stalled housing projects A further £100m for council house building |
| NHF | £3 billion fior retrofitting trials | £100 million to make homes more energy efficient |
| Chartered Institute of Housing | A retrofitting programme, with tax incentives Help for councils to finance new-build homes Cash for private rental sector | £100 million for council house building programme, of which £50 million will be prudential borrowing £100m for energy efficiency |
| British Property Federation | Freeing up real estate investment trust rules to tap into £3.5 trillion UK residential market | No joy on real estate investment trusts for residential investment |
| Home Builders’ Federation | Funding to kick-start mothballed housing sites and cover developer’s 106 payments More cash for shared equity Stamp duty threshold rise to £250,000 | £400 million to kick-start stalled housing schemes Stamp duty holiday extended until December 2009 £80 million for Homebuy Direct |
| National Federation of ALMOs | Continued investment in decent homes beyond 2010 Go-ahead for councils to use rental proceeds and sales receipts to invest in existing homes | £100m for energy efficiency |
The reaction
Richard Blakeway, housing director for the London mayor
‘We’ve got to see how the £500 million [to kick-start mothballed housing sites] works. The reality is it won’t go far. It’s London that you need to help, because that has traditionally been the route to housing market recovery.’
Jacqui Watt, chief executive of the Scottish Federation of Housing Associations
‘Scotland can only look forward to a share of the £500m earmarked to help kick-start stalled housing developments, and we will be fighting for a share for housing associations.’
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Readers' comments (1)
Paul Heasman | 24/04/2009 10:30 am
The really sad part of the budget proposals on housing is not so much the actual amount being spent although more is always good, it is in the tired old directions that the money is being directed.
We are in a financial disastrous time possibly the worst of the last century a situation that has to a significant part been caused by tempting people of limited income into property purchase that they couldn't afford, yet once again the major philosophical weight of the proposals is towards home ownership and enticing people into it at the margins where they might not be able to really afford it - do we never learn?
Construction is a great way to boost the economy, in a recession you directly employ people, maintain and develop real skills (not as many and not as much as it once did because of modern methods but still significant). Money goes directly into workers pockets and is spent in local communities, homes are built and a pressing national social need is met and the impact is quite quick - a win, win, win situation, but not if you rely on the house purchase market.
The fact that we need good quality affordable homes right across the country and why we are in this situation is not disputed it is because the market has failed to provide over the last 30 plus years. What on earth makes the government think that the market will provide now when financially we are at such a low ebb.
The money should have been spent on freeing housing associations and local authorities from the strangleholds of the financial markets (because in reality they are the only reliable players in the development market) and saying get on with it we want homes built, people employed and the homeless and overcrowded housed in decent affordable homes.
There should also have been incentives to retrofit existing stock to make it more energy efficient - it is after all in this area that there is and will continue to be the greatest waste of energy in housing.
Finally why is it always the first time buyers who get all of the incentives? This might have been valid once when setting up a home was for life - that may be the fairytopia land that politicians and certain newspapers think we still inhabit but the truth is we don't, family breakdown is more common, people live longer and more active lives, individuals often find themselves starting life again maybe more than once. These older people are often secure and reliable and in many ways a safer financial bet than first time buyers and often equally in need of a assistance to re-establish themselves but for them there is nothing.
I am grateful for what we have got but deeply saddened about the opportunities that the tired old policies makers have ignored, they have behaved like mice when they they should have been lions.
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