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Helen Collins looks at whether the Autumn Budget measures can really enable housebuilding to hit 300,000 homes a year
In his Autumn Budget speech, chancellor Philip Hammond made the right noises that the housing sector has been seeking to help improve housing affordability.
The headline number of 300,000 net additional homes each year from the mid-2020s is good news.
It’s not clear how much of the extra £15.3bn resource is new, but the focus on supply and the raft of measures points in the right direction, if not to a step change.
Yet, there were several items conspicuous by their absence – chief among them action on making public land available to build more affordable homes – that means there remains scope for further action by the government to achieve that 300,000 annual target.
First, the good news. There was plenty of it, but the following measures stood out for me:
The £44bn figure of total housing investment looks impressive, but will it deliver the surge in house building the chancellor craves?
The extra £15.3bn announced yesterday likely consists of measures such as the cost of the abolition of stamp duty for first-time buyers on homes up to £300,000, and the £2bn extra for the current Affordable Homes Programme that was announced by Theresa May at the Conservative Party conference in October.
“An important part of the mix is the powerful role for the rebadged Homes England.”
There is also £1.1bn for a new Land Assembly Fund and a further £2.7bn for the Housing Infrastructure Fund (taking the HIF to £5bn).
An important part of the mix is the powerful role for the rebadged Homes England in facilitating housebuilding.
When combined with the recently announced rent settlement of the Consumer Price Index measure of inflation plus 1% from April 2020, the abolition of the plan to cap housing benefit for social housing tenants at Local Housing Allowance rates and the new housing association deregulation measures, the additional resources should see the construction of thousands more homes.
“It is very positive that the government has recognised the contribution to be made by local authorities.”
Next there is the extra £1bn debt headroom for local authorities with Housing Revenue Accounts.
This is also good news. While we await the details, it is positive that the government has recognised the contribution to be made by local authorities to increasing housing supply.
Savills, working with sector trade bodies, has consistently made the case to ease the debt threshold and enable councils to build.
Recent analysis by Savills concluded that if councils were allowed to manage their own HRAs within the local authority Prudential Code, this could create capacity for an extra 15,000 homes across England.
While structural changes are needed to enable councils to make use of the additional borrowing, the £1bn may encourage those with existing headroom to use it.
“It falls to local authorities to step up and make use of the new freedom.”
If this additional borrowing can be combined with Right to Buy receipts, other forms of funding, and the potential for joint ventures with other partners to share capital and risk, this is a strong step in the right direction.
It now falls to local authorities to step up and make use of the new freedom.
The £125m increase in Targeted Affordability Funding for LHA claimants is welcome and recognises the inadequacies of the current LHA framework.
Although the changes are helpful, a broader LHA review is needed to recalibrate and ensure rates keep pace with the market.
While the Chancellor had plenty of good news, inevitably there remain some important issues missing from housing policy:
Will the chancellor hit his 300,000 annual target?
“There was little reference to the importance of social rented homes.”
The package of measures announced today and in recent months removes some of the barriers and gives him (and housing providers) a decent chance.
Further steps to free up public land for housing would alter this verdict to an excellent chance.
Helen Collins, director, Savills Housing Consultancy