Industry Response to the Spring Statement
Following on from the Spring Statement, here are some thoughts from the Industry.
Rightmove’s property expert Colleen Babcock:
“It’s extremely disappointing that the government have not used the Spring Statement as an opportunity to extend the impending Stamp Duty deadline for those currently going through the home-moving process. We estimate over 70,000 buyers are going to miss the deadline and complete in April instead, and a third of those are first-time buyers.
“Given the current challenges faced by first-time buyers, our data shows that a typical first-time buyer in Britain now faces average monthly mortgage payments of £940, a 59% increase compared with £590 per month five years ago. Over that same period rents have increased by 40% across Great Britain. So, while we welcome the government’s focus and investment to help build more affordable homes, we’re keen to hear more about how this, or other incentives, can help more first-time buyers.”
Timothy Douglas, Head of Policy and Campaigns for Propertymark:
“The Spring Statement had a clear focus on the vital role housing plays in the UK economy and as part of the UK Government’s plan for growth, so it is encouraging to hear that planning reforms will boost national income. However, workforce challenges remain and it’s vital that local councils have the resources required to deliver effective planning and infrastructure so communities up and down the country and the wider economy really benefit.”
Paresh Raja, CEO of Market Financial Solutions:
“Overturning outdated parts of government to improve efficiency has been a major focus for Labour since the election, and planning reform was raised again as a key part of this agenda. However, the “get Britain building” rhetoric must now translate into tangible action – bringing in new construction workers is a positive step, as the Chancellor had already announced three days ago, but much of today’s speech involved repeating the Autumn Budget’s plans to encourage housebuilding.
“Reforming the planning system is obviously important. However, investors and developers are unlikely to commit to new projects unless they see a strong and growing economy that provides long-term confidence and a return on their investment. The OBR forecasts were a blow in this regard, and the onus must now be on turning the corner to turbo-charge GDP growth.
“House prices are rising, inflation fell in February, and the base rate is expected to come down further this year. These are all positives, highlighting that the property market remains bouyant, and this is important given how significant the sector’s contribution to GDP is. In future statements and budgets, we need the Chancellor to focus more energy on supporting homebuyers and borrowers, which will further stimulate growth in the market.”
Tim Parkes, CEO of RAW Capital Partners:
“It might not have the standing of the Autumn Budget, but the Spring Statement was an opportunity for the government to set out a bold vision for growth nonetheless. However, today’s speech highlighted that there remains a keen focus on fixing legacy issues, both with the state of the economic and within the property sector, most notably where housebuilding is concerned. This is, of course, important. But the UK also needs a more proactive and forward-thinking strategy to meaningfully encourage economic growth.
“Creating the right conditions for investment should therefore be the government’s top priority if it hopes to attract both domestic and international capital. This means not just stabilising the economy and filling the fiscal blackhole, but fostering an environment where businesses and investors feel confident to commit to the UK for the long term.
“But the government can’t do it all on its own, so specialist lenders have a key role to play in facilitating overseas investment into UK property and contributing to a growing economy. By offering a tailored approach to lending and bespoke financial products, they can help international investors navigate the market with greater confidence, while reinforcing the UK’s position as a prime destination for investment.”
Brian Berry, Chief Executive of the FMB:
“Rachel Reeves has tasked builders with delivering economic growth according to today’s Spring Statement. This week’s injection of funding to train 60,000 new construction workers is welcome, but the Construction Industry Training Board (CITB) estimate we will need 250,000 more construction workers by 2028 to even get close to the Government’s targets. The numbers of workers don’t go far enough and the announcement of 1.3 million new homes by the end of this Parliament, seems to be a clear indication the original target was a step too far.”
“The Chancellor pointed to OBR figures showing that house building stands to add 0.2% to the UK economy by 2029-30, worth an additional £6.8 billion, with that rising 0.4% by 2035 worth £15.1 billion to the UK economy. Builders have an essential role to play in kickstarting the UK economy, and today’s figures demonstrate the immense potential of the industry. Now, more than ever, we need to see the Government support the nation’s SME house builders, so that homes can be delivered by a healthy market, and not just a few companies at the top of the tree.”
Ben Beadle, Chief Executive of the National Residential Landlords Association:
“Today’s statement was a missed opportunity to support renters across the country.
“It has done nothing to tackle the chronic shortage of rental housing to meet demand.
“It has done nothing to reform a broken tax system which is failing to encourage and support investment in energy efficiency improvements.
“And it has done nothing to address the unjust freeze on housing benefit which is leaving so many renters fearful of how they will afford their rents.”
“Planning reform doesn’t just unlock housing, it facilitates infrastructure, amenities, commercial spaces, new places, and in the case of new towns, where land is purchased at existing use value, the potential for truly affordable housing,
There is still a lot of work to do, but Labour are showing that they are serious about ensuring planning reform drives sustainable growth and strengthens the economy.”
The OBR highlighted that planning reforms, primarily relating to the Green Belt, are expected to increase new housing input by 170,000 additional homes, with almost 300,000 homes being delivered annually by 2029/30.
The Labour Government also announced its intention to unlock public land for the next generation of homeowners, with a taskforce to be set up to achieve this ambition. It highlighted that alongside unused defence land, rail estate will play a major role in creating a pipeline for development and placemaking.”
Rico Wojtulewicz, Head of Policy and Market Insight for the NFB:
“Labour are serious about tackling the housing crisis but must learn from past failures on strategic policies such as land release. If these sites primarily go to large builders, workforce challenges will persist because small constructors train 73% of construction apprentices.
The Chancellor must lean on MHCLG to start reforming planning for SME builders. Beyond training the workforce to a higher standard and offering greater employment security, SMEs are the learner pipeline for those ending up in the non-new housebuilding workforce, such as Repair, Maintenance, and Improvement (RMI), which delivers twice the level of output as new housing.
The OBR does not appear to have accounted for the risk that planning reforms focused on the biggest builders that do little to nothing for SMEs, will consequently shrink the RMI workforce capacity. Therefore, as things stand, any growth in new build would likely to be cancelled out by struggles in the RMI sectors.
The Government can view the Spring Statement in one of two ways, a vindication of their strategy, or as an indication that hard work that is still required. We believe it is the latter, but those conversations with industry need to happen sooner rather than later because for 99% of the industry, things are not improving.”
Francis Truss, Partner, Carter Jonas
£2bn top-up for the Affordable Homes Programme
The boost to affordable housing grant funding is very welcome, particularly at a time when many Registered Providers are prioritising improvements to the quality of their existing stock and therefore their appetite for taking on additional stock via Section 106 agreements is proving limited.
It is clear that the government’s priority is affordable housing for rent and there is a noticeable absence of support for first time buyers in the open market. Help to Buy was an important part of the growth in housing delivery pre-Covid (2015-2020).
While on the face of it the new money is welcome, it will be ring-fenced for sites that will be delivered in this Parliament. We are yet to hear whether there will be long term grant support for the government’s aspiration for twelve new towns (which will inevitably have a significant affordable housing requirement). Realistically, none of the new towns will come forward this Parliament but viability assessments, which will be taking place already, will not be able to assume the equivalent level of affordable housing grant funding.
The £2 billion package should be considered in the context of £2.1 billion in affordable housing grants which were made available via Homes England in 2023/2024. So as ‘new funding’ this represents £0.5 billion for each remaining year of this parliament or an increase of 25% per annum. The Government calculates the impact as being that of delivering 18,000 additional affordable homes or roughly 4,000 per remaining year of this Parliament. In comparison to previous government policy – most recently, the Help to Buy programme – this new approach may have a more limited impact. Indeed, it equates to just a tenth of the additional housing delivery which came forward under that programme.
Absent from the Spring Statement
As a priority, if the 1.5 million homes target is to be met, there will have to be greater incentives – fiscal and otherwise – to attract private funding for development. Specifically, support for large-scale housing developments including new towns and other infrastructure must be encouraged. It goes without saying that expanding and growing the quantum of development will rely on new sources of finance. This requires a long-term commitment from the government which gives investors the necessary security, and must be put in place swiftly to facilitate the delivery of such schemes.
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