Osborne’s Spending Review: Industry comment

The chancellor George Osborne has announced “the biggest housing programme since the 1970s,” with the government doubling the amount it spends on affordable housing to £2 billion a year as part of its Autumn statement.

Osborne said that the government would deliver 400,000 affordable homes by the end of the decade. He announced 135,000 homes under Help to Buy shared ownership, with the chancellor saying that restrictions on shared ownership would be removed.

The government will also introduce a London Help to Buy, offering an interest-free loan worth up to 40% of the value of a new home for Londoners with a 5% deposit.  A new rate of stamp duty will be imposed upon Buy-to- Let homes.

Osborne also said that further reforms would be made to the planning system and that the government would release land for 160,000 new homes. He added that the Conservatives would re-designate commercial unused land for the delivery of starter homes.

“This is the biggest housebuilding programme since the 1970s,” the chancellor stated. “In our spending review we choose to build.” He later added: “We are the builders.”

Melanie Leech, chief executive of the British Property Federation 

“While there are some really sensible suggestions in today’s announcement, the planning system still has one big problem – the lack of resources in local authority planning departments. Both the private and public sector have identified this as one of the biggest obstacles for development, and with the private sector willing to discuss how it might be able to plug the funding gap, it is frustrating that Government has not engaged on this matter.”

“The government will amend planning policy to ensure the release of unused and previously undeveloped commercial, retail and industrial land for Starter Homes, and support regeneration of previously developed, brownfield sites in the greenbelt, by allowing them to be developed in the same way as brownfield sites elsewhere, providing it delivers Starter Homes. This will be subject to local consultation, such as through neighbourhood plans.

“Whilst likely to raise howls of indignation from some quarters, this is a very sensible step. This change will put a stop to endless battles in the planning regime and will help bring forward the Government’s intended 200,000 Starter Homes.

“The sites that will be eligible for this will not be lush green fields, but rather disused scrap yards and car parks which happen to sit within the Green Belt, and which are calling out to be more productively used.”

 “Local Plans are the key to sustainable development, and this is a welcome move that will ensure that local authorities really do concentrate on growth for their area and that their local plans are focused on delivery and the practicalities of housing the population.

“The lack of resources afflicting local authority planning departments is an issue, and if authorities can keep their local plans kept short and sharp, they will help themselves.”

“The release of public sector land is always to be welcomed, and it is good to see this taking place. The homes that are brought forward on these sites must be serviced with sufficient infrastructure and will ideally have homes for sale and for rent, to ensure that they contribute to mixed, vibrant communities.”

Mike Chapman, Senior Manager, Corporate Tax at Knill James Chartered Accountants 

“As if George Osborne’s announcement in the Summer Budget of the phasing out of higher-rate tax relief on landlords’ interest payments wasn’t enough, today’s Autumn Statement introduces a further fiscal double whammy for landlords which could have major consequences for the residential property market.

“Firstly, higher rates of Stamp Duty Land Tax (SDLT) will be charged on purchases of additional rental property (above £40,000) from 1 April 2016 aimed specifically at buy-to-let properties and second homes. The higher rates will be three percentage points above current SDLT rates and the exclusion of companies from the charge indicates that the Government sees the freeing up of residential property currently in private hands as key to its housing policy.

“So, there will pain on the way into the buy-to-let market through SDLT and a second announcement in the Statement revealed an unwelcome Capital Gains Tax (CGT) surprise on exit. From April 2019, a payment on account of any CGT on the disposal of residential property will be due just 30 days after completion. This compares to the current rules where the settlement of the tax due can be anything up to 21 months after disposal depending when in the fiscal year the sale occurs.

“Clearly landlords who have maximised their borrowings with a view to enjoying capital growth may now seek to restrict their financial exposure by disposing of parts of their property portfolios. Where such properties are standing at a gain, disposal before the CGT acceleration is due will clearly be advisable.“

Iain McIlwee, chief executive of the British Woodworking Federation:

“The BWF welcomes measures to increase housebuilding as that boosts the market for many of the high quality timber products and services provided by our members. But  even given the newest technologies, offsite manufacturing and fast-tracked planning, the nation cannot benefit from a boost in homebuilding when our physical capacity risks being constrained by a widening skills gap and continued uncertainty here creates real challenges.

“A steady flow of new joiners and carpenters is critical to the Chancellor’s new housing ambitions. We have already warned that there could be a catastrophic collapse in apprenticeships if the CITB’s services are lost to construction and this would undermine the whole vision expressed by the Chancellor today.

“So we are keen to participate in the further development of the proposed Apprenticeship Levy now that government has confirmed the scope and the rate of the Levy, and has confirmed that all employers committed to training and development will be able to access this support. It’s particularly good news that the focus is on quality apprenticeships and ensuring standards of training are high, and we will continue to work closely with the industry’s training providers to develop improved qualifications for joinery and wood skills.

“The UK’s joinery and woodworking sector delivers a third of all apprenticeships in construction, the highest ratio in all the specialist trades. The joinery apprentice is the lifeblood of this industry. We are working flat out to try and increase the number of high quality apprenticeships in joinery and woodworking, helping the industry to reach its recruitment target of more than 4,000 new people a year for the next four years.”

Julia Evans, Chief Executive, BSRIA:

“It is heartening that the Chancellor is ranking housebuilding high on a national scale, even if some of this is imprecise and difficult to quantify. The key issue is the execution of such schemes. BSRIA understands that a blueprint for 400,000 new homes has been unveiled. First-time buyers aged under 40 are to be offered a 20 per cent discount on new homes to help them onto the housing ladder. And a string of new measures to bolster the ability of private developers to construct affordable houses will be at the centre of a ‘bold plan’ to back families who aspire to buy their own home.

“BSRIA is encouraged that Ministers are to change planning rules to release land specifically for developing starter homes. And developers are to be offered cash from the government to construct starter homes and regenerate ‘brownfield’ land. The Chancellor has pledged 135,000 new ‘shared ownership’ homes where buyers will be able to buy an initial stake in a new property and increase their share over time if they can afford to do so. This equates to £4bn being pumped into the scheme to provide properties for households earning less than £80,000 (or £90,000 in London). BSRIA welcomes the announcement by Treasury officials that the package represents ‘the largest programme of affordable housebuilding by a government since at least 1979 and the biggest ever programme of government building of homes for sale. Now all he has to do is deliver it.

“Today’s announcement could lead to thousands of new jobs and apprenticeships being created in the sector but we must, therefore, ensure that industry can indeed find the much-needed qualified and experienced construction employees to meet this demand. We must not let a labour shortage in this field impede progress.”