Budget 2018: The housing lowdown

Yesterday, chancellor Philip Hammond delivered his latest budget. Pre-election salve? Brexit crisis-limiter? Who knows for sure? Whatever the long or short term plans, here’s everything you need to know about what the budget means for housing…

Much of the headline cash funding had already been announced, but the budget provided some useful detail.

Going back to the Autumn Budget 2017, the government announced over £15 billion of new financial support for housing, bringing the total to at least £44bn over a five-year period. This budget heralds ‘further progress to implement this commitment’, including:

  • £291 million from the Housing Infrastructure Fund, funded by the NPIF, to unlock 18,000 new homes in East London through improvements to the Docklands Light Railway
  • the British Business Bank will deliver a new scheme providing guarantees to support up to £1bn of lending to SME housebuilders
  • £75m from the Home Building Fund for St Modwen plc, to fund infrastructure to build over 13,000 new homes

The most eye-catching, and welcome, announcement is the immediate lifting of the local authority HRA borrowing cap.

As a result, spending on housebuilding is expected to reach £1.2bn a year by 2022/23. The government says this will enable councils to increase housebuilding to around 10,000 homes per year – far more than has been achieved for many years. But the OBR is more cautious, forecasting 20,000 extra council-built homes to 2022/23.

Planning and infrastructure

Strategic housing deals: the government will make £10m capacity funding available to support ambitious housing deals with authorities in areas of high housing demand to deliver above their Local Housing Need.

The Housing Infrastructure Fund will increase by £500m to a total £5.5bn, unlocking up to 650,000 new homes.

The government has launched a consultation on new permitted development rights to allow upwards extensions above commercial premises and residential properties, including blocks of flats, and to allow commercial buildings to be demolished and replaced with homes.

There will be a simpler system of developer contributions, including simplifying the process for setting a higher zonal Community Infrastructure Levy in areas of high land value uplift, and removal of all restrictions on Section 106 pooling towards a single piece of infrastructure. A strategic infrastructure tariff for combined authorities and joint planning committees with strategic planning powers will also be introduced.

New discounted homes in up to 500 neighbourhoods: the government wants to see parishes and communities provide many more homes for local people to buy, at prices they can afford. The Localism Act allows people to prepare neighbourhood plans and development orders. The government will provide £8.5m of resource support so that up to 500 parishes can allocate or permission land for homes sold at a discount.

The government will update planning guidance to ensure that neighbourhood plans and development orders cannot be unfairly overruled by local planning authorities; and will also explore how it can empower neighbourhood groups to offer these homes first to people with a direct connection to the local area.

Housing associations

There’s £2bn in new funding for the Affordable Homes Programme to give some HAs long-term funding certainty to 2028-29 (announced in September).

Some £653m to 2021-22 will go to strategic partnerships, with nine HAs to deliver over 13,000 homes

Additionally, a new five-year strategic business plan for Homes England is being published today.

Other new supply

Help to Buy Equity Loan: by March 2021, the government expects to have invested around £22bn in the scheme. From April 2021, a new scheme will run for two years before closing in March 2023 – which only be available to first-time buyers, and for houses restricted to new regional property price caps (1.5 times the current forecast regional average first-time buyer price, up to a maximum of £600,000 in London).

Shared ownership: the government is launching a call for evidence, inviting proposals from investors willing to collaborate with it in delivering a new wave of shared ownership homes.

Stamp Duty relief in England and Northern Ireland will be extended to shared ownership. This change will apply immediately and backdated to 22 November 2017.

Accelerating housing delivery: alongside the Budget, Sir Oliver Letwin has published an independent review of the gap between housing completions and the amount of land allocated or permissioned.

The review found no evidence that speculative land banking is part of the business model for major housebuilders, nor that this is a driver of slow build out rates.

The review concluded that greater differentiation in the types and tenures of housing delivered on large sites would increase the market absorption rates of new homes – the binding constraint on build out rates on large sites – and has set out recommendations to achieve this aim. The government will respond to the review in full in February 2019.

In order to minimise uncertainty for housebuilders, the government confirms that Help to Buy Equity Loan funding will not be made contingent on large sites with existing outline permission being developed in conformity with any new planning policy on differentiation.

The government will honour any funding commitments made to sites with existing outline planning permission, regardless of any new planning policy on differentiation.

Welfare and benefits

The government has bowed to pressure from MPs and others to ease a variety of problems with Universal Credit. Rollout has been slowed again, to end in December 2023. Measures announced include:

The amount that households with children, and people with disabilities can earn before their UC award begins to be withdrawn – the Work Allowance – will be increased by £1,000 from April 2019

Extending an additional payment to housing benefit claimants to receive a fortnight’s worth of support during their transition to UC, to cover the income-related elements of Jobseeker’s Allowance and Employment and Support Allowance, and Income Support. Effective from July 2020

Extending the 12-month grace period (before the Minimum Income Floor applies) to all gainfully self-employed people. From July 2019 and implemented fully from September 2020

From October 2019, reducing the maximum rate at which deductions can be made from a UC award from 40% to 30% of the standard allowance. From October 2021, increase the period over which advances will be recovered, from 12 to 16 months

Housing benefit

Various detailed measures are already underway including:

  • Revising the timetable for transferring rent support from housing benefit to pension credit. The government will delay by three years to ensure that this transfer aligns with full implementation of UC
  • As announced in August, funding for supported housing within the welfare system will be retained, rather than moving to a local funding model
  • As announced in March, the government will reinstate automatic entitlement. This group will therefore be entitled to claim support for housing costs under UC

Other measures

The chancellor says the private finance initiative will not be used for any new projects.

The NHS will receive the lion’s share of new public sector funding for its new five-year settlement until 2023-24. Budgets for mental health services will grow as a share of the overall NHS budget over the next five years.

Local councils will receive additional funding for social care to help older people with care needs and help children to live safely at home (£240m extra this year and next year for all adult social care). Budgets for mental health services will grow as a share of the overall NHS budget over the next five years.

Councils will receive an additional £55m in 2018-19 for Disabled Facilities Grant, to provide home aids and adaptations.

The government will publish a consultation in January 2019 on a Stamp Duty surcharge of 1% for non-residents buying residential property in England and Northern Ireland.

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