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<\/a>The chancellor Rachel Reeves has just delivered her Spring Statement in the Common, which was more of an economic update than delivering a raft of tax changes or spending pledges.<\/p>\n
When it comes to housing, the chancellor pointed to the government\u2019s reforms to the UK\u2019s planning system, highlighting that it will result in housebuilding being at its highest level in over 40 years, according to the OBR.<\/p>\n
She said that the government\u2019s bold planning reforms back the builders not the blockers to deliver an extra 170,000 homes by 2029\/30 \u2013 boosting homes built by 30% that year after a 13 year house building low in 2025-26.<\/p>\n
According to the chancellor, this brings the UK one step closer to the government\u2019s Plan for Change mission to build 1.5 million new homes this parliament with the OBR confirming the government is on track to build an extra 1.3 million homes by the end of this parliament.<\/p>\n
Further reforms, such as the Planning and Infrastructure Bill, the government\u2019s long-term housing strategy and the new Affordable Homes Programme \u2013 on which the government made a \u00a32bn down payment this week \u2013 are not reflected in the forecast and will all help to reach the 1.5 million target.<\/p>\n
As a result of the planning reforms the UK\u2019s economic watchdog also think the economy will be 0.2% larger by 2029\/30, worth around \u00a36.8bn in today\u2019s prices.<\/p>\n
The OBR have also concluded in their forecasting that this could rise to over 0.4% in 2034\/35 \u2013 meaning billions of pounds more for public services like the NHS and more construction jobs to get houses built for hardworking families.<\/p>\n
For a zero-cost policy, this is the biggest positive growth effect the OBR have ever forecast.<\/p>\n
The government says the boost to GDP is driven by:<\/p>\n
+ Higher productivity in the construction sector, from bringing land on the edges of our largest towns and cities into more productive use, lower planning costs and removing artificial constraints imposed by planning that prevent the construction sector from expanding.<\/p>\n
+ A greater flow of \u2018housing services\u2019 \u2013 there will be more houses for the same number of people, allowing new households to form (e.g. people moving out of their parents\u2019 home into a home of their own). This increases GDP through more rent being paid (where new homes are let out), or \u2018imputed rents\u2019 (which reflects what owner occupiers would pay to rent their home on the open market).<\/p>\n
+ Beyond the five-year forecast, greater housing availability increases labour mobility which contributes further to growth, by allowing people to move to high productivity places.<\/p>\n
Homes will be built on disused car parks and petrol stations, whilst national landscapes and sites of special scientific interest will continue be protected. Government guidance ensures that Green Belt will not be fundamentally undermined.<\/p>\n
This features as part of the Plan for Change to get Britain building, which also includes the Planning and Infrastructure Bill currently going through parliament, which the OBR will take a judgement on in due course.<\/p>\n
The government will also consult on policies to support a more streamlined and consistent planning system. As part of delivering the Plan for Change milestone to deliver 1.5 million homes by the end of this Parliament, the government will publish a Long Term Housing Strategy and has committed to set out details of further new government investment in social and affordable housing to at the Spending Review this year, following on from the \u00a32bn down payment announced yesterday as well as confirming the government\u2019s plans to provide certainty for the transformative programme of building the new generation of new towns.<\/p>\n
Industry reaction:<\/strong><\/p>\n Richard Donnell, executive director at Zoopla, commented:<\/strong> \u201cThe housing market needs a strong and growing economy to support housing supply. It\u2019s promising to see the\u00a0Government focusing on longer-term impact by boosting funding for new homes and avoiding short-term measures like stamp duty holidays that don\u2019t really help with the fundamental challenges in the housing market.<\/p>\n \u201cThe top priority should be an easing of mortgage regulations, which will support first-time buyers, an important buyer group for homebuilders and the broader market.<\/p>\n \u201cThis would also help the rental sector, where there are still 12 people chasing every home for rent, with those on low incomes bearing the brunt. Increased funding for social housing is essential in the upcoming Spending Review to help support housing delivery and boost the stock of social rented homes, which has been static for 30 years.\u201d<\/p>\n \u00a0<\/p>\n Jeremy Leaf, north London estate agent and a former RICS residential chairman, said:<\/b> \u201cOur first wish was granted \u2013 the chancellor didn\u2019t do much, if anything, to deter existing activity in the housing market.<\/p>\n \u201cThe first way of dealing with a problem is to recognise it and the government seems to have realised that there is a housing crisis. It has been widely accepted that affordable housing in particular is insufficient and improving planning is a significant contributor to that aim. Rachel Reeves said herself that it is too slow so the extra funding announced yesterday in the social and affordable homes programme is good news, although we still need more detail of where, when and how those spades are going to be in the ground.<\/p>\n \u201cWe are disappointed there wasn\u2019t more direct assistance for the private sector, particularly SMEs who cumulatively can make such a big difference to the overall problem. Builders won\u2019t build unless it is profitable for them to do so and there is reasonable prospect of adequate demand for the product envisaged. It would have been good to see some recognition of this.<\/p>\n \u201cIt also seems a little unfair on those who have moved heaven and earth to take advantage of the stamp duty concession before it disappears but who may not make it, through no fault of their own. The deadline could perhaps have been extended for those transactions in solicitors\u2019 hands from the beginning of February as a small respite. Looking forward, a broader review into the impact of stamp duty on the market and making it less of a deterrent, particularly at the first-time buyer end, would have been welcome.<\/p>\n \u201cWe were sorry not to see anything supporting landlords to stay in the sector because it is not just a question of keeping house prices in check but also rents, which have softened a little lately but \u00a0are still too high.<\/p>\n \u201cOverall, it\u2019s a six out of ten. Could do better and hopefully this will improve to an eight out of ten in the next few months if these policies are seen to be making a contribution.\u201d<\/p>\n \u00a0<\/p>\n Matt Thompson, head of sales at Chestertons, commented:<\/strong> \u201cWe have met a lot of first-time buyers who held out hope for the Chancellor to make a U-turn on stamp duty thresholds in today\u2019s\u00a0Spring\u00a0Forecast. As this hasn\u2019t been the case, first-time buyers will now have to ensure that their budget can cover the cost increase which means some might compromise on location or type of property. Although the rush of first-time buyers that the market has seen earlier this year has slowed down, demand remains strong as mortgage rates are still attractive enough to motivate buyers to get on the property ladder.\u201d<\/p>\n \u201cEarlier this year, the news reported an exodus of wealthy individuals from the UK amid the abolition of Non-Dom tax breaks. Although the Chancellor decided to soften those changes, it had already alienated a demographic that is key to the UK\u2019s long-term economic growth. We are pleased that Rachel\u00a0Reeves has taken the backlash into consideration and decided not to introduce a mansion tax for the time being which could see some\u00a0HNWIs deciding to stay or return to the UK.\u201d<\/p>\n \u00a0<\/p>\n Timothy Douglas, head of policy and campaigns for Propertymark, said: <\/strong>\u201cThe Spring Statement had a clear focus on the vital role housing plays in the UK economy and as part of the UK Government\u2019s plan for growth, so it is encouraging to hear that planning reforms will boost national income. However, workforce challenges remain and it\u2019s 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.\u201d<\/p>\n \u00a0<\/p>\n William Reeve, CEO, Goodlord, remarked:<\/strong> \u201cThe PRS is creaking under intense pressure. A lot of this is attributable to supply and demand; there simply aren\u2019t enough homes to go around. Today\u2019s announcement that \u00a32bn will be directed towards social house building is welcome, but the planned 18,000 homes barely touches the sides of what\u2019s needed.<\/p>\n \u201cWe\u2019re going too slowly to hit the government\u2019s target of 1.5m new homes this parliament, which in itself won\u2019t be enough to close the UK\u2019s housing gap. And we are falling behind our neighbours \u2013 the numbers are stark when you compare our housing stock with countries like France. This is being compounded by anti-market reforms. Despite the Government\u2019s narrative about promoting growth and stripping away red tape, where housing is concerned it is doing the opposite. It is inhibiting the market from finding solutions that would reduce the amount of money the Government needs to pour into the sector.<\/p>\n \u201cFor example, we should scrap provisions in the Renter\u2019s Rights Bill that will suffocate market dynamics, such as bans on \u2018over-bidding\u2019 and abolishing fixed term student tenancies. Both reforms are anti-market and will actually make things harder for tenants, not easier. Likewise, we should remove the artificial barriers between the social and private sectors, introducing more fluid, means-tested pathways between the two sectors and targeting support more effectively. And we should be pushing even harder to drive through planning reform and make investing in property a more attractive option.\u201d<\/p>\n \u00a0<\/p>\n Brian Comer, chairman of The Comer Homes Group, commented:<\/strong> \u201cAs expected, the Spring Statement on the government\u2019s drastic measures to cut national spending but we are in an industry that is often overlooked despite its potential to provide a much needed shot in the arm for the Treasury. History proves that a healthy property market is the building blocks for a strong economy, so I\u2019m eager to see the government focus on their plans to build more homes and policies to help more people get their foot on the housing ladder.<\/p>\n \u201cWe have been encouraged by the housing minister\u2019s initiatives to free up and improve the planning system and were eager to see the chancellor support this in the Spring Statement. The planning process has become a costly and time-consuming exercise, often requiring appeals and adjustments that cause further delays and at times the complete abandonment of what could have been hugely viable and successful projects. The less homes we are able to produce on an annual basis the higher prices will become, so we need to be able to produce more homes to ease the pressure on current values. We hope that the chancellor and the wider government will give the industry the attention it needs because the societal, economical and political rewards on offer are great.\u201d<\/p>\n \u00a0<\/p>\n Rightmove\u2019s Colleen Babcock noted:<\/strong> \u201cIt\u2019s 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.<\/p>\n \u201cGiven 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 \u00a3940, a 59% increase compared with \u00a3590 per month five years ago. Over that same period rents have increased by 40% across Great Britain. So, while we welcome the government\u2019s focus and investment to help build more affordable homes, we\u2019re keen to hear more about how this, or other incentives, can help more first-time buyers.\u201d<\/p>\n \u00a0<\/p>\n James Dickens, managing director of Wavensmere Homes, said:<\/strong> \u201cFor property and construction, while the new NPPF and Planning and Infrastructure Bill both set out a positive policy reset, they don\u2019t offer immediate cheer to offset today\u2019s fiscal event. In the meantime, landlords and those hoping to move onto or up the housing ladder are braced for next week\u2019s Stamp Duty increases and higher energy costs. Developers are also grappling with the Building Safety Regulator Gateway process, next year\u2019s introduction of the Building Safety Levy, and the prospect of an additional Mayoral Community Infrastructure Levy for new developments within elected mayor boundaries.<\/p>\n \u201cHowever, the extra \u00a32bn in grant funding for the development of affordable housing is welcome. The \u00a3600m funding across four years to train up to 60,000 engineers, brick layers, and electricians is also helpful, but much more needs to be done to enable housebuilders and developers to bring commercially viable developments forward that can generate new construction jobs.<\/p>\n \u201cConstructing 300,000 new homes per year remains a pipedream! The Chancellor and the Deputy Prime Minister should be finding ways to assist housebuilders with delivering the Future Homes Standard and Biodiversity Net Gain legislation, to counteract the cost burden being passed onto the consumer. The prospect of the market being able to absorb additional significant upfront taxes aligned to the construction of new homes is very ill-advised.\u201d<\/p>\n \u00a0<\/p>\n Jonathan Pearson, director of Residentially, commented<\/strong> \u201cThe housing associations I work with have always said they stand ready to scale up their housebuilding efforts in line with the government\u2019s ambitions, but they first needed to know how much money was available and how it would be allocated. It is impossible for them to plan multi-year developments with the necessary financial commitments without this.<\/p>\n \u201cThe delays to the spending review, from March into June, have only compounded the uncertainty facing the sector, so bringing forward \u00a32 billion in funding for up to 18,000 social homes should now be welcomed by many, especially as it is underpinned by millions of pounds to train thousands more construction workers.<\/p>\n \u201cIt just remains to be seen whether this alone can reassure housing associations that the government is serious about investing in social and affordable housing so that they have the confidence to begin building the new homes our country urgently needs. Unless the spending review in June confirms genuine multi-year investment, housing associations will still struggle to plan the larger developments we all\u00a0want\u00a0to\u00a0see.\u201d<\/p>\n \u00a0<\/p>\n Paresh Raja, CEO of Market Financial Solutions, added:<\/strong> \u201cThe \u201cget Britain building\u201d rhetoric must now translate into tangible action \u2013 bringing in new construction workers is a positive step, as the Chancellor had already announced three days ago, but much of today\u2019s speech involved repeating the Autumn Budget\u2019s plans to encourage housebuilding.<\/p>\n \u201cReforming 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.<\/p>\n \u201cHouse 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\u2019s 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.\u201d<\/p>\n \u00a0<\/p>\n<\/p><\/div>\n