By Alan Gillies
1p off a pint of beer, 2p off cider and whisky, wine duty frozen… “a beer-soaked election budget”, according to the International Business Times. But of course there’s more to the Budget than tax cuts, even in the last Budget before the General Election.
One of the most pressing concerns of many commentators in the build up to the Budget was the housing ‘crisis’, with recent estimates suggesting that 245,000 homes a year need to be built in England alone, whereas only half of that number have been built in recent years.
So what’s been announced in the Budget in response?
The two headline announcements are a new Help to Buy ISA and more housing zones outside London – 20 zones compared to the 10 announced last June. While initial reaction to the Help to Buy ISA appears to be mixed, as it targets demand rather than supply, the new housing zones have been more warmly welcomed.
The government originally announced plans to create 30 housing zones on brownfield sites across the country in order to increase housing supply – 20 in London and 10 elsewhere. Local authorities would bid for investment funding, usually in the form of a loan with an appropriate interest rate applied in accordance with the state aid rules. In addition there is the opportunity to put forward an additional bid for a £5m ‘local development order’ incentive fund, to encourage bids from areas which can provide sites with outline planning permission to speed up the housebuilding process.
The first nine zones in London had already been announced on 20 February, which led to Peabody Housing Association reporting that it had increased the number of homes it plans to build from 700 to 3000 at two sites in Thamesmead. There were however suggestions from the Labour-led Hackney Council that the housing zone model is less appropriate for inner London boroughs because the challenges are more to do with making affordable housing viable than providing infrastructure.
Calls to encourage the release of more public sector land for housing have also been addressed in the Budget with the announcement that the government will implement a new ‘commercially-driven’ approach to land and property asset management across the central government estate. A new central body or bodies will own and manage central government property and land assets, which it is hoped will release land and property for productive use, “including building new homes”.
Further housing measures, already announced just prior to the Budget, included a Housing Finance Institute to address the skills and knowledge gap in delivering local authority housing, as recommended by a recent review of the local authority role in housing supply. Also measures to streamline the sales process for shared ownership properties in outright ownership and a wider review into shared ownership.
According to the Budget document itself, the new housing zones ‘could support up to 45,000 new homes’, so they are not going to solve the housing crisis by themselves. However the government argues that things are starting to move in the right direction, claiming that levels of planning approvals and housing starts are at 7-year highs.
Whether the effect of the housing measures announced in the Budget turn out to be a drop in the ocean or an important impetus to increasing supply to the levels required remains to be seen, with the president of RIBA already suggesting that “Whoever forms the next government must go much further and champion the long-term sustainable supply of high-quality new homes that people want to live in and communities will support”.