The Chancellor of the Exchequer, Philip Hammond, has highlighted next year’s property market plan in the recent Spring Statement. Quite frankly, investors and economists weren’t really shocked to learn that the list of new developments wasn’t that long seeing as the government has failed to deliver all it promised last year. Some stakeholders were, however, delighted to see the government reaffirming the plans that were outlined in the previous statement.
In the 2017 Autumn Budget, the government talked about setting up an investment program that was supposed to inject approximately £44 billion over a course of five years. These funds were meant to help build 300,000 new homes by the mid-2020s. So when the Chancellor of the Exchequer was delivering the 2018 Spring Statement, all that everybody wanted to know was how the government was planning to achieve its goals.
To help build the number of homes currently needed by the country, the government is working hand in hand with 44 areas across the economy. By doing so, it will be able to get support for its bid for the £4.1 billion Housing Infrastructure Fund. Small builders and developers who previously depended on the social impact investor will receive £220 million as the government looks to double its support for the Housing Growth Partnership.
London is to receive a significantly high funding seeing as the government wants to increase the number of affordable homes in the capital by the end of 2021/22.
The Spring Statement didn’t forget to give mention to the developments made since the stamp duty was scrapped for first-time buyers. It detailed that we have approximately 60,000 buyers who have benefitted to date.
Property industry experts have shared their two cents on these recent announcements. They believe that these are signs of great things to come even though they still feel like more work has to be done if we want to completely solve this affordability issue.
Reactions From Various Investors In The Property Industry
Russell Quirk, the founder and chief executive officer of Emoov.co.uk, was somewhat pessimistic. Even though he was pleased that the Spring Statement addressed the housing problem, he was underwhelmed by progress made on promises from previous budgets.
The property price increment has been a prime concern in the West Midland region. So if the government can manage to add 215,000 homes by 2031, the UK property market in this area will exponentially grow. It’s no news that the property landscape in this region has been plagued by uncertainty over the past couple of years. Fortunately, this hasn’t affected the sustained level of buyer demand and that’s another reason why investors are hopeful an increased investment will help this local property market to continue growing.
In addition, he criticised the government for setting what he thought were unattainable goals. Like many other people, he’s well aware of the fact that the appetite for property amongst first-time buyers in London has been dwindling in recent years. And as much as he appreciates the government’s commitment to add 26,000 affordable homes in the capital, he’s not optimistic that it will manage to deliver a total of 116,000 houses by 2022 seeing as it only managed to deliver 7,000 homes in 2017.
By contrast, Richard Pike, sales and marketing director of Phoebus Software, considers that the government is actually working really hard to tackle the housing problem. He claimed that the government had clearly made housing a priority in the relatively short time since it announced the £44 billion investment to raise the housing supply. He also wanted the small house builders in the industry to appreciate the fact that the government thought it was wise to increase the Housing Growth Partnership budget. This would ensure houses are available in those areas where people want to actually live.
The one issue that he found himself grappling with is how the government plans to transfer the funds to the developers, and how this money can be combined with other funds to ensure every project starts and completes in time.
At the same time he feels the government has to do more to tackle the gap between the planning permission and the build completion. He believes that if this issue can be dealt with, land banking will become a thing of the past.
The chief executive officer at Bricklane.com, Simon Heawood, was also quick to respond. He acknowledges that the £44 million investment program is great news, as it will help get the UK back on track to deliver 300,000 homes by mid-2020. He applauded the Government’s commitment to tackle the affordability crisis, but still thinks this is a complex challenge that requires a holistic set of solutions. He also supports the recent cut to stamp duty for first-time homebuyers.
Of course we can’t forget about Neil Knight, who is the Spicerhaart Part Exchange & Assisted Move business development director. He was happy to hear that the West Midlands will be receiving a substantial grant. The company recently made an acquisition in the region, and this announcement suddenly became very pertinent.
Just Mortgages and Spicerhaart group operations director, John Philips, welcomed the news and talked about the recent spike in demand for first-time homebuyers. Last year recorded the highest number of first-time property buyers in a decade. He says this might be attributed to the removal of the stamp duty, the low interest rates, and the help-to-buy scheme.
Inflation was another heated topic he talked about. The Chancellor of the Exchequer promised the country the inflation rate will drop to its original level, which was 2%. If the inflation numbers can go down, the borrowing conditions will be favorable and more people will want to own homes.
After listening to what different investors had to say, we can confidently say that the ‘upside’ is substantial and the ‘downside’ minimal. The Spring Statement is proof enough that the government is doing all it can to deliver affordable homes, and end the housing crisis.