Budget 2013 – The Second Lord of the Treasury giveth…

Budget 2013, a lot of hoopla but not much moolah. There are several housing related announcements to raise expectations of improvements in the construction sector, but the last few budgets also contained similar announcements and none of them have had much impact. So why does the Chancellor think that these are any different? Here are the main points.

Help to Buy: Offering Government loan guarantees to all borrowers of up to 20% of £600,000 for three years, is a new step, and could be considered a backwards one as it will artificially boost the housing market and maintain housing prices at their current levels. While it may help to lower unemployment and increase construction output, it will do little to help those who simply cannot afford a mortgage on a new home in many areas of the UK. Housebuilders will be happy as it will increase the size of their market, and they are already doing very nicely out of the current one. It will also help to oil the wheels of the second hand market and bring more buyers into it, but the problem there is a lack of homes on the market, not a shortage of buyers.

Affordable Housing:What about affordable housing?
The Government also recognises the concerns of social landlords regarding uncertainty on social rents after 2014-15. Certainty is important to help landlords plan future housing development, providing affordable housing and boosting the construction sector. At the 2015-16 Spending Round the Government will therefore set out a social rental policy that gives social landlords certainty until 2025.

At the 2015-2016 Spending Round? When will that happen? It takes about three years to get schemes set up and running, so around now would be helpful for RHP’s who want to follow on from their 2014/2015 programme.

Right to Buy: Why the Chancellor persists in propping up the Right to Buy scheme, now to the tune of £100,000 for London properties, is beyond me. These properties will be sold at a loss, and cannot be replaced for anything like £100,000, so the real cost to the nation is going to be more than £250,000 to replace each property. It amounts to an enormous wealth redistribution policy that would be better carried out by simply giving social tenants, who are happy to retire out of London, a £200k bribe to go and live elsewhere, freeing up social housing in London for people who need it.

Private renting got an additional boost with the Build to Rent fund increased to £1Bn.

Zero Carbon: The most cheering announcement, which shows how low our expectations have fallen, was that the government is
-committed to zero carbon homes by 2016,
-will respond to the Part L consultation in April and
-will announce Allowable Solutions by the summer recess.
So while we may or may not get an intermediary step in Part L 2013, we will definitely see ‘zero carbon’ homes by 2016. This announcement makes me think that we will see an intermediary step in part L 2013 for two reasons: because it makes sense to gradually ratchet up performance to the 2016 target, and because the loan guarantee scheme will see the Government take a stake in a lot of new homes. It is one thing to say that the market should set the standards for new homes when no Government money is being invested in it, it is quite another when 20% of a properties values is sitting on the Treasury’s loan book.

Planning: On the other hand, planning to :consult on allowing further flexibilities between use classes to support change of use from certain agricultural and retail uses to residential use to increase responsiveness within the planning system.‘: sounds a lot like preparing to build over the countryside to please Nick Boles, when we should be building homes at sufficient density to enable development to support walkable neighbourhoods, local schools, shops and amenities, not distributed land-hungry car dominated suburbs.

Growth: The announcement that the Government will ‘ask local areas to put in place pro-growth planning policies and delivery arrangements as part of new Local Growth Deals’ in response to Lord Heseltine’s report No Stone Unturned, sounds suspiciously like imposing top down housing targets to me. He recommends:
‘At the earliest opportunity civil servants based across the country should be brigaded into Local Growth Teams, structured around clusters of LEPs, primarily tasked with joining up government and local partners in the areas of their responsibilities to facilitate, identify and realise economic opportunities.’
Wouldn’t it have been simpler and cheaper to turn RDA’s into Local Growth teams, rather than rushing to dismantle them? Just saying.

Green Deal: The Cinderella policy of the Coalition. No announcement of any support for this supposedly flagship policy, which will allow home occupiers to carry out energy efficiency improvements by borrowing at a rate of 6-7%. Given that the policy is intended to treat 14 million properties by 2020 and currently is attracting interest at the rate of 1,ooo assessments per month, it is unlikely to get anywhere near its intended penetration without some significant incentive. Perhaps the Chancellor’s support for fracking is a ‘cunning plan’ to drive up energy costs sufficiently to make the Green Deal more attractive?

Renewable Energy: Nothing, nada, but given the hash this Government made of the FiTs that is probably a good thing. In this case, silence is golden.

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