On the 19th of March, George Osborne revealed coming changes in the 2014 Budget, including an extension of the Help to Buy scheme, assistance to build 200,000 new homes and a new Right to Build for custom builders.
The changes come in response to high demand for new housing development. Domestic builds need a shot in the arm if they're to meet the projected 221,000 increase in households per year. In 2013 we fell far short of that: 109,370 new homes were completed, the lowest figure for four years. With housing development, availability and affordability being key pillars for economic health, how is Osborne trying to get Britain building?
Help to Buy Extended Until 2020
This loan scheme was introduced in 2013's Budget to support buyers looking to purchase newly built properties. Help to Buy was originally set to end in 2016 and is intended to stimulate new developments by making them more attractive for buyers, taking some of the risk away for developers and helping people step on to the property ladder. However, there has been ongoing concern that Help to Buy risks fuelling a housing bubble. Without more direct efforts to aid domestic developers, it may just create more demand without addressing problems in supply. The 2020 extension shows the government has firm belief in its viability.
£500 Million Investment in New Homes
Osborne has estimated that 200,000 new homes will be supported by this healthy sum, with special attention given to the South-East where demand is at its highest. This includes confirmed plans to go ahead with the garden city development at Ebbsfleet, which will provide 15,000 new homes for the region, along with regeneration for Brent Cross and Barking Riverside. The investment comes in the form of finance for small housebuilders. The response has been largely positive, but there are questions as to how exactly the industry will reach the 200,000 new developments that this investment is supposed to help us towards and what's being planned for the rest of the country.
Making Life Easier for Custom Builders
A combination of £150 million worth of funding and a new Right to Build means those looking do build their own homes will find more support and less red tape. Custom builds are expected to have a role in the Ebbsfleet development. The funding will be available for up to 10,000 serviced building plots and come in the form of a loan to be repaid once development is complete (as in the current Custom Build Investment Fund). What Right to Build will allow hasn't been fully announced but the proposal is for custom builders to have more power to challenge local authorities who do not provide opportunities or land. The news was well received by The Self Build Portal and will be welcome to anyone with aspirations to build their own home, but with custom builds being an option for only a few, this won't make a large dent on the current state of housing supply.
The Industry Speaks
The internet has been abuzz since the Budget announcements as the construction industry has its say on the coming changes, what they mean and how much on an impact they'll have. Richard Steer, chairman of Gleeds Worldwide was pleased to see investments being made to nurture the talent of workers along with the developments themselves: “...I am most pleased to see the £85m set aside per annum for the next two years to support the apprenticeship grants for employers … We must get firms to invest in training again to hire, train and retain our craftspeople who will be the key to us controlling wage inflation as we go forward and manage the recovery phase of the economy.”
Help to Buy was most controversial. Nicholas Harris, Chief Executive of Raglan Housing stated that while it may stimulate the market, the scheme doesn't do enough for those on low incomes: “We need to build more homes and increase the supply of affordable properties. Some of the £6 billion government is investing in Help to Buy could be better spent on delivering more affordable homes.” Meanwhile, those involved with energy and sustainability noted their relative absence in Osborne's plans: “There continues to be a complete blind on the role that energy efficiency has to play in reducing consumer bills over the long-term, and generating home-grown jobs,” said John Aker, Director of Policy and Communication at UK Green Building Council. “Clarity on zero carbon homes and non-domestic buildings was also conspicuous by its absence ... Sadly, the future of Allowable Solutions still remains unclear.” What do you think of the 2014 Budget? Is this exactly the boost the industry needed or are solutions being looked for in the wrong places?
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