There were a number of announcements in the Budget affecting the UK’s residential sector. The policies set out by government don’t, in and of themselves, represent a substantial enough effort to address the systemic issues in the housing sector. However, the new five-year strategic business plan for Homes England is certainly a step in the right direction and shows that government have been listening to what industry has been saying on housebuilding.
Focusing on this year’s Budget, there is an extension of support for existing policies and funds to promote existing policies without doing anything dramatically new.
Support for house builders
The Government is conscious effort to diversify housebuilders more with additional support for SMEs, Housing Associations and Local Authorities to build.
The most noticeable step, which was a shift recommended by RICS, was the lifting of the Housing Revenue Account borrowing cap. This should provide local authorities more room to borrow for housebuilding; however, with the Right-to-Buy still in play, and the lack of skills and capacity in local authorities to pursue ambitious housebuilding projects, much more needs to be done to enable government to build again. Further measures include:
- The Housing Revenue Account cap that controls local authority borrowing for house building will be abolished from 29 October 2018 in England,
- The British Business Bank will deliver a new scheme providing guarantees to support up to £1 billion of lending to SME housebuilders
- £653 million will be provided to 2021-22 for strategic partnerships with nine housing associations to deliver over 13,000 homes
- The government will make £10 million capacity funding available to support ambitious housing deals with authorities in areas of high housing demand to deliver above their Local Housing Need.
Infrastructure and housing
Government are also allocating infrastructure spending to support housebuilding which is a prudent move. However, considering the rhetoric around devolution and the capacity for local authorities to better identify opportunities in their own region, government should seek to provide a framework to empower local authorities to identify and act upon these opportunities themselves.
- £291 million from the Housing Infrastructure Fund, funded by the NPIF, to unlock 18,000 new homes in East London through improvements to the Docklands Light Railway
- £75 million from the Home Building Fund for St Modwen plc, to fund infrastructure to build over 13,000 new homes
- The Housing Infrastructure Fund, funded by the NPIF, will increase by £500 million to a total £5.5 billion, unlocking up to 650,000 new homes