HCA and SBM (Posted 19.03.14)

2014 Budget Commentray

Headline announcements and industry comments relating to the 2014 Budget Statement.

Announcements in the Budget include:

Public Land The Strategic Land and Property Review has identified scope to generate £5bn of receipts from land and property to support growth and drive efficiency, and Departments have already committed to release £3.5bn. The Government Property Unit will also increase its work with local areas on better use of public sector assets, linking with Growth Deals, the Strategic Land and Property Review and the One Public Estate pilots.

Help to Buy The equity loan scheme will be extended to March 2020 with an extra £6bn to help a further 120,000 households purchase a home. No changes to eligibility are being made. There are no changes to the Help to Buy mortgage guarantee scheme, which will end in December 2016.

' Finance Fund Government will provide a £500m recoverable Builders Finance Fund to provide loans to SME developers for sites of 15 to 250 units. Funding is available in 2015/16 and 2016/17 and will unlock 15,000 housing units stalled due to difficultly in accessing finance. The prospectus is due later this year.

Estate Regeneration Government will establish a £150m loan fund to kick-start the regeneration of some of the worst housing estates, with expressions of interest invited from private sector developers. Some expressions of interest have already been made through the Greater London Authority. Funding is available from 2015/16 to 2018/19 with repayment expected over 15 to 20 years (max).

Custom Build Government will consult on a new ‘Right to Build’ to give custom builders a right to buy a plot from councils. Government will be seeking a small number of councils to act as vanguards to test the model. A new £150m Serviced Plots loan fund (2014/15 to 2018/19) will help provide up to 10,000 serviced plots for custom build.
Councils will need to work with contractors or builders to access the fund. The Government will also look to make the Help to Buy equity loan scheme available for custom build.

Garden Settlements A new Garden Settlement will be built in Ebbsfleet, selected because of its high-speed rail link to London, housing pressures in the south east and local support. Government will consult on an urban development corporation for the area to unlock up to 15,000 new homes – with up to £200m capital being made available. The UDC’s proposed mandate will be to work with local councils, developers, and residents, to support and accelerate the development. Government will also, by Easter, publish a prospectus seeking expressions of interest for other locally-led garden cities.

HCA Chief Executive Andy Rose said:
“Once again Government has put a strong emphasis on housing in the Budget. In our role as Government’s housing delivery agency, we welcome today’s announcement by the Chancellor of up to £7bn total investment to support delivery of thousands of new homes, which builds on the Spending Round announcement of £3.3bn for affordable housing.

“The likely role for the HCA builds on our expertise, the success of our existing programmes and proven track record of delivery, and on our effective regulation.

“The Budget reiterates Government’s commitment to the housing sector. Investment in housing meets the needs and aspirations of homeowners and provides choice for renters. It is also a key driver of local economic growth, creating jobs in construction and the wider supply chain, and helping employers to attract the staff they need, as well as stimulating buying activity in the local economy. We will work with DCLG and our partners on the details of the new programmes and to maximise their impact.”

We have received a number of further comments on the Construction related elements of the 2014 Budget which we share below:

Andrew Carpenter, Chief Executive of the Structural Timber Association says:
“We welcome the commitment from George Osborne that we should build more homes which offer families more aspiration. The proposed Ebbsfleet garden city and Barking Riverside, as well as measures to boost construction of homes are very welcome. What is essential, however, is to ensure these homes are both sustainable and energy efficient. These large scale projects offer the UK the opportunity to grasp the benefits of building in timber, which is a modern and quick method of construction that will allow the Government to tick all the boxes in terms of environmental performance through construction and the life of the buildings. It offers the UK a real chance to be a leader in sustainable construction “

The Mortgage Advice Bureau, or MAB, comments on ‘Right to Build’ and Custom Buildinitiatives with Andy Frankish, their New Homes Director comments:
“The announcement of a £150m custom build initiative is a ground breaking move that will extend the ‘Right to Build’ to balance the success of ‘Help to Buy’. It is a huge boost to have government throwing extra weight behind the custom build industry.

“Dropping the community infrastructure levy for self-builders is already making it more affordable for people to build their own homes, and it is a huge positive to see active moves towards offering Help to Buy equity loans on custom-built properties so people can access the mortgage finance they need to support their ambitions.

“Together with the overall extension of the Help to Buy equity loan scheme for new builds until 2020, this announcement is another eye-catching move to tackle the housing shortage. Initiatives in these markets are vital to balance supply and demand. Developers will rightly rejoice at these new measures and it is vital that lenders and the wider mortgage industry do their bit and get behind new build and custom build in greater numbers.”

Chris Temple, PwC UK engineering & construction UK lead, commented:
"House building needs a significant push, so it is good to see the £500 million investment into small house building firms, which has obvious employment connotations too. However, space is at a premium, especially in London and the south-east, where the Chancellor identified a specific need for new housing. To really kick-start the industry, I would like to see greater incentives for public and private landowners to sell sites to developers.

"There was a definite focus on first-time buyers in this Budget announcement, with plans for 200,000 new homes to be built nationally meaning good news for those interested in the Help To Buy scheme, both developers and purchasers. The confirmed new garden city in Ebbsfleet will be of great appeal to young professionals looking for a property in the commuter belt. The £150 million investment for people to build their own homes works well in parallel to the Help to Buy scheme – perhaps now people looking to get onto the property ladder will consider buying a plot at auction and starting from scratch?"