In a speech that was based on the premise of “supporting working families”, Rishi Sunak repeated his well-trailed £1.8bn pledge to fund the delivery of 160,000 greener homes on disused land against a national target of 300,000 per year.
This equates to spending around £11,250 to build each of these homes and therefore will drive development on cheaper land outside the capital, at a time when London house prices have hit record highs.
Only this month the Land Registry reported that the average house price in London jumped £28,000 to £525,893 in the year to August, the biggest monthly rise in 27 months.
Demand for homes soared in the summer as boomerang buyers and tenants returned to the office and were drawn back to London, as well, by the reopening of culture and hospitality. Of course values have also been driven up by Sunak’s own hand, via the emergency stamp duty holiday which ran from July 2020 to September this year.
Heard it all before
“The Budget was broadly underwhelming with no new policy announcements. We have heard it all before. With ongoing planning reform commitments paused we got no clarity or detail on supply.
“The £1.8bn goes some way to building new homes on simple brownfield sites such as offices but not on more complicated former industrial land that needs decontaminating,” says Lawrence Bowles of Savills.
Half of the Chancellor’s “woolly” £24bn of investment into the property market is the £11.5bn ringfenced for affordable housing that was announced back in March. “It is not a new number,” says Bowles.
“This was a missed opportunity to fix a broken market,” agrees Anthony Codling, housing analyst and founder of property website Twindig.
Nothing for London first-time buyers
The Budget was a chance for the Chancellor to reaffirm his commitment to turning generation rent into generation buy, says developer Ben Woolman of the Woolbro Group. “With the Help to Buy scheme set to end in 18 months’ time and house prices now at record highs, there has never been a more urgent need for clarity from the Government on how it plans to support the development of much-needed homes,” he says.
With rising inflation and energy bills, the cost of living in London continues to rise to prohibitive levels making inner London an exclusive haven for the mega rich and inaccessible for young buyers and tenants and key workers.
The current swell in demand is set to push house prices in London up seven per cent by the end of the year, and a further two per cent in 2022, according to the latest forecasts from Savills. The five-year forecast predicts a 12.4 per cent rise by 2025.
“It remains absolutely vital that our city’s crucial key workers have continued access to affordable housing close to their place of work”, says Olivia Harris who runs the housing charity Dolphin Living.
“As part of this we need a firm commitment to not only deliver more of this housing but to ensure a significant proportion of it is intermediate rental housing for those unable to afford local market rents and those who have been unable to save for a deposit to get onto the housing ladder.”
From the mortgage sector, Steve Seal of Bluestone Mortgages said the announcements needed to be backed by a realistic and credible plan to deliver on the critical need for housing. “Speed is of the essence, and we must see the government deliver on these promises quickly,” he says.
“Government must follow through on empty soundbites”
The lack of detail backing up Sunak’s speech was met with anger within the property sector. “It is interesting how suddenly ‘levelling up’ is the buzzword of the moment and ‘get Britain building’ has been swiftly forgotten. Both the public and the property sector could be forgiven for not finding remotely believable Sunak’s announcement that a £11.6bn cash injection is going to deliver new homes on brownfield sites,” says Simon Gerrard of Martyn Gerrard Estate Agents.
“Why should the property sector believe these promises when so many housing policies are gathering dust in Westminster? Rather than another shiny bit of policy all the sector really wants is for the Government to follow through and stop with the empty soundbites. It is impossible to deliver the homes this country needs without upsetting someone, and if they don’t realise this soon then the cycle of broken promises will continue, sites will sit empty and the demand for new housing stock will rise,” he continues.
Peter Bill, housing expert and author of Broken Homes, slammed the Budget housing content as “nonsense” and “pie in the sky”. “The Government give money to private developers to make land suitable to build houses upon. That is all. They do not build houses and they need to stop pretending that they do.”