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Autumn Budget 2017: Stamp duty abolished for first-time buyers; garden towns; £15bn extra for housing market

Words: Laura Edgar
Budget / iStock-184973453

Chancellor Philip Hammond has announced in the Autumn Budget that from today, stamp duty will be abolished for first-time buyers, a long-term goal to deliver 300,000 new homes a year and a review into delays preventing permissions granted being built out.

Following a pledge by Prime Minister Theresa May to “fix the broken housing market”, Hammond said young people are “rightly” concerned about their future prospects in the housing market.

He noted that the number of people aged 25-34 who own their own home “has dropped from 59 per cent to just over 38 per cent over the last 13 years”.

“If we don’t increase supply of land for new homes, more money will inflate prices, and make matters worse.

“If we don’t do more to support the growth of the SME housebuilding sector we will remain dependent on the major national housebuilders that dominate the industry,” he said.

Hammond pledged an additional £15.3 billion of funding, loans and guarantees to support the housing market, including for skills, resources and building land, taking the total to £44 billion for this Parliament. He also promised 300,000 net additional homes a year on average by the mid-2020s.

The Budget also features £204 million for innovation and skills in the construction sector that aims to train a new workforce to build the new homes.

The chancellor raised the stamp duty level to £300,000 for first-time buyers. In expensive areas such as London, he said the first £300,000 of the cost of a £500,000 purchase by first-time buyers would be exempt from stamp duty.

Last year, he launched the £23 billion National Productivity Investment Fund (NPIF). Today, Hammond extended this for another year and expanded it to over £31 billion.

The ability of the Homes and Communities Agency – to be renamed Homes England – to use investment and planning powers to intervene in the land market more actively will be strengthened by the government, according to the Budget document.

From the NPIF, £1.1 billion will be used for a new Land Assembly Fund, with the aim of enabling Homes England to work alongside private developers to develop strategic sites, including new settlements and regeneration schemes.

Five new garden towns will be built, using delivery vehicles such as development corporations, while the Housing Infrastructure Fund will be increased by £2.7 billion to £5 billion.

A housing deal has been agreed with Oxfordshire, which see the county commit to delivering 100,000 homes by 2031 in return for support from the government, including £30 million a year for infrastructure. Housing deal negotiations are continuing with Greater Manchester, the West Midlands, Leeds, and the West of England.  

The Budget sets out the lifting of the Housing Revenue Account borrowing caps for councils in areas suffering pressure on housing affordability.

The Budget document states: “Local authorities will be invited to bid for increases in their caps from 2019‑20, up to a total of £1 billion by the end of 2021‑22. The government will monitor how authorities respond to this opportunity, and consider whether any further action is needed.”

Reform for the planning system

For Hammond, “solving the housing challenge takes more than money. It takes planning reform”.

He said the government would focus on delivering homes in the urban areas that people want to live and where most jobs are created.

The government will make the best use of urban land and continue the “strong protection of our green belt”.

The Budget 2017 document notes that the government will consult on strengthening policy so it is clear that allocated land should be taken out of a local plan if there is no prospect of a planning application being submitted. It will also consult on a new policy which could see local authorities expected to “permission land outside their plan on the condition that a high proportion of the homes are offered for discounted sale for first-time buyers or affordable rent”.

The government plan to consult on minimum densities for housing developments in city centres and around transport hubs, with greater support for the use of compulsory purchase powers and a permitted development right to allow commercial building to be demolished and replaced with homes.

Building out faster

Local authorities will be expected to bring forward 20 per cent of their housing supply as small sites, the Budget document states, as this will “speed up the building of new homes” as well as supporting the government’s plans to increase competition in the housebuilding market, announced in February in the housing white paper. This is also to be consulted on.

A review panel will be established and tasked with reviewing the “significant” gap between housing completions and the amount of land allocated for permission. Chaired by Sir Oliver Letwin, MP for West Dorset, the panel will make recommendations for closing it and provide an interim report before the Spring Statement 2018 and a full report in one year.

Other housing announcements include:

  • £630 million, from the NPIF, aimed at accelerating the building of homes on small, stalled sites, by funding on‑site infrastructure and land remediation.
  • £1.5 billion for the Home Building Fund, to provide loans specifically targeted at supporting SMEs which cannot access the finance they need to build.
  • £400 million of loan funding for estate regeneration.
  • Following the tragedy at Grenfell Tower, the government said it is determined to ensure that those affected receive the support they need. The Budget reconfirms that, where measures are essential to make a building fire-safe, the government will make sure that current restrictions on the use of local authority financial resources will not prevent them going ahead.
  • Hammond announced that local authorities will be given the power to charge a 100 per cent council tax premium on empty properties.
  • Launch of a Homelessness Reduction Taskforce.
  • £28 million for three Housing First pilots in Manchester, Liverpool and the West Midlands, to support rough sleepers with the most complex needs to turn their lives around.

The Budget 2017 document can be found on the UK Government website.

* The measures outlined in this article are primarily related to England.

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