CRE Experts Give Their Verdicts On The Chancellor's Plan For Affordable Housing
There were no big surprises in Chancellor Phillip Hammond’s first and last Autumn Statement, but there will be some impact to British commercial property. The Chancellor (shown with PM Theresa May and the Vice Premier of China) announced the government would inject £1.4B into affordable housing plus £2.3B for more homes in "areas of high demand," and said the plan would result in 40,000 more affordable homes built. Response was mixed but generally underwhelmed.
Hadley Property Group CEO Andy Portlock said the government’s pledge to invest in affordable homes is “a welcome glitter of light.” Affordability is a significant issue in London's housing, so 40,000 new affordable homes is certainly a tentative tiptoe in the right direction, Andy says. He says the industry will welcome the £2.3B infrastructure fund with open arms, but what’s crucial is that developers across the private and public spectrum continue working together to address the wider industry issues such as an ageing workforce, skill shortages, a lack of entry-level training and the speed at which public land is delivered.
Landbay CEO John Goodall agreed that the £7.2B injection for the construction of new homes is most certainly a step in the right direction for addressing the chronic supply/demand imbalance facing aspiring homeowners priced out of the market. However, such measures won’t bear fruit overnight—even 2020 may not be a realistic target if past pledges are anything to go by. John noted that the Chancellor's announcement that he would abolish leasing fees could backfire and hurt the people stuck renting. "Cutting letting fees is a small measure but could result in tenants facing higher rents if landlords must absorb these costs. It’s encouraging to see no further taxes imposed on the sector—but Hammond could have gone further to relieve the rental pressure on Generation Rent.”
Online mortgage broker Trussle CEO Ishann Malhi (shown) said he wanted to see Hammond’s policies turn Generation Rent into Generation Buy. “The unaffordability of housing is arguably the biggest problem facing young people in the UK today, so it will come as a huge relief to many that the Chancellor has placed homeownership at the top of his agenda. These investments won’t change things overnight, but for aspiring homeowners and those trapped in the rental cycle, the prospect of purchasing a property may have become a little more realistic.”
OneSavings Bank sales and marketing director John Eastgate was pleased to hear the government recognize that the current level of housebuilding is just too low. He tells us the increased funding set out by Phillip Hammond is certainly a step in the right direction, and we should be optimistic that this marks the beginning, and not the end, of a series of positive changes to housing policy that will stimulate a surge in housebuilding, and establish a “housing market that works for everyone.”
CBRE head of UK research Miles Gibson noted that the £7.2B is over the next six years, and the spending is very heavily backloaded to the end of the Parliament. Of the £2.3B Housing Infrastructure Fund, for example, just £60M is earmarked for spending in the next financial year. "So this is property positivity, postponed.”
BNP Paribas Real Estate’s joint head of residential advisory, Anthony Lee, also had a lukewarm reaction. “While any additional funding towards affordable housing is welcome, as is more flexibility on how funds can be used, the amount proposed is unlikely to achieve the delivery of 40,000 new rented homes that the government suggests.”
Dukelease managing director Paul Cook also felt that none of the proposals went far enough. “This afternoon’s announcements are somewhat subdued in contrast to the more radical economic and political changes across the globe. There isn’t anything that is truly going to reignite housing production.”