Budget 2020 – what does it mean for the housing sector?

Chancellor Rishi Sunak’s £30bn package to help the economy get through the coronavirus outbreak made all the Budget headlines this week, but there was plenty to interest builders, developers and housing providers too.

Although the 240,000 new homes created in 2018-19 was the highest level in 32 years, even this high watermark falls short of the government’s desire to build 300,000 new homes, per year, by the mid-2020s.

So what did the Budget have in store to address this? Below we outline the main points announced by the chancellor that will affect the building of new homes in England and Wales.

Funding for affordable homes

The Budget announced £12.2bn for the Affordable Homes Programme and a further £400m for eight Mayoral Combined Authorities (including a new mayor for West Yorkshire) and local areas to establish housing on brownfield land across the country. The chancellor also confirmed £1.1bn from the Housing Infrastructure Fund for nine different areas including Manchester, South Sunderland and South Lancaster.

Land availability

Robert Jenrick, The Secretary of State for Housing, Communities and Local Government, is expected to announce comprehensive reforms to the planning system followed by a Planning White Paper in the next few months.

The reforms will be designed to “create a simpler planning system and improve the capacity, capability and performance” of local planning departments, with the aim to speed up the development process. Planning authorities that fail to meet their local housing need will face restrictions on the release of land for development and greater government intervention.

The government also intends to explore long-term reforms to the planning system to build more “certainty” into the process for all stakeholders.

Local Authority Borrowing through the Public Works Loan Board (PWLB)

The government announced a cut in the interest rates for social housing investment by one percentage point and made an extra £1.15bn of discounted loans available for local infrastructure projects. However, another consultation will take place on revising the terms of PWLB lending with the aim of ensuring local authorities continue to invest in housing, infrastructure and front-line services.

Flood defences

Recent storms and flooding have prompted the government to double the amount it invests in the flood and coastal defence programme in England, taking it to £5.2bn over six years, which it claims will better protect a further 336,000 homes and non-residential properties.

Greener homes

With the Future Homes Standard leading the drive to remove fossil-fuel-based heating in all new homes, developers need to start replacing natural gas and other fossil fuels with low carbon alternatives. The government believes this is likely to be a mix of so-called “green gas”, heat pumps and heat networks.

The Budget announced a new support scheme for biomethane, a type of green gas funded by a Green Gas Levy. The government will also support the installation of heat pumps and biomass boilers by introducing a Low Carbon Heat Support Scheme.

In recognition of the energy efficiency benefits of heat networks, the Budget announcement also confirmed funding for the Heat Networks Investment Project for a further year, to 2022. This provides £270 million of new funding to enable new and existing heat networks to take up low carbon heat sources.

Funding to remove unsafe cladding

The Budget outlined an extension of funding under the government’s Building Safety Programme, principally around cladding remediation. A previous funding pot was made available for the removal and replacement of unsafe aluminium composite material (ACM) cladding on buildings over 18 metres tall.

The chancellor announced that the government will now provide an additional £1bn to fund the removal and replacement of unsafe non-ACM cladding systems installed on high-rise residential buildings in both the private and social housing sectors.

The full Budget 2020 documents can be found here.

Please Note: Every care was taken to ensure the information in this article was correct at the time of publication. Any written guidance provided does not replace the reader’s professional judgement and any construction project should comply with the relevant Building Regulations or applicable technical standards. However, for the most up to date LABC Warranty technical guidance please refer to your Risk Management Surveyor and the latest version of the LABC Warranty technical manual.

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