It is no secret that housing is at the heart of the Conservative’s plans for the next five years. So it is no surprise George Osbourne announced that the national housing budget would be doubled to help build more affordable homes for Britain.
We have already covered the government’s plans for starter homes but there are some other key proposals that came out of the spending review including some more positive news for social housing landlords than the industry had previously expected. Most notably the announcement that councils will be able to keep 100% of the receipts from the sale of housing stock!
So who are the real winners and losers from the Autumn spending review? We delve into the facts and figures to explain what the proposals mean for you.
As you can see the housing market will receive investment of nearly £7bn but Osbourne also announced the following proposals that set out how developers and social landlords can provide these affordable homes:
1. Shared Ownership
To remove barriers for builders and buyers/tenants.
- For buyers/tenants - Households earning between £20-30,000 per year may now be able to afford to buy a home.
- For housing associations – Shared ownership has been a successful way of delivering affordable homes to rent/buy so this investment will create an opportunity to build more homes despite previous cuts to the sector.
- For buyers/tenants – These homes will be in place of traditional sub-market homes so there will still be a lack of affordable homes for those unable to purchase a shared ownership home.
2. London Help to Buy Scheme
- 40% interest free loan from the government will be offered to first time buyers in London.
- Available on new homes in Greater London area up to £600,000 in value.
- 5% deposit is required and the remainder to be funded through a mortgage.
- For buyers – Increased support for first-time buyers in London to help them get a foot on the property ladder.
- For developers – Increased in demand for new build properties in London making it easier to sell new homes.
- For developers – The increase in demand could push up land prices.
3. Stamp Duty
- 3% rise in stamp duty for buy-to-let and second home purchases from April 2016.
- Expected to raise £1bn by 2021 which will be reinvested into new homes and used to fund the Right to Buy extension.
- For buyers – Face less competition from buy-to-let investors and people buying a second home.
- For developers – Could see an increase in purchases over the coming months from buy-to-let investors and purchasers of a second home trying to avoid the increase in taxes next year.
- For tenants – May see rent prices increase to compensate landlords for the increase in taxes.
- For developers – Previously relied on buy-to-let buyers for new homes but may see a decline in these purchases from next April.
4. Planning Reforms
- Release of public land for 160,000 new homes.
- Re-designation of commercial unused land for starter homes.
- For developers – More land will become available to build starter homes.
5. Housing Benefit
- To be capped at the rate of Local Housing Allowance for new tenants.
- No longer paid to claimants who leave the country for more than 1 month.
- Restrictions on shared accommodation rate for single claimants under 35 with no children.
- Funding through the Discretionary Housing Payment to help councils house vulnerable people.
- For housing associations – Increased support to house the most vulnerable in area including those in supported accommodation.
- For buyers/tenants – Although this aims to reduce rents, those who are single, under 35 with no children will struggle to find homes to rent in the social and private sectors.
- 3m apprentices by 2020
- More funding per place for apprenticeships
- Apprenticeship levy for employers of 0.5% from April 2017.
- For housing associations – Further support to deliver more apprenticeships which they are already successfully doing.
- For developers – This extra funding could help to tackle the skills shortage within the construction industry.
- For developers – Construction firms with a pay bill of more than £3m will be subject to the levy which may mean they are hit twice, as many already pay a levy to the Construction Industry Training Board. However many firms hire their workforce through subcontractors so will be exempt from this levy.
It will be interesting to see how more changes unfold as further details on each of the proposals is published so watch this space!
By Anna Symington