Budget 2017 – A Closer look for the Construction Industry
On Wednesday 22nd November Philip Hammond revealed the Autumn Budget for 2017 and initially it looked like there were to be some sweeping changes affecting the construction industry. After the speech, some of the most discussed topics on social media were stamp duty and housing. As time passed and the analysis became more detailed, it became apparent that perhaps Autumn Budget 2017 didn’t contain the sweeping changes to the housing market that were expected.
Hammond announced that he would remove stamp duty land tax for first-time buyers with homes under £300,000 immediately, to improve affordability. The Office for Budget Responsibility (OBR) was quick to dismiss this announcement as actually helping to increase house prices overall. Suggesting that by freeing up this money, it could allow existing home owners to add it to the cost of the house itself. Meaning that existing owners are perhaps the most likely to benefit from this piece of legislation as opposed to first time buyers.
There has also been criticism of other funding announcements. £44bn was promised towards the buildings of 300,000 homes for next year, however only £15bn of this total is for new initiatives. A noticeable omission was the previously pledged ban letting agent’s fees.
The budget was wide ranging and will impact the construction and property industries in a variety of ways:
- £15.3bn of additional funding to facilitate the construction of 300,000 new homes a year by the mid-2020s. Making a total of £44bn annually
- Stamp duty removed for first time buyers on properties up to a value of £300,000 (£500,000 in more expensive areas like London)
- Doubling of Council Tax on properties not currently being inhabited
- Inquiry into land hoarding and potential forced purchasing if developers found to be sitting on plots of land
- £1.5bn fund to small builders
- Attempt to encourage long term lets
Where will the new homes be built?
The government is planning to encourage the construction of an awful lot of homes in the coming years but where are they going to put all these brand new properties? Well, a good portion of the new-builds could end up on the soon to be constructed Oxford to Cambridge Expressway. 100,000 homes have been confirmed to be built along its length close to the regions of Milton Keynes, Bedford and Northampton.
In other areas of the country will see new garden towns though no specific details were given on where these would be built, it was suggested they would go to ‘areas of demand pressure’. Earlier in the year the Government announced 14 garden villages of 1500-10,000 homes across England.
Hammond also promised homes would be built in urban areas (not the green belts surrounding 14 of our cities). Planning reforms, yet to be confirmed would hopefully help spur these developments along and allow a smoother process for developers. This is hoped to allow house-builders to make easier use of formally commercial or retail sites as well as making use of empty spaces above shops on the high-streets.
Seemingly one of the key goals for the government with this budget was making it easier to build on land which isn’t doing anything within towns and cities. Patches of wasteland, derelict buildings, old petrol stations etc. have been tricky to build on in the past as it’s not always clear who owns them and how planning permission could be gained.
The creation of this small-sites fund will allow self-builders to access the resources to potentially make use of these sites. That paired with the promised updating of the planning procedure may see some interesting new developments within our urban centres in the years to come.
Leading on from the end of the previous section, planning permission is due to be updated. Oliver Letwin, a former cabinet minister is leading a consultation into the gap between planning consents granted and houses being built. This consultation is open to input so if you work within the industry and are interested in having your say you can email Sir Oliver directly at email@example.com with any ideas.