The Chancellor, George Osborne has put housing delivery at the centre of the Autumn Statement and Spending Review announced today.
In seeking to address what he called a “growing crisis of home ownership in our country”, Mr Osborne confirmed a significant switch in the emphasis of affordable housing budgets away from rent and towards owner occupation as well as further reforms of the planning system and a new higher rate of Stamp Duty for buy-to-let and second home purchasers.
As well as extending the existing Help to Buy Equity Loan scheme to 2021, the Chancellor announced:
A new London Help to Buy scheme that will see the maximum equity loan available from government double to 40%
Further support for Starter Homes, including funding for house builders to fund discounts for buyers on up to 60,000 units of the 200,000 homes targeted
Loosening of restrictions on development of brownfield sites within Green Belt
Planning reforms to ensure planning authorities deliver against numbers in Local Plans; bring through more small sites; and reduce the time small developers have to wait for planning decisions
Plans to redirect government housing budgets to deliver:
135,000 new Help to Buy Shared Ownership homes with less strict rules around eligibility and opened up to private sector organisations
10,000 homes for tenants to save for deposits while renting
8,000 specialist homes for older people
In a further effort to prioritise home ownership, the Chancellor announced details of a new additional rate of Stamp Duty Land Tax (SDLT) to be charged on buy-to-let properties and second homes. A proportion of the receipts will be used to support communities where this is perceived to be a particular concern such as London and Cornwall.
Details of relevant announcements made can be found below.
Help to Buy Equity Loan
The Chancellor announced the extension by another year of the successful Help to Buy Equity Loan scheme to 2021.
In London there will be a new London Help to Buy scheme, expected to come into effect in 2016. The maximum Government equity loan will be 40% compared with 20% under the existing national scheme. More information will be available early in the New Year.
Help to Buy: Shared Ownership
The new Help to Buy Shared Ownership scheme, expected to provide 135,000 homes, will raise the income limits for qualifying households to £90,000 in London and £80,000 elsewhere with only military personnel receiving any priority. The right of local authorities to impose additional eligibility criteria will be removed. Delivery of shared ownership will be opened up to private sector organisations.
The Government has a much-publicised commitment to delivering 200,000 new Starter Homes for first-time buyers under 40. A new £2.3bn fund will be used to support the delivery of 60,000 of these, in addition to those delivered through the ‘Starter Homes requirement’ as established by through the current Housing and Planning Bill, and the current exceptions sites policy.
The precise operation of the £2.3bn fund is not yet known, but we anticipate house builders will be able to bid to government (probably the HCA) for funds. The land defined as eligible for Starter Homes exception sites will be expanded to cover unused and previously undeveloped commercial, retail and industrial land
There will be support for reuse of brownfield sites within green belt areas by loosening restrictions on development ‘providing it contributes to Starter Homes, and subject to local consultation’.
There will be further reforms to the planning system, including a new “delivery test” on local authorities to ensure they deliver on the number of homes set out in Local Plans (the time over which the test will apply has yet to be announced). Further information is expected to follow in due course.
Government will bring forward proposals for a more standardised approach to S106 viability assessments, and the ability to appeal against univiable S106 agreements will be extended to 2018 (currently 2016).
Planning policy will be amended to boost the release of more small sites in an attempt to support SME builders. Furthermore, for minor developments, the planning guarantee will be halved in length from 26 weeks at present to 13 weeks so that SMEs receive a decision on planning applications more promptly or receive a refund on planning application fees.
Government will review the operation of deemed discharge of planning conditions. The threshold for local authorities in special measures will be lowered from 20% of all major decisions overturned on appeal to 10%.
Stamp Duty on Buy to Let properties
The Chancellor announced a new, additional rate of Stamp Duty Land Tax (SDLT) to be charged on purchases of second homes and buy-to-let properties. This will be set at 3 percentage points above current SDLT rates, e.g. 5% instead of 2% on the £125,000 - £250,000 rate.
This is expected to yield £825m per year by 2019-20, of which £60m will be used to support ‘communities in London and places like Cornwall which are being priced out of home ownership’.
There was confirmation of the introduction of an Apprenticeship Levy on larger employers in April 2017 at a rate of 0.5% of an employer’s paybill. This is expected to support 3 million apprenticeship starts by 2020 and will, by that stage, be worth £3bn. It will double the government’s spending on apprenticeships in cash terms compared with 2010-11 levels.
While the levy will be set at 0.5% of paybills, each employer will receive an allowance of £15,000 to offset against their levy payment. This means the levy will only be paid on paybills greater than £3 million per year.
Builders Finance Fund
The £1bn Builders Finance Fund, launched in 2014 and designed to accelerate the development of small sites, will be extended to 2020-21
£2.3 billion in loans will be offered to help regenerate large council estates and establish the infrastructure required for major residential development.
New Homes Bonus
The Government will consult on reforms to the New Homes Bonus, particularly looking at how to sharpen rewards and reduce length of payments from six years to four years. More information will be put forward as part of next month’s Local Government Finance Settlement.
The Chancellor pledged to release central government public sector land with capacity for 160,000 new homes, up from the previous commitment to 150,000 homes.
The Government will also incentivise local authorities to dispose of surplus assets, with the main Autumn Statement document noting that authorities hold £225bn of assets, of which £60bn are not used for schools or housing.
Local authorities will be able to switch these capital receipts to revenue in some circumstances, to spend on revenue costs for projects designed to reduce long-term costs to the public purse. This is intended to change local authority mindset on land disposals by giving greater freedom over how receipts can be used to drive further savings. More detail will be published alongside the Local Government Finance Settlement in December.
The combined Spending Review and Autumn Statement can be read here
The Chancellor’s speech to the House of Commons can be read here
Home Builders Federation
London, SE1 9PL
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