The need to improve economic growth is probably even more important now than it was at the time of last November’s Budget. Addressing rising unemployment has become more of an issue too.
There’s no major Spring fiscal event now so thankfully there has been less speculation about tax rises and spending cuts which proved so damaging to the housing market a few months ago. Uncertainty is the energy of investment.
Fear or prospect of changes in interest rates, employment, taxes etc rather than actual change – as well as affordability – drives home buying activity and is crucial to economic growth.
However, in our view, further encouragement is still required for first-time buyers who are the engine room of the housing market, helping to unlock transactions further up chains, maintaining liquidity and often taking up the slack of properties formerly owned by buy-to-let landlords.
BUILDING STRATEGY
More new housing and an increase in transactions are not only good for the property industry as well as job and social mobility but keep prices in check and reduce the need for temporary accommodation.
However, the housing crisis will not be solved just by planning reform or setting high building targets. The widening gap between consents and delivery is no real surprise to us.
The government cannot dictate where and how much to build but could make it easier to obtain planning for more safe and energy-efficient affordable homes on publicly-owned land.
Better use of existing resources e.g. refurbishment, conversion of un- and under-used land and buildings, including empties, is also essential.
RELAX TAXATION RULES
Little demand means reduced or no supply but building homes is not currently financially viable in many areas. Governments do not often appreciate the time and money disconnect so many schemes are delayed or not built at all if, for instance, funding is lost.
In light of the exit by John Lewis from Build to Rent, the government may want to consider relaxing taxation rules in the sector to support specialist providers and their investors in this vital area.
The most important question for the Spring statement probably is: what will be the impact of any measures on market activity as well as the consequences for the wider economy?
Our plea to government is: please don’t choke off recent increases in home buyer and seller confidence.
