Chancellor Jeremy Hunt has given his Autumn Statement, in which he presented a £55bn “consolidation” package of tax rises and spending cuts
After the chaos of the September mini-budget, the latest Autumn Statement has been eagerly anticipated by the UK to see how Jeremy Hunt proposes to safeguard against the onslaught of inflation, the cost-of-living crisis, a lack of affordable housing and the second recession of the century.
The lack of support for sustainable, affordable housing has been criticised
Ben Woolman, director at Woolbro Group, said: “By side-stepping Britain’s crippling housing crisis, the Government has again kicked one of the biggest socioeconomic crises of our time into the long grass.
“Today, young people are grappling wither higher energy prices, higher food costs and higher private rent prices. There has never been, therefore, a more critical time for the Government to treat the housing crisis with the sense of urgency it warrants.
“Firstly, Britain’s antiquated planning must be reformed in order for the country to build the new homes it so desperately needs. It is not right that new homes for young families are being blocked by local politicians who care only about appeasing anti-development constituents.
“Secondly, a replacement to the Help to Buy scheme must be rolled out as quickly as possible to avoid a slowdown in the construction of new homes over the coming years. Failing to act now benefits nobody – not least the Conservative Party, which risks being punished at the polls by those still trapped in the private rental market come the 2024 general election.”
Not enough provision for planning reform in the Autumn Statement
Andy Morris, managing director of Hayfield, said:
“The extension of Stamp Duty cuts until 2025 will provide a degree of continuity in the medium term, but that was where the good news ended for housing.
“I sympathise with the local authorities that wasted resources on submitting applications for Liz Truss and Kwasi Kwarteng’s proposed investment zones, but I am not sorry they’ve been scrapped as they were only ever going to cover specific parts of the country, doing little for development in other areas.
“What we and other developers have needed is a clear, transparent and sensible planning application system across the board that avoids valuable time and money being wasted on all sides.
“Housebuilders, like all businesses, need rules that are applied consistently across the country. As it is, our planning system – which features under resourced local planning teams and rejections that go against local framework criteria – continue to hamper the development of thousands of new homes each year.”
Victoria Du Croz, head of planning and partner at Forsters law firm:
“The Government has reiterated its commitment to the growth agenda, with the aim of speeding up regeneration in areas that urgently need inward investment. While the private sector can bring forward plans for new homes, public realm, offices and leisure facilities, local authority budgets will be impacted by today’s statement with councils set to receive below inflationary increases over the next two years, before falling further to just 1% real term increases from 2025.
“Local authority planning teams are severely under-resourced, lacking both sufficient staff and budget to streamline processes. Added to this the planning system is long and protracted, making it difficult for developers to bring forward proposals with time and cost-certainty. Proposals to digitise the planning system may help address community engagement, but will now need to be balanced against budgetary constraints and the ability for local authorities to deliver.”
The housing sector and prices may suffer from a decrease of public sector investment
Stuart Law, CEO of the Assetz Group, said:
“Balancing the books further stabilises the mortgage market, meaning we will now likely avoid the most severe scenarios for house price depreciation, while some buyers may be able to revive their hunt for a new home with relative security that mortgage rates won’t keep ratcheting up. That being said, with inflation still high, a package of tax rises will further eat into household budgets, and this will take its toll, putting homeownership out of reach for more people and bringing house prices down from the historic highs we’ve see over recent years.
“Housebuilders will have their heads in their hands as Jeremy Hunt failed to afford any time to planning reform, while the retention of the SDLT cut will protect demand over coming years at a time when a huge imbalance in market forces sits at the heart of our national housing crisis. Until we stop kicking the can down the road, we will never build enough homes, or take steps to make housing more accessible and affordable for more people.
“Housebuilders and other housing providers will also be deeply concerned that the imperative for government departments to find efficiency savings will mean less public sector investment in the housing sector, as well as planning delays at already under-funded local authorities. Private sector investment in the housing sector will be absolutely essential in the years ahead if we are to fund the new homes that are desperately needed across the country.
Rents are likely to be driven up due to landlords being driven out
“In the rental market, the Truss Government already delivered the knock-out blow to the buy to let sector in the form of interest rate rises, compounding issues caused by tightening regulation and the impacts of inflation on running costs,” Law continued. “This statement will squeeze landlord’s personal finances even more while the profitability of their investment properties continues to decline. More landlords will leave the sector, reducing rental stock and driving rents up.
“Now is the moment for us to adopt a new model for private investment in the rental sector which enables investors to fund the delivery of more high quality properties and make them available for fairer rents, while at the same time achieving a far better return, avoiding the expense of property maintenance or a buy to let mortgage and cutting out the stress of managing bricks and mortar.”
An attempt to plug the fiscal ‘black hole’ threatening to swallow the nation
CEO of RIFT Tax Refunds, Bradley Post, commented on the Autumn Statement:
“A substantial hike in taxes in an attempt to plug the fiscal ‘black hole’ that is supposedly threatening to swallow the nation. While the average person has escaped relatively unscathed with respect to their day to day earnings, changes to capital gains tax allowances will certainly hurt those due to benefit from longer term, strategic investments, perhaps most notably the nation’s landlords.
“We’ve never been squeezed harder where tax contributions are concerned and the chancellor needs to be cautious here, as he risks pushing our economy from inflation mitigation into a long and deep recession.”
Investor demand and consumer interest in retrofitting has not been fully reflected in the Autumn Statement
Avinav Nigan, co-founder of real estate investment platform IMMO, which plans to spend £1bn retrofitting over 3,000 homes for rent, said:
“For years we have seen inaction on retrofitting Britain’s housing stock, which is some of the oldest and leakiest in Europe. There is a big question mark over whether today’s announcements on driving energy efficiency are enough.
“The leaky and old nature of Britain’s housing stock has obvious sustainability and personal finance implications, and the situation is particularly dire in the private rented sector, which has the greatest proportion of homes built before 1919.
“Modernising the UK’s rental housing to accommodate the fast-growing ‘generation rent’ should be the priority of any government, yet it seems to have fallen by the wayside, with a weakening house sales market seeming to suck up all the media and political attention.
“The criticality of the ESG agenda means institutional investors such as pension funds and insurers are increasingly keen to make sure their investments ‘do green and do good’ and the Chancellor should take advantage of that investor demand to improve the quality and safety of Britain’s rental homes keeping sustainability at its core.”
Following speculation about the future of HS2, the Autumn Statement indicates it is safe for now
Stephen Marcos Jones, CEO of the Association for Consultancy and Engineering (ACE), said:
“I wrote to the Chancellor this week outlining the importance of investment in infrastructure to deliver the jobs and growth that will help drive the economy through the challenging times ahead. With this in mind I was pleased to see the Government maintain the capital programme, which means the Northern Powerhouse Rail core, HS2, and the new hospitals programme can all progress. ACE also welcomes the commitment to new energy infrastructure in Sizewell C.
“As important was the news that devolution deals have been struck for Suffolk, Norfolk and Cornwall, as well as increased powers for the Combined Authorities in West Midlands and Greater Manchester. Increasing local decision-making is crucial if we are to make real progress on Levelling Up across the UK, but we would have liked to have seen the Government use this opportunity to consolidate and ringfence spending, rather than introduce another round of competitive funding.
“We were, however, surprised to see road duty on EV vehicles raised and it does raise broader questions around the long-term viability of the current system which relies on fuel duties to fund road investment. ACE has long argued for reform in this space, and we look forward to engaging with government departments on the issue.”
