A Property Spending Review
Dawn Gillon of Fisher Wrathall looks at the Chancellor’s
Autumn Spending Review and assesses the effects this may have on
the property market.
Are things finally going to change for the better in the world of
UK housing? Chancellor George Osborne certainly says that they are.
In his autumn spending review he announced plans to “end the
crisis of home ownership in our country.” Fine words. But
what do they mean?
The housing budget will be doubled to £2 billion a year and
400,000 new homes built across the country. The new building spree
will be funded by public money and developers will be encouraged to
build 200,000 starter homes. Funding will also go to build 135,000
shared ownership homes allowing for an initial buy-in from
purchasers and then the acquisition of more shares as they can be
The government will also widen the Help to Buy Scheme so that it
will be open to all households earning less than £80,000.
Londoners will get extra help with a new London Help To Buy scheme
and the Right to Buy is also being revised and tenants in five
housing associations will be able to buy their homes
Young families will also benefit from the Chancellor’s
decision to hold back the proposed cuts to tax credits by delaying
implementation of these unpopular cuts. He is, however, capping
housing benefit for new tenancies.
Other measures include 10,000 new homes to be built to rent out at
a rental value which will allow tenants to save for a deposit while
they rent. Also, 8,000 specialist homes are to be built for older
people or those with disabilities.
The homebuyers that will lose out this time round are those
purchasing second homes and buy to let properties. They will now be
asked to pay a higher rate of stamp duty of 3 per cent above usual
levels. Many will be greatly put out by this. But those non buy to
let purchasers at the lower end of the market may feel that they
have won back a slender financial advantage over commercial
investors. Those about to enjoy the pleasures of a second
home will also pay more for this luxury opportunity. Again, whether
this will deter buy to let or second home buyers in the long run
remains to be seen, but meanwhile the Chancellor will raise an
extra £1 billion by 2021 through this measure.
How all this will help the overall housing situation is hard to
gauge. Certainly even small steps forward are positive ones. Yet
the elephant in the room remains. This is the inexorable rise of
house prices – forecast by some to be between 6% and 10% next
year. With so few properties coming onto the market now prices are
being driven ever higher. The new home surge announced by George
Osborne will provide some help in the long run. But in the short
term it will only be a significant leap in the numbers of second
hand stock that will put a brake on price rises and allow many
buyers the vital time they need for their earnings to reach home