With Rachel Reeves’ maiden Budget just around the corner, Mark White, managing director for Hampshire-based housebuilder, Bargate Homes, is urging the Chancellor to recognise the vital role housing can play in the health and growth of the UK’s economy.
Chancellor Rachel Reeves has promised to deliver a Budget for economic growth and investment. But any positive sentiment has been overshadowed by fears of how she plans to address the reported £22billion overspend. This figure is effectively double the shortfall that triggered George Osborne’s maiden ‘Emergency Budget’ in 2010, which followed 13 years of Labour in Number 10.
Although the UK economy has recently returned to growth, the downbeat rhetoric of Sir Keir’s first 100 days has led to consumers adopting a cautious approach to spending. The threat of hefty tax increases coupled with spending cuts being announced on 30th October could further dampen confidence and slow economic recovery.
All this is at loggerheads with the chancellor’s own vision of Britain building 1.5 million new homes during the current five-year parliament. It was hoped swift planning reforms, ambitious housing targets and freeing up ‘grey belt’ land would quickly lead to the promise made at the recent Labour Party Conference of ‘shovels in the ground, cranes in the sky and the sights and sounds of the future arriving.’ However, the number of homes built annually across the UK has been in decline. 1968 saw a peak of 425,830 homes delivered, but there were 190,370 homes built in 2023, and only 135,000 predicted for 2024.
The Bank of England has hinted that another Base Rate cut is a possibility before the end of 2024, which would help to reduce the cost of servicing mortgages and aid affordability. But – for the first time since the 1960s – there is no home ownership support available to support vying first-time buyers. Without a healthy level of demand and affordable access to the first rung of the housing ladder, housebuilders will not be able to accelerate build programmes, even on sites with planning.
There are a range of measures the chancellor could implement to broaden access to the housing ladder to those without a large deposit. The Home Builders Federation (HBF), National Housing Federation and Savills have predicted that without government support for first-time buyers and social housebuilding, only one million homes will be delivered by 2029. This would mean Labour’s housebuilding drive was no less successful than the previous Conservative administration.
The best way to create thousands of new homeowners would be to implement a new version of Help to Buy. After nearly 10 years of successfully enabling hard-working people to move into energy-efficient new homes, it was madness to cancel such a popular initiative during a widespread cost of living crisis. Especially when Help to Buy did not cost the taxpayer – it generated a surplus!
We took a look at our own numbers for the past 12 months, where only 8% of 230 Bargate homes have been sold to first-time buyers. This is a staggering 50% reduction. Meanwhile, rents continue to go up disproportionately to inflation, which continues to make it harder for people to save for a deposit, and yet, with no Help to Buy, typical mortgage deposit requirements are higher than they have been for well over a decade. It is very unhealthy that the number of new homes being built is half what it should be and thousands of would-be first-time buyers can’t get a foot on the ladder.
To reward the early adopters of the Future Homes Standard, the chancellor should introduce a meaningful Stamp Duty rebate for homes rated EPC-A. This would increase footfall and sales activity at exemplary developments and could deliver significant savings to new homebuyers.
The Future Homes Hub’s SME liaison group is also calling for real data to be collected to analyse the energy and carbon use in new and old homes. Those who keep their energy and carbon usage below a calculated average should be rewarded.
As with Help to Buy, I’ve long been an advocate for the introduction of government subsidies to boost the take-up of Green Mortgages, which are only available for homes rated EPC-A or B.
If this Autumn Budget doesn’t stimulate housebuilding, it could de-rail Labour’s growth plan. The Cabinet’s positive proactive stance on planning and housing targets can only do so much. Rachel Reeves must balance the anticipated employer NI increases and Capital Gains hikes with a holistic boost to the whole housing market.
Bargate Homes is a wholly owned subsidiary of VIVID – Hampshire’s largest provider of affordable homes. Established in 2006, the company builds select developments in prime locations across Hampshire, Dorset, and West Sussex. Bargate Homes is currently delivering 300 homes across six live developments and has a pipeline of future sites expected to deliver in excess of 2,500 new homes.
