Mark White, managing director of SME housebuilder, Bargate, a board member of both the HBF and Future Homes Hub, and chair of the Hub’s SME liaison group, looks ahead to the Budget and what the industry need to hear to kick-start housing delivery.
Waiting four weeks longer for the Autumn Budget has had a negative impact on the economy and sent the property market into an unproductive whirlwind of panic and scaremongering.
Rumours about a mansion tax, hikes in council tax, changes to stamp duty thresholds, making principal residents liable for capital gains tax, introducing a proportional annual property tax, and the possible introduction of National Insurance on the income buy-to-let landlords receive, are reported as some of options Reeves’ is considering to fill this year’s £20billion black hole in government finances.
The uncertainty has had a detrimental effect on the usual seasonal uptake in activity, which can be pinned back to 3rd September when the Treasury announced the Autumn Budget wouldn’t be until 26th November. Without any strength in the buying market, housebuilders are not in a position to increase productivity.
Only 18 months ago, Labour put the housing crisis on the front pages and promised a highly ambitious housebuilding programme. Since they entered No.10, planning has become less of an uphill battle, but the same cannot be said for the pre-commencement process and the extra burden of new legislation, regulations and levies. The industry that supports close to one million UK jobs and generates over £50billion per year is struggling to make ends meet.
On Wednesday, the chancellor has to announce policies that will help the UK economy to prosper. Taking Bargate as a case in point, we have the ability to increase the number of homes we build by 25% per annum. The same growth is achievable for most SMEs. While the Building Safety Regulator process is creating major pre-commencement delays for tall buildings, dense urban developments aren’t the natural domain for SME housebuilders.
Creating sustainable clusters of family homes and enhancing traditional communities within edge of settlement, semi-rural and rural locations is the usual sweet spot for Bargate and many of our peers. That is where we can be distinctive and prioritise design quality, green technologies and placemaking over ugly densification. It’s the ability to scale up without compromising quality that makes small and medium housebuilders so invaluable to the overall health of the new homes industry – and the economy as a whole.
For this parliamentary term, the mood music has changed to maximising the number of home completions we can realistically get to. The only way the government can get any traction for scaling up the delivery of new homes is if a demand side initiative is announced and launched with immediate effect. Stimulating the bottom of the chain is essential to get Britain moving and building. Without a market step change, we will be heading for a second year of record low completions. The 370,000 new homes a year target set by the current administration only last year is no longer mentioned.
Additional shared ownership funds could be made available, specifically targeted at plots that have been ‘stock’ for over three months. 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. Either that, or a baby brother version of Help to Buy – something all housebuilders have been crying out for.
Housebuilders need one big initiative that works as well as Help to Buy did for a decade. While it’s widely known that some PLC housebuilders used it to inflate house prices, those of us with genuine intentions to simply assist buyers have been punished since its withdrawal.
Perhaps the government didn’t take into account that putting up the National Living Wage and employers’ National Insurance would have such a big impact on the overall health of the economy? Wednesday provides an opportunity to reset the direction of travel.
Bargate is a wholly owned subsidiary of VIVID – Hampshire’s largest provider of affordable homes. The 20-year-old company delivers select developments in prime locations across Hampshire, Dorset and West Sussex, with 300 homes currently under construction across six live developments and a pipeline of future sites expected to deliver in excess of 2,500 new homes.
