Chancellor Jeremy Hunt will be announcing his Autumn Statement tomorrow (17/11), the government’s second financial package in less than two months.
It is expected that much of Kwasi Kwarteng’s mini budget will be undone, but the nation waits to see what the Chancellor prioritises in his plan to “get our way back to growing healthily”.
As speculation grows about what will be included, Show House speaks to the members of the housebuilding industry to see what they feel are the important issues that Hunt needs to get right.
Brendan Sharkey, head of construction and real estate at MHA, said: “The government could do two big things for construction in its forthcoming Autumn statement: refrain from sweeping cuts in infrastructure spending and implement some tax reforms to address the housing crisis.”
“Rising mortgage costs reduce demand in the short term but don’t mean we actually need fewer homes. To solve the housing crisis, the government should consider introducing an annual tax on second homes. Second homes weaken the local economy and price out younger generations from owning their own home.”
“Similarly, the government should reintroduce tax relief on mortgage interest for first-time buyers to stimulate the property market, which should last for five years. This would run alongside the first-time buyers’ Stamp Duty Land Tax (SDLT) reduction, creating an attractive incentive to both the buyer and developer.”
“An SDLT exemption for downsizers who are significantly reducing their property value is also an alternative solution to freeing housing stock. Today’s high energy costs and increased mortgage payments may encourage older homeowners to downsize.”
“UK construction depends on a healthy pipeline of government work. It would be disappointing to see too many cuts in projected infrastructure spending. Ultimately, the government must deliver a strong message to ensure that housing shortages are addressed and that activity within the construction sector continues to flourish.”
Paul Woodward, finance director for affordable housing specialist AJC Group, said: “After a period of much economic and political turbulence, so much is resting on Jeremy Hunt’s Autumn Statement.”
“We welcome that the Stamp Duty threshold changes from the mini budget are being maintained and that first-time buyer properties are Stamp Duty exempt up to £425,000 to help people to get a foothold on the ladder. However, very little else from the mini budget still stands.”
“With the Energy Price Guarantee now only being in place for six months rather than the two years originally promised, there should be a huge focus on delivering highly energy-efficient new homes and retrofitting existing housing stock. However, the UK’s broken planning system, and the prolonged debacle to determine phosphates, nitrates and nutrient neutrality, means a green light for new development is few and far between.”
“For developers who do have live sites, the cost of delivering much-needed EPC-A and B-rated homes has sky-rocketed. The cost of labour, materials, plant and machinery is incomparable to the original budget forecasts. We are very aware of how much this uncertainty is slowing down housebuilding across the country.”
“We hope for some welcome news and more economic certainty on Thursday, enabling the housebuilding industry to progress with investment decisions and continue to strive towards delivering the 300,000 new homes per annum that the UK desperately needs.”
Bertie Russell, Director at London-based estate agents, Russell Simpson, said: “Prime central London has felt somewhat sheltered from the recent uncertainty in the market, however, the mini budget certainly left its mark. Following a consistent period of activity and steady values, there have been reports of a drop in activity levels and a slight decrease in values of c.0.3% since the mini budget, so we are looking for the Autumn Statement to right some of the wrongs and bring some stability back to the market. Hopefully, the Chancellor will put forward policies that have been made with the health of the economy in mind, which will only be a positive going into the new year.”
Rayna Hunter, CEO of LH1 Global, commented: “When life gives you lemons, make lemonade. That’s the mantra we followed after the mini budget, which caused the pound to crash and did a lot more harm than good. Despite this, we saw it as an opportunity to engage with our dollar-based buyers and discussed the opportunity to get a good deal if they moved quickly.“
“The Autumn Statement is an opportunity to turn the tide and provide much-needed stability, following a period of turmoil. Our belief is that there is always an opportunity in the market, no matter which way it turns, but we are in need of a confidence booster to reassure property investors, both international and domestic, that the UK remains a safe bet and that this is just a blip.”
“Rishi Sunak earned his stripes as Chancellor during the pandemic in what was probably the most unpredictable period since World War Two, and Jeremy Hunt has proven himself steadfast in his beliefs, if nothing else, so we are quietly confident that we are going to see a budget that will steady the ship and rebuild trust that the UK is a great place for business and a safe investment.”
Ross Smith, director at SiteSales, commented: “I don’t envy the fine balancing act that the Chancellor has to perform, but from an industry perspective I do hope he recognises, as his predecessors did, the importance of keeping the first-time buyer and new homes show on the road.”
“The recent Stamp Duty cut, whilst welcome, has been lost in the furore following the disaster that was the mini budget, but what buyers also need now is help with a deposit in order to access the market. The cost of living is restricting saving levels and parents are suddenly more cautious due to their own financial concerns, so there are thousands of would-be buyers who simply do not have sufficient deposits.”
“The government should incentivise developers and lenders to collaborate and create something that enables this to happen. Extending the Mortgage Guarantee Scheme to include new homes would help greatly and a Shared Equity scheme would be another way forward, offering a viable option to Shared Ownership whereby 20% of the property is retained by the developer to be realised in up to 10 years or when the property sells. Trouble is, developers have been spoilt rotten by Help to Buy and it will take a lot to tempt them back into a product that was a part of the new build arena until recent governments rendered it unnecessary by taking the hit themselves.”
Brian Comer, co-founder and chairman of Comer Homes: “Our hope for the Autumn Statement is that there will be support provided to those that not only want to move, but need to. The property market is a crucial cog in the UK economy and the recent mini budget and other issues, such as inflation and political turmoil, are hampering people from being able to move home all across the ladder.”
“Following the pandemic, we all understood the time would come to pay back the cost of getting through the crisis, but we hope the Chancellor is fair with his policies that will not hinder people’s ability to spend on one of the biggest purchases of their life, but also stabilise inflation and rising interest rates, which is causing havoc in the mortgage industry. A healthy property market requires confidence and stability, so it’s crucial we get this one right.”
Matt Dukes, managing director of Pennyfarthing Homes: “The Autumn Statement will likely see the budgets of most government departments squeezed, which will have a profound effect throughout the public sector and impact housing and planning.”
“The UK currently faces several challenges, and one of the most pressing is the housing crisis. We need more homes, and to achieve this we need planning reform – primarily to achieve a speedier approach to planning across local authorities.”
“Since its publication more than two years ago, the ‘planning for the future’ whitepaper has fallen by the wayside. While increased funding for local authorities to improve planning capacity may not be possible at this moment in time, further detail about how planning reforms will be brought forward by the government would go some way to appeasing the housebuilding industry.”
Mark White, managing director for Hampshire-based housebuilder Bargate Homes, said: “I feel we will all be disappointed with Thursday’s Autumn Statement, but what is crucial is that the government delivers on what it says and creates market certainty.”
“When lowering our carbon footprint and reducing energy consumption is so critical, why is more not being done to fix the planning system, solve the prolonged phosphates, nitrates, and nutrient neutrality issue, and stimulate the new homes market? For the best part of a decade, 30-40% of our sales were via Help to Buy. Designed to replace it, the Deposit Unlock scheme only has three lenders signed up, so it does currently not have the market traction that is needed to help our potential customers.”
“What would make a much bigger difference is if green mortgages were subsidised so that monthly repayments for the most energy-efficient new homes were significantly cheaper. The Feed-in Tariff for household renewable energy generation should also be reintroduced, to make living in a home with solar panels much more financially rewarding.”
“With the impact of planning and nutrient neutrality issues, Brexit, the prolonged unrest in Ukraine, soaring energy costs and inflation, it costs £20,000 more to build a typical three-bedroom Bargate home than it did only five years ago. It is no wonder the industry has totally lost pace with the 300,000 new homes per annum that the UK desperately needs.”
