The budget has been widely referred to as ‘the housing budget’. The big announcement, left to the end of Hammond’s long budget speech, was the introduction of a stamp duty exemption for first time buyers on properties purchased at up to £300,000, with a zero rate for the first £300,000 of properties in London with a purchase price up to £500,000. In the past stamp duty exemptions have been used by Governments to prop up a falling market, not an issue for most of the country at the moment. This is because the main impact of exemptions is to increase transactions but also to increase house-prices as by removing stamp duty, effective demand is increased, but rarely with any impact on increasing new supply since the majority of first time buyers are buying existing homes rather than new homes. So as the Office of Budget Responsibility was quick to point out ( and rather rain on Hammond’s parade), sales prices will quickly inflate to match the stamp duty reduction, the Government will lose significant revenue, and new homes do not actually become more affordable. The Government’s decision was however a popular one as marginal prospective home owners think they will save money, and in the short term, some will. The Labour Party’s response was not just to welcome the stamp duty exemption but to claim that the policy was stolen from Labour as Labour had proposed something similar in its 2017 election manifesto. The popularity of the initiative with young would be homeowners is such that Labour was not going to risk the support some potential younger voters (in effect the 25-40 cohort so hardly that young) by pointing out the negative consequences. This just reinforces the continuing influence of the politics of home-ownership on housing policy and the lack of serious policy analysis.
The Chancellor announced a new housing target of 300,000 homes a year, which is somewhat higher than previous targets and in fact higher than recent estimates of the annual national housing requirement which have generally been in the range of 240,000 to 260,000. But there was little new on how this would be delivered. The Green Belt remains sacrosanct, so we got the usual assertions that the target could be delivered though brownfield site development and the densification of urban areas, especially near transport hubs – in effect the approach pursued, not very successfully , by successive Mayors in London. There was criticism of developers for landbanking and not building out consented schemes, and suggestions that we need to bring back the lost smaller builders ( who tend to be focusing on basements and attic extensions for the well-off rather than on building additional homes). There was rhetoric about the need for greater public intervention to get sites developed, but the chancellor backed off from some of the more radical suggestions of Sajid Javid and Gavin Barwell (former Housing minister and now May’s chief of staff) so the Green Belt stays and the idea of changing the legislation on Compulsory Purchase so councils don’t have to pay for the speculative hope value for land for housing ( which has been the case since 1961) has been dropped. While the Government now recognises that social rented housing is needed, there was no indication of new funds for this, and when it comes to the sensitive issue of funding for fire safety retrofitting post Grenfell, the Government still thinks councils should pay. Hammond said that if councils were short of money, they could write to Ministers, without acknowledging that those who have already done so, including the Conservative Westminster, had not as yet had a positive reply. There was no real recognition of the financial crisis facing local authorities – see my article on this in the November/ December issue of Chartist- though it does look that the Government may move back its proposal to end revenue subsidy to local councils beyond the current 2020 target date.
There were other proposals in the budget as far as housing is concerned. There was an endorsement of the Oxford/Milton Keynes/ Cambridge growth arc promoted by the National Infrastructure Commission and proposals for four more ‘ garden towns’ note not ‘garden cities’, so numerically these will only be a marginal contribution to new supply , some more funding for infrastructure in growth areas and some commitments on reducing rough sleeping – but nothing on the private rented sector nor on improving the quality of temporary accommodation for homeless households, which is scandalous and quite rightly beginning to get more media coverage. This budget was expected to take forward more of the proposals in Gavin Barwell’s Housing White Paper, but instead we are promised another policy review. Labour is now working on its own social housing policy review. We must do better.
Duncan Bowie is a senior lecturer in spatial planning at the University of Westminster and a visiting lecturer at the Bartlett School of Planning. He is the author of a number of studies including, People, Planning and Homes in a World City (Routledge 2010), Housing and the credit crunch: The Government and property market failure (Compass, 2008) and The Politics of Development in an Age of Austerity (Chartist 2012). Before moving into academia, Duncan worked in housing and planning policy, investment and research roles for the Mayor of London, the Association of London Government, the Housing Corporation, the LDDC and the London boroughs of Newham and Lambeth.