The UK government has pledged £15.3bn of new ‘financial support’ for housing in the form of capital funding, loans and guarantees as it targets the delivery of 300,000 homes per year by the mid-2020s
A five-year housing package announced by Chancellor Philip Hammond at his Autumn Budget today (22 November 2017) includes the lifting of the housing revenue account (HRA) borrowing cap for local authorities in areas of high affordability pressure "so they can build more council homes".
Councils will be invited to bid for increases in their caps from 2019‑20 to a total of £1bn by the end of 2021‑22.
There will also be a focus on planning reforms to “ensure more land is available for housing” in a way that “maximises the potential in cities and towns for new homes while protecting the Green Belt”.
The government also announced £1.5bn of reforms to the Universal Credit programme.
And Mr Hammond announced the removal of stamp duty on properties worth up to £300,000 for first time buyers – though the Office for Budget Responsibility has said that this will increase house prices by 0.3 per cent.
Meanwhile, the Budget documents confirm that the voluntary Right to Buy pilot will proceed with a "£200m large‑scale regional pilot of the Right to Buy for housing association tenants in the Midlands".
The Chancellor set out the latest raft of new financial programmes and policies, wrapping them up with previous initiatives and announcements to come up with “£44bn of capital funding, loans and guarantees” for UK housing over the period.
He said it marks “an ambitious plan to tackle the housing challenge” and represents the “biggest annual increase in housing supply since 1970”.
However, the Budget documents show £15.3bn of new financial support, and over half of that - £8bn - is an idea for guarantees to support SMEs and purpose built rented housing, which would need to be explored with the industry. (See breakdown below).
Some of the schemes will be run through the National Productivity Investment Fund (NPIF), which was announced at the 2016 autumn budget as £23bn of high-value investment from 2017-18 to 2021-22 to support housing, research and development (R&D) and economic infrastructure.
There was no specific mention of capital funding for social or affordable housing in his speech. The Budget documents reference October’s announcement of £2bn funding for affordable housing, which it says is “including funding for social rented homes”.
However, last month had already seen a flurry of policy announcements, including the removal of the local housing allowance cap and proposals for a new funding regime for supported housing, along with a return of social and affordable rents to CPI+1% from 2020.
There was also no mention by the Chancellor of the reclassification of housing associations and their £63.5bn of debt off the public balance sheet and back into the private sector, which grabbed national headlines last week. The budget documents say the reclassification “reduces [public] borrowing by £5.1bn in 2020‑21”.
Turning to land and planning, Mr Hammond said there will be a focus on “high quality, high density homes in city centres and around transport hubs”.
Government will “intervene to change the incentives to ensure such land is brought forward for development”, he said, and use “direct intervention compulsory purchase powers as necessary”.
“In London alone, there are 270,000 residential planning permissions unbuilt. We need to understand why,” he said, ahead of revealing plans for an ‘urgent review’ to look at the gap between planning permissions and housing starts.