The government’s £200m Build to Rent funding pot has been increased to £1bn in today’s Budget due to being “significantly oversubscribed”, while the HCA’s £225m affordable fund is to be doubled.
The B2R fund is used to provide equity or loan finance for projects to build more homes for private rent, with investment running until the end of 2015/16.
Chancellor George Osborne also announced that the affordable homes guarantee programme is to be increased by £225m to support an additional 15,000 affordable homes in England by 2015.
This brings the total for the scheme – which is underpinned by housing guarantees – to £450m, aiming to build 30,000 new houses.
Also unveiled was a new £3.5bn mortgage initiative, Help to Buy, aimed at contributing up to 20 per cent of the cost of new homes up to £600,000.
Developers applying for funds under the scheme can now do so under the extended deadline until 21 May.
“The list is endless as to what could have been announced but wasn’t”
Jon Hart, Pinsent Masons
Additionally, a £1.1bn reduction in departmental expenditure limits in 2013-14 and a £1.2bn reduction in 2014-15 will also be used to “support housing”.
A spending reduction of £135m from the International Development budget, “to reflect the downward revisions to nominal Gross National Income”, is to be spent on housing.
But Pinsent Masons partner Jon Hart poured cold water on the announcements. “I’m trying to be positive about it but I don’t necessarily see it converting into new work”, he told CN.
“There was nothing on PF2, on roads, not even any lip service, and nothing on priority projects. The list is endless as to what could have been announced but wasn’t.”
On the news that departmental savings appeared to be going towards supporting housing, rather than a capital spending boost, Mr Hart said: “I don’t buy any of it – you’ve got one number, something you’re going to save, and to make it politically digestible they find a pot it broadly fits and allocate it there.
“There wasn’t an awful lot there which jumped out as new.”
Persimmon chief executive Mike Farley welcomed the measures to expand FirstBuy, saying it gave the industry “the long term certainty it needs”.
“Help to Buy will be particularly helpful to capital constrained small and medium-sized housebuilders, providing a boost to sales and build rates.”
Barratt Development chief executive Mark Clare called the budget a “major boost” for homebuers and housebuilders.
“High deposits and limited availability of finance have combined to lock many people out of the housing market - this will be a major boost to the economy.” “We are now gearing up to meet the increase in inquiries that we expect to see.”
Communities secretary Eric Pickles said:
“Today’s multi-billion pound package for housing recognises its vital importance to the economy. But this support is not just an economic calculation – it’s about values.
“Today’s measures mean whoever you are – whether a prospective first time buyer, an existing homeowner or a social tenant – if you work hard and want to take responsibility for your future, we will support your aspiration to move up the property ladder.
“At the same time our funding for thousands of new affordable and private rented homes will get spades in the ground, workers on site, and deliver a vital boost to the British economy.”
Housing minister Mark Prisk said:
“Today’s Budget places housing front and centre in the Government’s plans for economic growth, with measures aimed at getting Britain building, helping aspiring homeowners, and supporting our growing market for privately rented homes.
“The clear message from today’s multi-billion pound package of measures is clear: that wherever you are in the housing market, whether renting council housing or privately, whether a first-time buyer or looking to move up the property ladder, there is help available for you.”
And AECOM head of residential Ben de Waal said Help to Buy was “great news” for volume housebuilders, as well as giving confidence to registered providers.
He added that it was “disappointing” that local authority debt caps had not been raised.
Wedlake Bell residential property partner Jeremy Raj said the Help to Buy scheme would be a “welcome opportunity” for those not able to buy, but would solve neither supply-side problems nor “long-term issues and imbalances in the market”.
“It will serve primarily to prop up house prices, rather than bringing them down. The only sure way to achieve affordability is to calm the market down by creating more supply,” he added.
Home Builders Federation executive chairman Stewart Basely said: “A lack of affordable mortgage availability remains the biggest constraint on housing supply, something government now clearly understands and is looking to address.
“Extending FirstBuy is very welcome and will provide a real option for people currently unable to buy – so providing a vital market for the new homes industry. Building the homes the country desperately needs can be a key driver of economic activity.
“Government must be praised for its attempts to stimulate activity, but must also be wary to get the details right.”
The British Property Federation welcomed the Build to Rent funding.
Director of policy Ian Fletcher said: “It’s encouraging that the government’s confidence in build to rent has been reciprocated and we are delighted to see that the equity funding was heavily oversubscribed.
“Working in partnership with the government, the sector should deliver an exciting and quality array of homes for renters.”
UK director at consultancy WSP Richard Hustings said: “The incentives contained in today’s Budget for housing are a welcome boost to what is currently a dysfunctional market, and will hopefully give confidence to investors to build. The extension of the First Buy scheme, the money for build to rent and the Help to Buy initiative from 2014 will underpin the weak signs of recovery as repossessions are at a five year low, the number of first time buyers is rising for the first time in four years and affordability is improving.”
NHBC Chief Executive Mike Quinton said:
‘The Chancellor has today given a welcome shot in the arm for the UK’s housebuilding industry.
‘We warmly welcome the expansion of measures for people who want to buy their own homes. This will help boost the housing market and provide vital support for the construction industry.
‘Builders up and down the country have been working hard to build high quality homes while operating in tough economic times. Housebuilding fell 9% in 2012 compared to the previous year. It is therefore great news that housing has been the centre piece of this Budget.
“This is a positive step for homebuilders and homeowners alike.”