The Chancellor of the Exchequer presented his Autumn Budget to Parliament on 22nd November 2017. The Chancellor has pledged to fix the UK’s ‘broken housing market’. The investment he announced in the budget – which included £15.3bn of new funding – is meant to deliver at least 300,000 more houses by the 2020s.
He has also pledged to deliver five new garden towns by 2050 which would mean almost a million more houses.
Here is the need to know facts about housing from the 2017 Autumn Budget:
Planning for more homes
The planning system needed reform to boost land availability in the right places for homes, and to ensure that better use was made of underused land in urban areas whilst confirming the government’s commitment to maintain the existing protections for the Green Belt.
Deallocating sites from plans:
It will consult on strengthening policy to be clear that allocated land should be taken out of a plan if there is no prospect of a planning application being made.
Intervention where there is a failure to progress Local Plans:
DCLG had begun the formal process of considering intervention in 15 areas where the local authority had failed to put an up-to-date plan in place. It would shortly activate powers enabling it to direct local planning authorities to produce joint statutory plans and undertake an assessment of where they should be used.
First-time buyer led developments:
It would consult on a new policy whereby local authorities would be expected to permission land outside their plan on the condition that a high proportion of the homes were offered for discounted sale for first-time buyers, or for affordable rent. This would exclude land in the Green Belt.
Increasing housing density in urban areas :
It would consult on introducing:
- Minimum densities for housing development in city centres and around transport hubs, with greater support for the use of compulsory purchase powers for site assembly
- Policy changes to support the conversion of empty space above high street shops
- Policy changes to make it easier to convert retail and employment land into housing
- A permitted development right to allow commercial buildings to be demolished and replaced with homes
Ensuring that planning permissions were built out faster
It was determined to ensure that land released for housing was put to the best use. It will consult on:
- Strengthening the Housing Delivery Test with tougher consequences where planned homes are not being built, by setting the threshold at which the presumption in favour of development applied at 75% of housing delivery by 2020
- Expecting local authorities to bring forward 20% of their housing supply as small sites. This will speed up the building of new homes and supports the government’s wider ambition to increase competition in the house building market
- Speeding up the development process by removing the exemptions from the deemed discharge rules. This will get builders on site more quickly, ensuring that development is not held back by delays in discharging planning conditions
Review of build out:
It would set up a review panel, chaired by Sir Oliver Letwin, to explain the significant gap between housing completions and the amount of land allocated or permission, and make recommendations for closing it.The review will provide an interim report in time for Spring Statement 2018 and a full report at Budget 2018.
Register of planning permissions:
It would develop a central register of residential planning permissions from local authorities to improve information on where permissions are held and progress towards them being built out.
Land value uplift:
In this year’s Housing White Paper, the government committed to responding to the CIL Review. DCLG will launch a consultation with detailed proposals on the following measures:
- Removing restriction of Section 106 pooling towards a single piece of infrastructure where the local authority has adopted CIL, in certain circumstances such as where the authority is in a low viability area or where significant development is planned on several large strategic sites. This will avoid the unnecessary complexity that pooling restrictions can generate
- Speeding up the process of setting and revising CIL to make it easier to respond to changes to the market. This will include allowing a more proportionate approach than the requirement for two stages of consultation and providing greater clarity on the appropriate evidence base. This will enable areas to implement a CIL more quickly, making it easier to set a higher ‘zonal CIL’ in areas of high land value uplift, for example around stations
- Allowing authorities to set rates which better reflect the uplift in land values between a proposed and existing use. Rather than setting a flat rate for all development of the same type (residential, commercial, etc.), local authorities will have the option of a different rate for different changes in land use (agricultural to residential, commercial to residential, industrial to residential). All the protections for viability from CIL, such as the Examination in Public, will be retained
- Changing indexation of CIL rates to house price inflation, rather than build costs. This will reduce the need for authorities to revise charging schedules. This will ensure CIL rates keep up with general housing price inflation and if prices fall, rates will fall too, avoiding viability issues
- Giving Combined Authorities and planning joint committees with statutory plan-making functions the option to levy a Strategic Infrastructure Tariff (SIT) in future, in the same way, that the London Mayoral CIL is providing funding towards Crossrail. The SIT would be additional to CIL and viability would be examined in public. DCLG will consult on whether it should be used to fund both strategic and local infrastructure
These reforms would ensure that there was more land for housing, but the private sector and local authorities would need support to ensure homes were built as soon as possible.
- The government would strengthen the ability of the Homes and Communities Agency (to be renamed Homes England) to use investment and planning powers to intervene more actively in the land market
- Land Assembly Fund: It would provide £1.1 billion for a new Land Assembly Fund, funded from the NPIF, enabling Homes England to work alongside private developers to develop strategic sites, including new settlements and urban regeneration schemes
- New garden towns: It would bring together public and private capital to build five new garden towns, using appropriate delivery vehicles such as development corporations, including in areas of high demand such as the South East
- Increasing the Housing Infrastructure Fund: It would invest further in infrastructure through the NPIF to support new housing in high-demand areas. The Budget committed a further £2.7 billion to the competitively allocated Housing Infrastructure Fund (HIF) in England
- Strategic planning in the South East: Government would support more strategic and zonal planning approaches through housing deals in the South East, where housing need was at its most acute. As a first step, it had agreed on a housing deal with Oxfordshire, part of its wider strategic investment in the Cambridge-Milton Keynes-Oxford corridor. Oxfordshire would bring forward for adoption a joint statutory spatial plan and commit to a stretching target of 100,000 homes in the county by 2031, in return for a package of government support over the next five years, including £30 million a year for infrastructure and further support for affordable housing and local capacity. The government was also continuing housing deal negotiations with Greater Manchester, the West Midlands, Leeds and the West of England
- Small sites: infrastructure and remediation: It would provide a further £630 million through the NPIF to accelerate the building of homes on small, stalled sites, by funding on-site infrastructure and land remediation
- Home Building Fund: SMEs: It announced a further £1.5 billion for the Home Building Fund, providing loans specifically targeted at supporting SMEs who cannot access the finance they need to build
It would explore options with industry to create £8 billion worth of new guarantees to support housebuilding, including SMEs and purpose-built rented housing.
- It confirmed a further £2 billion of funding for affordable housing, announced in October, including funding for social rented homes
- The Budget would lift Housing Revenue Account borrowing caps for councils in areas of high affordability pressure, so they could build more council homes. Local authorities would be invited to bid for increases in their caps from 2019-20, up to a total of £1 billion by the end of 2021-22. The government will monitor how authorities respond to this opportunity and consider whether any further action is needed
- Estate regeneration: there would be £400 million of loan funding for estate regeneration to provide new homes in high‑demand areas
To deliver a workforce fit to build these homes, it was providing £34 million to scale up innovative training models across the country and was working with industry to finalise a Construction Sector Deal to support innovation and skills in the sector, including £170 million of investment through the Industrial Strategy Challenge Fund.
Stamp duty land tax: It would permanently raise the price at which a property became liable for SDLT to £300,000 for first-time buyers to help young people buy their first home. The relief will not apply for purchases of properties worth over £500,000. 95% of first-time buyers that paid SDLT will benefit, up to a maximum of £5,000, and 80% of first-time buyers will pay no SDLT at all.
Help to Buy Equity Loan:
The Help to Buy Equity Loan scheme helps people to buy a home with a 5% deposit and has supported 135,000 people so far. The Budget confirmed the announcement in October of a further £10 billion for the scheme, supporting another 135,000 people to buy a new home.
Creditworthiness and rental payment data:
The government will launch a £2 million competition, to support FinTech firms developing innovative solutions that help first-time buyers ensure their history of meeting rental payments on time is recognised in their credit scores and mortgage applications. Mortgage lenders and credit reference agencies are often unable to take rental payment history into account as they do not have access to this data. This competition will support firms to solve this problem.
Empty homes premium:
To encourage owners of empty homes to bring their properties back into use local authorities would be able to increase the council tax premium from 50% to 100%.
Right to Buy pilot:
It would proceed with a £200 million large-scale regional pilot of the Right to Buy for housing association tenants in the Midlands.
Cambridge – Milton Keynes – Oxford corridor – Housing:
Up to 1 million new homes were needed in the area by 2050 to maximise its economic potential, starting with a housing deal with Oxfordshire (see above) and working with Central and Eastern sections on commitments in 2018. It would also consider significant new settlements and the potential role of development corporations to deliver these using private finance.
Land value uplift:
Authorities and delivery bodies in the Cambridge – Milton Keynes – Oxford corridor were expected to use existing mechanisms of land value capture and the new powers (subject to consultation) announced at the Budget to capture rising land values from the additional public investment. It would also encourage authorities to explore the introduction of a Strategic Infrastructure Tariff, in addition to the Community Infrastructure Levy (CIL), supported by appropriate governance arrangements, requiring developers to baseline their contributions towards infrastructure into the values they paid for land.