In a fast-paced budget speech today the allocation of time to 'housing' was similar to the allocation of funds. Fair enough, as The Chancellor had a lack of funds to play with, but at least there are some property morsels to ponder upon.
The first morsel
came, in fact, in a Parliamentary debate yesterday which focused on
Labour's call for a Mansion Tax to: "fund a tax cut for millions of
people on middle and low incomes". This was roundly defeated by 63
votes (301-241). Good news there for those in tune with the higher
end of the market (or average in central London).
In today's election speech, Mr Osborne earnestly battled against an unruly opposition but held on to his voice to announce some further property morsels.
Help to buy
This new label was described by the BBC correspondent Nick Robinson as 'a deliberate echo of Margaret Thatcher's Right to Buy' and, indeed, part of the plan is to encourage more people to but their council owned homes, on the Tories' long held view that that people who can afford to buy, should buy.
But there was more. The developers should be pleased by the extension of shared equity schemes, with interest free loans of up to 20 per cent of the value of new homes - available to any buyer - not purely First Time Buyers - astonishingly, for new build properties for sale at prices up to £600,000.
Jeffrey Adams, Chief Executive of London developer United House, is pleased, of course, but said, "We need the Chancellor to get on with it. He needs to press fast forward on selling public sector land, easing planning restrictions and making it easier for developers to raise the funds to get building. We have had endless major announcements but they all come with interminable timelines. Our first-time buyers will be middle-aged before we see any tangible increase in homes in the capital."
If only such support was available for all homes, new or old - that would bring an increase in transactions. However, some good news for the rest of the market; The Chancellor also introduced new bank guarantees to underpin £130bn of new mortgage lending for three years. The bad news is that this measure does not come into play until April 2014. Time for buyers to plan, at least.
Simon Rubinsohn, RICS Chief Economist, said, "The range of measures announced under the 'Help to Buy' scheme to kick start the housing market are much needed. Helping those who can't afford large deposits by using the Government's balance sheet to guarantee mortgages and using capital savings to offer shared equity loans on new build for all buyers will help prevent prolonged market stagnation - although it presents a significant risk to Government. The devil will be in the detail about how the Government will treat buy-to-let and those in negative equity. However, Government need to be careful this doesn't create another housing bubble - pushing prices up at the expense of buyers.
Mark Collins, Chairman of CBRE Residential, said, "We are pleased to hear that the Government has allocated £3.5billion to its Help to Buy regime. It is vital for the whole of the property market that families and first time buyers can get on the property ladder, and the primary issue they face is lack of mortgage availability. This move will also provide a much needed boost for the house building industry.
Kevin Hollinrake, MD, Hunters Property Group, said, "The Chancellor's announcement of the help to buy scheme is a positive move and will undoubtedly generate activity in the housing market. However, our concern is that this measure only affects the new build market. The current take up of the First Buy scheme means it only helps one per cent of transactions in the UK. First-time buyers are struggling to get on the ladder in the resale market too, with many being out bid and marginalised by buy to let investors, and we would have liked to have seen the Chancellor help first-time buyers right across the market.
"However, his plan to extend the scheme to second steppers is a positive move, as it will help get the rest of the market moving and with the new mortgage guarantee scheme looking like it will be available across the new and resale markets - the need for more new homes to meet demand will give the construction industry, which was down seven per cent last year, a much needed boost."
Dawn Carritt, Director, Jackson-Stops & Staff, said, "The announcement to continue with the guaranteed mortgage scheme will help support not only first time buyers and those looking to obtain a mortgage with limited funds for a deposit, it will help support the housing market, enabling not just new owners but existing owners and go towards freeing up the market and support the signs of recovery in the housing market which are just starting to emerge in some areas of the country."
The British Property Federation welcomed the fivefold government funding increase to kick start build-to-rent schemes. The £200m made available in December's Autumn Statement will be expanded to £1bn, and will provide equity or loan finance to support development stage finance.
Ian Fletcher, Director of Policy said, "It's encouraging 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 Government the sector should deliver an exciting and quality array of homes for renters."
Funding for Lending
The Chancellor said, "We are now actively considering with the Bank of England whether there are potential extensions to the successful Funding for Lending Scheme that will boost lending still further."
Mark Blackwell, MD of xit2, property data specialists, said, "Funding for Lending isn't really sustaining first time buyer activity, and has been poorly targeted. Lower monthly payments for the better-off - those with the most equity - will do little to lift a sluggish housing market.
"Given the Government's pledge to support borrowers, today's 8% fall in gross mortgage lending will be a significant disappointment. A one percent uplift in gross mortgage lending from a year ago is a very poor performance given the external impetus lenders are able to access. Including non-banks in Funding for Lending could make the scheme more effective.
"However, lenders can be applauded for some of their caution - a return to the recklessness of 2007 would be as much of a failure as a further collapse in lending levels. Quality of lending is as important as quantity. Proper property and credit risk management will be vital for a more sustainable model of lending in future."
Dr Neil Blake, Head of UK and EMEA Research, CBRE said, "Despite additional promised funding, not nearly enough measures have been taken in this budget to get institutional investment into infrastructure and ensure the delivery of more residential stock. Initiatives of this type have been announced before but have stalled. If they were introduced they would provide a win-win policy for the government as it could secure funding for its infrastructure programme and boost demand in the economy at the same time, whilst institutions could get liability matching assets. Further action is urgently required to close the gap between the two parties.
"There is a similar opportunity in residential development. What the economy needs is a new way of getting funds into residential development, not just ownership. multi-family housing is leading the recovery in the USA but it is practically non-existent here. Similarly, institutional investment in housing is prevalent in a number of other European countries, particularly Germany. Getting institutional money into residential development would not only boost demand but it would help to address the UK's chronic housing supply problem - which saw house building barely match demographic trends at the peak of the boom, never mind in these depressed times."
Still, if all else fails, we can drown our sorrows in beer, which is about the only thing in the UK that is getting cheaper.
Cheers Mr Osborne!