philip hammond

Autumn Statement 2016: £2.3bn housing infrastructure fund launched




In his inaugural, and surprisingly last, Autumn Statement, Chancellor of the Exchequer Philip Hammond announced a £2.3bn Housing Infrastructure Fund to deliver up to 100,000 homes in areas of high demand.

Exactly five months after the EU referendum and four months since Theresa May became prime minister, Mr Hammond presented the government’s plans and priorities for the economy, including how to tackle the housing deficit in the UK.

Mr Hammond also unexpectedly explained that this will be his first, and last Autumn Statement, where it will be replaced with a Spring Statement in 2018.

In October, the communities secretary Sajid Javid launched the £3bn Home Building Fund to deliver over 200,000 homes and up to £2bn to speed up construction on public sector land.

However, Mr Hammond said the UK must go further, stating that the communities secretary will bring forward a housing white paper to address the long-term challenges in house construction. 

“The challenge of delivering the housing we so desperately need in the places where it is currently least affordable is not a new one.

“But the effect of unaffordable housing on our nation’s productivity makes it an urgent one.”

Mr Hammond stated that one of the biggest objections to housing development was the impact on local infrastructure. 

£2.3bn housing infrastructure fund to deliver up to 100,000 homes

“…We will focus government infrastructure investment to unlock land for housing … with a new £2.3bn Housing Infrastructure Fund to deliver infrastructure for up to 100,000 new homes in areas of high demand.

“And, to provide affordable housing that supports a wide range of need, we will invest a further £1.4bn to deliver 40,000 additional affordable homes.”

London is set to receive £3.15bn of affordable housing funding to deliver over 90,000 homes.

A wider range of housing types

Mr Hammond declared that restrictions on government grants would be relaxed to allow for a wider range of housing types and announced a large-scale regional pilot of Right to Buy for housing association tenants.

“…This package means that over the course of this parliament, the government expects to more than double, in real terms, annual capital spending on housing.

“This commitment to housing delivery represents a step-change in our ambition to increase the supply of homes for sale and for rent, to deliver a housing market that works for everyone.”

Property market reacts to Autumn Statement

Rajiv Nathwani, Director and Founder of Quivira Capital, felt the announcement came as a disappointment to many of those within the industry as it fell short of the proposed £5bn to deal with the housing shortage.

"For small developers looking to get their housing projects off the ground and into the market – how does the new fund really help us achieve this? What small developers really want to know is; access. When will they start seeing the funding? What's the time frame from the Government? How soon can the fund translate into land purchases where they can start building work? These are all areas that needs addressing from the Government to put confidence back into small developers to move forward and start creating homes for a generation that desperately needs it.
 
"We saw the initial boost in funds last year when the Government gave a £100 million to support small developers. However with the complexities, red tape of planning laws, lending and local council bureaucracy, small developers are hardest hit when it comes to securing bricks and mortar projects.

"What needs to be answered this Autumn Statement, is transparency from the Government in delivering the funds for small developers. This is crucial for our social-economic situation post-Brexit so we can start building the necessary homes across the country.”

Jonathan Sealey, CEO of Hope Capital, said the announcement was welcomed but felt 40,000 homes was just a drop in the ocean when the target was to build one million by 2020.

"According to a recent survey we need to build 685 new homes every day to even meet the current shortfall of 915,000; with existing delivery rates at 475 per day.  The plain fact is that with the best will in the world we are nowhere near our target.  

"Perhaps rather than just pledging money to help, the government should be looking at the reasons why?  We can but hope that the promised white paper will provide solutions to the age old question - how can we build more homes to meet demand?

“We all had high hopes that the Chancellor would tackle the one thing that many believe is killing the market; but disappointingly stamp duty was again conspicuous by its absence.”

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