Spring Statement

Industry reacts to Spring Statement 2018




Philip Hammond’s Spring Statement has received a mixed reaction from those within the property and business finance communities.

The chancellor addressed the House of Commons earlier today to provide an update on the overall health of the UK economy.

Mr Hammond also revealed the government’s progress since the Autumn Budget 2017 and discussed new measures to help achieve policies introduced last year.

Improving housebuilding

Mr Hammond announced that the government was working with 44 areas on their bids for the £4.1bn housing infrastructure fund.

He also announced that London would be receiving £1.67bn of funding to support the development of a further 27,000 affordable homes by the end of 2021/22.

"The absence of a major policy shake-up in the chancellor’s statement today is precisely what the industry needed,” said Matthew Tooth, chief commercial officer at LendInvest.

“Rather than wasting time adapting to the step changes we’ve become used to seeing, lenders and developers alike can get on with what they do best, getting more homes built across the UK.”

Benson Hersch, CEO of the Association of Short Term Lenders, added: “Although it’s positive to hear that the government [is] on track to meet its new building targets for new homes, with chancellor Philip Hammond’s speech confirming that London will get more money for affordable housing, it is unlikely to produce the volume needed or to sufficiently lower prices in the first-time buyer market."

However, Paresh Raja, CEO at Market Financial Solutions, felt that today’s modest speech offered few meaningful solutions to the long-term challenges facing the property market.

“While the announcement of higher growth in the economy is welcomed, the decision to water down the Spring Statement so much is not.

“After all, underlying problems such as housing supply won’t wait until the Budget in the autumn.

“Yes, the chancellor reiterated that £44bn was available to help hit new-build targets, but following Theresa May’s housing speech last week, today’s announcement could have taken further steps towards developing a successful plan for helping more people get on or move up the property ladder.”

Jonathan Sealey, CEO at Hope Capital, said that although the Statement was not earth-shattering, it was positive news that the housing growth partnership for small housebuilders would more than double to £220m.

“It is these smaller developers and housebuilders that often turn to bridging funding to get their developments off the ground. 

“Any measure that increases positive sentiment among builders and developers and gets them building, not only increases the much-needed housing supply, but also helps to boost the economy.

“The other positive for the housing industry was the commitment by the chancellor to spend £44bn over the next five years to increase housing supply by 300,000 a year by the mid-2020s, as pledged last autumn. 

“What we need to see now is if this pledge is actually followed by action and the housing numbers do indeed increase.”

Meanwhile, Stuart Law, CEO at Assetz Capital, added: “We’ve seen a real and much-needed focus from the government on boosting the housing market, and it’s now vital that the government continues to support smaller developers and construction businesses.”

Jeremy Leaf, former RICS residential chairman, said: “The stamp duty concessions have definitely prompted more interest among first-time buyers, who are often taking the place of investors at the lower end of the market.

“But further help is needed to make a real difference, not just at the bottom end of the market, but right through to the top end if we are to achieve genuine growth.”

Supporting UK businesses

Mr Hammond also announced measures to support the growth of UK businesses, revealing that he was bringing forward the next business rates revaluation to 2021.

The government has also set out its thinking on how the tax system can change to give a fair result for digital businesses.

The government is seeking views on what more it can do to support people and businesses who use digital payments, ensure those who need to are able to pay with cash and prevent the use of cash to evade tax and launder money.

Toby Ryland, corporate tax partner at HW Fisher & Company, said: “While this is still just a consultation, it opens the door for the government to force online platforms to deduct VAT from sales, and then obliges sellers to prove they are eligible to claim it back.

“However, such an approach would be a hammer to crack a nut and is likely to raise lots of tricky questions about whether the platforms will have to deduct VAT from all sales, or just those made by sellers they think are businesses.”

Despite these announcements, Angus Dent, CEO at ArchOver, felt the government was unable to jolt the economy out its lethargy.

“If we can’t get out of this rut, we won’t stand much chance of making a smooth economic transition out of the EU next year – we won’t have the leeway to absorb any unexpected shocks.

“Despite that, Philip Hammond used today’s Spring Statement speech to essentially sit on his laurels and avoid taking any new decisive action.

“While the chancellor rests easy, British business must get to work.”

 

 

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