The Chancellor of the Exchequer delivered the Spring Statement 2019 on Wednesday 13th March.
Despite obvious concerns over Brexit and the economic uncertainty surrounding that, Philip Hammond was upbeat about the economy and said that the public finances continued to improve.
The Government is investing in infrastructure – roads, rails, and housing – and this is benefiting the whole of the UK.
Up to £260m will be made available for new investment in border regions.
A special mention was given of the housing market:
Last year 220K homes were delivered, the highest number in 31 years bar one.
A new £3bn Affordable Homes Guarantee scheme, to support delivery of around 30,000 affordable homes…
And £717m from the Housing Infrastructure Fund to unlock up to 37,000 new homes on sites in West London, Cheshire, Didcot, and Cambridge.
From 2025, fossil fuel heating will be banned from all new homes.
The Chancellor concluded:
“We are the fifth largest economy in the world. There is no limit to our ambition and no boundaries to what we can achieve”.
Bearing in mind that stamp duty receipts have been a very lucrative income for the Government in recent years, this could put a large hole in the government’s coffers.
Conservative MP Greg Hands expressed his concern on twitter:
“Buried in the detail, however, is ever worsening problems on Stamp Duty. Numbers are horrendous. A further -*additional* £3.5bn shortfall in here, “deteriorated significantly since October”. Receipts fell 9.8% in 2018. Action needed.”
The property industry largely reacted negatively to the statement, many describing it as a “damp squib” and a “wasted opportunity” to reignite the housing market.
Neil Cobbold, Chief Operating Officer of PayProp in the UK, had this to say:
“Due to the shift to annual Treasury reporting, the Spring Statement was not as in-depth or wide-ranging as an annual Budget. That said, relatively few housing measures and spending plans made it into the Chancellor’s statement.
The government has consistently promoted its commitment to fixing the UK’s ‘broken’ housing market, so we expected more updates to this effect.
Some of the housing measures yet to be addressed or finalised, include the ban on letting agent fees, the proposed extension to mandatory HMO landlord licensing and additional regulation of the private rental sector.
The government is clearly committed to addressing the UK’s ongoing housing problems. Increasing the supply of available homes to buy is a key strategy and one that could have obvious positive outcomes in the future.
However, one issue that is potentially being overlooked is affordable housing in the private rental sector. Private tenants now account for a fifth of all households and the latest annual English Housing Survey shows that renting is now the largest housing tenure in London.
It could, therefore, be beneficial to move away from the notion that everyone wants to buy a home, embrace the rental revolution and work out how to provide more high-quality, affordable rental housing.
The Chancellor revealed that the stamp duty cut for first-time buyers announced in November’s Budget has benefitted over 60,000 property purchasers.
Moving forward, what could be valuable is a government investigation into the 3% stamp duty surcharge on additional homes and how it has affected the rental market during the two years it has been in operation”.
Following the Statement, the Office for Budget Responsibility predicted that UK house prices will be in decline by the end of this year.
The OBR has downgraded its forecasts for the housing market, due to signs that house price growth has flowed, and there is reduced activity and transactions in the market.
It now thinks house price inflation will turn negative, before bouncing back in 2021.
