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Budget 2014: Mixed reaction to Chancellor’s spring statement

There has been a mixed response to the Chancellor’s 2014 Budget from property industry experts.

Grainia Long, chief executive of the Chartered Institute of Housing (CIH), said: “Historically we know that small and medium sized builders have played a critical part in delivering new homes.

We have been calling for government to introduce measures to support SME builders to increase the role they can play in addressing our national housing crisis. Following the credit crunch small builders have found it more difficult to access finance and government moves to help them get building by providing £500 million of support are welcome”.

“If we are going to build the number of homes that we need to solve the housing crisis, garden cities and other new developments are going to be a huge part of the mix.”

She added: “The Chancellor’s announcement of the Ebbsfleet garden city and developments in Barking, Riverside and Brent Cross is a welcome recognition of this. We hope this is start of things to come and that we will see more major announcements that will contribute to the supply of new homes.”

“We need to build 250,000 homes a year to keep up with our growing population, but we’ve been failing to reach that target for decades – the result is a housing crisis in which millions of people are being denied access to a decent home at a price they can afford. In his Budget speech the Chancellor claimed that the measures he announced would deliver 200,000 new homes, including the 120,000 homes supported by the extension of Help to Buy equity loans. This would be an important step along the road to addressing our housing crisis, but it still leaves us with much to do.”

Paul Smith, CEO at haart, the UK’s largest independent estate agency, comments:   “The Chancellor’s deaf ear to the myriad of calls from industry to reform Stamp Duty in the Budget is at best disappointing and at worst will perpetuate a dysfunctional housing market. In one fell swoop he could have increased the supply of homes for sale and capped rising house prices helping every level of the housing ladder. Instead he’s turned a blind eye and given nothing to the majority of homebuyers and sellers rather than throwing them a lifebelt.”

Richard Lambert, Chief Executive Officer at the National Landlords Association (NLA) commented: “We welcome the reform to pension taxation and the removal of limits on drawdowns and investment restrictions announced in today’s Budget.

“These changes will make offering housing a more financially viable option for providing an income in retirement while, importantly, furthering investment and creating more homes to support the future generations of renters who will increasing look to private providers to meet their the housing need.

“Finally, the Chancellor has made it clear that landlords will be exempted from the immediate changes to Stamp Duty Land Tax (SDLT) on properties held by a company.”

Peter Girling, Chairman, Girlings Retirement Rentals said:

“Today’s budget brought a raft of positive measures for savers and a big boost for the over 65s. Some of the good news included the announcement of a new ‘Pensioner Bond’ from National Savings and Investment which will be made available to all over 65s from January, offering interest rates of 2.8% for one-year bonds and 4% for three-year bonds. The Chancellor also announced significant reforms to pensions.

“The Chancellor plans to increase the simplicity and generosity of ISAs, by merging cash and stocks ISAs to create a single product and raising the total limit to £15,000.The limit for Junior ISAs was also raised to £4000. In terms of pensions, the government announced plans to legislate to remove all tax restrictions on how people access their pension pots, giving the over 65s freedom to draw as little or much of their pension pots at any time without penalties, caps, limits or the need to buy an annuity.

“The requirement to buy an annuity has attracted public anger in recent years, as ultra-low interest rates and rising longevity has translated into meagre incomes.   These measures will be music to the ears of retired people who have seen little or no return on their investments in recent years. We think it might spark another change too. Many people over 65 still own their own homes, many of which are under occupied, and many dream of downsizing but feel unable to do so. According to think tank Demos, four out of 10 over 60s in Britain want to downsize to a retirement property – that’s 3.5 million people nationally. One of the reasons they have been deterred from selling and downsizing has not only been the shortage of retirement properties, but also the lack of investment opportunities for their capital. We hope these new investment vehicles will not only give them new opportunities to increase their savings, but also the confidence to realise their housing ambitions.

“With the housing market picking up, the economic forecast healthier and the number of decent investment opportunities increasing, the conditions might soon be right for them to sell and move into retirement accommodation – secure in the knowledge they will be getting decent returns that could help fund their future.”

National Housing Federation Chief Executive David Orr said:

‘We welcome the Chancellor’s focus on housing and the announcement of a new garden city, but we think the Budget is a missed opportunity. Measures like Help to Buy are likely to stimulate demand for housing but the Budget does not go far enough to boost the supply of homes needed to meet that demand.’

‘The Chancellor says the 23% increase in house building is not enough and we agree with him. While he has taken some steps – like a new garden city – to increase supply, we were disappointed that he did not include measures to deliver homes more quickly, at little or no cost to the tax-payer. An effective release of public land for house building, increasing the borrowing capacity of housing associations and extending Government guarantees to back financing for new development, would all have made a significant and immediate boost to the supply of affordable homes.’

‘While the extension of Help to Buy will assist some people to buy their own home in the short term, in the long term it risks fuelling a house price bubble. The longer that the new build housing market is dependent on Government intervention, the more difficult it will be for them to withdraw in future years. It will be hard for the Government to demonstrate Help to Buy will generate new homes being built that would not have already been developed. It is not the most effective way of using public investment and is far too small an amount to address the crisis.’

We welcome the announcement of the new garden city in Ebbsfleet, but it will only make a difference if it is the first of many. The new homes in Ebbsfleet must not merely replace homes that would have been built elsewhere.’

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