Property industry experts react to Spending Review

“If the pound weakens, euro buyers could come back in force.”

“The ‘one size fits all’ fiscal stimulus being applied to the whole of the UK through low interest rates and quantitative easing is a huge benefit for Londoners who generally have better paid jobs and can access mortgage finance.”

“Despite this possible influx of investment, it was likely that the London property market would remain in a thin and fragile state for a while yet.”

Richard Diment, Director General of the FMB said:

“For the five million people on social housing waiting lists today’s announcement offers no hope to those needing an affordable home. It is also a big blow to house builders who have suffered the worst recession in decades.”

“Householders wanting to upgrade their homes to make them greener and more energy efficient might be encouraged by the £1billion investment for the green investment bank but the truth is this is little more than a token and it remains to be seen if the bank will attract the additional funding that will be needed to retrofit the UK’s 26millin existing homes.

“The boost for more apprenticeships does offer some real hope for those seeking to learn a skilled trade. However, employers in the construction sector will want to be convinced the economy is strong enough to take on new trainees.”

Steve Lees, Director at SmartNewHomes.com said:

“The chancellor’s statement this afternoon will have won him no friends in the housebuilding community. The usual platitudes about the new homes bonus and reform of the planning system were there, but there is still no flesh on those bare bones, in the form of a timescale or implementation budget.

“But while up to now the ‘localism’ agenda has at least been unambiguous – if not entirely popular – the promise to deliver 150,000 new affordable homes over four years sounds uncannily like a central target of precisely the kind that Grant Shapps has been campaigning against. The chancellor’s comment that that he wanted to see more power in the hands of local people will also be music to the ears of nimbys around the country but a hammer blow to anyone who ever hopes to afford their own home.

“Housebuilders have been struggling for months now over how to deal with the complete lack of clarity on the government’s housing plans. The CSR was a chance to give renewed clarity and impetus to this vital industry, which creates jobs, improves communities, and which could help to stem the increase in housing costs by supplying more homes. Instead, George Osborne’s statement has actually achieved the difficult task of muddying the waters still further.”

Robert Bartlett, Chesterton Humberts’ CEO, said: 

“With the comprehensive spending review now behind us, both buyers and sellers will have a more focused personal financial picture and be able to move forward with property decisions.  Unfortunately, the obstacle for many remains financing.   Until the banks regain a more rational attitude towards lending, many worthy buyers face hardships.  

“While details have yet to emerge, there are clearly implications for property owners in the various transport projects that will be going ahead as well as possible cost increases in rail travel that will be affecting commuters.  

“For new homes, the reductions in local authority budgets may well make the New Homes Bonus a significant enticement to overcoming objections to development.”

Prime property consultant Charles McDowell added:

“The Chancellor’s emphasis on the value of the financial sector to the British economy today is a welcome confirmation that the government appreciates the sector’s contribution, as long as the details of the permanent tax levy on banks don’t belie his words today.   Prime London property continues to increase in value with interest from both domestic and international buyers but hopefully, with the comprehensive spending review behind us, general market confidence will improve. “

Spicerhaart and Valunation Business Relationship Director Alison Beech said: “The Comprehensive Spending Review has yielded no surprises. While the stated emphasis is on ‘fairness’, there is no escape from the harsh reality of the full extent of the cuts that lie ahead. With close to half a million job losses expected from the public sector over the next four years, we will no doubt see a rise in the number of households defaulting on their mortgages as they struggle to stay afloat.

“The health of the property market in general is also set to suffer, as the number of first time buyers is driven down as a result of the Review’s impact on young people. As well as facing higher contributions to university fees from 2012, resulting in significantly increased student debt, young people may struggle to find employment as they come up against heightened competition in the jobs market. This will result in even fewer first time buyers getting a foot on the property ladder, which will have a knock on effect on the market as a whole, causing continued stagnation. We can only hope that the Government’s assurances that the cuts will enable the economy to recover prove to be true sooner rather than later.”

Stuart Law, Chief Executive of Assetz, said:

“The increases to social housing rents and caps on Housing Association benefits will permit them greater profits to reinvest in new housing. Unfortunately, their new tenants will find 80% of market rent much less affordable than the lower rates available at present and may find it better to go into the homebuyer market – with some people simply unable to rent at all.

“The Government forecast of 150,000 affordable homes being built from this extra rental profit is as misguided and inaccurate as the housing targets of the outgoing Government. It is far more likely that the increased rental profits from new tenants will go towards paying increased bank lending margins than providing new housing.

“Hot on the heels of the withdrawal of the HomeBuy Direct shared equity scheme, which has already come as a blow to first-time buyers, these new changes will mean that getting a foot onto the ladder will become increasingly difficult as competition in the market heats up and renting becomes as expensive as owning your own home.

“The key casualties from all of these cuts are likely to be first-time buyers in addition to new tenants of Housing Associations who will find increasing rental costs unaffordable.”

Baroness Margaret Eaton, chairman of the Local Government Association, said:

“This spending review will hit councils and the residents they serve very hard and will inevitably lead to cuts at the front line.

“These are some of the biggest cuts in the public sector and we have to be honest about their impact.

“Town halls will now face extremely tough choices about which services they can keep on running. These cuts will cause real pain and anxiety for millions of people who use the services councils provide, from keeping children safe to ensuring that streets are clean.

 “Councils will do all they can to minimise the effect of these cuts and will build on their record of delivering new and better ways of doing things in order to keep public services running in these tough times. But savings on this scale are bound to hit services upon which people rely.

“The Government has responded positively, however, to some of the central arguments made by local government. The significant increase in funding for adult social care from Government and the NHS is good news and reflects something councils have been arguing for many years.

“There are also important moves towards much simpler funding mechanisms that will help councils do their job. The Government has eased burdens on local government, given us much greater freedoms and flexibilities over our budgets and taken a first step towards wider reform with councils in the vanguard of reforming the way the public sector operates.

“Town halls want to join up local public services to ensure we deliver the services residents demand and expect, but we can’t do it alone. Councils want to work with other areas of the public and voluntary sector to break down wasteful bureaucratic barriers.

“Ministers must move much faster to redraw the way public services are delivered so the people we serve come before the interests of the Whitehall machine.”

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