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‘Budget designed to water seeds of housing recovery’

Development funding, addressing the non-viability of development, levelling the playing field for investors, counteracting the lack of mortgage finance and barriers to market entry would remain big issues that would affect both the industry and consumers beyond this budget.

Savills said that Chancellor of the Exchequer Alistair Darling headlined a sum of £1billion to help the housebuilding industry but his speech failed to break this down fully.

He referred to £500million going directly into support for home building on stalled sites, though in the Budget report, the figure was only £400million.

There may be more devil in the detail but there is little evidence in the full Budget report of any further direct help for the industry. There will be some impact on the industry as a result of the £100million for Local Authorities to develop new housing and in the £50million refurbishment of Armed Forces stock but the sums seem to stop short of what the industry may have hoped for.

There is uncertainty as to how the £400million or £500million will be spent.

Yolande Barnes, Head of Savills Residential Research, said: "We have made a very rough estimate that the number of committed but unsold new-build stock is at least 50,000 units nationwide so this money amounts to around £10,000 per unit for help in getting these units occupied.

"It is difficult to see how the funds can stretch very much further to unlocking new development and delivering many thousands of new homes on top of this. The HCA or other administrators of these funds, will have a hard job prioritising which schemes to support."

Dominic Grace, Head of Residential Development for Savills, said: "Any assistance is to be welcomed but the full details of how it will work remain to be seen.  It is difficult to picture how this can have a meaningful impact on house-building. What we need is a completely new funding model for house-building, for example one designed to stimulate build-to-let development, or other models with a longer-term cashflow perspective."

With regards to Stamp Duty Savills said there was no mention of legislation change hoped for by investors, who currently paid Stamp Duty (at the highest rate) on the total price of flats bought in a portfolio, rather than on the price of each individual apartment.

This penalised bulk investors and needed to be changed if institutions and professional investors were to be attracted to the sector, Barnes said.

"This is a missed opportunity to help stimulate the private rented market.

"If the Chancellor wants to help the housing market, and particularly first-time buyers, he needs to look at how Stamp Duty is paid in broader terms. It is currently a huge barrier to market entry for first-time buyers who, especially in London and the South East, have to find huge sums for this as well as their deposit. It is a pity that the Budget didn’t announce a Stamp Duty amnesty for all first-time buyers or, more radical still, look at charging vendors rather than purchasers to eliminate the market entry problem."

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