Council chiefs welcomed the Chancellor’s emphasis on housing in yesterday’s Budget, but warned more needs to be done to fix the broken housing market.
Mr Hammond announced around £44bn to address the housing crisis, pledging to deliver 300,000 new homes a year, alongside an urgent review of land banking practices.
He also promised to lift the Housing Revenue Account (HRA) cap in areas of high housing demand in order to get local authorities building again.
Responding to the measures on housing, Cllr Martin Tett, the Local Government Association’s (LGA) housing spokesman, said: ‘The LGA has long called for councils to be given greater freedom to borrow to build new homes and today’s Budget has taken a step towards that by lifting the housing borrowing cap for some councils.
‘This is an important recognition of our argument about the vital role that councils must play to boost homes for local families in need and solve our housing crisis.’
The LGA also welcomed announcements regarding more funding for Land Assembly, the Housing Infrastructure Fund and for SME builders.
However, Cllr Tett stressed that Whitehall should provide the necessary funds to cover the costs of processing planning applications.
‘Planning is simply not a barrier to housing growth. Councils approve nine out of 10 applications and are doing all they can to deliver affordable homes with wider local services and infrastructure,’ he said.
‘The single biggest measure that the Government could take to speed up the planning process would be to cover the cost of processing applications for councils.’
Cllr Tett also welcomed the Government’s decision to allow councils to charge more for empty homes as well as the announcement of a review into the practice of land banking.
‘The LGA has also consistently called for councils to have the powers to make sure that sites that receive planning permission become homes in our communities,’ he said.
‘We look forward to contributing to the forthcoming Letwin Review, and will make a vigorous case for councils to be given the strongest powers possible to make sure that developers are held to account.’
The former civil service head and chairman of Be First, Lord Kerslake, branded the Chancellor’s budget ‘a mixed bag’ which will struggle to deliver the Governments’ ambition on new housing.
He welcomed the new funding available to tackle the housing crisis, but warned the opportunity to ‘fully lift’ the cap on local authorities’ ability to borrow and build has been missed.
Cllr John Fuller, chairman of the District Councils’ Network (DCN), welcomed the announcement of a review into land banking, saying it has put developers ‘on notice’.
‘District councils are the planning and housing authorities and will welcome the focus on making sure approved developments actually result in new homes being built,’ he said.
‘A rebalancing of the negotiating strength of local authorities is important and it is clear that developers have been put on notice that they will be expected to make good on the promises they make when they seek land to be allocated and permissions to be granted.
‘The threat of deallocation should focus the minds of speculators on delivery, rather than financial engineering. This will help ensure families in all parts of the country can aspire to a roof over their heads at a price that they can afford.’
Jamie McKie, planning senior associate at law firm Dentons, was less positive about the review.
‘The commissioning of an 'urgent' review into the 'slow' build outs suggests a continued failure to get to grips with the real issues which compromise the delivery of new housing,’ he said.
‘Constrained land supply, financing and planning red tape are just a few of them. Arguably, the time and costs associated with such a review would be better invested in adequately resourcing Local Planning Authorities.’
‘House builders have nothing to fear from a review of land banking and if it identifies non house builders who are sitting on land and brings that forward for development it would be a positive move,’ said Stewart Baseley, executive chairman of the Home Builders Federation.
‘Any review should also focus on why so many plots that some suggest are in a builders ‘land bank’ are mired in the planning system and identify ways to process them more quickly so they can actually be built.’
Chris Fox, Liberal Democrat spokesperson for Business, Enterprise and Industrial Strategy, added: ‘Sending Oliver Letwin in to deal with the housebuilders landbank is like sending a hamster into a cage of ferrets.’
Cllr Fuller also repeated Lord Kerslake’s concerns over the HRA cap, saying ‘the Government must go further, and lift the housing revenue account cap for all stock holding district councils immediately, rather than creating a bidding process for certain councils in future years.’
Cllr Paul Carter, chairman of the County Councils Network (CCN) and leader of Kent County Council, welcomed the ‘direction of travel on housing’ outlined in yesterday’s Budget.
However, he emphasised it ‘would be further a strengthened through a stronger role for county councils in the draft Statement of Common Ground and in strategic infrastructure tariffs.’
Summing up the Budget’s housing announcements, Rob Whiteman, chief executive of the Chartered Institute of Public Finance and Accountancy (CIPFA), said: ‘House buyers were arguably the biggest winners, with £44bn investment to boost building and the removal of stamp duty on first time buyers (however, the OBR suggests that removing stamp duty could lead to a slight increase in house prices).
‘Change to the HRA cap is a welcome and a previously non-negotiable move that could offer a glimpse of flexibility that should benefit authorities wanting to invest in building, but the cap of £1bn might not have a significant impact at the national level.
‘The additional council tax charge on empty properties is a simple means to try to influence a better use of limited resources, but I’d question whether this will benefit all parts of the country equally.’
Writing for The MJ, head of news and events for think-tank Localis, Jonathan Werran, looks at what the Budget means for housing.