Jan Crosby, UK Head of Housing, comments on the Chancellor's plans for housing.
Jan Crosby, UK Head of Housing at KPMG UK, said:
“The latest Budget has made big noises around ambitious housing plans, and yet the latest OBR statistics still forecast a rise in house prices of around 3 per cent per annum over the next five years.
“The stamp duty give away will be inflationary and just means sellers will ask for £5,000 more. Given the typical 90% mortgage available to first-time buyers, that £5,000 could provide up to £50,000 more buying power. Indeed, the cost of this likely popular measure - at £0.5bn - will find its way back into house prices. It pales into insignificance when Stamp Duty Land Tax receipts are forecast to move to £13.2bn this year – an 11% increase on last year. They are expected to continue to rise to £15.8bn over the OBR forecast period - a key revenue raiser.
“Some policy ideas hint at game changing opportunities for reform if executed correctly. The Public-Private Partnership (PPP) funded Garden towns for example, must be used to deliver a completely new model of development and offer a real opportunity for true and rapid place-making, which includes multiple tenure like rental, retirement, affordable housing, shared ownership, to name just a few. This is the Asian model, and building new cities is bread and butter for Asian capital, however there must be an appropriate model to encourage rapid build out.
“Capturing more of the uplift in land value, when infrastructure is put in place or residential planning permission is granted could be transformational, if it was applied to the land owner rather than the developer. The gains through planning are often very large and it is the land owner that benefits - not the housebuilder. If the policy is applied post land purchase and paid by the housebuilder, there will be uncertainty and negotiations which will slow getting sites built.
“The £8bn of guarantees to help new rental accommodation and housing could create alchemy, attracting risk averse pension funds to the build to rent sector. Taking it a step further, this could be used to create growth in discounted rental housing for teachers, nurses, police, military and other public sector workers who just can’t afford to live near their work in well-designed housing. It could create discounted rents at 35% discount to market and would cost the Government nothing, as we described in our latest Reimagine housing piece.
“The threat of action on land banking is clever politics, however housebuilders are not incentivised to land bank and one of the big problems is actually getting the planning system, and often multiple public sector stakeholders, to make more rapid decisions and actually grasp the nettle on complex sites. This is perhaps one of the key areas in productivity that the Government should focus on if it wants to solve the housing crisis.”
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Notes to editors:
KPMG’s latest Reimagine Housing piece: Employer-backed Built-to-Rent can be viewed: here