David Smith, Solicitor
The Negotiator - 30 November 2011
email David
The chancellor’s Autumn Statement was not entirely positive. In fact, much of the good news had been announced in advance and so there was little left to cheer the spirits. It began with an admission that the economy was not performing as the government had hoped. No amount of explanation of the underlying reasons for this could really soften the news and the ongoing concern for the overall health of the housing sector will continue as a result.
Turning to specific announcements relevant to the housing sector, the government confirmed that it will be cancelling Stamp Duty Land Tax relief for first time buyers in March 2012. It states that it will be publishing analysis which shows that the relief has not been effective in encouraging first time buyers to enter the market. The relief will be replaced by some of the schemes set out in last week’s publication of Laying the Foundations: A Housing Strategy for England.
The first of the announcements relating to this is that the government will support the new-build indemnity scheme led by the Homebuilders Federation and the Council for Mortgage Lenders by providing up to £1bn of security alongside that supplied by housebuilders. This money will be provided in a fund available to mortgage lenders when the mortgagee defaults. The aim is to encourage lending at up to 95% of loan to value.
There is also new help for those social tenants who wish to exercise their right to buy by increasing the levels of discount offered to those tenants on the purchase price to make it a more attractive option. At the same time the government is committed to providing a new affordable home - but notably not a home for a social tenant - for every home purchased. If this scheme takes off it will increase the stock of affordable homes but will may actually lead to a further reduction in stock in the social rented sector. This will almost certainly mean more of these tenants being encouraged, or even compelled once the Localism Act 2011 is brought into force, to enter the private sector.
There is substantial new support for developers of all stamps with new investment finance being made available to restart stalled projects and support from the government for larger developments which can show local backing.
For smaller private landlords, there is the Green Deal which sees an extra £200m allocated to it to support energy efficiency improvements in homes at no up-front cost.
However, this is all small stuff. In fact, it may actually be the investment in new infrastructure including roads, railways and broadband that is most useful. Those who own property in areas which benefit from this investment will see demand and prices rise, while those affected by the new building will see local drops in value, although these may be ameliorated by the increased ease in claiming compensation. It is well-known that it is access to key transport links and good infrastructure, which is the ultimate driver of housing value, and so it may well be this area of investment which has the most lasting effect.
David Smith is a solicitor in Anthony Gold's Housing & Public Law department. For further information email David or call 020 7940 4000.
