Chancellor Jeremy Hunt MP announced the 2023 Spring Budget today (March 15th). PHPD will collect reactions to the budget from across the industry. This article will be updated as more reactions come in.
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Reacting to Jeremy Hunt’s Spring Budget announcement, James Dickens, Managing Director of Birmingham-based housebuilder Wavensmere Homes, said: “We were bracing ourselves for a lacklustre Budget and this did not feel like a Budget for growth. Increased revenue could be created for the Treasury if more initiatives had been announced today.
“We welcome the energy price guarantee remaining at the £2,500 level until June, as the proposed change kicking in next month would have disproportionately affected the lowest income households – many of which are already reliant on foodbanks. Fuel duty remaining frozen, and the continuation of the 5p reduction for another 12 months is also a relief.
“With the weakness of Sterling against the Euro, a cut – rather than the significant rise to 25% – to corporation tax would have been more appropriate, given the UK is a net importer. Wages are high and yet the productivity of the country’s workforce is lower than it was prior to Covid. As part of Hunt’s new Industrial Strategy, businesses need access to incentives and initiatives to be able to remain competitive within the global marketplace.
“With mandatory housing targets scrapped, there is a significant reduction in the number of affordable homes coming onto the market. Above inflation rises in the cost of raw materials, and additional new costs facing housebuilders for environmental mitigation – which would be more appropriately directed at those using fertilisers – are also negatively affecting the supply of lower cost new homes.
“With the recent conclusion of Help to Buy, the only help first time buyers have is the current Stamp Duty exemption for homes valued up to £425,000. But with less homes being built, there has been a marked impact on the rental market. For every home available to rent, there can be as many as seven people vying to occupy it. It is no surprise we have therefore seen rent hikes of 24% for soon to be completed homes at our Belgrave Village scheme in central Birmingham, and similar increases of 22% at Nightingale Quarter in Derby City Centre, where the final phases of the £165m scheme are being matched with buyers. With the continued rise in the cost of living, hard working people are more trapped than ever as renters, because mortgage deposit payments are so hard to save for.
“As a Birmingham-based housebuilder, we welcome the West Midlands Investment Zone announcement, and look forward to seeing how real levelling up can be delivered by this proposed investment injection.
“While no one expected the Chancellor to announce a silver bullet, the fragility of the UK’s economy has not been sufficiently boosted by today’s Budget.”
In reaction to Jeremy Hunt’s Spring Budget announcement, Paul Sams, Partner and Head of Property for Dutton Gregory Solicitors, said:
“We predicted that this would not be a Spring Budget to remember, it was a positive move to introduce the price cap on energy bills, the introduction of the childcare reforms, and reassurance that inflation will decrease by over half to 2.9%, however there were some missed opportunities, particularly for the property industry. There were a number of simple initiatives that could have had a transformative impact on the UK’s property sector, with every new transaction pumping circa £10,000 into the wider economy. This should have included a Help to Buy Scheme that would have actively increased the number of first time buyers, and incentives and support for landlords to make the investment into retrofitting eco-friendly technologies into their Buy to Let properties.”
“As Help to Buy was self-funding, it should have been reintroduced. The tightening of the original Help to Buy criteria – which was open to first time buyers, as well as existing homeowners until two years ago – was a sensible change. The scrapping of Help to Buy entirely has made no sense. First time buyers are now scarcer than we have ever seen, so there is a danger of a generation of young people being denied accessible home buying opportunities. Prior to a decade of Help to Buy, there was Home Buy Direct and First Buy, so how is it right that there is no longer a government initiative to make home ownership a possibility for those without a substantial deposit?”
“If we want to see the UK’s homes become far more energy efficient, landlords need to be incentivised to make the investment into retrofitting eco-friendly technologies into their buy to let properties. There are some grants available, but the uptake is very low because of the complexity and red tape. A largescale residential property upgrade scheme could be rolled out, mirroring the simplicity of the 2020 furlough system. By seizing the opportunity to see millions of homes upgraded to an EPC-C performance, the Chancellor could deliver a very welcome shot in the arm to the property, construction, and manufacturing sectors, while also reducing the energy bills and carbon footprint of renters.”
“The climate of demonising buy to let landlords should also end. Modernising and upgrading buy to let properties has been far more scarce in the three years since landlords stopped receiving interest tax relief on their mortgage expenses. This is not beneficial to the wider economy.”
“Our property conveyancing team has just received the highest number of weekly new instructions of the year. This number even exceeds March 2022, when the housing market appeared to be more buoyant. The media hype about a property downturn has now been proven to have been blown out of proportion. Now is the time for the Chancellor to reintroduce some much-needed levelling up and help vying first time buyers in the way that nearly 300,000 before them were given assistance to become homeowners.”
Mark White, Managing Director for Hampshire-based premium housebuilder Bargate Homes, said: “I am struggling to see how Hunt can call this a Budget for growth, with new tax rises and below-inflation spending proposals.
“There would have been absolutely no benefit at all in going through with April’s proposed change to the energy bill support scheme, so it is welcome to see the current £2,500 level of support continuing until June. Jeremy Hunt has also kept to the status quo regarding fuel duty tax. Increasing it would have had a catastrophic impact on food, and raw material costs at a time when supplies are already limited, and inflation needs to be curtailed.
“Jeremy Hunt referred to solar panels, but without substance. Feed-in tariffs should have been reintroduced for homeowners with solar panels, to reward people for supplying renewable energy back to the grid. Tax breaks for investing in renewable energy generation and smart home technology would have delivered a clear message today, rather than see the Chancellor simply focus on nuclear power.
“With corporation tax rising from 19% to 25%, businesses now need the opportunity to make more profit to fund it. If housebuilders could build more homes, we could make more profit and tax revenue. However, the planning and environmental policy changes are achieving the total opposite. For this government to stay in power beyond the next election, it needs to promote housebuilding. It is such a huge and vital industry that supports the wider economy, and the lack of appropriate, sustainable, and affordable housing may become an increasingly divisive political issue.
“We took a look at our own numbers for January and February and found it alarming that only 8% of Bargate’s homes have been sold tofirst time buyers over those two months. This is a 50% reduction in first time buyer sales, compared to those same two months in 2022. Meanwhile, rents are going up disproportionately to inflation, which is making it harder for people to save for a deposit, and yet, with the end of Help to Buy, mortgage deposit requirements are higher than they have been for well over a decade. It is very unhealthy for thousands of would be first time buyers to drop out of the market. Help to Buy worked well and should be reintroduced.
“The government introduced measures to lure unemployed over 50s back to work, but we see far more benefit in incentivising businesses to train and employ young people. We passionately believe in the future generation and want to overcome the perception that housebuilding isn’t as fashionable or as lucrative as other professions. New tax credits to train and transition students to work across various skilled site and office-based roles would have encouraged housebuilders to make a significant investment and allocate the right resources.
“We welcome the reforms to the access and cost of childcare for pre-school children. We need the government to think more in this way about how businesses, families and individuals can be helped further over the next decade, rather than being focused on the next big political event.”
Bargate Homes is a wholly owned subsidiary of Vivid – Hampshire’s largest provider of affordable homes. Established in 2006, the company builds select developments in prime locations across Hampshire, Dorset, and West Sussex. The company is currently delivering 900 homes across six live developments and has a pipeline of future sites expected to deliver in excess of 2,500 new homes.
Mike Burton, Director of Hampshire-based housebuilder Metis Homes, said:
“The Spring Budget has some welcome news for the British public – but it is very disappointing that nothing meaningful has been announced to help the housebuilding industry. What is positive is support in the form of a cap on energy bills for the next three months, the news that inflation will be falling by over half from 10.7% to 2.9% by the end of 2023, and retaining the fuel duty cuts. The technical avoidance of a recession is welcome news and a forecasted return to growth over the next few years, even if it is relatively low, should improve confidence in investment and purchase decisions. However, more needs to be done to help first-time buyers in particular. By assisting hard working people to be able to buy their first property by way of new incentives, and aiding housebuilders to build more energy efficient new homes by providing a policy environment where development is welcomed and can be delivered without unnecessary delays or obstacles, both would in turn have boosted long term investment and economic recovery. This is a missed opportunity in our view”
“More support is desperately needed for the housebuilding industry to enable us to build more homes, so it is disappointing to not see this being included in the Spring Budget. Simon Clarke, former housing minister, reportedly said that every 100,000 homes built in the UK adds 1% to GDP, so the importance of increasing housebuilding output to aid economic recovery and growth is obvious at a time when the UK needs all the help it can get.
“The Home Builders Federation (HBF) recently reported that house building rates are set to fall to their lowest level in decades, due in a large part to planning policy changes and the impacts of government department intervention on environmental grounds. 93% of SME developers said that planning was the most significant barrier to growth, and I couldn’t agree more. This is an area which requires urgent focus from Ministers to both benefit the economy and ensure that appropriate housing for generations to come is delivered.”
“As energy prices have a real impact on all households and businesses, the decision to extend the Energy Bills Support Scheme is welcomed and will provide some further certainty – although we had all hoped for a more long term solution rather than a 3 month extension. What is now critical is that we see a stabilisation of costs during this period to ensure that people know what they will be paying each year and that this is at an affordable level. Energy costs have a significant financial impact on house building, from premises, raw materials, and the production of new homes, to the costs for our labour force and our buyers. Over the past 12 months, energy price hikes have raised awareness of the benefits of buying a highly sustainable energy efficient new home, which has been an unintended positive for the industry. It is good to see this promoted more by the government.”
“At a time when costs are still a challenge for many, the continuation of control over fuel prices is welcomed, even if it’s only avoiding an increase rather than providing a saving. Fuel costs affect all elements of the house building life cycle – the cost of running plant and machinery, deliveries to site, the cost of manufacturers’ raw materials, the site’s labour force commuting costs, and the impact of rising costs on our customers and how this may affect their ability to purchase a house. This inherently increases construction cost and can reduce the pool of new home buyers. Financial help here is well received by the housebuilding industry.”
“At a time when economic growth should be a core objective of the government, continuing with the proposed raise in corporation tax will only stifle economic growth, as well as making the UK a less attractive business environment from a global perspective. Where there is normally reliable profitability, the housebuilding industry is seeing this projected to fall this year, as a result of the economy’s current state. The government’s ongoing changes to planning policy and environmental issues – and then taxing businesses at a higher rate – will only further impact investor sentiment and the amount of capital available to reinvest.”
