Online House Hunter: Budget round-up
THE dust hasn’t quite settled on the Budget but already responses are coming in from the various interested parties with regard to the property market.
The consensus appears to be that it’s probably good but for the building industry but may not be enough to kick-start any great activity in the housing market.
Mr Osborne’s FirstBuy scheme is aimed at encouraging first-time buyers into the market by asking them only for a five per cent deposit on a new home.
But pressure group PricedOut is deeply sceptical.
Commenting on the budget announcement of a new assisted deposit scheme, PricedOut spokesperson Matt Griffith said: “The interests of First Time Buyers are not being served by this new assisted deposit scheme.”
“When independent economists are predicting a 10 per cent fall in house prices this year, having the government encouraging First Time Buyers get onto the ladder using a 5% deposit looks foolhardy at best and, at worst, pretty irresponsible.
“The reason why banks aren’t lending to First Time Buyers without a large deposit is because banks know they have a very large funding gap, and that house prices are likely to fall further. Having the government using tax payers money to encourage vulnerable consumers to take on a very large debt burden, when house prices are highly likely to fall, is not something we should welcome”
“George Osbourne is behaving like a shop keeper trying to shift overpriced stock by offering a clever financing scheme. Consumers would be wise to be sceptical and steer clear, the big problem is that prices are still far too high.
“It’s main purpose appears to be to help bail out the house building sector – which is suffering from buying too much expensive land at the peak of the boom. We saw plenty of these schemes under the Brown government, and it is depressing to see the coalition continue to connive with the building industry and act against the best interests of consumers.”
Even the National Association of Estate Agents is dubious. Wendy Evans-Scott, President Elect of the National Association of Estate Agents said: “The Chancellor’s help for first time buyers is a good gesture towards re-starting the stalling property market. However, it is nothing more than a gesture – the focus on new build properties, rather than incentivisation across a broader spectrum of property, means there will still be little upward momentum in the market. While the measures aimed at first time buyers must be welcomed, it is unlikely that they will provide the kick-start that the housing industry badly needs.”
She was more optimistic about some of the Chancellor’s other measures aimed at boosting the property market but with reservations.
She said: “The review of Stamp Duty, for which we have long-campaigned, is a positive step and we believe the Chancellor is right to address planning laws and change of property use. However, without the ability to overcome the substantial capital barriers that are currently restricting property ownership, the market will stagnate in 2011. Such a stagnation has wider implications for the economy as it restricts the flexibility of the workforce and the ability of families to own the homes they need as they grow. Encouraging first time buyers back to the market is an important first step, but it is just that – a first step on a long road to recovery.”
As to the Chancellor’s wider reforms for boosting the property sector, The National House-Building Council welcomed Mr Osborne’s measures to help boost and incentivise the house-building industry.
These measures include the release of public sector land to encourage new homes, the presumption in favour of sustainable development and the shared equity scheme for 10,000. The NHBC also welcomed the Government’s confirmation of the definition of zero carbon new homes.
Imtiaz Farookhi, Chief Executive of NHBC comments: “NHBC’s new home registration statistics have, in recent months, clearly demonstrated that there are not enough homes being built in the UK. The squeeze on mortgage finance, exclusion of FTBs from the market, and wider economic uncertainty have all contributed to a major shortfall in the number of new homes.
“There is a need to ensure that FTBs are able to benefit from well-designed, energy efficient new homes without the need for unrealistic deposits. The shared equity scheme provides a vital boost for this group of homebuyers, while also providing housebuilders with the incentive to build. It also means that thousands of jobs in the construction industry will be secured and that the house-building sector can focus its attention on building modern, sustainable homes.
“As well as supporting recent Zero Carbon Hub proposals for levels of on-site Carbon Compliance, the Plan for Growth also clarifies that unregulated CO2 emissions – those that come from occupant uses of the home such as plug-in domestic appliances – are now excluded from the zero carbon definition for housing. Since this policy was first announced in 2006, there has always been a question as to whether building regulations should be used to control unregulated energy use. Allowable solutions to offset emissions seem to have little benefit for the owners of new homes.
“I am pleased that the hard work and evidence provided by the Zero Carbon Hub has today resulted in the Government being able to effectively finalise the definition of zero carbon new homes today. The industry can now move forward to deliver new homes in a cost effective and consumer-focused way.”
But not surprisingly, the UK Green Building Council criticised what it saw as the Government’s ‘U-turn’ on zero carbon homes.
UK-GBC chief executive Paul King said it revealed a “shocking weakening of the government’s green agenda which would remove a valuable stimulus for low carbon growth”.
Paul King, Chief Executive of the UK Green Building Council added: “In the space of two weeks, this government has gone from a firm commitment on zero carbon homes, to a watered down policy. A zero carbon home will no longer do what it says on the tin. The world leading commitment that new homes would not add to the carbon footprint of our housing stock from 2016 has been scrapped despite a remarkable consensus between industry and NGOs in support of it.
“Thanks to a crude de-regulation agenda we now have a policy that is not only anti-green but anti-growth. Low carbon construction has been one of the few sectors showing genuine green shoots of growth. This U-turn will result in loss of confidence leading to lower investment, less innovation, fewer green jobs and fewer carbon reductions. It is a backward step by a government that wanted to be seen as ‘the greenest ever’.”
On the letting side of the market the reform of stamp duty was particularly welcomed. Ian Potter, operations manager of the Association of Residential Letting Agents, said: ”We have campaigned for a number of years for the Government to reform Stamp Duty, so its inclusion in this year’s budget is a welcome one – particularly for the Private Rented Sector (PRS).
“The PRS plays a vital role in the housing market but is suffering from a lack of institutional investment, which in other countries is flourishing. In the UK there are many barriers to this kind of investment but by reforming Stamp Duty to bulk purchases, it seems the Government might be removing one of them. This, we hope, will help drive institutional investment to the UK PRS, benefiting the housing market has a whole. In addition, and depending on exact details, the proposed changes to REITs could act as a further step towards enabling institutional investment”
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