Budget 2014

On Budget day Glengian commented on the Chancellor’s statement and published a summary of the key measures in the Budget that had implications for UK construciton. A copy of the report can be found here.

Glenigan Comment

Private housing has been an important driver behind the recovery we have seen in construction activity over the last year. Accordingly it is encouraging that the housing market, and specifically increasing new housing supply, was a central theme of today’s Budget. The Chancellor announced in advance of the Budget that the Help to Buy scheme for new housing would be extended from 2016 and 2020. The move provides additional certainty to house builders to bring forward sites for develop and is projected to help a further 120,000 household to purchase a home. However, while keen to improve access to the housing market, the Government is clearly concerned that the market may overheat as the economy recovers. The Chancellor has called upon the Bank of England to be vigilant on house prices and importantly has announced further reforms to improve the supply of new homes.

Over the last two years it has been the larger housebuilders that have had the resources to bring forward sites for development as the market has recovered. Accordingly it is encouraging that the Government is creating a £500 million Builders Finance Fund to help SMEs that have struggled to secure bank lending. This is predicted to unlock 15,000 plots that have been stalled due to difficulty in accessing finance.  The government is also establishing a £150 million fund to kick start the regeneration of large housing estates through repayable loans in order to boost housing supply with the creation of mixed tenure developments.

In addition the Government is proposing to extend planning reforms, allowing to conversion of a wider range of buildings such as warehousing and light industrial premises to residential use without the need for planning approval.  More radically the Government is proposing a new “Right to Build”, giving people who want to build their own home the right to a plot from local authorities, backed up with a £150 million repayable fund to help provide 10,000 serviced plots for custom build.

Taken together with earlier initiatives, the measures in today’s Budget underline the Government’s desire to boost supply of much needed new homes.