The Chancellor of the Exchequer has unveiled his Budget for autumn 2021 and it includes the announcement that the housebuilding industry will receive "the largest cash investment in a decade".
While this sounds like great news, it's important to take a closer look at what Mr Sunak actually said and what impact his announcement is likely to have on housebuilders before we start celebrating. So what are the new housing measures?
New homes
The good news is that a multi-year investment of £24 billion to build new homes has been promised, with £1.8 billion to be spent developing 1,500 hectares of brownfield land to free up space for one million new homes, and £11.5 billion being invested in the Affordable Homes Programme.
However, according to a senior research analyst at estate agents Savills, these figures "work out at £11,250 per home - enough to make a difference on some brownfield sites but a drop in the ocean compared to costs on more heavily contaminated or complex sites. It’s also worth noting there simply isn’t enough brownfield land to build anywhere near housing needs."
There are also concerns that the amount promised for new affordable homes will be insufficient as the homes need to be built to new, significantly more expensive, green standards.
While the shortage of affordable houses remains a serious problem, any new home-building program is welcome. However, until the cost of building environmentally-friendly homes begins to fall, many will argue that these new measures simply do not go far enough.
Stamp duty
Perhaps unsurprisingly, the stamp duty holiday which was announced in last year's Budget has not been extended.
As Britons' homes became more important than ever during the onset of the coronavirus pandemic, the tax cut helped support the property industry, so there is obviously some disappointment that it has come to an end. However, the result of the stamp duty holiday was house prices being driven up by as much as 20%, so its abolition was never likely to be overturned.
In more positive news, at a time when several companies are reporting an increase in enquiries from overseas buyers, no additional taxes on overseas buyers have been introduced.
Planning
£65 million is to be spent improving England's planning system, primarily through digitising the process to make local plans more easily accessible.
Russell Pedley, co-founder and director of Assael Architecture, said: “We welcome any digitisation that simplifies planning, preferably with a zonal approach that would make it more transparent and easier to hear a range of voices representative of local communities.
“It would also, in our view, attract more national and international funding by providing certainty to investors. In promoting digital means of consultation, we’d expect to see genuine engagement that takes us out of the Stone Age and into the sensible, modern use of planning technology.”
Cladding removal
Also included in the Budget was £5 billion for the removal of dangerous cladding from high rise buildings, which will be partially funded by the Residential Property Developers Tax, which is levied on developers with profits over £25 million at a rate of 4%.
While speeding up the removal of unsafe cladding and not forcing leaseholders to foot the bill is clearly a good thing, many are aggrieved that a blanket tax is being forced on developers while those directly responsible for the unsafe cladding are still not being held to account. With the cost of replacing unfit cladding systems currently diminishing the Building Safety Fund by an estimated £30 million a month, it's not hard to see why.
Furthermore, no mention was made of buildings with potentially unsafe cladding below 18 metres, an issue that is currently seeing thousands of leaseholders unable to sell their homes.
Conclusion
While an extra £24 billion to build new homes is extremely welcome, only time will tell how far that money will stretch and how beneficial it will actually prove to be.
However, it is worth remembering that the figure could have been much lower so there are certainly reasons to be cheerful, especially when you also factor in the money to overhaul the planning system. And although the stamp duty holiday will certainly be missed, nobody was under any illusion that it would last forever.
At this stage - and it is always worth delaying judgement on the pros and cons of any Budget announcement until after any new measures have had time to take effect - it appears the 2021 Autumn Budget is a decidedly mixed bag for homebuilders.