The budget has offered £44bn for housing over the next five years.
Chancellor Philip Hammond has also abolished stamp duty for first-time buyers on homes up to £300,000 on properties up to £500,000.
Shares in Britain’s housebuilders have already been hit by the budget threat to compulsorily purchase land if they don’t build on it.
Within minutes of the announcement, Barratt, Persimmon, Taylor Wimpey and Berkeley were leading the FTSE 100 fallers – suggesting the City thinks the measure may have teeth.
Under scrutiny, the housing proposals soon exposed their potential to unravel.
Critics claim a promise to build 300,000 homes a year by the mid-2020s represents a long wait that won’t end by the next election.
Nor is the figure seen as a significant increase on the 217,000 homes Hammond said were being added to the housing stock each year.
The £44bn falls well short of the £50bn communities secretary Sajid Javid was said to be seeking – and much of it is wrapped up in loans and guarantees rather than immediate cash.
Labour leader Jeremy Corbyn said that with the worst rate of housebuilding since the 1920s and 250,000 fewer council homes “any commitment” would be welcome.
“But we’ve been here before. The government promised 200,000 starter homes three years ago. Not a single one has yet been built in those three years.
“‘We need a large scale publicly funded house building programme, not this government’s accounting tricks and empty promises.”
Labour, said Corbyn, backed the abolition of stamp duty for first-time buyers because it was another Labour policy in its election manifesto.
Key announcements on housing are:
- 100% council tax premium on empty properties
- £28m in three new housing pilots – in the West Midlands, Manchester and Liverpool – to halve rough-sleeping by 2022
- £44bn for capital funding to help build 300,000 homes annually by 2020
- £8bn of financial guarantees to support private building
- £2.7bn housing infrastructure fund
- £34m for construction skills
- A review to be chaired by Oliver Letwin to look at ways to speed up planning permission
- Five new garden towns
- One million new homes on the Cambridge/Milton Keynes/Oxford corridor by 2050
- Homes and Communities Agency becomes Homes England to pool expertise, planning and purchasing powers.
Additional material also shows government will postpone HA Right to Buy pilot till 2019/20.
Post-Grenfell, Kensington & Chelsea Council gets £28m for mental health services and local regeneration.
Hammond warned of the complex challenge ahead on housing.
Without more land on the market, house prices will just go up, without more SME’s building homes, the big companies will just benefit, he said.
Over the next five years, £44bn will be committed to help the housing market. By the mid-2020s Hammond said there should be 300,000 homes being built every year – the highest level since the 1970s.
The budget also pitched plans to legislate for councils to be allowed to impose a 100% empty homes premium on properties left vacant.
Several councils, including a number in London, have called for the cap, which is currently at 50%, to be raised.
Under the proposed legislation, owners would be fined £170,000.
On planning reform, the budget allows for a review of unused permissions and how land is used for housing.
The review is expected to report back by next spring in time for the financial statement.
Sajid Javid, the communities secretary, will make a statement on the plans “in due course.”
The housing proposals can be set against an underlying message that the UK economy is weaker than thought in March.
Budget heard how growth is going to slow steadily over the next three years – as Brexit looms.
The new growth forecasts mean that Britain’s economy is now expected to grow at below its long-term trend growth until well into the next decade.
Damage done by Britain’s weak productivity breaks down to:
- 2017: 1.5%, down from 2% in March’s budget
- 2018: 1.4%, down from 1.6%
- 2019: 1.3%, down from 1.7%
- 2020: 1.3%, down from 1.9%
- 2021: 1.6%, down from 2.0%