Budget 2020: Sector says ‘so far so good but still not far enough’

Broad welcome for the principles of what the Budget holds for housing, but there are issues with application.


Westminster in London next to the Thames

Budget 2020 has pitched a new multi-year settlement of £12bn to the Affordable Homes Programme (AHP).

This sum represents a rise of £3bn increase on the current five-year AHP worth £9bn and is due to end next year in 2021.

The government is also to cut interest rates for councils on lending for social housing by 1%.

There’s a £1bn building safety fund for cladding removal, which Chancellor Rishi Sunak says will “go beyond ACM”.

Some £650m will be spent tackling rough sleeping, with initial estimates suggesting some 6,000 new places for rough sleepers – funded by the promised stamp duty surcharge on non-UK residents, worth 2%, coming in from April next year.

Nearly £1.1bn of allocations will be found from the Housing Infrastructure Fund to build nearly 70,000 new homes in “high demand” areas across the country.

There’s £400m for new homes on brownfield sites and a pledge to reform planning due to be detailed by Housing Secretary Robert Jenrick in the Commons tomorrow (12th March).

CIH chief executive Gavin Smart acknowledged “important measures” to tackle our housing crisis.

“A £12.2bn multi-year extension to the affordable homes programme will give some certainty, but we hope this will include significant funding for homes at social rents.

“A building safety fund of £1bn recognises the urgent need, (but) it is also important that we ensure that affected buildings below (specified) height and leaseholders receive the funding needed to make their homes safe,” said Smart.

“The commitment of £643m funding to provide up to 6000 home for rough-sleepers is a positive step.

“To support this commitment the gap between local housing allowance rates and the lowest 30% per cent of private rented homes locally needs to be closed, if we are to successfully end homelessness once and for all.

“With a comprehensive spending review still to come, we will continue to urge government to invest in the social rented homes we need so badly and to ensure that people on low incomes have the help with housing costs they need,” he said.

Welcoming the housing pledges, NHF chief executive Kate Henderson said: “We look forward to working with government to shape the details, ensuring this money delivers homes for everyone.”

If greater investment in the Affordable Homes Programme is a “positive step”, LGA housing spokesman Cllr David Renard warned that with more than a million households on council waiting lists, and over 86,000 households in temporary accommodation, it was vital the programme re-focussed on building homes for social rent.

With over two thirds of councils spending more than they planned to on tackling homelessness, it was equally vital that Government boosted the budget’s homelessness provision with more  long-term funding for  prevention in the Spending Review, said Cllr Renard.

And there was nothing on the restoration of local housing allowance rates to cover at least the lowest third of market rents or the prospect  of  Right to Buy reformation so councils to keep receipts in full and set discounts locally.

Adrian Plant, director of Shared Ownership, Leaders Romans Group, offered faint praise for the “lip service” the budget lent to the social housing agenda.

“But it could have gone further, influential voices including the National Housing Federation have been making sensible calls over the last few weeks, which have been all about providing additional security and stability for those who need it most and that view doesn’t seem to be at odds with the government,” said Plant.

“There seems to be a recognition that the sector is suffering from a real supply shortage at the moment as first time buyers and key workers find it harder to get a foot on the ladder, and today’s announcements represent a positive step in that sense,” he said.

Federation of Master Builders chief executive Brian Berry said that though investment of £13.7bn in housing was welcome, it was tempered by  no mention of how the government planned to back SME housebuilders.

“Master Builders are facing major barriers finding land, accessing finance and skilled workers – these will all need addressing if we are to build 300,000 homes a year,” he said.

Mary-Anne Bowring, author of leaseholdersupport.co.uk and group managing director of Ringley – which has over 10,000 leasehold and private rented homes under management – said that more than 1,000 days since Grenfell, the government has shown it is still not ready to act at the scale needed for the cladding crisis.

“We cannot simply wait for the next crisis to happen, while millions of people are left unsure over the safety of their building.

There needs to be an acceptance of the scale of the problem and today’s sums just simply are not enough,” said Bowring.

“The crisis goes far beyond removing Grenfell-style cladding – even leaseholders who have had their cladding found safe are still unable to remortgage or sell their properties.

“It is not just about dangerous cladding, it is about retrospectively tracing the physical construction of the building and testing and how all the components and layers of the building act together.

“Support is needed for leaseholders and freeholders alike to navigate the process of getting their homes certified as safe as we have to retroactively re-create the ‘as built’  reality of the homes people are living in,” she said.

David Westgate, group chief executive, Andrews Property Group, said the key issue with the £1bn lies in how quickly the funds can be called upon and if there are any specific criteria that must be met for developments to be eligible.

“The funds have officially been made available but the logistics have yet to emerge. In the meantime, many people’s lives have been put on hold as they cannot secure mortgage finance and they cannot sell their homes,” said Westgate.

“What’s also vital is that the new fund covers rendered insulation as well as combustible cladding.

“In our experience, the cladding issues we are seeing around the UK could soon be surpassed by the problem of rendered insulation.

“If we are to genuinely make every apartment and housing block in this country safe then the newly announced fund needs to cover all materials that are deemed to be unsafe, not just cladding,” he said.

Paul Howells, CEO of Accumulate Capital, qualified the commitment to constructing more homes as promising.

“Though as someone closely involved in the construction sector, I do question whether its current objectives are achievable,” he said.

Audley Group CEO Nick Sanderson said that by “again” focusing on building new houses the budget was “yet again” another missed opportunity to support specialist housing rather than indiscriminate building.

“We don’t need 70,000 new homes – we need to free up existing housing stock to bring movement to the housing market and provide more people with homes that are suitable to their current needs,” he said.

“The focus needs to be on long-term solutions rather than headline-grabbing numbers.”

Sanderson also said the budget showed up the government’s “empty promises” on social care.

He said: “It is still very disappointing to see so little on social care in the Budget – the growing crisis in the system should be one of the highest priorities for any government.

“The promised green paper has been endlessly delayed – this is not a subject that can be repeatedly kicked into the long grass.

“We need to be bringing together housing, health, and social care as soon as possible to ease the pressure on the social care system by delaying, and even preventing, older people’s support needs.”

Leading youth homelessness charity Centrepoint praised the budget’s proposed increase in the amount of Universal Credit young people can claim for their housing costs when they move on from hostel accommodation.

Seyi Obakin said the increase was a vindication for the charity’s Chance to Move on campaign.

The government said it will introduce additional exemptions from the Shared Accommodation Rate (SAR) for Universal Credit claimants to protect those at risk of homelessness.

According to the Budget document: “This will enable rough sleepers aged 16-24, care leavers up to the age of 25, and victims of domestic abuse and human trafficking to live on their own, supporting their recovery from homelessness.”

Prior to today’s decision, most young Universal Credit claimants were only eligible for the lower Shared Accommodation Rate of Local Housing Allowance, based on the assumption they could live with family.

The rules already recognised this wasn’t an option for some vulnerable groups such as care leavers aged 18 to 21 and homelessness hostel leavers older than 25, who are able to claim the higher one bed rate.

But this haphazard system of exemptions meant young hostel leavers were stuck on the lowest rate, whilst care leavers faced a financial cliff edge on their 22nd birthday.

Analysis by Centrepoint last month found that the Local Housing Allowance (LHA) rate, used to calculate the housing element of Universal Credit for tenants renting from private landlords, only covers the cost of renting a room in a shared house in only one of the 234 local authorities.

In 166 local authority areas, the shortfall between the average cost of a room in a shared house and the shared accommodation rate is £100 or more per month.

L&Q Chief Executive David Montague was relieved by the absence of “threats or actions” feared by the sector.

“The devil will be in the detail, but a commitment to invest £600bn in capital projects over the next five years, a £12bn extension to the Affordable Housing Programme, a £1.1bn Housing Infrastructure Fund, £650m to help bring an end to rough sleeping, and a £1bn Building Safety Fund are all very good news.

“It was also encouraging to see that home ownership isn’t the only game in town,” he said.

At Aster Group, CEO Bjorn Howard was “particularly encouraged” by the funding to drive forward the delivery of affordable homes.

“£12.2bn (for AHP) is a considerable commitment and I believe it reflects the government’s understanding of the importance of delivering choice and variety in the housing market as well as volume.

“If we’re to meet the diverse housing needs of people across the country, we need to provide homes in a range of tenures, including social and affordable rent and shared ownership, not just for open market sale,” he said.

Following years of tax hikes on the sector, organisations such as the Royal Institution of Chartered Surveyors, Hamptons International, Zoopla, and ARLA Propertymark have warned private-sector rents are likely to rise as the demand for such homes outstrips supply.

Professor David Miles, a former member of the Bank of England’s Monetary Policy Committee, said: “Aspiring first-time buyers are hardly helped by squeezing the supply of rental property and driving rents up.”

The RLA and the NLA had called for the Chancellor to scrap the stamp duty on the purchase of additional homes where landlords invest in property and add to the net supply of housing.

In a joint statement, the Residential Landlords Association and the National Landlords Association said: “The government is undermining its own efforts to boost homeownership through its attacks on the private rented sector. By choking-off supply and making renting more expensive it is tenants who are hardest hit.

“Ministers need to wake up to the reality of the damage their tax measures are doing to the private-rented sector and support landlords to provide the new homes for private rent we desperately need.”

NHC (Northern Housing Consortium) CEO Tracy Harrison gave her thoughts on the Budget, saying: “Today’s budget represents a welcome first-step in levelling-up.

“NHC members will welcome key announcements such as the certainty provided by the extension of the Affordable Homes Programme.

“What’s vital is that government doesn’t stop now – future announcements like the planning White Paper, infrastructure strategy, and the comprehensive spending review will provide proof that levelling up is more than a slogan.”

Commenting on specifics, Harrison said: “NHC members will welcome the certainty of the extension of the Affordable Homes Programme. But, as sector bodies warned before the Budget, this must remain open to the whole country.

“The £400m for Mayoral Combined Authorities and local areas to establish housing on brownfield land across the country is a positive step to level up.

“This could help revitalise left-behind places in the North, but we want to see more from government’s promise of levelling up in the infrastructure strategy late in spring and the comprehensive spending review in July.”

Harrison continued: “Our local authority members will welcome the cut to the interest rates for investment in social housing by 1%, after government increased it by 1% late last year. Many of the top local authority builders are located in the North, and our councils are ambitious to do more.”

“The Budget promises planning reforms which will address the capacity, capability, and performance of local planning authorities.

“Recent NHC research shows northern councils have been disproportionately impacted by housing and planning capacity reductions, and we hope government will take the opportunity to level up local authority capacity.”

Jon Sparkes, chief executive of homelessness charity Crisis, said: “Missing from today’s Budget is bold action to prevent people from being forced on the streets in the first place, such as clear targets for increasing the supply of social housing and restoring housing benefit to cover the cost of rent.

“Rough sleeping is the most brutal and devastating form of homelessness, and while the additional funding announced to tackle this is much needed, a dark cloud remains over the government’s ability to end rough sleeping within this Parliament without tackling its root causes.”

Sparkes continued: “The lack of investment in housing benefit is a complete missed opportunity for the Chancellor to free some of the most vulnerable people from the grip of poverty.

“The upcoming Spending Review must restore housing benefit to cover at least the lowest third of rents – the government cannot continue to look the other way while people are forced into homelessness under the constant pressure of rising rents and low incomes.”

Stuart Ropke, chief executive at Community Housing Cymru, outlined what the Budget means for the housing sector in Wales, saying: “Today’s Budget announcement has rightly been dominated by support and stimulus to tackle Coronavirus.

“We welcome the emergency announcements to widen access to financial support through the welfare system, but we urge further action to prevent unnecessary hardship caused by sanctions during this unprecedented time.

“With extra funding promised to Wales, we urge Welsh government to act on their promise to prioritise additional spending for the Housing Support Grant, which funds crucial services to tackle homelessness in Wales.

“We would also like to see Welsh government now invest further in supporting housing associations to build 75,000 zero-carbon affordable homes and create 50,000 jobs by 2036.”

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