Last year’s Spring Budget was no doubt one of the most significant budgets for the UK property market in recent history. Many consider last year’s stamp duty cut to be the key factor behind the nearly £30,000 increase in average house prices over the past 12 months.
However, what last year’s Budget failed to do was tackle the alarmingly tight supply side of the housing market equation. But with the government’s commitment to build 300,000 new homes reiterated in a recently published report presented to the House of Lords’ Built Environment Committee, we are looking forward to seeing concrete actions to address the complex challenges of housing shortage announced in this year’s Spring Budget.
Despite one of the most pressing housing crises in decades and the shortage of supply, housebuilding starts and completions have both continued their decline in recent months. According to data by the Department for Levelling Up, Housing and Communities (DLHC), the number of homes completed in England in Q4 2021 was down by 11% on Q4 2020. So, will the chancellor have any tricks up his sleeve to help boost housing supply this year?
We certainly hope so, but in order to give the chancellor a helping hand, here are a few welcome suggestions that could go a long way to alleviate the housing supply shortage.
First, we call on the chancellor to bring specialist lenders into the fold to help unlock funding for SME property developers. A survey of SME housebuilders conducted by the Home Builders Federation (HBF) found that 18% of respondents in the north and 24% of respondents in the Midlands saw development finance as a major barrier to housebuilding.
Second, we appeal to the chancellor to take action to support property developers, particularly SME developers, affected by the rising cost of energy and construction material. According to the HBF, material shortage and other cost pressures have hit hard SME developers who do not have the necessary cashflow to cushion the effects of higher prices and who are also unable to buy materials in bulk.
And third, we invite the chancellor to consider tax reliefs for SME developers who are building schemes that include affordable and sustainable homes.
Roxana Mohammadian-Molina, chief strategy officer, Blend Network
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