The Government’s planning reforms have been given a seal of approval from the Office for Budget Responsibility (OBR) but economic growth forecasts have been cut.
Chancellor Rachel Reeves delivered her first Spring Statement yesterday, revealing an outlook from the OBR that predicted that the Government’s planning reforms will result in housebuilding being at its highest level in more than 40 years.
The OBR suggested the Government is on track to build an extra 1.3m homes by the end of this parliament, although its manifesto aimed for 1.5m.
However, economic growth forecasts were slashed from 2% to 1% and the OBR is anticipating that inflation will rise by 3.2% by the end of this year, up from predictions of 2.6% previously.
Commenting in response to the Spring Statement, Timothy Douglas, head of policy and campaigns for Propertymark, said: “The Spring Statement had a clear focus on the vital role housing plays in the UK economy and as part of the UK Government’s plan for growth, so it is encouraging to hear that planning reforms will boost national income.
“However, workforce challenges remain and it’s vital that local councils have the resources required to deliver effective planning and infrastructure so communities up and down the country and the wider economy really benefit.”
Justin Young, chief executive of the Royal Institution of Chartered Surveyors, said: “We are glad the Chancellor has announced a number of measures RICS have been advocating for to support housebuilding, skills development and businesses.
“The announcement by the government of an additional £2 billion investment to build 18,000 new social homes is an enormous boost for the sector. Alongside ongoing reforms to planning, this should provide increased confidence for housebuilders across the country. According to RICS data, the gap between housing demand and supply continues to widen, so these new social homes will prove vital for supporting new supply and crucially housing the most vulnerable.
“The £600 million of additional funding for construction sector skills is a decisive investment in the UK’s built environment. This should help secure the next generation of construction sector workers and professionals as we look to tackle the challenge of an aging workforce alongside acute labour and skills shortages. If this can be combined with a new GCSE for the Built Environment in England, we can drive fresh talent to take up the new opportunities afforded by this investment.
“We are pleased the government will publish plans for much needed business rates reform later this year – hopefully creating a fairer system for businesses as they face increasing financial pressure.
“Given that the country currently faces deep economic challenges, these measures are certainly positive news for the built environment. While this isn’t everything on our list of asks, this is certainly a step forward. We look forward to its and continuing our conversation with the government as it seeks to transform the built environment.”
However, Rightmove was less impressed, citing a lack of any mention about Stamp Duty changes.
Rightmove’s property expert Colleen Babcock said: “It’s extremely disappointing that the government have not used the Spring Statement as an opportunity to extend the impending Stamp Duty deadline for those currently going through the home-moving process. We estimate over 70,000 buyers are going to miss the deadline and complete in April instead, and a third of those are first-time buyers.
“Given the current challenges faced by first-time buyers, our data shows that a typical first-time buyer in Britain now faces average monthly mortgage payments of £940, a 59% increase compared with £590 per month five years ago.
“Over that same period rents have increased by 40% across Great Britain. So, while we welcome the Government’s focus and investment to help build more affordable homes, we’re keen to hear more about how this, or other incentives, can help more first-time buyers.”