Great expectations

Bob Hunt

October 11, 2016

philiphammond

Bob Hunt is Chief Executive of Paradigm Mortgage Services

Of all the main political party conferences – not withstanding the ‘excitement’ that surrounded the re-election of Jeremy Corbyn as Labour leader – it is the Conservative one which brings with it the biggest sense of expectation, particularly in terms of what is likely to be announced in the Autumn Statement, and how our governing party might actually be preparing for Brexit.

Chancellor Philip Hammond’s address to the party faithful had the anticipated Ed Balls/Strictly joke you might have anticipated but already it could be argued that Hammond is far more of an economic dancing partner to Balls, than a certain George Osborne.

The decision to drop Osborne’s commitment to a budget surplus by the end of this Parliament has been widely touted – and no surprise to see Hammond remaining committed to this – but it would seem that the Autumn Statement will also bring some fiscal stimulus to bear, with increased spending and/or cuts to taxation. Perhaps even both – a decisive move away from his predecessor although one would imagine Osborne would perhaps have been making the same decision if somehow he’d managed to keep his job post-EU referendum.

In terms of the big infrastructure projects we might be anticipating then further information has also been forthcoming – we were told that a million new homes will be built by 2020 and that the government is borrowing £2bn in order to up the number of homes being built on brownfield sites. There’s also going to be a Home Building Fund – a further £3bn to be used as loans for building projects which they anticipate being able to come up with 25,000 homes, potentially more in the future.

It all sounds positive however I can’t help remembering that the previous government commitment prior to this announcement was for 1 million new affordable homes by the 2020. Will these be an extra million on top? You have to doubt it but it is positive to see the government recognising that housebuilding levels have to improve, and it appears that a further loosening of planning laws should help in terms of brownfield building.

What is perhaps interesting in the context of this new anticipated housing supply is the fact these are not necessarily going to be units just for owner-occupation. The ‘previous’ government in its Cameron/Osborne form seemed completely wedded to the notion of new homes being for owner-occupiers (predominantly first-time buyers) and no-one else, certainly not landlords, should get a look in. Now, however, we appear to have seen something of a shift, notably in terms of the opinion that new housing for private renting is an important part of the overall ‘housing strategy’. Indeed, perhaps this is (at last) a recognition that not every individual in the UK wants, or indeed is able, to buy a property and that having quality properties available for rent is also important.

What we have all known for some time, and something Communities Secretary, Sajid Javid, re-emphasised at the Conservative Conference is that the number of houses being built in recent years has been pathetically low. There is a huge gap to be bridged just to stand still, let alone hit those 250,000 new homes each year – a statistic which is often trotted out and taken as the industry norm with no-one quite appearing to know how to get anywhere near this figure. With most recent years at least 100,000 shy of this figure by the end of the next Parliament, even with these proposed 1 million new homes, we will still be lagging behind.

Having said that, far better to have a government that recognises the issue and is willing to put greater resource into tackling it, than continue to let it stagnate. The proof of the pudding will be in the eating and, as we await the Autumn Statement, we shouldn’t rule out even further activity in this area.

My own feeling is that we still remain a generation away from building the required number of houses necessary for today’s demand, let alone what might be needed in the future. Perhaps, the immigration checks and curbs Brexit should bring will dampen this demand but it will still take time to work its way through and for the necessary homes to be built. Therefore our notion of housing supply being inadequate is likely to remain right for some time to come.

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