Reeves’ first Budget – does it lay the foundations for growth and the delivery of 1.5 million homes?

The property and development industry is crying out for stability and the last five months has been yet more waiting. 

At Labour Party Conference, which felt more like a housing conference at times, there was palpable enthusiasm to get Britain building. But any questions seeking detail were answered with “wait for the budget in October”.

These are the Chancellor’s key announcements in relation to the housing and development sector. Will this start the journey towards the delivery of 1.5 million homes during this government?

  • A new 5-year social housing rent settlement to give social housing providers the certainty to invest in new social housing and a potential 10-year settlement subject to consultation. Whilst this will be welcomed by providers who have reduced their development pipelines and spending on Section 106 properties, a 10-year option is what housing associations, the G15 and LGA have been pushing for.
  • £3.1bn of additional funding for the Affordable Homes Programme, expected to deliver around 5,000 more affordable social homes, taking the overall value of the programme to £12bn.
  • Planned changes to government debt rules to unlock up to £50bn of investment for major infrastructure projects such as roads, railways or hospitals, a commonly touted obstacle to the delivery of new homes.
  • Right to Buy discounts will be reduced from 70% to a maximum of 25% to help protect existing council housing stock, whilst local authorities will be able to retain 100% of receipts from a Right to Buy sale and reinvest in their portfolio.
  • £3bn support and guarantees to help small housebuilders contribute to the new homes targets.
  • Commitment to the recruitment of more planners to address local skills shortages.
  • Improvements to the rail links between Oxford and Cambridge to support the Oxford-Cambridge Arc and life sciences.
  • Investment to bring forward key sites across the country – including Liverpool Central Docks – to deliver 2,000 new homes.
  • Increased settlements for devolved governments, and Greater Manchester and the West Midlands will be the first mayoral authorities to receive integrated settlements to give mayors more of funding for their local areas.
  • Stamp duty increasing surcharge for second homes by 2% to 5% from tomorrow, whilst the increased threshold for first time buyers is to be extended.

I would argue that these steps, coupled with efforts to reduce inflation and the cost of debt, are a move in the right direction to build market confidence, but obstacles remain which are outside the Chancellor’s control.

  • Local authority resourcing remains a key obstacle to handling the sheer number of planning applications that will be needed to deliver 300k homes a year and is being acutely felt in the Capital – with PPA deadlines often missed and agency staff being used to stem the tide, which is simply not sustainable. The Chancellor’s re-commitment to improve staffing is welcome, but the reality is a frontline challenge for local councils.
  • Political will is something that Angela Rayner will have to tackle in the next 6-12 months and proactively intervene where local authorities are seeking to refuse applications which accord with the government’s mandate for growth – particularly with local elections in 2025 and 2026. Much-talked-about partnerships with regional mayors on growth plans will be key here.
  • Policy changes associated to the recent NPPF consultation, the review and publication of government’s response will inevitably slip past the end of this year and may not come into play until autumn 2025.
  • Interest rates have come down and inflation is now below the Bank of England’s 2% target, which increases the potential for further interest rates cuts, and this is essential for investors to balance the delays associated with drawn-out planning applications.

If you would like to discuss your site or project and the impact of the Labour’s first Budget since 2010, please get in touch on 020 7871 3565 or swilson@cascadecommunications.co.uk.