In what many will see as a case of déjà vu, the UK government has announced plans to inject £5 billion into the UK housebuilding sector. Along with admittance that the UK housebuilding industry has not delivered the amount of houses required in recent years UK Chancellor Philip Hammond looks set to take a very different tone to his predecessor George Osborne. So, what can the UK housebuilding sector look forward to in the medium to longer term?
Investing £5 billion
There is no doubt that a £5 billion investment in the UK housebuilding sector would in theory go a long way towards a move to more affordable housing. The intention to “have tens of thousands of new homes built twice as quickly” will certainly grab the headlines but the authorities do need to deliver. We all know there has been an acute shortage of new housing developments right across the UK for decades. Many will suspect that governments of the day were happy to create excessive demand compared to the supply of new properties. However, while the current government has promised change, the proof is most certainly in the pudding.
Home Building Fund
Initially the UK government will allocate £3 billion of investment to a new Home Building Fund the details of which we currently await. The idea is that this fund will help the building of 25,000 new homes by 2020 with plans for a further 225,000 in the longer term. There are hopes that derelict shopping centre sites and brownfield sites will be made available to the building industry via a more flexible planning system.
Again, the use of brownfield sites has been mentioned on numerous occasions by governments in years gone by. It makes sense, although perhaps the only downside is the potential cost to “clean” land which may have been contaminated by various substances in years gone by. If the UK authorities are good to their word regarding the use of brownfield sites this could be a major step forward.
Using surplus public sector land
It is rather ironic that the authorities are now promising to use “surplus public sector land” to assist the general public in fulfilling their dream of owning their own property. Let us not forget that these assets are owned by the general public/taxpayers across the UK. It is estimated that around £2 billion of the £5 billion being made available would be used to convert surplus public sector land but again we await more details.
Government finances
Under the stewardship of George Osborne many would be asking the government how they plan to raise £5 billion while also instigating an array of austerity measures. Philip Hammond has confirmed that while austerity was “the right thing to do at the time” there will be a loosening of the public purse strings with the idea of encouraging economic growth. This is a major change to the recent policy of George Osborne and while opposition parties will no doubt pick holes in the various plans announced by Philip Hammond he does seem to be moving in the right direction?