Does the budget go far enough for social housing?

While housing has been high on the political agenda recently, and significant focus was given to it at this week’s budget, specialist lawyers ask whether the new measures go far enough, particularly with regards to affordable housing.

It was confirmed that, following the Prime Minister’s October announcement, a further £2bn of funding would be given for affordable housing, including funding for social rented homes, with the aim, when added to existing funding, of providing at least 25,000 new affordable homes

As well as this, there are plans to lift the Housing Revenue Account borrowing caps for certain councils to enable more council homes to be built, and more power to the HCA (to be re-named Homes England) to use investment and planning powers and “intervene more actively in the land market”.

But social housing lawyers at national firm Clarke Willmott LLP say the focus remains heavily on home ownership rather than affordable and social rent.

Lisa Guelfi, a Partner in the social housing development team at Clarke Willmott, said: “Key issues for housing associations, such as availability of grant funding, rent review restrictions which are limiting the number of affordable rented properties being provided, and the question of what will happen with Right to Buy receipts from the Midlands pilot and beyond, aren’t really addressed.

“It is also unclear what the increased powers to be given to the HCA will mean in practice, particularly since the recent de-regulation to reduce the HCA’s involvement.”

One of the more publicity-friendly measures is the first-time buyer’s Stamp Duty Land Tax relief, a permanent relief for first time buyers which means that no SDLT will be payable on the first £300,000 of a property worth up to £500,000.

Tim Miles, also a Partner in the social housing development team at Clarke Willmott, said: “This should certainly give a boost to shared ownership sales as it is far more likely that the value of a first share in a property will be less than £300,000 than one on the open
market, particularly in areas such as London and the south-east.

“However, the Office for Budget Responsibility has pointed out that that a boost in sales to first time buyers due to the SDLT relief may push house prices up – they expect an increase of 0.3% in 2018. That in turn continues to reduce affordability generally and results, ultimately, in the people gaining most from the policy being those who already own property rather than the first time buyers.

“As the OBR puts it, “[f]or some potential FTBs with smaller deposits, who are constrained by loan-to-value lending criteria, the relief will enable them to borrow a multiple of their SDLT saving, allowing them to buy properties that they otherwise could not afford – but more expensively”.

“It’s also worth noting the OBR’s observation of a prior HMRC evaluation on the temporary SDLT holiday for first time buyers introduced not long after the initial crisis. This concluded that along with a rise in house prices, the actual effect was limited in any event in that most people who bought with the benefit of the relief would have bought anyway – raising the question, then and now, of whether the money would have been better spent on genuinely affordable housing for those who would not otherwise be able to buy.”

Further measures announced include £400m of loan funding for estate regeneration; a further £10bn towards the Help to Buy scheme to support another 135,000 people to buy new homes; £200m to continue with the Right to Buy pilot scheme, this time in the Midlands; and revisions to the delivery of Universal Credit to eliminate the seven day waiting period.

Tim continued: “As to much of the rest of the Budget proposals, that overused phrase ‘the devil will be in the detail” seems rather too appropriate. It remains to be seen whether the measures do translate into real boosts to affordable housing and the support and funding that housing associations need in order to provide the required levels of affordable housing to those that need it.”

Clarke Willmott LLP is a national law firm with seven offices across the country, including Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton.

For more information about Clarke Willmott visit clarkewillmott.com.